Item B: School/Youth Services Funding

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Work Session: School/Youth Services Funding Meeting Date: April 18, 2007 Agenda Item Number: B Department: Library, Recreation and Cultural Services Staff Contact: Renee Grube www.eugene-or.gov Contact Telephone Number: 682-6065 ISSUE STATEMENT The purpose of the work session is to solicit City Council interest in pursuing potential revenue alternatives to support local school districts and out-of-school youth services provided by the City. BACKGROUND City Council Action and Litigation History On November 7, 2000, Eugene voters passed Ballot Measure 20-37, a two-year, $3.5 million local option tax levy to fund youth activities. The levy expired on June 30, 2003. On November 5, 2002, Eugene voters passed Ballot Measure 20-67, a four-year, $0.86/$1,000 of assessed value local option levy expected to raise approximately $8.0 million for youth and school- based services. This levy will expire June 30, 2007. The current levy was challenged in Tax Court in the Urhausen v. City of Eugene case, where the petitioners asserted that the portion of the levy used to fund youth services provided by Eugene and Bethel (93% of levy) school districts should be counted as part of the Measure 5 tax rate limit of $5 per $1,000 of assessed value for schools rather than the general government $10 tax rate limit. On February 16, 2006, the Tax Court agreed with the petitioners that Measure 5 requires that a portion of the levy should be counted toward the $5 limit. On August 31, 2006, the Supreme Court affirmed the Tax Court’s decision that 93% of the proceeds—those dedicated to funding school-based services—should be categorized as school taxes for purposes of Measure 5. This reduced the estimated net amount of the levy in FY07 from $8.5 million to $6.8 million. On June 26, 2006, the council held a work session on the potential of a future youth/school-based services local option levy. Staff recommended not going forward with the renewal of the levy as both school districts had developed alternative strategies to fund programs that were receiving levy funding. This recommendation was also consistent with the discussion of the Budget Committee and the council around the library local option levy. As a result, the council decided not to renew the youth/school- based services levy. At the state level, the Governor’s proposed budget includes $6.06 billion for K-12 schools, which is a 14.2% increase over 2005-07 funding levels. Each of the two local school districts has a different budget situation: L:\CMO\2007 Council Agendas\M070418\S070418B.doc