In our final episode for the school year, we delve into a foundational topic: Public School Funding 101. Join us as we sit down with special guest Stuart Ketzler, Assistant Superintendent of Business Services for the Lake Oswego School District. Stuart brings his expertise to the table, explaining how public schools in Oregon and Lake Oswego are funded and walking us through the intricate budgeting process.
School finance might seem like a dry subject, but Stuart's pearls of wisdom and thoughtful insights make it accessible and engaging. This episode provides a comprehensive funding framework for Oregon and our local school district, clarifying the complexities of school finance.
Tune in to gain a deeper understanding of how public school funding works and why it matters for our community.
Dr. Jennifer Schiele, Superintendent, LOSD
Mary Kay Larson, Executive Director of Communications, LOSD
Stuart Ketzler, Assistant Superintendent of Business Services, LOSD
MICHELLE ODELL:: [00:00:00] Welcome to Learning in Lake Oswego, a podcast providing educational insights for an engaged community. Lake Oswego School District Superintendent, Dr. Jennifer Shealy, will discuss what's important to our learning community. She'll be joined by experts examining various topics, answering important questions, and sharing upcoming events and activities you won't want to miss.
And now, it's your host.
Welcome to Learning in Lake Oswego. This is our last episode of the school year, and we're wrapping up on a foundational topic, school funding 101. This episode will discuss how our schools are funded and what it means to our students and our community. I'm your host Mary Kay Larson here with our superintendent, Dr.
Speaker 2: Jennifer Schiele. And with us, we are joined by a special guest, Stuart [00:01:00] Ketzler. He is our assistant superintendent of business services for Lake Oswego School District.
DR JENNIFER SCHIELE:: Thank you, Mary Kay. We are extremely fortunate to have Stuart at the helm of our business and finance department. He is crucial in our district's ongoing success.
For over 26 years, our community has benefited from his wisdom and care. Stuart. School finance is super complex and in this episode we aim to provide a framework of funding in Oregon and here in Lake Oswego.
STUART KETZLER:: Well thank you, Jen. It's my pleasure to be here today.
DR JENNIFER SCHIELE:: Great. Thanks. First, please explain how Oregon public school funding fundamentally changed in the 1990s.
STUART KETZLER:: Oregon funding for schools changed dramatically after Measure 5 was passed, which was a voter initiative. It changed the ability of local communities to set their own tax base by limiting the amount that a school could levy to no more than 5 of real market value. And prior to [00:02:00] that, there was no limit.
And so school districts like Lake Oswego were able to raise substantial funds to the extent that the local community wanted to be taxed. Measure five fundamentally changed the amount that school districts could raise. Could raise and also shifted the funding from primarily a local funding base, roughly two thirds prior to measure five and then one third from the state to what we have now, where it's essentially two thirds funded from state allocations to essentially a third raised on a local basis.
And this new model eventually reduced Lake Oswego's school district operating budgets by more than a third.
DR JENNIFER SCHIELE:: Wow. How did the community respond to those changes? And then what role did the state legislature play in allowing communities to supplement that state funding?
STUART KETZLER:: In Lake Oswego, the Lake Oswego Schools Foundation was established to help our school district put more teachers back in classrooms.
The [00:03:00] Volunteer Art Literacy Program was also created to keep art at elementary schools. And at the state level, in 1999, the state legislature allowed communities to supplement state funding for local schools by allowing local voters to approve a local option levy. LOSD voters approved the first Lake Oswego school levy in 2000, which helped restore some of the educational opportunities that had been eliminated following the implementation of Measure 5.
Since then, LOSD voters have approved the levy every time it has been on the ballot in 2004, 2008, 2013, 2019, and most recently in 2023 to improve and protect educational excellence in Lake Oswego School District.
DR JENNIFER SCHIELE:: So let's walk through the Lake Oswego School District's current funding pillars, state school funding and state grants, as well as levy, bond, and foundation.
Starting with our largest pillar, state school funding, what is the significance of state funding [00:04:00] for the district?
STUART KETZLER:: Well, that's a great question and the way that state funds are allocated isn't intuitive and differs greatly from other states. In Oregon, the state school fund is a fund that the legislature grants appropriations to on a biannual basis.
And those funds combined with property taxes collected at the local level provide for Lake Oswego School District, anyway, approximately 85 percent of our operating funds. Those funds are distributed on a statewide basis, essentially on a per student basis with extra weights for students with specific designations, such as students on IEPs or students that are economically disadvantaged.
These SSF funds on a statewide basis are comprised roughly two thirds of state money, again allocated from the legislature every other year, and then permanent property taxes that are collected at the local level. Those two combined [00:05:00] provide the total allocation under the the state school fund or SSF for short.
These revenues fund are required in basic operations and SSF is allocated as I noted every two years and and so that provides us Some stability within a two year period, but looking out further long term requires us to make estimates as to what this next state legislature is going to do. As of this recording, we are awaiting the allocation for the 2025 2027 biennium, which the legislature will take up in their 2025 session.
And SS funds Again, those fund our required operations, comprised primarily of personnel, textbooks, and things that keep our schools open and operating.
DR JENNIFER SCHIELE:: So relatively new state controlled grants are used for specific purposes, such as hiring social workers, academic support center workers, and interventionists.
to support students mental health, [00:06:00] behavioral health, and academic needs. So, that helps them stay on graduation, which is fairly new money that we've gotten. How important are these grants to our district's financial health?
STUART KETZLER:: We're very fortunate to be able to have these new funds. And the most significant of these new state grant funds began in 2020 21.
When the state implemented the Student Success Act, a new funding source funded by a corporate activity tax dedicated primarily to education. The Act's largest program is the Student Investment Act, or SIA, and then the other is the High School Success Grant. Together, these grants represent approximately 7 percent of our budget.
And the Student Investment Account and High School Success Grants are subject to state controlled distribution. The SIA resources support students mental health and behavioral health needs, and increase academic achievement, and allow us to also maintain reasonable class sizes throughout the district.
The HSS resources help students [00:07:00] stay on track through high school graduation, and these programs largely supplement our regular education programs.
DR JENNIFER SCHIELE:: So continued support from our community through local option levy, bond measures, and personal donations to the Lake Oswego Schools Foundation is crucial in our ability to offer high quality educational experiences.
This collective effort enables us to achieve high academic and operational standards. Let's talk a little bit more about the significance of the levy to our operating budget.
STUART KETZLER:: Well, the Levy here in Lake Oswego is, is instrumental to our success because it comprises almost 15 percent of our operating budget and it taps into a kind of a gap that was created first by Measure 5 passed in, in 1990 that is on a real market value basis and then a subsequent measure that was passed in the late 90 Measure 50.
That established a new assessed value system in Oregon and permanent rates that apply to those assessed values. So the difference between the assessed value and [00:08:00] the real market value provides the opportunity for, for where we derive the value for our local option levy. And what's great about local option levy, those monies stay local in Lake Oswego School District.
Our current local option levy, which is roughly 16 million dollars a year, funds the equivalent of a third of all classroom teaching positions in our district. And our voters, as I noted earlier, have passed the levy every time it's been on the ballot.
DR JENNIFER SCHIELE:: Yeah, we are so grateful for our voters here in Lake Oswego.
Another area that people vote on our bonds and bonds are another local funding source provided through our generous support of our voters. What do bond funds cover?
STUART KETZLER:: That's a great question. And sometimes we do get questions about why can't we pay for certain items out of the bond. And bonds are limited to fund significant capital expenditures, and within each bond measure there's a listing of what types of activities we intend to fund from that bond, and we have to stay within those [00:09:00] parameters.
The first phase of our, of our current bond program, which 2017, replaced Lake Ridge Middle School and extensive infrastructure capital investments at all schools. In 2021, Lake Oswego voters approved the second of the district's three phase capital improvement program, replacing the River Grove Elementary building and allowing for the replacement of Lake Oswego Junior High School, which will begin construction this summer.
We anticipate going out for the third bond in 2025. And this is under a three phase plan that our school board adopted back in 2016. And bond measures may only pay for significant capital improvements such as new and remodeled buildings, capital improvements such as roof replacements, and they are not allowed to be used for operating expenditures.
DR JENNIFER SCHIELE:: So, one thing that can be used for operation is the Lake Oswego Schools Foundation, and they allow our community to make personal financial contributions to enhance students educational experiences. So, tell [00:10:00] us what those contributions mean to our budget.
STUART KETZLER:: Yes, the Lake Oswego Schools Foundation contributes approximately a million dollars annually.
to our operating budget amongst the schools in the Portland metro area and even on a national basis. That's quite a remarkable achievement in relation to our overall budget. Donations in Lake Oswego from the foundation go solely to hiring and retaining teaching positions beyond what is possible with public funding and are applied equitably across all schools in the district.
Foundation donations enable full time elementary music and more middle and high school electives here in Lake Oswego, many of which are no longer offered in many districts in Oregon. The community's voluntary foundation support for over 35 years speaks volumes about how Lake Oswego values education.
DR JENNIFER SCHIELE:: Absolutely, we are very grateful for all the work that the foundation does. Now in 2015, LOSD established a new fund balance policy on what some refer to as our financial reserves. What was the [00:11:00] reasoning behind this and how does that affect our stability?
STUART KETZLER:: Reserves are essential to good financial stewardship.
They give us some flexibility to adapt to the uncertainty of state school funding, and they also allow us to present the community favorably whenever we go out for bonds, which helps us with lower interest rates on, on those bonds. And the school board adopted a new fund balance policy in March 2015.
Which among other things established a minimum ending fund balance target of eight percent of general fund budgeted expenditures and a maximum of 15 percent.
DR JENNIFER SCHIELE:: So let's talk about taxes because that's a very popular topic amongst all of our listeners. What is our current tax rate when it comes to schools?
STUART KETZLER:: Our tax rates, which the ones that we control at a local level, are our property tax rates. Those are expected to remain flat for 2024 25. They are presently roughly 000 of taxable value, which is essentially the [00:12:00] same as we have currently. And it's important to note that the actual tax rate for a particular lot may be less.
And that's because of compression, which is the difference between the assessed value and real market value rates, where if the gap is not that large, the tax rate on that particular tax lot gets compressed. There was a period in the district's history that actually is not that long ago, at least for me and that was from 2011 through 2014.
Where the district was experienced significant depression in the wake of the 2009 Great Recession, which significantly depressed real market values, you know, not only locally, but throughout the state and nationally as well. As real property values have increased for the past 10 years at a rate greater than increases in assessed value, Compression has been significantly reduced, falling from 3.
1 million in 2013 14 to less than 600, 000 in this current 23 24 [00:13:00] fiscal year.
DR JENNIFER SCHIELE:: So I think that's where it gets really complex to me when you start talking about compression. And we've had these conversations every day and Stuart's an amazing teacher, which is why he's in education. But I think people are real curious on how does Lake Oswego's taxpayers contribution compare to those around us?
Especially concerning these property tax for levy and for bond.
STUART KETZLER:: Great question. Overall, Lake Oswego School District's total property tax rates are close to, and in some cases below, our neighboring districts. Of the nine neighboring districts closest to Lake Oswego, Lake Oswego School District currently is 45 cents higher than the average overall tax rate.
But again, we are lower than several of our neighbors.
DR JENNIFER SCHIELE:: Got it. And that makes good sense. So, now can you walk me through our whole district budgeting process? Like, where do we start? How do we begin? How do we manage all this complexity?
STUART KETZLER:: All right. Great question. And it's a process that we're nearing the conclusion of for our 24 25 budget.
And it begins with the formation of a [00:14:00] budget committee. And that's a requirement of the Oregon state law. And this committee is comprised of the five elected school board members. Plus five equal number of citizens that are appointed by the school board and then using revenues forecast That are primarily driven by estimates of student enrollment.
We establish what our Likely revenue is going to be for the next school year and we have allocations of funds to schools and departments Some of those are very formula driven with an eye towards equitable distribution at the school sites and given the constraints of available resources, prioritization, both at the school sites and with departmental budgets becomes crucial.
District goals, particularly regarding classroom size and full time equivalent ratios. Take precedence, though other operational aspects are also considered, such as obligations we might have under contracts some of which are significant a primary example being our contract with Student Transportation of America for bus [00:15:00] services.
There are other operational aspects that can vary from year to year, such as textbook adoption cycles, and the costs of those can vary quite a bit between which the curriculum is, is up for adoption. And, but those factors are, are con, considered and, and brought together. for a budget that is presented to the legal budget committee and it has to be a balanced budget, meaning that at the end of that budget cycle, we cannot have a negative fund balance.
We certainly can have drawdowns of reserves which is where we anticipate being not only this year, but, but next year as well. But that process is highly I don't want to say regulated, but there are a lot of rules under the state local budget law that we have to follow. And we've committed we've finished our committee work this year, and they've approved the proposed budget and so our next phase will be bringing that budget forward to our school board for a budget hearing, and then final adoption at our June 17th meeting.
And then on a more ongoing basis throughout the fiscal year. [00:16:00] Individual schools and departments have some flexibility to transfer funds between programs and objects subject to approval by, by my office and then within appropriation levels. Requests exceeding these levels necessitate board approval and such modifications are subsequently incorporated into either an appropriation transfer resolution or a supplementary budget resolution via an established process.
DR JENNIFER SCHIELE:: Wow, and you, you and I and this whole department does this every year?
STUART KETZLER:: Yes, and you know, I don't want to make light of it, but it's something that all Oregon school districts, and all municipal entities in the state of Oregon, their rules for other municipal entities differ a fair amount. We all have to follow the Oregon local budget law.
DR JENNIFER SCHIELE:: Sure. So then who oversees the district's financials, like ensuring accountability and transparency?
STUART KETZLER:: That ultimate responsibility is, is the school boards, and they require regular reports throughout a fiscal year, and then [00:17:00] presentation of our, of our annual audit report at the conclusion of each fiscal year.
And within the state of Oregon, there are special rules that, Prescribe additional auditing procedures that auditors of school districts have to do each year to help make sure that that our funds are being spent in accordance with state law and our community also has high expectations about how we spend our funds and so our budgets and and audit reports.
We post those on the district website. They're also available through my office and And occasionally I do get questions from local patrons, more often from investors that may own district bonds but it's a process that, that does require us to have an on annual audit each year. And it's not just a financial audit, but it also is an audit of, of our compliance with certain rules and regulations.
Those types of procedures go beyond a, a typical audit that a regular commercial business might be subject to.
DR JENNIFER SCHIELE:: Wow, thank you so much Dirt for [00:18:00] providing such a valuable insight into our funding mechanisms and financial health of the Lake Oswego School District. Understanding how our schools are funded and managed is crucial for our community and so we really appreciate your time and expertise.
STUART KETZLER:: Well, thank you, Jen. And, and if listeners want to know more, we will be having a budget hearing at our June 17th meeting with adoption anticipated that evening as well. And, and again, I invite listeners to review our budget documents and audit reports that are posted on the district website. under the Business Services Department, and there's a wealth of information especially in the audit reports that cover elements not relating solely to our finances, but in relation to property tax rates and the calculation of state school fund distributions for not only this year, but for upcoming periods and prior periods as well.
Speaker 2: Yeah, that budget book. It's a little light reading for everyone out there. Highly recommend it. Oh, but in all [00:19:00] seriousness, thank you, Stuart. I work with Stuart almost on a daily basis, and I learn something from him every time I talk to him. And even today I learned things. Things that I didn't know. So I hope our listeners as well got something out of this episode and, and had some insights.
And as Jen said in the beginning, all of this is intended to provide people with a framework for how a school budgeting happens and how school funding happens. And specifics change every year on the numbers, but this gives us a little bit of a framework for navigating. Thank you for listening. how we do things here.
So before we wrap up our school year and our last episode of the school year, let's talk about where you'll be, Jen, in the next coming weeks.
DR JENNIFER SCHIELE:: Yes. As everyone can imagine, it's a super busy time for everyone in schools. So I will be spending as much time as possible inside our schools, which hosts a myriad of end of the year activities.
Activities, events, and of course, celebrations. [00:20:00] Each elementary school hosts a fifth grade celebration, and our middle schools do the same for eighth graders crossing over to high school, and of course, our high schools host graduation award assemblies and graduation ceremonies for our seniors. I want to take a moment to thank all of our students and staff, particularly our seniors who will be leaving us soon for participating on this podcast throughout the year.
We're really looking forward to welcoming others onto the show next year. As we all know, summer's approaching quickly. Here are some important dates for the last days of school and the first days of the 24 25 school year. So on June 5th is the last day of school for Elo and Lake Ridge seniors. June 7th is the Lake Ridge High School graduation ceremony.
June 11th is the Lake Oswego High School graduation ceremony. June 13th is the last day for grades kindergarten through 11th grade, and it is a half day dismissal schedule, so please make sure you're checking your website or your newsletters to find out when your student will be home. First day of school is next year, September [00:21:00] 3rd.
That's the first day of school for first grade through fifth grade. sixth grade and ninth grade. September 4th is the first day of school for seventh and eighth graders and tenth, eleventh, and twelfth graders. And the reason why we do that is that first day of school we like for middle school and high school to just have sixth graders and just have ninth graders in the buildings just learning the new system.
And then September 6th is our first day for all kindergarteners. And the reason why they start a little later than everyone is that They have individual meetings with their teachers those first couple days, so you will still get to get in the school if you have a new kindergartner, but the first day for all kindergartners is September 6th.
At the end of the summer, your school's main office will send information about your child's orientation appointment time. If you're a kindergarten, it will either be September 3rd, 4th, or 5th. That first day again for all kindergartners is September 6th.
Speaker 2: Thank you, Jen. And thank you everyone for joining us on our premier season of our podcast, Learning in Lake Oswego.
We'll be back [00:22:00] in September with new episodes because there is always something to learn here in Lake Oswego. Thank you. And until next
DR JENNIFER SCHIELE:: school year, keep exploring and stay engaged. Class dismissed for the summer.
Speaker: We hope you found this episode informative and helpful. While our discussions are general, we understand each family's experience is unique.
If you have specific questions about your child, please contact your school principal. To learn more about the topics we discussed, ask a question, or share ideas for future episodes, please visit LOSDSchools. org. And remember to like and follow us wherever you get your podcasts. Thank you for engaging with Learning in Lake Oswego.
We appreciate your support and look forward to having you with us for our next episode