Transforming the Education Budget Process

If broadly defined, education (early childhood to post-secondary education) accounts for sixty percent of Oregon's general fund budget. And yet the budget framework through which we allocate public resources for education views early childhood investments; primary and secondary education; community colleges and the Oregon University System (OUS) as separate competing entities rather than as part of an interdependent continuum.

Currently the budget for OUS is developed by the Board of Higher Education; the community college budget is developed by the State Board of Education; the K-12 distribution formula is set in statute; and the budgets for early childhood programs are developed through yet other disconnected process. These isolated education budgets move independently through the legislative process. Funding is based largely on enrollment (not even on attendance). Therefore, the fiscal health of our schools, colleges and universities is related to the number of students enrolled, not on how well those students are served. This budgeting system – as well as the incentives within it – must be fundamentally changed if Oregon is to achieve its long term educational objectives.

First, our current fragmented budget allocation process must be replaced by a unified, transparent budget in which the focus is shifted from enrollment-based funding of institutions to outcome-based funding of the success of students as they move along the continuum.

Second, we must replace our current segmented budget development and governance process with one that recognizes the interdependent nature of the entire enterprise of education. The State Board of Education and the budgetary functions of the Board of Higher Education would be replaced with a new Oregon Education Investment Board which would assume responsibility for the development of the unified, transparent education budget; and for developing performance expectations at each stage of the Pre K-20 continuum.

Third, the position of State Superintendant of Public Instruction would be moved to an appointed position within the Executive Branch as the State's Chief Education Investment Officer. The functions of the State Department of Education would likewise be transferred to the Executive Branch to serve this new performance based investment strategy.

Finally, we must move to a long term (ten-year) budget framework that allows us to account for how and when our investments pay off; giving us the capacity to understand how investments and programs at one education level inherently affect outcomes at another. The system will assist in determining the needs and measuring growth for all students, particularly those with special needs. It will allow both legislators and citizens to look beyond the budget numbers to actual student results. This, in turn, will allow us to make transparent and justify the need for educational improvements that require additional funding as part of a ten year effort. We will be in the position to ask not only for more money for student achievement, but to describe how we will invest those resources to increase student performance.

These changes in the way Oregon budgets for and invests in education must be accompanied by a number of important structural changes in our approach to early childhood programs and investments; in primary and secondary education; and in post-secondary education.