Traditionally, when the state government goes out and borrows hundreds of millions of dollars, it uses the money to invest in physical assets such as roads, bridges and buildings.

Oregon Treasurer Ted Wheeler, however, has a different and intriguing idea for making good use of the state’s borrowing capacity. He wants to utilize the proceeds from two $250 million bond sales to invest not in structures, but in brains — specifically those belonging to college students.

Wheeler proposes creation of a Student Opportunity Fund that could help make a college education more affordable for multiple generations of Oregonians. This proposal is long ranging and daring enough that it someday could take its place next to other Oregon innovations — the Health Plan, the Bottle Bill and the Beach Bill — as a piece of landmark legislation.

Helping all students who need it

The Opportunity Initiative, as it has been dubbed, would directly attack the issue of college access and affordability by providing a vastly deeper pool of money available to people seeking higher education. If the Legislature and voters approve Wheeler’s idea, the state would sell a total of $500 million in general obligation bonds in 2014 and 2015. Those funds would form the corpus of the Opportunity Fund, which would generate investment returns for the purpose of funding student aid grants.

The Opportunity Fund would require no new taxes. As the state is selling these new bonds, it will retire older debt, which will give it the funding stream needed to pay off the bonds. In the meantime, the $500 million endowment will grow at a faster rate than the low interest the state would pay on the bonds. The increasing size of the fund will produce money immediately for student aid. With additional state contributions over the years, however, Wheeler envisions a fund equaling $6 billion within three decades.

The mathematics behind the Opportunity Fund can get a little complex, but the goal for this proposal is easily expressed: Eventually, if the state continues to direct money into the Opportunity Fund, it could generate enough investment returns each year to meet the unmet financial need of every Oregon student for two years of his or her post-secondary education.

Long-lasting consequences

When coupled with the relatively low cost of the state’s community colleges, the Opportunity Fund raises the real possibility that every Oregon student who wants to continue his or her education could do so. This means much more than personal growth for these students. Such a whopping investment in Oregon’s human capital will raise the state’s per-capita income, attract quality industries to Oregon and reduce college debt loads that are now burdening young people as they enter the work force.

The Opportunity Initiative requires action by the Oregon Legislature, which must pass Senate Bill 11 if this idea is to move forward. The Legislature also must forward a referendum to the statewide ballot to create a permanent Opportunity Fund that is constitutionally protected.

This proposal, now before Sen. Mark Hass’ Senate Education and Work Force Committee, deserves thorough consideration and passage onto voters. Rather than simply bemoaning a continual shortage of money, this is a rare chance for Oregon to do something bold in the name of education.

Contract Publishing

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