budget full budget

8/7/2019 BUDGET Full Budget

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LAYING THEFOUNDATION

GOVERNORSBUDGET MESSAGETo the Citizens of Oregon

We have an opportunity this year -- to set Oregon on a course to a bright future.

It wont be easy. I believe the next biennium will be our most difficult, which is why we have toapproach it together and approach it correctly. We are at or near a low-point in state revenues,but we are at or near the highpoint in terms of human need. Balancing the next budget willrequire some very difficult choices. It will require managing to a clear set of priorities and in away that reflects our long-term vision. And it will require leadership with the courage and

discipline to look beyond the next two years to where we want Oregon to be in 2020 and beyond.

This budget marks the first step in shifting state investment from addressing problems after theyhave developed to preventing them in the first place. It funds proven job creation programs toget Oregonians back to work in the short-term and supports early childhood investment as thefoundational element to achieving long-term education and economic objectives for Oregon.

Think of our state government as a house that was built many years ago, and Oregonians as thefamily that has been living in it for generations. Its design may have made sense when it wasbuilt, but the family -- its needs and the way it lives -- are different now. The rooms are thewrong size and there are too many of them. There is no insulation and the windows are drafty, so

it costs more than our family can afford to keep it up. The foundation is cracked and the roofneeds a complete replacement. There comes a point when patching things up just wont workanymore: we need to rebuild a house that is affordable and is built for the way we live.

Early Childhood

If our central challenge is to rebuild the house of Oregon, then successful investment in thedevelopmental needs of children is the foundation on which our house will be built.My budget will ensure our children enter school ready to learn by unifying disparate programs,streamlining administrative costs and measuring outcomes.

Job Creation

This budget continues proven programs and services that are vital to creating, retaining andattracting small and large businesses that provide sustainable, living-wage jobs for Oregonians.It includes additional investment in the Oregon Innovation Council (Oregon InC), an effectivepublic/private partnerships that converts university research into market-ready products and jobs.

Education

This budget establishes a stable funding floor for Oregons K-12 public school system. Itprovides $5.56 billion for the biennium. However, fifty-two percent ($2.9 billion) will be


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distributed during the first school year of the biennium, equivalent to a $5.8 billion budget forschool funding. The effect is to provide an increase in state funding for the 2011-12 school year.Front-loading the funding also provides a year to find cost savings through consolidation andother efficiencies to maintain this level of classroom support during the 2012-13 school year. Inpost-secondary education, this budget focuses on undergraduate education and access.

Health Care

The Oregon Health Plan and long-term care services are profoundly impacted by the loss of one-time funding sources, like federal stimulus revenue. This budget builds a platform to transformour health care delivery system in the second year of the biennium through integration ofservices; incentives for prevention; and community-based management of chronic conditions.

Public Safety

The cost of corrections has grown dramatically over time and now comprises 53 percent ofpublic safety spending. Despite reduced funding levels, this budget funds Measure 73reimbursements to counties, and avoids early release of adult offenders. However, such cost

increases are not sustainable, and I am recommending a comprehensive review of sentencingguidelines for consideration during the 2012 legislative session.

We should not underestimate the magnitude of these challenges; but at the same time, we shouldnever question our ability to successfully meet them. If we do this right and if we do ittogether the 2011-13 biennium can become the floor, the foundation on which we willrebuild Oregon.

Together we can rebuild a state where our children are ready to learn before they get to school;where they have the resources and attention to learn and our teachers have the time and supportto teach; where drop-out rates are steadily falling and graduation rates are steadily rising; whereall Oregon high school graduates are prepared to pursue a post-secondary education withoutremediation; and where 80 percent of them achieve at least two years of post-secondaryeducation or training. We should live in a state that creates family wage jobs and careerpathways that lead to those jobs, and where the average per capita income exceeds the nationalaverage in every region.

In short, we must view the upcoming biennium as the first step toward our vision for the future a more prosperous and sustainable Oregon.

Sincerely,

John A. Kitzhaber, M.D.Governor, State of Oregon


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Table of Contents

GOVERNORS MESSAGE

INTRODUCTION

THE ECONOMIC AND REVENUE ENVIRONMENT .................................................................................................. A-1

2011-13GENERAL FUND/LOTTERY BUDGET (Graphs) ..................................................................................... A-12

2011-13ALL FUNDS BUDGET (Graphs) .............................................................................................................. A-13

STATE OF OREGON ORGANIZATION CHART......................................................................................................A-14

PROGRAM AREA AND AGENCY INFORMATION

EDUCATION..............................................................................................................................................................B-1

Community College and Workforce Development, Department of.................................................................B-6

Early Learning Council ......................................................................................................................................B-9

Education, Department of.................................................................................................................................B-12Student Assistance Commission, Oregon........................................................................................................B-16

Oregon University System...............................................................................................................................B-18

Teacher Standards and Practices Commission................................................................................................B-21

HUMAN SERVICES ...................................................................................................................................................C-1

Blind, Commission for the .................................................................................................................................C-5

Human Services, Department of ........................................................................................................................C-7

Health Authority, Oregon.................................................................................................................................C-12

Long Term Care Ombudsman..........................................................................................................................C-17

Private Health Partnerships, Office of .............................................................................................................C-19Psychiatric Security Review Board..................................................................................................................C-20

PUBLIC SAFETY ...................................................................................................................................................... D-1

Corrections, Department of ............................................................................................................................... D-4

Criminal Justice Commission, Oregon ............................................................................................................. D-8

District Attorneys and Their Deputies ............................................................................................................D-10

Justice, Department of .....................................................................................................................................D-11

Military Department, Oregon..........................................................................................................................D-14

Oregon Youth Authority..................................................................................................................................D-16

Parole and Post-Prison Supervision, State Board of ......................................................................................D-18

Police, Department of State.............................................................................................................................D-19Public Safety Standards and Training, Department of ...................................................................................D-22


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Table of Contents

ECONOMIC AND COMMUNITY DEVELOPMENT .....................................................................................................E-1

Business Development Department, Oregon.....................................................................................................E-3

Employment Department....................................................................................................................................E-6

Housing and Community Services Department ................................................................................................E-9

Veterans' Affairs, Department of .....................................................................................................................E-11

NATURAL RESOURCES ............................................................................................................................................F-1

Agriculture, State Department of .......................................................................................................................F-4

Columbia River Gorge Commission..................................................................................................................F-6

Energy, Department of .......................................................................................................................................F-7

Environmental Quality, Department of..............................................................................................................F-9

Fish and Wildlife, Department of.....................................................................................................................F-11

Forestry Department, State...............................................................................................................................F-13

Geology and Mineral Industries, Department of.............................................................................................F-15

Land Conservation and Development, Department of....................................................................................F-17

Land Use Board of Appeals .............................................................................................................................F-19Lands, Department of State..............................................................................................................................F-21

Marine Board....................................................................................................................................................F-23

Parks and Recreation Department....................................................................................................................F-25

Water Resources Department...........................................................................................................................F-27

Watershed Enhancement Board, Oregon.........................................................................................................F-29

TRANSPORTATION .................................................................................................................................................. G-1

Aviation, Oregon Department of....................................................................................................................... G-3

Transportation, Department of .......................................................................................................................... G-5

CONSUMER ANDBUSINESS SERVICES ................................................................................................................... H-1

Accountancy, Oregon Board of......................................................................................................................... H-3

Chiropractic Examiners, Board of..................................................................................................................... H-4

Clinical Social Workers, State Board of ........................................................................................................... H-5

Construction Contractors Board........................................................................................................................ H-7

Consumer and Business Services, Department of ............................................................................................ H-8

Counselors and Therapists, Board of Licensed Professional.........................................................................H-10

Dentistry, Oregon Board of ............................................................................................................................. H-11

Health Licensing Agency, Oregon..................................................................................................................H-12

Health-Related Licensing Boards

Dietitians, Board of Examiners of Licensed..............................................................................................H-14Mortuary and Cemetery Board, Oregon .................................................................................................... H-15

Naturopathic Examiners, Board of............................................................................................................. H-16

Occupational Therapy Licensing Board.................................................................................................... H-17

Radiologic Technology, Board of ..............................................................................................................H-18

Speech-Language Pathology and Audiology, Board of Examiners for ...................................................H-19

Veterinary Medical Examining Board, Oregon State ...............................................................................H-21

Labor and Industries, Bureau of...................................................................................................................... H-22


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Table of Contents

CONSUMER ANDBUSINESS SERVICES (cont.)

Medical Board, Oregon...................................................................................................................................H-24

Nursing, Oregon State Board of...................................................................................................................... H-25

Pharmacy, Oregon Board of............................................................................................................................ H-27

Psychologist Examiners, Board of .................................................................................................................. H-28

Public Utility Commission ............................................................................................................................. H-29

Real Estate Agency..........................................................................................................................................H-31

Tax Practitioners, State Board of .................................................................................................................... H-32

ADMINISTRATION .....................................................................................................................................................I-1

Administrative Services, Department of.............................................................................................................I-3

Advocacy Commissions Office, Oregon............................................................................................................ I-6

Employment Relations Board .............................................................................................................................I-7

Government Ethics Commission, Oregon..........................................................................................................I-9

Governor, Office of the......................................................................................................................................I-11

Liquor Control Commission, Oregon...............................................................................................................I-13Public Employees Retirement System..............................................................................................................I-15

Racing Commission, Oregon ............................................................................................................................I-18

Revenue, Department of....................................................................................................................................I-19

Secretary of State...............................................................................................................................................I-21

State Library.......................................................................................................................................................I-23

Treasurer, Office of State ..................................................................................................................................I-24

LEGISLATIVE BRANCH ............................................................................................................................................J-1

Indian Services, Commission on.........................................................................................................................J-2

Legislative Administration Committee...............................................................................................................J-3

Legislative Assembly...........................................................................................................................................J-4

Legislative Counsel Committee ..........................................................................................................................J-5

Legislative Fiscal Officer ....................................................................................................................................J-6

Legislative Revenue Officer................................................................................................................................J-7

JUDICIAL BRANCH.................................................................................................................................................. K-1

Judicial Department, Oregon............................................................................................................................. K-3

Judicial Fitness and Disability, Commission on............................................................................................... K-5

Public Defense Services Commission ..............................................................................................................K-6

MISCELLANEOUS

Emergency Board ...............................................................................................................................................L-1

Tax Expenditure Report .....................................................................................................................................L-2

State and Local Shared Services ........................................................................................................................L-6


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Table of Contents

CAPITAL BUDGETING

Capital Construction..........................................................................................................................................M-1

Program Funding Request Summary...........................................................................................................M-2

2011-13 Recommended Projects .................................................................................................................M-3

2013-15 Estimated Requirements ................................................................................................................M-5

2015-17 Estimated Requirements ................................................................................................................M-7

Bonded Indebtedness.........................................................................................................................................M-9

Borrowing Authorizations..........................................................................................................................M-13

Private Activity Bond Volume...................................................................................................................M-15

Table A - Recommended State Bond Issuance Authorization .................................................................M-23

Table B - Long Term Obligations and Authorities ...................................................................................M-24

Table C - General Obligation Debt Summary...........................................................................................M-25

Table D - Summary of General Obligation Debt Service.........................................................................M-26

Table E - Summary of Debt Service Requirements for State Bonded Indebtedness by Fund ................M-27

Table F - Capital Financing Six-Year Forecast Summary........................................................................M-29

APPENDIX

GLOSSARY............................................................................................................................................................... N-1

REVENUE SECTION

Revenue Summary............................................................................................................................................. O-1

General Fund Revenues (Schedule I) ...............................................................................................................O-3

General Fund Summaries .................................................................................................................................. O-4

Lottery Funds..................................................................................................................................................... O-6

Combined General Fund and Lottery Funds Summary ................................................................................O-10

Non-General Fund Summaries........................................................................................................................ O-11Other Funds and Lottery Funds Revenue by Source (Schedule II)............................................................... O-14

Receipts from the Federal Government (Schedule III) .................................................................................O-15

All Funds Summaries ......................................................................................................................................O-20

Summary of Detail Revenues by Program, Agency, Fund (Schedule IV)...............................................O-21

Education Program Area ............................................................................................................................ O-21

Human Resource Program Area ................................................................................................................ O-29

Public Safety Program Area....................................................................................................................... O-36

Economic and Community Development Program Area ......................................................................... O-46

Natural Resources Program Area...............................................................................................................O-52

Transportation Program Area.....................................................................................................................O-70

Consumer and Business Services Program Area ...................................................................................... O-74Administration Program Area.................................................................................................................... O-86

Legislative Branch Program Area.............................................................................................................. O-98

Judicial Branch Program Area .................................................................................................................O-103

Miscellaneous Program Area................................................................................................................... O-105


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Table of Contents

EXPENDITURE SECTION

Current Service Level....................................................................................................................................O-107

Schedule of Total Expenditures by Program, Agency, Fund (Schedule V) ................................................O-108

Summary of Expenditures by Category by Fund (Schedule VI) ................................................................. O-124

Number of Full-Time Equivalent Positions (Schedule VII) ........................................................................O-125

Statutory Limits (Narrative) .......................................................................................................................... O-129

INDEX ..................................................................................................................................................................... Q-1

STAFF PAGE


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The Economic and Revenue Environment

2011-13 Governors Balanced Budget A-1 The Economic and Revenue Environment

ECONOMIC PERFORMANCE AND OUTLOOK

Recent Performance

As of fall 2010, the numberof nonfarm jobs in Oregonwas the same as when the

decade began. Labor

markets in other states havenot fared any better.

Although job growth over

the decade as a whole hasmatched that seen

elsewhere, employment in

Oregon has gone through

relatively large swingssimilar to the states typical

experience during past

business cycles. Large localjob gains during the middle

of the decade were

sandwiched between tworelatively severe downturns

that fully offset them

(see Figure 1).

Figure 1: No Job Gains this Decade

Nonfarm employment

1.55

1.60

1.65

Per capita personal incomegrew at a modest 2.6

percent annual rate between2000 and 2009. Adjusting

for inflation reduces these

income gains by half. The

1930s is the only decadeon record when income

gains were slower

(see Figure 2). Oregonsincome gains of recent

years have lagged behindthose seen in allneighboring states.

The recession that began atthe end of 2007 wasparticularly painful. By

mid-2009, employment in

Oregon had fallen by more

1.70

1.75

2000 2001 2003 2005 2006 2008 2010

1.20%

1.21%

1.22%

1.23%

1.24%

1.25%

1.26%

1.27%

Millions (left axis)

Share of U.S., %

Figure 2: Disappointing Income Growth

Personal income, annualized % change

-2%

0%

2%

4%

6%

8%

10%

12%

1930's 1940's 1950's 1960's 1970's 1980's 1990's 2000-09

Oregon Washington Idaho California Utah United States


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than 8 percent from its pre-recession peak level. Of all the downturns on record, only the 1980 recession

was harder on the local labor market. At that time, statewide employment fell by nearly 12 percent.

Oregons severe recessionand lackluster recovery

have been characterized by

a credit crunch among

many of its firms togetherwith sharp corrections in

the states largest housing

markets. Residentialconstruction activity and

house price appreciation

have fallen to levels notseen since the timber

industry restructured during

the early 1980s (see Figure3).

Across Oregons industries,local manufacturing firms

have suffered through thelargest net job reductions

over the decade. Sharp

recessionary job lossesexacerbated the long-run

structural decline of

domestic manufacturingoperations, resulting in a

28 percent employment

decline in the industry.Despite these large losses,

Oregons manufacturing

payrolls have performed

better than those elsewhere

in the U.S. Nationwide,manufacturing employment

has fallen by 33 percent thisdecade with old-line textile

and vehicle operations in the Midwest and South being hit harder than Oregons relatively diverse andmodern mix of producers (see Figure 4).

Figure 3: Housing Hits Bottom

0

5

10

15

20

25

30

35

40

45

50

1975 1980 1985 1990 1995 2000 2005 2010

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Housing permits issued, ths ( left axis)

Median sales price (existing homes, y/y % change)

Figure 4: Expanding & Contracting Industries

Employment, percent change Jan 2000 to Oct 2010

-30% -20% -10% 0% 10% 20% 30% 40%

Manufacturing

Construction

Transportation & Utilities

Feder al Government

Re tail Trade

Financial Activities

Wholesale Trade

Prof essional & Business Svcs

Total Nonfarm

Other Services

Local Government

State Government

Leisure & Hosp italityEducation & Health Svcs


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In addition to manufacturing operations, construction firms have also suffered from extreme job lossesduring the most recent business cycle, which has been characterized by imbalances in residential and

commercial real estate markets. Over the decade as a whole, the number of construction jobs has fallen

by 21 percent statewide. Relative to its 2007 peak level, construction employment has fallen by 37percent.

In general, consumer-oriented service industries and retailers for which demand is tied to populationgrowth have fared the best over the decade. In particular, employment in education and health serviceshas risen by 32 percent. Demand growth in education and health firms can largely be tied to

demographic shifts. The baby-boom population cohort is spending an increasing amount on health

services while their children are now enrolling in colleges and universities en masse.

Although not as successful as health and education firms, most of Oregons consumer service industriesalso added jobs during the decade. Employment among leisure and hospitality firms has risen by 13

percent. Wealth losses, a weaker dollar and the terrorist attacks of 2001 have resulted in a larger shareof entertainment budgets being spent close to home.

Statewide, the unemployment rate more than doubled over two years from a low of 5 percent in May2007 to 11.6 percent in May 2009. The regional pattern of job losses across the state largely matches the

pattern of weakness in housing markets. Labor market conditions deteriorated the most in Central and

Southern Oregon where housing corrections were most severe. In particular, the unemployment rates inDeschutes and Crook counties more than tripled during the downturn (Figure 5). Labor markets have

typically held up better in counties with smaller housing bubbles and those with a large degree of

exposure to agriculture. As such, many of the top performing labor markets are located in EasternOregon. Within the Willamette Valley, Benton and Polk counties saw the smallest increases in

unemployment.

6.3%

MULTNOMAH

MARION

CLATSOP

WASHINGTON

COLUMBIA

DOUGLAS

LANE

LINCOLN

POLK

TILLAMOOK

COOS

DESCHUTES

MALHEURHARNEYLAKEKLAMATHJACKSONJOSEPHINE

CURRY

HOOD

RIVER

BENTONLINN

JEFFERSON

CROOK

WALLOWAUMATILLA

MORROWGILLIAM

WASCO

SHERMAN

WHEELER

GRANT

BAKER

UNION

CLACKAMAS

Below 6% 6 to 7.5% Over 8 %

YAMHILL

6.5 to 8%

Source: Oregon Employment Department

9.0% 8.2%

8.5%

8.0% 9.5%

7.9%

8.6%4.7%6.3%

5.4%

5.7%

7.5%

6.0% 8.6%

5.7%

6.3%

5.2%

5.7%

10.5%

11.8%

16.2%

6.8%

8.4% 8.2% 11.6%

5.2%

7.4%

7.3%

8.3%

6.2%

8.0%

5.3%

7.2%

7.6%

6.5%

OR average=6.6%

Figure 5: Rise in Joblessness Across Regions

Unemployment rate: Percentage point increase trough to peak


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Outlook

Key Assumptions

Technically, economic recovery began in both Oregon and the U.S. as a whole during the summer of2009. At that time, growth in output and consumption resumed, and mass layoff announcements becamerare. Despite these improvements, the economy is still growing beneath its potential more than one year

into the recovery, with significant job gains yet to materialize.

As is usually the case in the aftermath of financial crises, the current economic recovery is expected tobe a slow one by historical standards. Demand growth among interest rate-sensitive industries such as

housing, vehicles and other durable goods often lead the way during rapid economic recoveries. This

time around, relatively little boost is expected while consumers make long overdue corrections to theirsavings behavior, and the housing sector returns to balance.

Consumers will not lead during the recovery. Instead, exports and business investment will fuel demandgrowth. Among the first industries likely to come back are professional and business services, health

care services, technology manufacturing and retail trade.

The housing sector will remain weak well into the economic expansion, and will do little to fuel growthgoing forward. That said, housing is no longer creating the same headwind as in recent years

Residential permitting and construction activity have likely hit bottom, as has the volume of home sales.However, house prices still have some room to fall. Prices will remain soft until excess inventories of

homes are worked off. Despite a slow pace of homebuilding, inventories remain stubbornly high due

largely to a growing supply of foreclosed, bank-owned, and other distressed property sales.

In addition to housing-related industries, state and local governments will represent a drag on growthgoing forward. It takes several months for changing economic conditions to be fully reflected in

government finances. With tax revenues still depressed, and the aid to states and localities associated

with federal fiscal stimulus programs now being phased out, further contractionary state and localspending and tax policies will be required going forward.

The impact of federal fiscal and monetary policies on the economic outlook is mixed. Federal fiscalpolicies are providing a decreasing amount of support to private sector growth. Federal home buying

incentives and hiring of 2010 Census workers are now a thing of the past, and stimulus spending

associated with the American Recovery and Reinvestment Act will fade over the next few months

While fiscal policy is no longer supporting growth, monetary policy remains very accommodating, withreal interest rates near 0 percent and a second round of quantitative easing underway.

Growth in the global economy and favorable terms of trade will help fuel U.S. exports. Exports to Asiaare of particular importance to Oregons producers. With developing countries in Asia expected to

maintain above-average rates of growth, and the dollar expected to depreciate vis--vis the Chineseyuan, trade will continue to support the recovery going forward.


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Oregon Outlook

Oregons economic recovery will persist, albeit at a painfully slow rate. Job gains will remain belowtrend through most of 2011. After next year, trend-like job growth on the order of 2 percent per year is

expected throughout the medium term. Under these assumptions, total employment will not return to itspre-recession peak level until late 2014.

In keeping with the outlook for employment, personal income gains will remain below trend for severalmore months. In 2012 and beyond, personal income will grow at annual rates between 4 percent and

6 percent, matching what has been seen during past expansions.

Oregons industrial structure and ties to rapidly growing Asian markets position the state to join in thenationwide economic recovery. The recovery will be led by business investment and export growth

Many of Oregons firms produce investment goods and other business inputs rather than serving

consumer demand. Examples include Oregons technology manufacturers, metal makers and commodity

firms, transportation equipment producers, utilities, and its warehousing and transport firms.

Although Oregons labor market recovery will be a slow one relative to past business cycles, once thestate gets back on its feet, it is expected to grow faster than the national average over the extendedforecast horizon. Oregons primary long-run growth advantage remains its healthy migration trends

Oregon is expected to continue to enjoy above-average population gains, including an ample flow of

skilled labor to supply its growth industries.

Oregon can be expected toattract many migrants fromother states as job

opportunities become moreplentiful. In particular,Oregon has traditionally

netted thousands ofhouseholds from California

whenever the local

unemployment rate is lowerthan Californias, as it is

now. Oregons relatively

affordable housing remains

a draw for migrants. During

the peak of the housingboom, only 22 percent of

houses sold in the Portlandmetropolitan area could be

afforded by a household

earning the median incomelevel. Now, nearly 70 percent of houses sold in the area are affordable for the typical household

(see Figure 6).

20

30

40

50

60

70

80

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Portland metro area US

Sources: NAHB, OEA

Figure 6: Housing Is Affordable Once

Again

Housing opportunity index: percent of sales affordable bymedian income household


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Risks

Oregons economic recovery remains fragile, and there is a significant risk that the state will slip backinto recession before job growth becomes self-sustaining. Firms have remained lean following the

return of sales growth. As a result, most have seen strong growth in profits for several months. Despitewidespread profitability, many firms remain unwilling or unable to expand their operations through

investment or hiring. In part, small businesses are having difficulty getting access to credit. Smallbusinesses depend on small regional banks, many of which are still repairing their balance sheets and

therefore remain unwilling to lend.

Oregons ties to foreign markets also put it at risk. In the near term, Oregons relatively small amount ofexposure to Europe provides some degree of protection from the currency risks facing the euro zone.Longer-term, Oregon faces a good deal of risk associated with the overvalued Chinese currency and

future Asian demand conditions. The local impact of the Asian financial crisis during the 1990s

highlights this risk, with Oregon now even more closely tied to Asia than it was at that time.

The performance of the housing sector remains a downside risk to the outlook. Until the wave offoreclosures plays itself out, and housing inventories return to normal, the potential for further wealth

losses exists.

A persistent lack of job opportunities puts Oregons healthy migration trends at risk. In addition to jobs,migrants care about a wide range of factors including the quality of school systems, public safety

operations and the overall cost of living. As such, any tax increases or reductions in public services thatresult from state and local budget problems threaten to deter migrants. Also, a lack of household

mobility due to dysfunctional housing markets further threatens future population gains.

Following the economic recovery, the reemergence of inflation poses a risk to growth. Theunprecedented amount of monetary and fiscal stimulus seen in recent years will generate upwardpressure on prices going forward. If these policies are combined with growth in aggregate demand and

wages, inflation will once again become a significant threat.


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DEMOGRAPHIC CHANGE

Oregons population reached 3.844 million on July 1, 2010, as estimated by Population Research Centerof Portland State University. This is an increase of nearly 423,000 or 12.4 percent since the 2000

Census. Oregons population growth between 2000 and 2009 was 13th

highest in the nation. Howeverwith the exception of California, Oregons growth rate was still slower than its neighboring states. Over

a long run, Oregon has retained a distinction of major destination for migrants in the United StatesDuring the 2000 to 2009 period, nearly 68 percent of the population growth in Oregon was due to net

in-migration. Oregons population growth changes with its economic and employment outlook

Economic slowdown associated with recent recession has caused slow population growth. Populationgrowth in the near future is expected to continue the path of slow growth in sync with the slow pace of

economic recovery. Its population is expected to reach 4.142 million in 2017 with an annual rate of

growth hovering around 1.1 percent.

Geographic Variations

Figure 7 shows population growth by county between April 1, 2000, and July 1, 2010. Overall stategrowth was 12.4 percent during this period. However, there are large variations by region and county.High growth counties (exceeding 18 percent increase) in order of magnitude were Deschutes, Crook,

Jefferson, and Washington. All three central Oregon counties experienced very rapid population growth

The moderately growing counties (between 10 and 18 percent increase) were Jackson, Morrow,Yamhill, Clackamas, Marion, Columbia, Benton, Polk, Multnomah, and Josephine. The slow growing

counties (between zero and 10 percent increase) were Linn, Lane, Tillamook, Hood River, Clatsop,

Douglas, Klamath, Union, Umatilla, Wheeler, Wasco, Lake, Harney, Malheur, Lincoln, Coos, andCurry. Five counties losing population (negative growth) were Gilliam, Baker, Wallowa, Grant, and

Sherman. Population growth by county reflects the local economic environment. The differential

population growth rates will have real geo-political consequences when 2010 Census results are releasedfor legislative redistricting.


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Figure 7: County Population Growth, April 1, 2000 July 1, 2010

(Oregon: 12.4 percent)

CLATSOP

WASHINGTON

MULTNOMAH

COLUMBIA

DOUGLAS

LANE

LINCOLN

POLK

YAMHILL

TILLAMOOK

MARION

COOS

DESCHUTES

MALHEURHARNEYLAKEKLAMATHJACKSON

JOSEPHINE

CURRY

HOOD

RIVER

BENTON LINN

JEFFERSON

CROOK

WALLOWAUMATILLA

MORROWGILLIAM

WASCO

SHERMAN

WHEELER

GRANT

BAKER

UNION

Below 0% 10 to 18%0 to 10% Over 18%

Sources: U.S. Bureau of Census 2000, and Population Research Center, Portland State University 2010 (priliminary)

CLACKAMAS

Change in Age Structure

Figure 8 shows that population growth differs by age group with budgetary implications.

Children

Under five years: The size of this age group directly affects demand for childcare, Head Start, andTemporary Assistance for Needy Families (TANF). Between 2011 and 2013 the number of children

under age five will decline by 2.4 percent due to the recent decline in the annual number of births

associated with an increasing tendency towards smaller family-size and slowdown in the net in-migration of children and young adults at the early stage of family formation.

School Age: This age group drives demand for K-12 public school enrollment. Nearly 90 percent offive to 17 year-olds are enrolled in public schools. After growing rapidly during the early 1990s,population growth in this age group has slowed for nearly a decade. After about four years of negative

growth, the growth in the number of school-age children will turn positive starting in 2011. However,

the percentage increase will remain well below the states overall population rate of change. Between2011 and 2013, the number of school-age children is expected to grow by 1.4 percent. During


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economic hardship the public schools feel added pressure when parents cannot afford private school

expenses.

Figure 8: Population by Age Groups

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

19801982198419861988 19901992199419961998200020022004 200620082010201220142016

Population

Year

Children

Forecast

5-17

0-4

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

19801982198419861988199019921994 1996199820002002200420062008201020122014 2016

Population

Year

Adults and Elderly

Forecast

25-44

45-64

65+

18-24

Adults

Ages 18 to 24: This age group drives demand for post-secondary education and entry-level jobs. Nearlythree-fourths of all undergraduate students in Oregon public universities are 18 to 24 years old

However, college enrollment in Oregon has increased at a much faster rate than the 18-24 age

population due to the lack of competing employment opportunities. Also, males in this age group are the

criminally at risk population with the highest arrest rate of all adults. Consequently, populationincrease in this age group can raise demand for prison and jail beds and probation services. The growth

in this population group, however, has slowed and will continue to taper off to negative territory as the

baby-boom-echo cohort exits this age group. Between 2011 and 2013, this population will remainvirtually unchanged.

Ages 25 to 64: Working-age adults comprise 55 percent of the total population. The nature of this groupis heavily influenced by baby-boomers. The working-age population is the major contributor to thestates tax revenue and puts very little direct pressure on state services. However, younger adults need

entry-level jobs and older adults require continued training in a changing technological environment. All

of them, especially young adults, need affordable housing, childcare, and schools for their young

children. Overall, this population group will grow by 1 percent between 2011 and 2013, with olderworking age adults 45 to 64 remaining unchanged as the early baby-boomers mature out of this age

category.

Elderly

Since 1950, Oregons elderly (ages 65 and over) have more than tripled, while the total population hasnearly doubled. Growth in this group was slow until 2004, largely due to the depression era birth-cohort

reaching retirement age. However, the trend has already started to reverse and will continue its faster pace


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of growth. Beginning in 2011, this population group will consistently exceed four percent annual growth

rate. Between 2011 and 2013, the number of young elderly (aged 65 to 74) will increase by 15.1 percent as

the early baby boomers enter this age group, far exceeding the state's overall growth rate and at the fastest

pace of all age groups. During the same period, the number of oldest elderly (85 plus) will increase by3.9 percent. The number of persons aged 75-84 has just transitioned from a period of negative growth to

slow but steady growth. The young elderly require relatively little government assistance, while personsaged 85 and over tend to require more public assistance. Many members of the senior population require

health care, pension support, and special housing. They are highly dependent on state long-term care

services. Different age groups of elderly population will manifest the effects of people born during thedepression era and baby-boom period.

Race and Ethnic Composition

Oregon has become more racially and ethnically diverse. A more diverse population entails meeting theneeds of increasing racial and ethnic minorities. Oregon's population is overwhelmingly White. The Census

Bureau estimated 89.8 percent of Oregons population as of the White racial group in 2009. However, only79.6 percent were non-Hispanic White in 2009, down from 83.9 percent in 2000 Census. Each of the otherracial categories accounted for less than four percent of the population. Between April 1, 2000, and July 1,

2009, the Asian population grew by 37.2 percent and the African-American or Black racial group increased

by 34 percent, much faster than 9.9 percent growth of the White population.

The Hispanic or Latino ethnic group, which can be of any race, reached 11.2 percent of Oregons populationin 2009. This ethnic group has been increasing very rapidly. The Hispanic population increased from

112,707 in 1990 to 275,314 in 2000 Census. This ethnic group had grown to 428,469 in 2009. BetweenApril 1, 2000, and July 1, 2009, the Hispanic population increased by 55.6 percent whereas the non-

Hispanic population increased by 8.0 percent.


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Figure 9: Population by Race and Ethnicity, 2009

2.0% 1.6% 2.6% 11.2%

88.8%89.8%

4.0%

White alone African-

American alone

Native Indian

alone

Asian & Pacific

Islander alone

Two or more

races

All non-

Hispanic

All Hispanic

Race Ethnicity

one race

Source: U.S. Bureau of Census.

Figure 10: Oregons Population Growth by Race & Ethnicity, 2000-2009

11.8%

9.9%

34.0%

25.3%

36.8%

29.8%

55.6%

All

White alone

African American alone

Native American alone

Asian & Pacific Islander alone

Two or more races

Hispanic (of any race)

Non-Hispanic

Source: U.S. Bureau of Census.


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2011-13 General Fund/Lottery

2011-13 Governors Balanced Budget A-12 2011-13 General Fund/Lottery

Resources

Total: $14,760 MillionPersonal

Income Tax

$11,995

82%

All Other

$541

4%

Estate Tax

$204

1%Cigarette/

Tobacco

Taxes$126

1%

Corporate

Income Tax

$945

6%Lottery

(including

Beginning

Balance &

Carry Forward)

$949

6%

Expenditures

Total: $14,550 Million

Natural

Resources$316

2% Economic &

Comm. Dev.

$190

1%

Human

Services

$3,795

26%

State School

Funding

$5,557

38%

Higher

Education

$9246%

Public

Safety/Judicial

$2,401

17%

Community

Colleges

$4463%OtherEducation

$513

4%

All Other

$408

3%


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2011-13 All Funds

2011-13 Governors Balanced Budget A-13 All Funds

Resources


Federal Funds

$12,555

11%

Other Funds &

Federal Funds

Beginning

Balance

$53,468

48%

Other Funds

$30,936

27%

General Fund$14,760

13%

Lottery (including

Beginning

Balance & CarryForward)

$949

1%

Expenditures


Administration

$9,035

16%

All Other

$711

1%

Natural

Resources

$1,759

3%

Economic &

Comm. Dev.

$4,454

8%

State School

Funding

$5,557

10%

Higher Education

$5,387

10%

Human Services

$18,17034%

Public

Safety/Judicial

$3,554

6%

Other Education

$2,665

5% Transportation

$3,992

7%


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State of Oregon Organization Chart

2011-13 Governors Balanced Budget A-14 State of Oregon Organization C

S

TATE

OFOREG

ON

--ORGANIZATION

CHART

ThePeople

ofOregon

JudicialBra

nch

ExecutiveBranch

Legislativ

eBranch

Senate

Houseof

Representatives

Secretary

ofState

Attorney

Gen

eral

Governor

Superintendent

ofPublic

Instruction

Labor

Commissioner

Treasurer

ofState

ChiefJusticeof

Suprem

eCourt

Jud

icial

Department

Treasury

Department

Bureauof

Labor&

Industries

Department

ofEducation

Depa

rtment

ofJustice

Econo

mic&

Comm

unity

Develo

pment

Programs

Education

Programs

Human

Resources

Programs

Natural

Resources

Programs

Public

Safety

Programs

Transportation

Programs

Administration

Programs

Consumer&

Business

Services

Programs


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Education

2011-13 Governor's Balanced Budget B-1 Education

PROGRAM AREA AGENCIES

DEPARTMENT OF COMMUNITY COLLEGES AND WORKFORCE DEVELOPMENT ......................................... B-6EARLY LEARNING COUNCIL..................................................................................................................... B-9DEPARTMENT OF EDUCATION ................................................................................................................ B-12OREGON STUDENT ASSISTANCE COMMISSION ....................................................................................... B-16OREGON UNIVERSITY SYSTEM............................................................................................................... B-18TEACHER STANDARDS AND PRACTICES COMMISSION ............................................................................ B-21

2007-09

Actuals

2009-11

Legislatively Approved

2011-13

Governor's Balanced

General Fund $6,751,674,571 $6,985,122,644 $6,974,389,113

Lottery Funds $1,145,146,747 $590,293,238 $466,031,778

Other Funds $2,384,804,026 $2,514,869,284 $2,328,198,233

Federal Funds $1,053,645,676 $1,463,327,743 $1,071,033,212

Other Funds (Nonlimited) $2,329,391,474 $2,366,021,317 $2,356,976,754

Federal Funds (Nonlimited) $288,535,152 $297,661,250 $412,000,212

Total Funds $13,953,197,646 $14,217,295,476 $13,608,629,302

Positions 18,712 18,756 19,249

Full-time Equivalent 13,196.47 13,394.79 13,604.78

Overview

Agencies and expenditures in this program area operate or support all public educational activities from

pre-kindergarten to post-secondary and life-long learning. Specific agencies are the Department of

Community Colleges and Workforce Development, the Department of Education, the Oregon University

System, the Oregon Student Assistance Commission and the Teacher Standards and Practices Commission.

State support of the Oregon Health Sciences University public corporation is also included in this program

area. The newly created Early Learning Council is included in the Education program area.

The Department of Community Colleges and Workforce Development coordinates the efforts of

17 community colleges statewide and maintains educational opportunities and workforce development

capacity in the state. This agencys budget includes funding to support general community college

operations. The agency administers federal Workforce Investment Act programs, supporting local workforce

investment boards and service providers.

The Department of Education supports pre-kindergarten through 12th grade (Pre-K-12) education. This

agency includes support for school districts in the areas of school improvement, assessment, special

education, professional/technical education, legal requirements, nutrition and transportation. This budget

funds the following programs:


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Oregon State School for the Blind and School for the Deaf. Education services at youth corrections facilities and youth detention centers. Special education. Professional/technical education. Child nutrition. Early intervention programs. Educational programs for children of low-income families. State school funding for the states public elementary and secondary school districts and education

service districts.

The Oregon University System is the state agency name for the educational institutions, governing board,

central administration, support services and public services that make up Oregons public university

system. The institutions include the University of Oregon, Oregon State University, Portland State

University, the three regional universities (Eastern, Western and Southern Oregon universities) and theOregon Institute of Technology. Oregon State University also operates the Cascades campus in Bend and

the statewide public service programs, the Agricultural Experiment Station, the Extension Service and the

Forest Research Laboratory.

The Oregon Student Assistance Commission helps Oregon students obtain post-secondary education by

administering, evaluating, coordinating and promoting financial aid programs. The commission administers

over 400 state-funded and privately-funded grant and scholarship programs, including the Oregon

Opportunity Grant.

The Teacher Standards and Practices Commission works to ensure that every student in Oregon receives

instruction from skilled and ethical educators. The agency establishes rules for licensing and issues licensesto educators. The commission must approve college and university teacher education programs.

The state provides Oregon Health and Science University a subsidy to assist with funding a number ofprograms, including the Schools of Medicine, Nursing and Dentistry. State funds also provide support toArea Health Education Centers, the Child Development Research Center and the Allied Health TrainingPrograms. It also supports operation of the Oregon Poison Center.

The newly created Early Learning Councilprovides a single point of accountability for programs relatedto early childhood and school readiness. The programs were previously operated by the Commission onChildren and Families, the Employment Departments Child Care Division, the Department of HumanServices, the Oregon Health Authority, the Department of Education and the Oregon State Library. Theagency serves as a focal point for re-engineering the states early childhood system to focus efforts onthree goals: readiness to learn at kindergarten, readiness to read entering first grade, and reading whenleaving first grade.

Transforming Public Education in Oregon In order to successfully transform Oregons economy, it isnecessary for more Oregonians to attain high levels of education, as envisioned in the Oregon BusinessPlans 40-40-20 goal: that 40 percent of Oregon adults have a four year college degree or higher; 40


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percent have an Associates degree, professional certificate or equivalent; and the remaining 20 percenthave at least a high school diploma or equivalent.Achieving this goal will require a more integrated operation of the education enterprise, from earlychildhood to post-secondary education. It will also require a unified, transparent, student-centered budgetframework that improves understanding of existing and planned expenditures, allows more informed

policy and budget choices, and holds institutions accountable for results.

The Governors balanced budget begins the process of transforming the way education is funded in thestate. It consolidates programs from across state government that serves children from the time they areborn to the time they reach kindergarten, to improve coverage and maximize investments in health care,family support, child care, and pre-kindergarten programs. For Oregons public education system itestablishes a stable funding floor with more flexibility for schools to direct money into the classroom. Itredirects the efforts of the Oregon University System to focus on undergraduate education and keyeconomic development programs. It preserves funding for the Oregon Opportunity Grant program tomaintain the states commitment to access to post-secondary education.

In other actions, the Governor will establish the Oregon Education Investment Board to replace thecurrent segmented budget development and governance process with one that recognizes theinterdependent nature of the entire enterprise of education. Legislation will be introduced to move theposition of the State Superintendent of Public Education to an appointed position within the ExecutiveBranch as the states Chief Education Investment Officer. And the state will begin the process of movingto a long-term budget framework to better account for link investments with results.

Balanced Budget

The budget for the Education Program Area is $13.6 billion total funds, a 4.2 percent reduction from the2009-11 Legislatively Approved Budget. General Fund and Lottery Funds total $7.4 billion, a 2.6 percent

decrease from 2009-11 levels. Compared with the 2011-13 Current Service Level, total funds are reducedby 4.0 percent while General Fund and Lottery Funds are reduced by 15.2 percent.

The budget includes $6.848 billion for the Department of Education. This is $441 million General Fundand Lottery Funds less than the current biennium. About half of this reduction is because early childhoodprograms have been moved out of the Department of Education and into the Early Learning Council.

Key elements of the 2011-13 Governors Balanced Budget are:

The Governors Balanced Budget establishes a stable funding floor for Oregons public schoolsystem. It provides $5.56 billion for the biennium. However, 52 percent ($2.9 billion) will be

distributed during the first school year of the biennium, equivalent to a $5.8 billion budget forschool funding. The effect is to provide an increase in state funding for the 2011-12 school year.Front-loading the funding also provides a year to find cost savings through consolidation and otherefficiencies to maintain this level of classroom support during the 2012-13 school year.

The General Fund budget for programs within the Early Learning Council was increased by 3.3percent from the 2009-11 LAB to preserve the programs for early childhood system redesign. Thebudget also includes Lottery Fund bonding authority to invest in a coordinated early care andeducation data system.


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The General Fund and Lottery Funds budget for the Oregon University System is reduced by 4.9percent from the 2009-11 LAB. Including federal revenues received under the AmericanRecovery and Reinvestment Act in the 2009-11 LAB, the reduction is 11.9 percent.

With reduced funding, OUS is expected to prioritize undergraduate education and graduateprograms directly related to state workforce goals such as health care engineering, and teachereducation. Research funding in areas related to state economic development goals, is expected tobe maintained.

Reductions in graduate and professional schools, public service programs, and the Oregon StateUniversity statewide public service programs will require redesign and business planning aroundefficiency and effectiveness. Graduate and professional programs will need to be given moreflexibility in raising tuition and seeking grant funds.

A total of $406.9 million is included for 27 OUS Capital Construction projects and reserves at allseven universities. This includes $41.4 million for three deferred maintenance projects; thedepartments deferred maintenance backlog is estimated in excess of $640 million. The budgetalso includes $51.4 million for capital repair, code compliance, and safety projects to keep the$640 million deferred maintenance backlog from growing.

Other higher education Capital Construction projects include construction of a new businesseducation building at Oregon State University and funds to complete the purchase of a building inWilsonville for consolidation of the Oregon Institute of Technologys Portland area programs.The budget also includes a variety of housing, dining, parking, athletics, and student activitiesprojects.

Debt service on General Fund and Lottery Funds backed debt for OUS capital projects increasedby 38.2 percent, to $113.6 million.

Funding for the Community College Support Fund is reduced by nine percent from the 2009-11biennium to $410 million. State support per full-time student is estimated to drop from $1,744 inthe current biennium to $1,559 per full-time student in 2011-13, a 10.6 percent reduction.

The CCWD budget includes investment in the Getting Oregon Back to Work program and inincentives for colleges and universities to improve progression towards, and completion of,certificates and degrees.

No state funds are recommended for community college capital construction projects in 2011-13,due to constrains on debt capacity. Over the past three biennia, the state has authorized $207.3million in general obligation and Lottery-backed bonds for college projects, with each collegebeing authorized for at least two projects. Debt service on these bonds in the 2011-13 biennia is$24 million, a 39.2 percent increase from 2009-11.

Total funding for the Opportunity Grant program is increased from $101.8 million to$115 million. This amount is expected to allow the Student Assistance Commission to make asmany as 17,000 more awards in 2011-13 than in 2009-11.


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Funding for the Access to Student Assistance Programs in Reach of Everyone (ASPIRE)Volunteer Advisory Program is shifted primarily to Other Funds. A program coordinator issupported with General Fund for fund raising and program management.

State support for the Oregon Health and Science University is reduced from the 2009-11 bienniumby 20 percent. Within the lower funding level, education and rural health programs are prioritized.The funding directs state resources to education programs, that traditionally operate in a deficitsituation, from hospital operations, which traditionally generate a surplus. Funding to support theOregon Poison Center is reduced slightly from the 2009-11 biennium.


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DEPARTMENT OF COMMUNITY COLLEGES AND

WORKFORCE DEVELOPMENT

2007-09

Actuals

2009-11


2011-13

Governor's BalancedGeneral Fund $504,017,927 $464,644,408 $438,058,756

Lottery Funds $0 $8,929,603 $7,469,632

Other Funds $156,201,246 $137,864,296 $6,874,666

Federal Funds $120,549,268 $163,149,805 $116,785,442

Other Funds (Nonlimited) $0 $0 $0


Total Funds $785,875,226 $793,556,944 $588,157,328

Positions 57 61 68

Full-time Equivalent 56.06 60.06 67.45

Overview

The Department of Community Colleges and Workforce Development (CCWD) provides leadership,

accountability, and technical assistance to Oregons 17 community colleges and seven local workforce areas.

The agencys goal is to help Oregonians achieve the skills and knowledge needed to combine careers and

lifelong learning.

The department administers the Community College Support Fund, the states contribution to community

college operating costs. Funds are distributed primarily based on the number of full-time equivalent

students at each college. The colleges combine state funding with property tax and tuition revenues to

provide professional and technical education programs; lower division transfer classes equivalent to those

offered in the first two years at a four-year university; training for displaced workers and skill

enhancement for workers who already have jobs; training tailored for particular businesses; and adult

literacy, including General Educational Development (GED) course work. The department also manages

the states participation in community college construction projects.

The agency supports local workforce investment boards and service providers. It administers the Federal

Workforce Investment Act programs. These programs assist youth, adult and dislocated workers byproviding education and workforce development services. The funds are targeted to people who faceserious barriers to employment.

Department programs also include GED tests and program coordination; Adult Basic Education tests; andthe Oregon Youth Conservation Corps.


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Balanced Budget

The Governors Balanced Budget of $588.2 million total funds is a 25.9 percent reduction from the 2009-11 Legislatively Approved Budget (LAB). The total funds reduction is primarily due to the phase-out offederal grants received under the American Recovery and Reinvestment Act and the elimination of Other

Funds for community college capital construction projects. Due to the state revenue shortfall, no newcapital projects are recommended for the 2011-13 biennium.

General Fund and Lottery Funds are reduced by 5.9 percent from the 2009-11 LAB. Debt service onbonds sold to finance community college capital construction projects is increased by 39.2 percent.

The budget includes $410 million for the Community College Support Fund, reduced by nine percentfrom the 2009-11 LAB. Based on the departments enrollment estimate of 263,000 full-time equivalentstudents, General Fund support would decline from $1,744 per student in 2009-11 (after the June andSeptember 2010 allotment cuts) to $1,559 per student in 2011-13, a 10.6 percent reduction.

Community College Support Fundper Student FTE

$2,074

$2,310 $2,330 $2,371$2,189

$1,905

$2,293$2,435

$2,604

$1,882$1,744

$1,559

157,347

169,307

183,894179,285 176,072

239,419 238,527

262,976

191,984196,969196,969196,969

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

1995-97 Actuals1997-99 Actuals1999-01 Actuals 2001-03 Close

of Session

2001-03 Post

Special

Sessions

2001-03 Post

SS w/ Shift *

2003-05 Post

M30

2005-07 LAB 2007-09 LAB 2009-11 LAB 2009-11 LAB

with allotment

reductions

2011-13

Governor's

recommended

-30,000

20,000

70,000

120,000

170,000

220,000

270,000

General Fund per Student FTE Student FTE

* 2001-03 LAB after 5th Special Session w/o $56 million that was shifted to the first quarter of 2003-05

The Governors Balanced Budget includes a $3.4 million investment in the Getting Oregon Back to Workprogram to help recovering Oregon companies resume hiring while helping Oregonians get back to workin sustainable jobs. The investment will allow local Workforce Investment Boards to put 626 Oregoniansback to work in the first year of the biennium. An additional $2 million is invested in incentives forprogression towards, and completion of, degrees and certificates. Funding for healthcare workforceprograms and two skills centers is eliminated.



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Increases in Other Funds and Federal Funds will allow the department to participate with the Departmentof Education, the Oregon University System, and the Employment Department in development of alongitudinal data system and continue workforce and youth employment programs.

In the 2005-07 biennium, the state resumed issuing bonds to support community college capital

construction projects. This was the first state bond issuance for college projects since the 1979-81biennium. In the past three biennia, $207.3 million in general obligation bonds and Lottery-backed bondshave been authorized to support community college capital construction. Each college has had at leasttwo projects authorized. Debt service in the 2011-13 biennium will be $24 million General Fund andLottery Funds. Due to constraints on the states bonding capacity in the current economic climate, nonew college projects are recommended for the 2011-13 biennium.

Revenue

General Fund resources finance the Community College Support Fund, debt service on Article XI-G

bonds, and a portion of office operations costs. Lottery Funds pay the debt service on Lottery-backed

bonds.

Other Funds revenue sources include fees for the GED and adult education tests; charges to communitycolleges for Adult Basic Education materials and training, funds from the Department of Education forCarl Perkins program support and amusement device taxes for the Oregon Youth Conservation Corpsprogram. The department continues to receive a small amount of timber tax revenue that is transferred to thecolleges as part of the Support Fund.

Federal Funds revenue sources include Workforce Investment Act Title II for Adult Basic Education and

Workforce Investment Act Title IB for job training. The department also receives National Emergency

Grants following economic or other dislocations; these funds are included in the budget as NonlimitedFederal Funds.


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EARLY LEARNING COUNCIL

2007-09

Actuals

2009-11


2011-13

Governor's Balanced

General Fund $0 $0 $361,581,626

Lottery Funds $0 $0 $0

Other Funds $0 $0 $34,231,904

Federal Funds $0 $0 $231,294,898

Other Funds (Nonlimited) $0 $0 $40,000,000

Federal Funds (Nonlimited) $0 $0 $102,729,051

Total Funds $0 $0 $769,837,479

Positions 0 0 [185]*

Full-time Equivalent 0.00 0.00 [174.14]**The positions and FTElisted above are not new positions but are existing position transferred in to the Early LearningCouncil from other state agencies. The goal of the Early Learning Council redesign is to streamline services and reduceadministrative overhead.

Overview

If our central challenge is to rebuild the House of Oregon, then successful investment in thedevelopmental needs of children is the foundation on which the house will be built.

The Governor has proposed the creation of a single transparent 0-20 education investment budget theOregon Education Investment Fund which will be administered by a new Oregon Education InvestmentBoard. Under this board will be created a Council of Early Learning which will focus on ensuring thatchildren enter school ready to learn, enter the first grade ready to read, and leave the first grade reading.Research has demonstrated that children who achieve these three goals are more likely to progresssuccessfully through the remaining school years and become productive, employed adults. It is alsoduring the early years that the family and community have a significant impact on childrens ability toachieve these goals. The state can help families who need and want support in addressing the very earlyprecursors to learning which left unattended, later place a much larger burden on the K-12 educationsystem and other social services programs.

Although the state has a range of programs and significant public investment for these children, the goalsand efforts have not been sufficiently unified across agencies, nor have the results of these efforts beenconsistently documented at the child/family level. This budget moves to a model that focuses onoutcomes for children and their families, not resources for programs. Unifying efforts, streamliningadministrative costs, and committing resources to a sustained strategy of early childhood investment, withmeasurable results, will be the foundational element in achieving long term educational and economicobjectives for Oregon. The Council of Early Learning is created in this budget to bring together thoseprograms focused on primary and secondary prevention. The following programs are included:


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Early Intervention and Early Childhood Special Education; Headstart and Early Headstart; OregonPre-kindergarten; Even Start; and Special Education for infants with disabilities, and pre-schoolgrants from the Department of Education;

Healthy Start; Relief Nurseries; Community Schools; Children, Youth and Families; Great Start;Family Preservation and Support; and statewide system development and planning from the StateCommission on Children and Families;

The Childcare Division and Childcare Commission from the Employment Department; Ready to Read from the Oregon State Library; Maternal and Child Health Programs; and Women Infants and Children from the Oregon Health

Authority; and

Employment Related Daycare and the Childrens Wrap-around Initiative from the Department ofHuman Services.

In the first year of the biennium, the Governors Early Childhood System Director will oversee a designteam to re-engineer and transform the early childhood system to produce measurable outcomes and cost-benefit analyses on a regional basis through performance-based contracting with local providers. Thedesign team will also recommend a process to transition to the new delivery model in the second year ofthe biennium. Although the budget and positions for the existing programs are moved to the Council ofEarly Learning, the programs themselves will continue to operate in their current form for this first year ofthe biennium. Beginning the second year of the biennium, the programs will operate under the newsystem design with unified efforts and streamlined administrative services.

In addition to the programs directly focused on early learning, the following programs from the StateCommission on Children and Families have been transferred to the Council of Early Learning: CourtAppointed Special Advocates; Youth Investment; the Runaway and Homeless Youth Initiative; andJuvenile Crime Prevention.

Balanced Budget

The Governors Balanced Budget totals $770 million total funds, with $362 million General Fund. Forprograms relating to early childhood, this is a General Fund increase of 7.4 percent from the 2009-11Legislatively Approved Budget. Total fund expenditures remained flat from the 2009-11 LegislativelyApproved Budget.

Investments were made in the early childhood programs to the extent possible to foster system re-engineering and produce the desired outcomes. Funds will be spent at the direction of Governors EarlyChildhood System Director, who will provide the single point of accountability.

The budget also includes Lottery Fund bonding authority to invest in a coordinated early care andeducation data system. This system will be a statewide, child-based data system to track expenditures(including the return on investment) and outcomes. The system should ultimately be integrated across thehealth and education system.


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The programs transferred from the State Commission on Children and Families, mentioned earlier, thatare not specifically focused on early childhood issues are funded at the level of the 2009-11 LegislativelyApproved Budget less allotment reductions.

Revenue

Approximately 47 percent of the Department of Early Learning budget is General Fund, 10 percent OtherFunds, and 43 percent Federal Funds. The primary sources of Federal Funds are the Child Care andDevelopment Block Grant, the Maternal and Child Health Grant (Title V) and Women Infants andChildren. Other Funds mostly consist of Federal revenues transferred to the Department from otheragencies. These include Title XX (Social Services Block Grant), Title IV-B(2) (Safe and Stable Families)received from the Department of Human Services and Title XIX Medicaid funds received from theOregon Health Authority.


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DEPARTMENT OF EDUCATION

2007-09

Actuals

2009-11


2011-13

Governor's Balanced

General Fund $5,272,290,511 $5,594,170,040 $5,281,669,587

Lottery Funds $1,117,673,277 $549,318,319 $427,416,330

Other Funds $60,883,458 $60,411,670 $47,585,138

Federal Funds $875,676,402 $1,229,435,317 $722,225,628

Other Funds (Nonlimited) $140,351,340 $100,687,342 $84,024,055


Total Funds $7,750,303,355 $7,812,715,105 $6,848,300,992

Positions 481 393 385

Full-time Equivalent 443.51 375.22 365.40

Overview

The Oregon Department of Education is the lead agency for Oregons Pre-Kindergarten through grade 12

public education system. Its mission is to improve the achievement of all students. The Superintendent of

Public Instruction is elected to lead the agency. The agency provides support to the State Board of Education

and the Superintendent in carrying out their responsibilities, including:

Adopting rules for general governance of schools and distributing funding for all public schools. Implementing statewide standards for schools. Establishing rules for schools and ensuring that they are followed. Administering Oregons statewide assessment testing system. Acting as a liaison and monitoring implementation of federal programs. Working in partnership with all education stakeholders. This includes local school districts, education

service districts, community colleges, parents, teachers, administrators, businesses and community

members.

The agency also contracts for services for certain education programs such as services to infants and youngchildren with disabilities, preschool programs, compensatory education programs and professional/technicaleducation programs. Through regional programs, the department provides special education services tochildren with disabilities such as autism, hearing impairments and vision impairments.

The agency provides direct educational services at the School for the Deaf. In addition, the departmentcontracts for most educational services at Oregon Youth Authority work-study camps and correctionalfacilities.


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Education


Balanced Budget

Investment in education is a top priority in the Governors Balan

budget full budget

Documents