Over the next 8 years, Oregon's revenues will grow by 40%

But costs will grow even faster

How can we fix the budget and support Oregon students and families?

Oregon faces a structural budget deficit beginning in the 2017-19 budget cycle that extends through the following three budget cycles if action is not taken. We can solve both the current deficit and place the state on a sustainable 10-year trajectory by taking a balanced approach that includes expense reforms that address the budget’s biggest cost-drivers and cost-centers and new investments and revenues to fund them. In this exercise, you will be taken through this balanced framework, being prompted to review and select options to grow the economy, contain costs, make critical investments and raise new revenues. At the end, you will have solved the current budget deficit while addressing the state’s forecasted chronic deficits.

How Can We Fix the Budget?

Use the options below to explore the different ways to solving the state budget crisis.

Revenues/Expenditures  
2017-19 Deficit
$ -1,385

Projected Long Term Deficit  
Next 8 Years
$ -7,584
  • 1 Step 1 Grow the Economy
  • 2 Step 2 Manage Costs
  • 3 Step 3 Make Investments
  • 4 Step 4 Add New Revenue
  • 5 Finish

Background

Strong economic growth has delivered billions of dollars for the state budget in the past few years. Because of a growing economy Oregon’s state budget has grown by nearly 40% since 2011. However, the state economist predicts that growth will begin to slow down soon. It is important that policymakers stay focused on actions they can take (and not take) to help keep Oregon’s economy humming. Small changes in growth make a big difference for the long-term budget.
Revenue   2%
$ 205 million
8 year total: $1,784 million

Background

Many factors effecting economic growth are out of the control of state government, but there are things that the state can do to help including: • Passing a transportation investment package that helps people and goods can move efficiently throughout the state. • Doing no harm by avoiding new red tape on businesses • Pursuing research and development opportunities with Oregon’s universities and community colleges to help create the next generation of Oregon companies and products

Background

Over the past four years, almost 400,000 Oregonians gained health insurance coverage through the Oregon Health Plan, paid for by the federal government under the Affordable Care Act (Obamacare). Using an innovative delivery model in CCOs, Oregon has kept per enrollee cost growth to just 3.4% per year, much slower than the growth of overall healthcare costs. As a result, Oregon’s Medicaid funding challenge is primarily driven by a reduction in federal support for the state’s program. Oregon has several available options to fund Medicaid that does not include taking coverage away from people: reducing administrative costs and improving program efficiency while embracing options to maximize federal dollars to help pay for the program.
Expenditure   -0%
$ -86 million
8 year total: -$365 million

Background

Supported by information provided by the Oregon Health Authority, we believe a savings of $90 million could be achieved without impacting the quality of health care provided through the program. Components include: admin reductions; holding hospital and physician fee for service rates flat; additional drug rebate money; initiatives to improve program integrity; small reductions in other OHA programs; enforcement of mental health preferred drug list.
Expenditure   -1%
$ -315 million
8 year total: -$1,062 million

Background

Oregon’s hospitals pay a unique assessment on their revenues called the “hospital assessment” that is an effective avenue to raise funds to support Medicaid without shifting costs to the state’s commercial insurers. We can maximize the impact of this assessment by dedicating any available carry-over balance from the 2015-17 biennium, as well as broadening the base of this innovative tax to include all hospitals in the state. Lastly, we can offset about $150 million by enabling OHSU to receive an intergovernmental transfer with the state government.

Background

Oregon’s Medicaid programming in Long Term Care (LTC) and Intellectual and Developmental Disabilities (IDD) is essential for the Oregonians living with physical and developmental disabilities, providing critical supports that improve the well-being and independence of these individuals. At the same time, these programs are expected to grow nearly twice as fast as revenues over the next 8 years. We explore how much the state could save if biennial growth rates were capped at 10% or 12% -- rates still faster than overall revenue growth – based on a report completed at the direction of the legislature. However the savings are achieved, we are grounded firmly in the principle that no deserving clients lose eligibility.
Expenditure   -2%
$ -284 million
8 year total: -$2,027 million

Background

Lewin Group identified options to slow program growth include: implementing a more robust method for managing per-member cost growth, increasing participant cost-sharing, revisiting service allocation determinations by level of acuity or by reducing the rate of increase in provider payments.
Expenditure   -2%
$ -259 million
8 year total: -$1,720 million

Background

Lewin Group identified options to slow program growth include: implementing a more robust method for managing per-member cost growth, increasing participant cost-sharing, revisiting service allocation determinations by level of acuity or by reducing the rate of increase in provider payments.

Background

At roughly 50% of the budget (including state expenditures for schools), employee compensation is the largest single expenditure in the state budget. And total compensation per state government employee —including salaries, retirement and health benefits—is higher in Oregon than in other states and the private sector because of significantly higher premiums paid on employee health benefits and pensions.
Expenditure   -3%
$ -688 million
8 year total: -$2,835 million

Background

According to the most recent salary and benefit report from the Oregon Department of Administrative Services, and federal data from the U.S. Department of Education, Oregon state government employees earn 109% of the total compensation of similar employees in in the western states (Washington, California, Idaho and Nevada).

Background

Oregon has significantly higher costs for government employee health insurance than in other states or in the private sector. On average, health insurance premiums per-employee for state and school districts workers are higher here than in Washington (38% and 30% respectively) and California (9% and 24% respectively). Oregon state employees also contribute less to their premiums than employees in the same states (between 1-5% vs 15% and 23% in Washington and California.
Expenditure   -2%
$ -123 million
8 year total: -$1,604 million

Background

To bring state and school district employer costs closer in line with other states across the country, Oregon could freeze current employer contributions per employee at their current level through the 2023-25 biennium to bring state and school district employer costs closer in line with other states across the country. This could be achieved in a number of ways, including re-formulating benefit packages offered.
Expenditure   -1%
$ -195 million
8 year total: -$819 million

Background

The Oregon Department of Administrative Services Salary and Benefit study finds that state employer costs are 28% more expensive than private sector employer costs. Legislators could draw state employer costs equal to the private sector average by by reformulating benefit packages in the near term, and establishing a defined contribution system in the long-term.
Expenditure   -1%
$ -201 million
8 year total: -$846 million

Background

The Oregon Department of Administrative Services Salary and Benefit study finds that state employer costs are 38% more expensive than the average of employer costs across Washington, California, Idaho and Nevada. The state could draw costs in Oregon equal to the average of these states by reformulating benefits in the near term and establishing a defined contribution system in the long-term.
Expenditure   -3%
$ -727 million
8 year total: -$3,328 million

Background

Employer costs are significantly more expensive in Oregon than across the country for both state agencies and school districts. The state could draw costs in Oregon equal to the average of these states by reformulating benefits in the near term and establishing a defined contribution system in the long-term.

Background

State agency, school district and other public employers will be on the hook for billions of dollars as PERS rates climb to 32.5% by 2025 to pay down the unfunded liability. The result of these increases could be cuts to vital programing for Oregonians including teachers and school days, firefighters and police officers. Court permissible options are available to legislators, including benefit modifications for existing employees on a go-forward basis. Employees can also be asked to contribute to pay for their pensions. (see here [Jeremy please add] for more on the PERS problem and the range of solutions available) (see here for more on the PERS problem, the range of court-approved options available and how much that can save the state and school districts)
Expenditure   -2%
$ -369 million
8 year total: -$1,628 million

Background

For the remainder of their career with an Oregon public employer, employees earning the most generous PERS benefits (Tier 1 and 2, those hired before 2003) would accrue future benefits at a rate more similar to Tier 3 employees (those hired after 2003), and all employees would be asked to contribute something to their pensions, as is required of employees in nearly every other state.
Expenditure   -2%
$ -553 million
8 year total: -$2,442 million

Background

For the remainder of their career with an Oregon public employer, employees earning the most generous PERS benefits (Tier 1 and 2, those hired before 2003) would accrue future benefits at a rate more similar to Tier 3 employees (those hired after 2003), and all employees would be asked to contribute something to their pensions, as is required of employees in nearly every other state.

Background

Relative to other developed countries across the world, however, Oregon’s incarceration rate, like the United States, is without peer even while academic research indicates that long-term, mass incarceration for certain crimes is not an effective strategy to achieve public safety. Furthermore, while Oregon’s prison population is middle of the road, Oregon state and local corrections spending is the 10th highest in the country.
Expenditure   -0%
$ -50 million
8 year total: -$225 million

Background

This policy has three big parts (and we encourage you to read more here): the expansion of “smart re-entry” programs; the expansion of the “family sentencing alternative program”; and sentencing reforms for nonviolent offenders. Taken together, the bills are united by the theme of deploying evidence-based policies or programs to improve public safety while reducing recidivism, and thereby prison costs.

Background

Oregon’s schools are failing its children. Oregon’s high school graduation rate is amongst the worst in the country. We call for an outcome-focused investment that places resources in areas that will help improve the state’s dismal graduation rate – like funding voter approved Ballot Measure 98 – and ensure that more of Oregon’s youth successfully completes high school on their way to productive employment or post-secondary enrollment.
Expenditure   1%
$ 293 million
8 year total: $1,285 million

Background

This investment would fund Ballot Measure 98 at a cost of roughly $300m per year.

Background

With the connection between post-secondary completions and upward mobility having never been stronger, Oregon needs to do a better job ensuring that individuals can afford and access the education they want and need, and ensuring that those enrolled realize the promise of post-secondary education and complete their degree. We advocate a $200 million investment spread across Oregon’s public universities and community colleges – helping to improve access and completions in each.
Expenditure   1%
$ 200 million
8 year total: $903 million

Background

this $200 million investment would help buy-down tuition increases to Oregon’s public universities – thereby increasing access for the less affluent -- and increasing access to and completion in Oregon’s community colleges (? Not sure if this is an accurate description re: community colleges).

Background

Reading proficiency by the third grade is an important indicator of later success for a child. Kids that are proficient readers by third grade are more likely to achieve a slew of outcomes, like graduate high school.
Expenditure   1%
$ 200 million
8 year total: $903 million

Background

This investment would fund programming to improve literacy in early ages, thereby setting up our kids for further life success.

Background

There are various options available to raise revenue from members of the health care community. However, it is important to note that many of these options carry the risk of being passed on to employers and folks on the individual market in the form of larger premiums.
Revenue   0%
$ 90 million
8 year total: $406 million

Background

While providing critical care to Oregonians of all stripes, hospitals have unquestionably benefited since the Medicaid expansion as charity care has fallen and revenues have increased. This proposal would tax net patient revenue of DRG hospitals at a rate of 0.7%, raising $X revenue. It is important to note that this tax would almost certainly be passed on to insurers and thus employers.
Revenue   1%
$ 195 million
8 year total: $881 million

Background

Oregon can raise revenue by taxing premiums – and thus revenue – charged by insurers. While revenue raised can approach $150 million, it also is likely that insurers will, where possible, pass this tax on to those they provide coverage to: small businesses and individuals in the individual market. This tax would include insurers and CCOs.

Background

Oregon corporations currently pay X% of their income in taxes. We support raising the corporate rate if it does not result in double taxation for Oregon employers.
Revenue   1%
$ 150 million
8 year total: $677 million

Background

Revenue   1%
$ 225 million
8 year total: $1,016 million

Background

Revenue   1%
$ 300 million
8 year total: $1,355 million

Background

Revenue   NaN
$ NaN million
8 year total: NaN million

Background

Background

This tax cut was originally passed to spur economic development, but...
Revenue   0%
$ 70 million
8 year total: $317 million

Background

Background

The deduction for early payment of property tax bills was originally intended to encourage early payment of property tax bills when interest rates were high and folks had little incentive to pay early. This is no longer an issue however, and eliminating the deduction could raise more than $100 million for schools (much of which is sourced from businesses).
Revenue   1%
$ 118 million
8 year total: $533 million

Background

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