Planned budget cuts in Oregon run afoul of the federal government

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April 15, 2011

By Eileen McGuire-Mahony

Salem, OREGON: Cutting budgets under remarkably austere times doesn't mean legislators are freed from any of the usual competing requirements, and Oregon lawmakers heard that message loudly when the U.S. Education Department threatened sanctions if the state did not amend its plan to trim special education funding.[1]

It is only with a waiver from the federal government that states may freely cut such funding. Oregon sought such a pass and cited falling revenues and projections of continued declines. Washington DC officials, however, turned down the application and ordered the state to dip into reserve funds and keep spending at least at 2009-2010 levels.

Total dollars dedicated to all special education funding was $350 million in FY 2009, down to $332 million in FY 2010. Part of a bid to address a $3.2 billion hole between now and the end of the 2013 fiscal year, education took financial losses along with everything else in the state.

In response to across-the-board cuts ordered by former Governor Ted Kulongoski, the state sought to invoke the clause allowing exceptions for “uncontrollable circumstances” and “unforeseen decline in the financial resources of a state.” Shortly after Kulongoski's replacement, John Kitzhaber, was elected, the state's education officials made the application, one that was declined five months later.[2]

In issuing its decisions last week, the U.S. Education Department turned down Oregon - and only Oregon. New Jersey and Alabama got waivers, but regulators told Oregonians their analysis showed the state had enough reserves to make up the shortfall and high enough projected revenue in the near future to take such a step.

If Oregon can't meet that number, the fine amounts to a $15.7 million cut in federally allocated education dollars. That's not as bad as the $19 million projected by the state when they first applied, but it is still a loss of more than 10% of the anticipated dollars available for 2010-2011. The legislature must decide by June 30, 2011 whether to use reserve funds or accept the funding cut.