Ballot measure would create state endowment for student aid
Measure 86 has not produced the passions generated by other Oregon ballot measures in the Nov. 4 election, but if voters approve it, its long-term significance may dwarf the others.
Measure 86 would create an endowment fund for aid to Oregon students at universities, community colleges and post-secondary job training.
The state would be authorized to sell bonds to raise money for the fund, which also could accept direct appropriations from the state budget and private donations. Only investment earnings from the fund would be distributed in aid.
Lawmakers in 2013 referred the measure to voters at the request of state Treasurer Ted Wheeler, who sees it as a way to boost Oregons aid to higher education over a decade or more.
The basic financial investment principle is that the earlier you invest and the more you invest, the more you get over the long term, he says. Its a long-term commitment to grow an asset that helps students.
Wheeler says that while an increasing number of jobs require skills and training beyond high school a state education goal envisions 80 percent of high school graduates moving on to advanced education by 2025 Oregon has fallen behind in helping students do just that.
Oregon ranks near the bottom in operating expenses per capita for higher education, and in state support per student.
Separate measurements by the State Higher Education Executive Officers put Oregon 46th in terms of support per full-time student, and 44th in per capita operating expenses, in 2011-12. Only Colorado in the West ranks lower.
Oregons per-capita average for 2011-12 was $161.93, below the U.S. average of $242.45. All of Oregons four neighboring states exceeded $200 per capita.
Its per-student average was $3,851, below the U.S. average of $5,906.
Oregon ranks 22nd among states in people ages 25-64 with an associate degree or more. Its 40 percent puts it slightly ahead of the U.S. average of 39.5 percent, and ahead of three neighbors, but below 15th-ranked Washingtons 43.4 percent.
Measure 86 is an honest effort to turn the tide and get Oregon off the bottom of all those lists, Wheeler says.
It does not solve all of our problems with higher education. Its not a quick fix, but a long-term strategy.
Students bear costs
Wheeler also says that for every five students who qualify for the Oregon Opportunity Grant, only one is awarded an annual grant averaging $2,000 and there is no guarantee of renewal for the following year.
Scholarship help is currently unavailable for career and technical training. Wheeler says companies are willing to contribute to public-private partnerships that benefit them by providing trained workers but they have not been asked to help.
While costs at state institutions have been relatively stable when adjusted for inflation, Wheeler says more of the burden of paying for education has fallen on students and families as direct state support has dwindled over the past 25 years and universities and community colleges have made up the difference via tuition increases.
Wheeler says the endowment fund is a long-term approach that no other state has tried.
Ill be the first to admit its a bold approach, but its based on the reality that Oregon has been moving in the wrong direction for a long time, he says. We are digging ourselves out of a deep hole.
What opponents say
Although only one argument was filed against it in the official state voters pamphlet, Measure 86 does have its critics.
One of them is Sen. Doug Whitsett, R-Klamath Falls, who says Measure 86 would add to state debt.
The measure would limit total debt to 1 percent of Oregons real market value of property currently estimated at $4.3 billion but debt created by Measure 86 would not be ultimately secured by a statewide property tax. Instead, it would be an obligation of the tax-supported general fund, which in practice is tapped to repay much state debt.
All of the costs of repaying the borrowed money are to be borne by Oregon taxpayers, Whitsett wrote in an online post on the Oregon Catalyst website.
Lawmakers themselves would have to authorize the sale of bonds as part of the states two-year budget.
Lawmakers generally limit bond repayments to 5 percent of the general fund, currently about $750 million in a two-year cycle. This excludes bonds repaid from lottery proceeds or earmarked sources.
The cost to service Oregons existing debt is an equally compelling reason for Oregon voters to reject Measure 86, Whitsett wrote in the online post.
The only argument filed in the voters pamphlet was by Steve Buckstein, founder of Cascade Policy Institute, a free-market think tank based in Portland. He questions why taxpayers should subsidize many students who are not ready for college and require remedial courses.
The answer is that we shouldnt, Buckstein writes.
He says until public schools do a better job of preparing students, and higher education takes advantage of new technologies, voters should reject Measure 86.
Wheeler says bonds are not the only option to provide seed money for the fund.
Bonds were considered a good option three years ago, when interest rates were zero. Rates have risen to about 3.5 percent on the types of bonds likely to finance the fund.
Wheeler says while bonds are still an option for lawmakers in 2015 if Measure 86 passes they are unlikely to remain so if rates reach 4.5 percent.
I think there is a short-term opportunity here while interest rates are low, he says. But that window is going to close.
Still, he says, its important for Oregon to create a fund even if the principal is created through direct set-asides from the state budget and donations from individuals, companies and foundations.
Wheeler acknowledges that some critics say Oregonians want a higher priority on funding public schools.
In the 2013 Oregon Values and Beliefs Project conducted by DHM Research of Portland for several organizations, 81 percent of those sampled ranked such funding as very or somewhat important. Of 19 other government services, support for community colleges ranked fifth at 68 percent; for four-year universities, 10th at 63 percent, and vocational and technical training, 11th at 61 percent.
After years and years of neglecting higher education, it may never be as much on peoples minds as primary education, Wheeler says.
But it is still critical to our states economic competitiveness. Yes, we should do that (aid to public schools) and we should do this, too. Leadership is about doing both, not putting one over another.
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