Spending More, Achieving Less Oregon’s Education Challenge

Summary

Oregon’s education spending has increased significantly over the past two decades, but student achievement remains stagnant or in decline. In fact, despite record per-pupil funding of $17,988 in 2022-23, proficiency rates in math, reading, and science remain low, raising concerns about how effectively these resources are being used.

At the same time, public school enrollment has declined while staffing, particularly for administrative roles, has expanded. Additionally, pension costs under the Public Employees Retirement System consume a larger share of school budgets, straining district finances and reducing the funds available for classroom instruction.

This report examines the relationship between education spending and student outcomes, analyzing enrollment trends, expenditure allocations, workforce expansion, and student achievement data. The findings suggest that while Oregon continues to invest heavily in education, these investments have not yielded better results. 

A more strategic, outcome-driven approach to funding and accountability is needed to ensure education dollars directly benefit students.

Key Findings

Oregon’s K-12 public education system continues to receive more funding year after year even though student achievement has remained stagnant or declined. Despite a significant rise in per-pupil spending, growing administrative costs and non-instructional expenditures mean classroom instruction is getting a smaller share of funding.

Oregon’s K-12 enrollment has declined for five consecutive years.

• After peaking at 581,700 students in 2018-19, public school enrollment fell to 547,400 in 2023-24, a drop of more than 34,000 students.
• The largest single-year decline occurred in 2020-21, with more than 20,000 students leaving the public school system. This exodus was largely due to COVID-19 disruptions and a shift toward other education options.
• Enrollment has not rebounded, forcing school districts to consider school closures, budget cuts, and staffing adjustments.

Despite declining student numbers, education funding continues to rise.

• Per-pupil spending reached $17,988 in 2022-23, nearly double the amount spent per student two decades ago.
• Total funding for Oregon’s K-12 system has continued to grow even though fewer students attend public schools.
• The majority of the new funding is going toward retirement benefits and administrative expenditures. Classroom instruction now receives a smaller share of school budgets.

While rising overall, the relative share of spending on on classroom instruction has declined over time.

•  Spending on support services, administration, and pensions has outpaced classroom investments.
•  In 2009-10, 54.8% of per-pupil spending went to instruction; by 2020-21, this share had dropped to 44.6%.[i]
• The most recent data from the Statewide Report Card also suggests Oregon is spending a smaller share of school budgets on classroom instruction, raising concerns about whether education dollars are being effectively allocated to improve student learning.

Oregon’s teacher workforce has grown, but administrative roles have expanded at a faster rate.

 Between 2013 and 2023, the number of teachers increased by 18% while the number of administrators grew by 32.5% and the number of support staff expanded by 59%.

 The share of teachers among total school staff has fallen, dropping from 44.7% in 2013-14 to 38.9% in 2023-24, reflecting a shift toward non-instructional roles.

Administrative salaries have risen faster than teacher salaries, with superintendent pay increasing by 70% over the past decade, compared to a 50% increase for teachers.

Student performance has declined, despite record-high education spending.

•  Oregon once outperformed the national average in 8th-grade reading and math, but by 2024, the state had fallen behind ranking 40 among 50 states and Washington D.C.
•  8th-grade math scores declined from 285 in 2009 to 268 in 2024 while 4th-grade reading scores dropped from 218 to 207 over the same period.
•  The state’s post-pandemic recovery has been weaker than many other states, with persistent learning losses in core subjects.

Oregon must shift its education spending priorities.

• More funding alone has not driven academic improvement, suggesting that spending decisions, not just funding levels, play a crucial role in shaping educational outcomes.
• Aligning investments with evidence-based practices and ensuring stronger accountability in school spending are necessary to improve student performance.

Introduction

Oregon’s public education system faces mounting challenges as student achievement stagnates despite increasing investment. Recent statewide assessments reveal that average proficiency across all grade levels remain low, with only 42.5% of students proficient in English language arts, 31% in math, and 29.3% in science. Meanwhile, education funding has continued to rise, prompting concerns about whether resources are being allocated and used effectively.[ii]

In response to these concerns, Governor Tina Kotek and state lawmakers introduced new accountability measures through House Bill 2009 and Senate Bill 141. These initiatives aim to track student performance more rigorously and improve fiscal responsibility in schools. The legislation includes the addition of two new student success metrics — K-12 regular attendance and 8th-grade math proficiency — that research shows are strong predictors of long-term academic success. Additionally, the state is standardizing interim assessments to better measure student growth and help districts adjust their strategies in real time.

At the same time, the financial sustainability of Oregon’s school system is under duress. One of the largest fiscal challenges is the rising cost of employee retirement benefits within the Public Employees Retirement System. Put simply, retirement benefits are now competing for resources that would otherwise go toward classroom instruction, teacher salaries, and student support services. With enrollment declining and school budgets increasingly constrained, understanding how funds are distributed — and whether they translate into better educational outcomes — is more critical than ever.

This report examines the connection between education funding and student performance in Oregon, analyzing enrollment trends, spending patterns, and key student achievement data. The Common Sense Institute’s goal is to provide a clear, data-driven assessment regarding whether increased investment in education has led to improved student success and to highlight where policy changes may be needed to ensure a more effective and sustainable system.

K-12 Schools Have Seen a Decline in Enrollment

As Figure 1 indicates, Oregon’s K-12 public school system saw steady enrollment growth year after year, reaching a peak of 581,700 in the 2018-19 school year. This trend reversed in recent years, with total student enrollment declining to approximately 545,088 in 2024-25 — a drop of more than 36,000 students.

The largest single-year decline occurred in 2020-21 when enrollment fell by more than 20,000 students. A report by American Institutes for Research (AIR), presented to the House Committee on Education, analyzed the COVID-19 pandemic’s on school enrollment using an interrupted time series analysis. It found a statistically significant enrollment drop due to the pandemic since many families opted for homeschooling, private schools, or charter schools instead of public education.

Figure1

While AIR’s analysis suggests enrollment began stabilizing in 2022-23, it focuses on average school enrollment rather than total K-12 enrollment. Statewide data actually shows total public school enrollment continues to decline. This finding suggests that rather than students returning to the system, some schools may have consolidated or closed, causing a redistribution of students that skews per-school averages. In fact, school districts such as West Linn-Wilsonville and Beaverton are considering school consolidations and closuresin response to falling student numbers, though no final decisions have been made.[iii]

Even though student numbers are falling, Oregon’s teacher workforce is growing, rising from 26,750 teachers in 2013-14 to approximately 31,600 in 2023-24. As Figure 2 shows, this increase has led to a decline in the student-teacher ratio, from 21.2 students per teacher in 2013-14 to 17.3 in 2023-24.

Figure2

While smaller class sizes generally benefit students, the disconnect between falling enrollment and rising staffing levels presents funding challenges, especially as average teacher salaries have also increased significantly over the past decade. Together, higher staffing levels and rising compensation amplify the financial strain on school budgets.

Each of these factors has led to budget headaches for local school districts. 

Portland Public Schools, for example, is projecting a $40 million budget shortfall for the 2025-26 school year, adding to concerns about the long-term sustainability of Oregon’s public education system under the current funding model.[iv] Indeed, since Oregon’s education funding is partially tied to student count, the ongoing enrollment decline highlights the need to assess whether spending is aligned with student needs. 

The next section examines how education funding has changed over time and whether rising investments are being effectively allocated.

Where Oregon Schools Get Their Money

Oregon’s School Funding Model: How Schools Get Their Money

K-12 public education in Oregon is funded through a combination of state income taxes, the Oregon Lottery, local property taxes, and federal funds. Over time, the balance between these sources has shifted, particularly due to state policy changes that reduced the role of local property taxes and increased reliance on state-collected revenue.

Prior to 1990, local property taxes were the primary source of school funding, but the passage of Measure 5 in 1990 placed strict limits on property tax rates, significantly reducing the amount of local revenue available for schools. This shift was reinforced by in 1997 with the passage of Measure 50, which capped the growth of assessed property values, limiting property tax growth even as housing prices rose.[v]

As a result, Oregon moved toward a state-controlled funding model, relying more heavily on state income taxes and the Oregon Lottery to provide resources for schools. Today the State School Fund (SSF) pools these resources and distributes them to school districts based on a weighted funding formula that adjusts for:

•  Students requiring additional resources (e.g., special education, English language learners, students in poverty or foster care).
• District size and rural status, recognizing that smaller and more remote districts often face higher operational costs.

While this model aims to equalize funding across districts, challenges remain. Some districts, particularly those that previously relied on higher local tax revenue, have faced funding gaps. Other districts fill gaps by relying on local option levies and bond measures, leading to continued disparities in school funding across the state. Additionally, because Oregon’s education funding now relies heavily on state income taxes, school budgets are highly sensitive to economic downturns, making long-term planning more difficult for districts.

The Corporate Activity Tax: A Major New Funding Source, but Limited Visibility

In 2019, Oregon lawmakers approved the Corporate Activity Tax (CAT) through the Student Success Act, creating a new revenue stream intended to close longstanding education funding gaps. The CAT is a gross receipts tax on businesses with more than $1 million in annual revenue. It now generates approximately $3 billion per biennium.

The funds are distributed in line with the original legislation: roughly one-third goes to the General Fund to offset income tax reductions included in the Act, while the remaining two-thirds fund new, targeted education programs such as the Student Investment Account and Early Learning initiatives. These programs aim to expand access to preschool, reduce class sizes, improve student mental health, and support historically underserved students.

However, CAT dollars are not integrated into the State School Fund and are not additive to baseline K-12 education funding. As a result, many Oregonians remain confused about why this new tax has not resolved broader school funding challenges. The complexity of the funding streams — combined with limited public visibility — has led to scepticism, especially as districts continue to face budget shortfalls, staff reductions, and possible school closures.

Improving transparency around how CAT dollars are allocated and how those programs impact student outcomes is essential for maintaining public trust and delivering on the tax’s long-term goals.

New State Legislation Impacting School Funding and Oversight

In response to ongoing concerns about education spending and student performance, Oregon lawmakers introduced House Bill 2009 and Senate Bill 141 in 2025, which aim to standardize student performance metrics and improve financial oversight of school spending.

Key components of these bills include:

•  New student success metrics: Schools will now be evaluated on K-12 regular attendance and 8th grade math proficiency in addition to existing measures such as 3rd grade reading proficiency, 9th grade on-track rates, and high school graduation rates.
• Standardized interim assessments: School districts will be required to use uniform measures to track student progress over time, allowing the state to better assess which districts are improving and which are falling behind.
• State-directed interventions for struggling districts: In districts that fail to meet performance benchmarks, the state may require targeted coaching, direct oversight of up to 25% of school funding, and stricter financial planning requirements.
• Administrative streamlining: The Oregon Department of Education will work to reduce unnecessary reporting burdens on school districts and eliminate redundant administrative requirements.

These legislative proposals signal increasing efforts toward more standardized evaluation of school performance and increased financial oversight in order to ensure more generous funding translates to measurable improvements in student outcomes.

Rising Pension Costs and Their Impact on School Budgets

Beyond general school funding, retirement costs have placed increasing pressure on education budgets. The Public Employees Retirement System (PERS), which provides pensions for school employees, has become a major financial burden, requiring schools to allocate a growing share of their budgets to meet pension obligations.

PERS contributions are consuming a growing share of school budgets — in some cases rivaling teacher salary costs:

•  Portland Public Schools allocated 30% of its payroll to PERS costs, nearly double the national average.[1]
• Salem-Keizer School District anticipates 5-7% annual increases in retirement costs, adding to financial strain.[2]
• Statewide, retirement costs have outpaced total education funding growth over the past decade, leading some districts to cut programs or staff to cover pension obligations.[3]

These increasing retirement costs create long-term financial challenges for Oregon’s schools, particularly as enrollment declines. With fewer students leading to declines in student-based funding formula allocations and more money going toward pensions, districts are left struggling to balance budgets while maintaining classroom resources.

The next section will examine how these rising costs translate into spending decisions, including how funds are allocated for teacher salaries, classroom instruction, and administrative costs.

Expenditures: How Education Dollars Are Spent

According to the latest Statewide Report Card, Oregon’s per-pupil spending reached $17,988 in 2022-23. But while education funding has increased, including the share going to instruction, overhead and non-instructional costs have increased even more.

The most detailed expenditure breakdown available from the National Center for Education Statistics(NCES) is for 2019-20, but comparing this data to 5 years ago (2014-15) and 10 years ago (2009-10) provides insight into how spending patterns have evolved. 

As Figure 3 shows, in 2009-10 Oregon spent $11,372 per student, with 54.8% ($6,234) going toward instruction. By 2014-15, per-pupil spending had increased to $11,894, but the share going to instruction had fallen to 51.3% to $6,096 per student. By 2019-20, Oregon’s total per-pupil spending had surged to $17,160 yet only 43.5% ($7,466) was allocated to instruction. 

This decline in the instructional share of spending shows that, while overall funding has increased, the proportion reaching classrooms has shrunk.

Year	Total Spending Per Pupil	Instructional Spending	Instruction Share
2009-10	$11,372	$6,234	54.80%
2014-15	$11,894	$6,096	51.30%
2020-21	$17,913	$7,988	44.59%

Figure 3

While a full breakdown of the latest spending is not yet available, the decade-long trend suggests that a growing portion of education funding continues to be absorbed by administrative costs, support services, and other non-classroom expenses.

As Figure 4 indicates, over the past two decades, operating expenditures per student have more than doubled, rising from $7,494 in 2000-01 to $17,988 in 2022-23. While direct classroom expenditures, activities directly related to student-teacher interaction, including teacher salaries, instructional materials, and classroom activities, have also grown, increasing by 132% over this period, other categories, particularly classroom support and central support,[4] have expanded at a faster rate. Since 2020-21 alone, classroom support spending has risen by 35% compared to a 16% increase in direct classroom expenditures. This finding suggests that while most funding remains concentrated on student services, a growing portion is being directed to non-instructional support functions rather than direct teaching.

Figure 4

Changes in Oregon’s K-12 Workforce and Salaries

Over the past decade, Oregon’s K-12 workforce has expanded significantly, but not evenly across all roles. While the number of teachers has risen, administrative and support staff have increased at a much faster rate. 

For example, between 2013 and 2023 the number of:

• Teachers increased 18%, from 26,750 to 31,601.
• Administrators increased 32.5%, from 1,968 to 2,608.
• Support staff increased 59%, from 18,346 to 29,211.

Figure 5 shows the school staffing composition changes between 2013 and 2023.  

Figure 5

Salary Growth: Faster Increases for Administrators

The share of administrators is not only outpacing growth in the number of teachers. As Figure 6 shows, administrators enjoyed the lion’s share of salary increases over the last decade. Specifically:

• Average teacher salaries increased 31.5%, from $58,630 in 2013-14 to $77,130 in 2023-24.
• Average superintendent salaries increased 40%, from $121,875 to $170,556.
• Average principal salaries increased 31%, from $101,765 to $133,283.

While higher administrator salaries may reflect increased responsibilities and district complexities, the growing gap raises questions about spending priorities — especially as teacher pay struggles to keep pace with inflation and cost-of-living increases.

Figure 6

Student Performance: Stagnation Despite Increased Investment

Despite significant increases in education funding over the past decade, Oregon’s student performance—particularly in reading and math—has not improved accordingly, as shown in Figures 7 and 8. This performance data comes from the National Assessment of Educational Progress (NAEP), the benchmark federal assessment used to measure student achievement across states. This disconnect between funding and outcomes raises important questions about whether current spending strategies are effectively supporting student achievement. 

• Grade 8 Reading: In 2009, Oregon’s average score was 265, slightly above the national average of 262. By 2024, the state’s score had declined to 255, falling below the national average of 257. 
• Grade 4 Reading: Scores decreased from 218 in 2009 to 207 in 2024, with Oregon consistently trailing the national average.

Figure 7

Grade 8 Math: Oregon’s scores peaked at 285 in 2009, but declined to 268 by 2024 while the national average decreased from 282 to 272. 

Grade 4 Math: Scores remained relatively stable around 238 from 2005 to 2015, but dropped to 229 in 2024. The national average did experience a similar decline, falling from 237 to 238 between 2009 and 2024.

The persistent decline in student performance, despite record increases in education funding, signals a fundamental disconnect between investment and outcomes. Simply increasing financial resources has not translated into measurable improvements in student achievement.

Oregon’s consistent underperformance relative to national averages highlights the need for targeted, data-driven interventions. More funding alone does not guarantee better results — strategic, evidence-based investments are necessary to improve instructional quality, support students effectively, and close achievement gaps. Ensuring stronger accountability in education spending is key to making sure that every dollar spent leads to real gains in student learning.

Oregon’s policymakers must reassess how education dollars are allocated in order to ensure that funding prioritizes direct classroom instruction, teacher effectiveness, and proven strategies that drive academic success. Without a shift in spending priorities, Oregon risks continued stagnation in student outcomes despite ever-rising costs.

Figure 8

Bottom Line

Oregon’s education system is at a crossroads. Despite a significant increase in funding, student achievement has remained stagnant, and in many areas, it has declined. The state now spends more than it ever has on K-12 education, with per-pupil expenditures reaching $17,988 in 2022-23. Still, student proficiency rates in math, reading, and science remain persistently low. 

This disconnect raises serious concerns about how education dollars are allocated and whether they are being used effectively to support student success.

Oregon policymakers must determine whether allocating a growing share of education funding toward administrative costs and support services is helping students. While pension obligations are a major and growing cost, they largely stem from past commitments and are far less flexible in the short term. The expansion of school staff, particularly administrators and support personnel, has outpaced the growth in the number of teachers. Additionally, salaries for administrators have risen at a faster rate than salaries for educators. Added to these pressures is the fact that the financial burden of the Public Employees Retirement System has forced districts to allocate more resources toward retirement benefits, diverting funds from programs that directly benefit students.

At the same time, Oregon has struggled to recover from pandemic-era learning losses. Unlike many states that have implemented targeted interventions to help students regain lost ground, Oregon’s students remain behind pre-pandemic achievement levels. Chronic absenteeism, inconsistent academic recovery strategies, and delays in intervention efforts have contributed to the state’s slow progress. 

Without decisive action, these trends threaten to further widen achievement gaps and limit opportunities for Oregon’s students.

To drive meaningful improvements in student outcomes, policymakers must put a greater emphasis on accountability and strategic investment. Simply increasing funding is not enough. Resources must be directed toward initiatives that have a proven impact on student learning, including strengthening classroom instruction, supporting teachers, and ensuring that funds are used efficiently. 

Put simply: Oregon policymakers must rethink how education dollars are spent so the focus is on student outcomes. 

Without a shift in approach, the state is putting students, and their futures, at risk.

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