By Matt Buckingham

Two years ago, the black-haired, bespectacled 16-year-old transferred from Wilson High School to attend Lincoln High. He's currently preparing for that school's international baccalaureate program, which offers advanced classes in subjects ranging from English to calculus. The courses, Jason says, will allow him to pursue a career in international business or law.

Those plans are now threatened, however, by perhaps the most serious budget crisis in the Portland School District's 144-year history.

What Jason can't understand is why no one seems to share his sense of alarm.

Thursday, March 14, the Portland School Board will approve a tight-fisted operating budget for the Portland Public Schools next year. As a result, the board will be forced either to lay off as many as 400 district employees-most of them teachers-or to shorten the school year by as much as four weeks. The board will likely vote to do some combination of both.

It's almost certain that Lincoln's International Studies Center and international baccalaureate program will be cut. Also on the chopping block are full-day kindergarten, the Benson High health careers program, the Jefferson High Performing Arts Center, the Cleveland High business and marketing program, the Grant High Institute of Science and Math, the Franklin High law and public service program and the Bridger Elementary SE Science Learning Center.

As if that weren't gloomy enough, the district and its teachers union are at an impasse in teacher contract talks, which have dragged on since April. Teachers could strike as early as next month.

Under any circumstances, the funding picture for public education in Portland would be troubling. But what's really perplexing is that the budget crisis is occurring at a time when everyone else is swimming in dollars.

The City of Portland, for example, estimates it will collect more money than it needs for at least the next two years. Multnomah County's budget has climbed year after year. Corporate Portland, as well, is enjoying record profits.

What frustrates Jason is that no one has exhibited the political courage to point out-both loudly and publicly-that (a) the Portland Public Schools are in serious financial trouble and (b) money needed to fix the problem, at least temporarily, is right in front of everyone's noses.

Instead, much of the job of drumming up public support for arguably the most important service local government provides, public education, has been left to political novices like Jason.

Last month, he was one of a handful of Lincoln students who organized a 700-supporter rally on the front steps of the State Capitol as the Oregon Legislature convened its special session. Jason's group also distributed 1,500 postcards to state leaders asking them to come up with more money for Portland schools.

Since Feb. 1, he's been meeting personally with corporate business leaders, urging them to donate their corporate tax credits this year to the Portland School District Foundation.

The results of his efforts? Diddly.

Jason wonders when business and city leaders will wake up to the mess in which the Portland schools find themselves.

"I think there's a misconception that, when it comes to the Portland Public Schools, the money has always been there," he says. "We haven't been able to look to a single leader."

Budget crises aren't new to the Portland Public Schools. The district has been in financial turmoil ever since voters approved property-tax limits under Ballot Measure 5 in 1990, placing the state Legislature rather than district voters in the business of funding schools.

Since then, the district has had to cut spending per pupil by more than 14 percent, from $6,183 in 1991-92 to $5,407 last school year, while enrollment has increased from about 55,000 students to almost 58,000.

Until now, the Portland schools have been able to weather budget cuts by eliminating 620 full-time positions, mostly in administration and staff support.

But next year, Superintendent Jack Bierwirth will no longer be able to put off cuts that affect the classroom. The school board will cut spending next year to $304 million, down $15 million from this school year ("Where Did All the Money Go?" page 25).

In addition, the district will have to spend at least an additional $6 million next year that it didn't spend this year-on teacher raises to be negotiated with the union; on expansion of special-education programs mandated by state and federal law; and on office supplies at the individual schools, which haven't increased their annual supply budgets for two years.

To make up for the funding shortfall as well as new spending, the school board will have to make about $21 million in budget cuts next year ("What Might Be Cut," page 25).

"I've lost the ability to look people in the eye and tell them we're still swimming upstream but everything is going to be all right," says Bierwirth, who recently met with Lincoln High parents to discuss proposed cuts. "It was the most depressing night of my career-if not my life."

If there is any fat left to be found in the school district's budget without laying off teachers or shortening the school year, no one-including a 25-member Citizens Budget Review Committee-has been able to find it.

"We were a diverse group who came in with a chip of cynicism and doubt on our shoulders," says committee spokeswoman Joyce Cresswell. "When we started this process, we were all over the map. But pretty soon, no one disagreed that we had a problem. That's the message we need to get out. The public needs to understand, this is a real budget crisis."

Businessman Joe Mahoney recognizes the value of making money. The 61-year-old semi-retired investment consultant came to Oregon five years ago and decided to put the financial expertise he had gained on Wall Street to work for causes he believed in.

He joined Oregon Fair Share, a nonprofit citizen activist organization, to head the group's education projects. Last year, he and other education activists decided to launch a fund-raising campaign that would target Oregon businesses.

Oregon Fair Share and other groups pose two arguments about why Oregon businesses haven't paid their fair share to support the public schools.

First, the state has undergone a dramatic and unintended shift in the past 10 years that, according to the Oregon legislative revenue office, has saved state companies about $300 million a year in property taxes-much of which would have gone to the public schools.

Residential property values have risen faster than commercial values, so more of the tax burden has shifted onto homeowners. Five years ago, businesses paid 42 percent of property taxes. Now they pay 34 percent ("Guess Who Got the Bigger Property Tax Break," WW, Nov. 1, 1995).

Second, corporate profits, according to the legislative revenue office, have almost doubled in the past five years, Fair Share and others point out.

There's nothing wrong with profits, they say, but businesses don't have to pay corporate income taxes on all of those profits, thanks to Oregon's so-called "kicker" law.

Under the law, the legislative revenue office projects the amount it will collect in corporate income taxes over the next two years. If corporate profits exceed projections and the state collects 2 percent more taxes than expected, the Legislature must "kick back" all surplus tax dollars in the form of a refund or credit.

That's what happened this year. Oregon companies paid $576 million in corporate income taxes during 1993-95, $167 million more than the state expected to collect.

In the past, lawmakers have voted to waive the kicker and use the extra money for education or other financially strapped programs. But last year, Senate President Gordon Smith and the rest of the Republican-controlled Legislature decided to give it back to Oregon businesses in the form of a tax credit.

Legislative revenue officer Jim Scherzinger says one in four of those tax credit dollars-about $40 million-will go to the state's 10 largest companies, almost all of them headquartered in the Portland area.

Oregon Fair Share and other groups view this $167 million tax credit as unpaid taxes. Coupled with the $300 million in property-tax savings businesses receive each year thanks to Measure 5, Oregon companies should have more than enough cash to spare for the public schools, they reason.

"We give corporations enormous tax breaks as a matter of policy. I'm not saying we should repeal those, but key members of the Portland business community have themselves characterized the kicker as a windfall," Mahoney says. "We think they should give something back. We're talking about our children and our future here."

So last fall, Mahoney and representatives from Portland Citizens for Oregon Schools and the Rainbow Coalition formed "Kickers for Kids" and began meeting with corporate executives from Portland's top companies in hopes of persuading them to donate all or part of their kickers to the Portland School District Foundation.

The foundation was established in the summer of 1994 as an alternative way for parents to raise money for Portland schools. Several Portland companies donated $5,000 apiece to hire noted fund-raiser Cynthia Guyer as the foundation's executive director.

When Oregon Fair Share started its campaign to raise money for the foundation by hitting up local companies, the effort was fully endorsed by Bierwirth and the school board. Despite this ringing endorsement, the Kicker for Kids campaign has been anything but successful.

Mahoney-along with Oregon Fair Share president Mallory Pratt, Portland Citizens for Oregon Schools president Russ Plaeger, school board members Sue Hagmeier and Joseph Tam, state Reps. Margaret Carter and Avel Gordly and others-has been arranging meetings with corporate leaders since October.

Portland General Electric, Bank of America, Northwest Natural Gas, Fred Meyer, US Bank, PacifiCorp, Key Bank, Standard Insurance Co. and The Oregonian were all asked to contribute. According to Mahoney, some have said no to the campaign, some haven't made up their minds, and others declined to meet with campaign organizers at all.

But so far, not a single Portland company has agreed to part with a dime.

"I'm really surprised by the lack of corporate leadership on this," Mahoney says. "Even in New York, in campaigns I worked on for Mayor Ed Koch, the business community got involved. No one wants to step up to the table and help. Leadership is the key here. There's a vacuum of leadership."

School board member Sue Hagmeier says the discussions she attended seemed hopeless. "We'd say there's a problem and they'd say, yeah, we know there's a problem, but here's our problem-we can't give away stockholders' money," she says.

Fred Miller, vice president of public affairs for PGE and a former director of the state executive department under Govs. Neil Goldschmidt and Barbara Roberts, says most companies have turned the campaign down because corporations simply don't give away tax savings. Besides, he says, most of these companies do business throughout Oregon, not just in Portland.

"We think we should get rid of the kicker law altogether," he says. "If the Legislature wants to dedicate that to K-through-12 education, that's great. But to give it to the Portland schools and not do anything for David Douglas or our people in Salem, that would be the wrong way to proceed."

US Bancorp takes the position that the Kicker for Kids program should seek corporate contributions like any other charity.

"We do not intend to give our kicker to that organization or any other organization," says corporate spokeswoman Mary Ruble. "We make significant contributions already, and anyone interested in a contribution should go through our normal channels."

Furthermore, US Bank feels no obligation to fund the Portland schools directly even if it reaps millions of dollars in profits here, Ruble says.

"In terms of actually funding the schools, we do not," she says. "It's been our position for a long time that getting the private sector involved in funding public education is not an answer to the school-funding problem."

Faced with such rejection, campaign organizers decided to focus their attention on the Portland Chamber of Commerce, which had endorsed repealing the kicker law during the 1995 legislative session. They met repeatedly last month with the Northwest Natural Gas vice president of public affairs, Bruce Sampson, who is also chamber president, to see if he could informally persuade members to contribute something to the foundation.

Sampson's final answer came last week: No.

"I spent hours and hours worrying about it and talking with other people, and I'm convinced we have to look at how to prevent this from happening again," he says. "The amount of the school district's deficit is just too large to handle through corporate fund-raising."

The chamber's position is also informed by the views of executive director Don McClave, who criticizes the district's handling of its finances and its failure to warn the public of the impending budget crisis sooner.

"I think the district has done a terrible job of preparing the public for the cuts next year," McClave says. "The district used up its one-time reserves this year, and that's the bulk of the shortfall next year. I don't doubt Jack Bierwirth that the school district needs more money. My criticism of the district is that they didn't let anyone know about this sooner."

Bierwirth defends the district's decision to keep programs running as long as the money holds out and says he's been careful neither to exaggerate nor to overestimate the effects of funding cuts.

"We said last spring we were in trouble. I'm just not sure everyone grasped the full ramifications of that," he says. "We've always gone on the philosophy that we would try to preserve district programs as long as possible. We've been telling people all along that our funding's been going downhill. We just didn't know how fast it was going to happen."

Jason Franklin, who attended the meetings with Sampson and other corporate leaders, says he found the experience frustrating.

"There were times we felt like saying, 'Why don't you give us an answer? We asked you about this a month ago,'" he says. "The first few meetings were very disappointing. I didn't expect them to give us a million dollars, but I wish they would have at least taken it to their CEOs right away. We don't have that much time left."

Despite the campaign's lack of progress, Jason says he remains optimistic, a little naively perhaps, that Portland business leaders, in the end, will do the right thing.

"We've heard businesses say, 'We're formulating the details right now,'" Jason says. "If by March 14 we don't have a response, I'll be a little upset. But I'm still hoping that businesses will come forward and help out, not only with next year's budget but with a long-term solution to the school-funding problem."

Portland companies are not the only ones that continue to enjoy the robust economy. Local government agencies other than the school district are also thriving.

The City of Portland expects to collect an operating surplus of $32 million in the next two years and is sitting on fund reserves of $114 million, more than one-third the size of its general fund. The school district, by comparison, will start next fall with a fund balance of virtually zero.

Other local governments such as Multnomah County, Metro, Tri-Met and the Port of Portland also have seen their budgets increase steadily for the past five years while the school district's has declined (see "Higher Math," page 23).

One reason for that is the stricter limits Measure 5 places on property taxes for schools ($5 per $1,000 assessed value) as opposed to local governments ($10 per $1,000 assessed value). Property values have climbed so fast that tax rates charged by Portland and Multnomah County haven't reached that $10 limit.

Rising property values don't help schools, because they rely on the state for most of their funding, and the Legislature can reduce state support if property-tax revenues go up.

Government agencies such as Tri-Met that rely on payroll taxes or fees rather than property taxes also have benefited from Portland's strong economy.

Mayor Vera Katz insists that the city won't turn its back on the schools, but most of the financial assistance it proposes to give the district next year is either a continuation of programs the city funded this year or money that won't save teachers' jobs.

The city will continue to fund the Portland School District Police, for example, to the tune of about $1.6 million next year.

But funding for school police won't do anything to prevent the cutting of special-education programs that make the Portland schools so unique or the laying off of hundreds of teachers who have helped give Portland its highest achievement scores in 25 years.

The city is also considering expanding its funding of after-school activities and some school sports through the Portland Parks and Recreation Bureau. Again, a worthwhile cause, but not one that will save the district any money for academic programs or teachers.

Portland lawyer Jim Francesconi, a former vice president of the Portland Organizing Project who is running for City Council, says the city should be doing even more for the schools, including opening homework centers for children.

"Our schools are keeping working families in the city," he says. "The City Council needs to be greater advocates for the schools. Mayor Katz needs to be more visible on this issue."

City Council hopeful Erik Sten says the city ought to give the schools at least $5 million to spend where it's needed most-in the classroom.

"The City Council needs to recognize that schools are the best investment we can make for our economy, jobs and safer communities," says the 28-year-old city aide, who led a march Monday from Lincoln High School to City Hall. "If the schools fail, so will the tax base that created the city's windfall."

Mayor Katz says the city will do what it can, but she's not prepared to take the bold step of funding teachers' salaries directly, even as an emergency measure.

"Ultimately, the state Legislature is responsible for school funding," she says. "I would not support the city picking up some teachers' salaries. If we do that, we would have to take over the schools."

State Rep. Gail Shibley, who is also running for City Council, says the city and the school district are dreaming if they think Salem will give the Portland schools more money merely because they ask for it.

"It's not enough to have relatively closed sessions between local political intelligentsia," Shibley says. "Portland-bashing down in Salem has become almost an Olympic event. The solution has to come from a statewide grass-roots initiative. Some of us have been out working in the mines, and we're not getting a lot of help from local officials."

Whether the answers to Portland's school funding woes come from the Legislature or a statewide ballot initiative, the city's business and government leaders need to take steps to address the school-funding crisis now-not next biennium, but next year.

Experience has shown that no urban school district that begins the long slide toward inadequate funding ever recovers. Once special-education programs are dropped from the budget, more often than not, they never return.

Those special programs and the high test scores that teachers help students achieve are what keep Portland parents and their kids coming back year after year. More than 90 percent of Portland parents enroll their children in the public schools. Compare that to San Francisco (82 percent), Seattle (70 percent) or St. Louis (64 percent).

A strong urban school district is what gives downtown Portland its attractive economic base for business; its vibrant character to support a clean, well-used transit system; and the property-tax base to support well-funded local governments.

But city leaders seem to have lost sight of where their greatest investment lies, where their success begins, in fact, where this city begins - with students like Jason Franklin.

[End]

to the Oregon Services Plundered for Drug War page.

to the Oregon Schools Plundered for Drug War page.

This URL: http://www.pdxnorml.org/leadersh.html