Educational Investment and Economic Growth

Oregonians know funding public education is one of the smartest investments taxpayers can make. Investments in education pay for themselves many times over, not just in a better economy but also with a better quality of life for everyone in the state. To get the best outcomes, Oregon needs to sustain improved programs over the entire course of a students educational careers. Since Oregon schools are currently so underfunded, bringing education funding back up to an adequate level will require a significant amount of new revenue.

Improving Oregon’s educational system is one of our best population level economic improvement options. Nearly all the proposals we’ve seen for improving Oregon’s economy include some recommendations for educational investment. The Path to Prosperity report that we’ve been discussing in our five part series includes a number of educational programs ranging from early childhood education to career and technical education. These are good ideas, but unfortunately their report makes no suggestions for raising revenue to pay for these programs. Therefore, any enhancement in education for some students would come at the expense of others. It doesn’t have to be an either or:  Oregonians support raising funds for education. In today’s post we estimate the education investments necessary to make a real difference. In the following post we will present our plans for raising the revenues needed to make those investments.

Early Learning

Funding early learning programs is a good investment, with potential returns of $8 or more for every $1 spent. Aside from starting kids on a good path early, early learning programs like Head Start can free up parents to participate in the labor force. Currently not all eligible families are able to participate in Head Start, due to lack of funding. According to the Oregon Head Start Association, providing universal pre-K services to all 35,000 3 and 4 year olds living in poverty who are not currently being served would cost about $290 million in additional funding per year. This would be a wise investment in Oregon’s future.

Career and Technical Education

Across the state, employers have unmet needs for skilled workers. By expanding and strengthening Career and Technical Education (CTE) programs, more people will have the skills to work in good jobs. For CTE programs to be effective at preparing students to enter the workforce, they require state-of-the-art equipment that must be maintained and experienced instructors who are certified in their fields. Neither come cheap.

Unfortunately, budget cuts at community colleges and the K-12 system have reduced technical training opportunities. Because CTE programs are more expensive to run than general education courses, and serve smaller numbers of students, they are often the first to get cut. In the 1990s there were 1,200 approved high school CTE programs; today there are only 641 (Laura Roach, Oregon Department of Education).

To get a sense of what one successful CTE program might look like and what it costs, let’s look again at the Path to Prosperity report. That report mentions one new CTE program in Malheur County, where “local leaders are working to connect recent high school graduates with local business owners who anticipate unfilled jobs.” (p.10) In the first year of the program, high school juniors learned how to weld using new shop equipment at Ontario High School. Local businesses donated materials and equipment for students to practice on. Treasure Valley Community College added a new two-year welding program, and as seniors students will earn college credit for taking advanced classes on welding and fabrication there. The first cohort of 20 high school juniors just finished their first year of the program, with promising results; five or six students are even planning to transition to the community college program to continue their training (according to Cathy Yasuda, Treasure Valley Community College). 

While the Malheur County project is a great example of what communities can do when resources are available, to sustain and scale up those efforts statewide will take a large investment. Here’s what the Malheur County project cost: The Oregon Department of Education granted $200,000 for the Malheur County project, and additional funds came from school districts and a foundation grant. Businesses contributed in-kind resources like raw materials and equipment for students to use. This initial investment got the program up off the ground, but now they need to raise an additional $450,000 to keep operating. Program staff are currently applying for grants to keep the program running but only a few foundations fund programs like these and competition is fierce. If funding can’t be secured, all this good work will disappear.

In order to sustain and replicate this project across the state, we need to make funds available for communities to put to work. Because community colleges have already prioritized technical education programs with the help of local business leaders, they are well positioned to act quickly with additional funds.

An additional $150 million per biennium would raise Community College funding per student to 2007 levels (Oregon Community College Association).  These funds could be put to use restoring and expanding CTE and other programs, like those that prepare students who will transfer to a four-year university. $100 million more would enable community colleges to expand course offerings and reduce tuition costs.

K-12 Education

Sustained investment throughout K-12 education will amplify the positive effects of early learning programs and get more students ready to succeed in CTE programs, college, or whatever else they pursue after high school.

Quality education makes a big difference in students’ lives, but there are striking differences in educational attainment across Oregon’s schools. Though technical assistance can help schools be more efficient with limited resources, disparities in student outcomes are driven primarily by economics, not teaching styles. In every state, students who are economically disadvantaged (noted by being eligible for free or reduced-price lunch) are less likely to meet or exceed expectations in reading, math, and science. In 2009-10, 59.8% of economically disadvantaged high school students in Oregon graduated on time, compared to 72.1% of students who weren’t economically disadvantaged (Oregon Department of Education, Graduating Class 2009-2010).  When comparing average test scores between school districts, the percent of students from economically disadvantaged families is the main predictor. In the 2013-14 school year, 52% of the students in Oregon lived in economically disadvantaged families (Oregon Department of Education).

While all students benefit from more individual attention from teachers, low-income students get the biggest boost from smaller class sizes. After controlling for the percent of students on free and reduced-price lunch, 8th grade test scores are lower in states that average more students per teacher. The associations between 8th grade reading and math test scores and student/teacher ratios were stronger for students eligible for free and reduced-price lunch, evidence that greater investments in education helps kids from economically disadvantaged families the most (author’s analysis of data from National Education Association’s Rankings and Estimates report).

Between the 2007-08 and 2013-14 school years, Oregon public schools lost nearly 5,300 full time equivalent (FTE) positions. According to historical data from the Oregon Department of Education, the biggest cuts were in the classroom: 3,386 FTE teachers and 1,176 FTE instructional assistants, (equivalent to 1 in 9 of those jobs lost).  With fewer teachers, class sizes increased—Oregon now has one of the largest average class sizes in the country (National Education Association, “Rankings & Estimates” report).

In addition, according to the Oregon Department of Education budget cuts forced school districts to close one in twenty schools and consolidate operations.  With fewer neighborhood schools operating, more kids have longer commutes to school. Oregon also has one of the shortest school years in the country. Most states require 180 days of instruction, but no school district in Oregon offers that many days to students. In recent years some school districts even switched to four-day school weeks to save on operating costs. This creates an additional financial burden for working families who must make child care arrangements for school-age kids.

Education experts estimate an additional $2.4 billion per biennium is needed to fund K-12 at an optimal level. This investment would be used to hire back teachers, reduce class sizes, extend the school year, and restore programs and extracurricular activities.

Higher Education

In addition to underfunding K-12, Oregon has also disinvested in higher education, shifting costs to students. Between the 1989-1990 and 2011-2012 school years, average tuition and fees for community college students more than doubled, from an inflation-adjusted $1,003 to $2,175 per full time student (Oregon Department of Community College and Workforce Development).  Tuition and fees in the Oregon University System have also much climbed faster than inflation, while state funding has declined. To cover increasing tuition costs, many students take on debt. 55% of the Oregon University System class of 2012 graduated with debt, with the average debt being $24,673. This debt load is a big drag on young adults trying to transition from school to a career.

$1.6 billion in funding could be used to cut university tuition and fees in half, greatly reducing the debt burden on post-secondary students.

Summary of Ideal Educational Investment

Oregon could have a world-class education system with an additional $4.8 billion dollars per biennium. This substantial investment in education would have a big positive impact on Oregon’s economy.

• $580 million for universal pre-K for all 3- and 4-year olds living in poverty

• $2.4 billion for K-12 to reduce class sizes, add school days, and expand programs

• $250 million for Community Colleges

• $1.6 billion to cut university tuitions and fees in half

$4.8 billion is a lot of money, but if the state increased corporate taxes to raise that much per biennium from big companies headquartered outside of the state, Oregon would still only be 40th among the states in business taxes (calculations based on Anderson Economic Group 2014 State Business Tax Burden Rankings).  In our next post we describe how to raise the money.

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