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Oregon Could Close Prisons To Help Save School Funding During Pandemic

Special housing cells at an Oregon Department of Corrections prison.
Special housing cells at an Oregon Department of Corrections prison.

A proposal to close a major gap in the state's budget would maintain school funding, but close two state prisons.

Two Oregon prisons are on the chopping block, as state lawmakers wrestle with how to close a yawning budget gap spurred by the coronavirus pandemic.

In proposed cuts revealed Thursday, the state’s top budget writers float closing the Shutter Creek Correctional Institution and the Warner Creek Correctional Facility, prisons that can hold a combined 795 inmates.

At the same time, lawmakers have prioritized protecting the $9 billion state school fund, which pays for K-12 education in the state. Lawmakers also hope to keep intact money for early learning and statewide initiatives slated to be funded by a new sales tax on businesses, and maintaining funding for universities and community colleges, according to Rep. Dan Rayfield, D-Corvallis, a co-chair of the Legislature’s budget writing committee.

In addition to those priorities, lawmakers hope to protect state funds for housing and Medicaid, in order to prevent outcomes that could elongate a recession in Oregon.

“We think that this next year is going to be extremely critical in terms of providing services for vulnerable Oregonians,” Rayfield said. “We were leery about making cuts [to those things], which caused us to look at other cuts.”

In a 13-page framework, the budget co-chairs — Rayfield, along with state Sens. Elizabeth Steiner Hayward and Betsy Johnson — stress they worked to "protect essential investments in public education, health care, child welfare, housing, economic development, and other critical areas during this unprecedented public health and economic crisis."

Among those "other critical areas," the proposal maintains funding for Oregon State Police troopers and fighting wildfires.

"There were more aggressive cuts we could have taken, and I think eventually we may need to take," said Steiner Hayward, D-Portland. "But for now I think we did a pretty good job of finding savings that were primarily administrative." 

While not a final product, the framework includes a mix of nearly $400 million in cuts and administrative savings, pulling another $400 million from a state reserve fund for schools, and tapping a series of resource adjustments that allow the state to close a nearly $1.1 billion budget gap.

Those numbers could look far different if Congress passes another aid package to help states struggling with COVID-19, something the governor and other state leaders have called for repeatedly. Oregon already received $1.4 billion from the $2 trillion CARES Act passed earlier this year.

It was unclear Thursday how many layoffs would be involved as a result of cuts. Beyond the proposed prison closures, the proposal also contemplates reductions at the state's Bureau of Labor and Industries and the Oregon State Hospital. 

Stacy Chamberlain, the executive director of the American Federation of State, County and Municipal Employees Council 75, which represents some of the state’s corrections workers, said Thursday afternoon her members had not been consulted about the prison closures. 

"We're frankly a little but surprised that this is coming," Chamberlain said, noting that prison guards are on the front lines as COVID-19 threatens to infect inmate populations.  "We have not been engaged in this conversation of where these cuts should be coming from."

The Oregon Department of Corrections did not respond to questions about how it would handle the closures, if they come to pass. 

The proposed prison closures would be staggered. Shutter Creek, a 302-bed facility in North Bend, would close quickly under the plan. Warner Creek, a 492-bed facility in Lakeview, would close during the budget cycle that runs from 2021-23. Despite the closures, the budget framework contains funding for the current prison population.

Cuts to agencies within the human services realm represent the largest portion of the budget realignment, with more than $180 million in reduced spending. 

More than $80 million of that comes in the form of holding positions vacant, reducing services and supplies spending, restricting travel and actuarial adjustments. But lawmakers have also proposed eliminating some services at the Oregon State Hospital, which would include laying off 22 "non-direct care staff." The details of those changes are not laid out in the framework.

Despite sustained funding in the state's primary school fund, around $150 million less will be available to school districts around the state in the form of grants created by the Student Success Act, which established a new tax on businesses to bolster education funding. The proposal also reduces funding for programs that help students pay for college, obtain their GED, and attend outdoor schools programs.

Lawmakers have been preparing for months to wrestle with the severe downturn in revenues brought on by the COVID-19 pandemic. In May, state economists predicted that a hit to income taxes, lottery revenue and business sales could result in Oregon taking in $2.7 billion less than expected for the two year budget cycle that ends in June 2021.

Not all of that money represents a budget hole. Prior to the downturn, the state had been anticipating bringing in more than $1 billion than it planned to spend, money that helps paper over the revenue hit the state expects.

Oregon also has record reserves on hand to grapple with tough times — roughly $1.75 billion by the end of the budget cycle. The budget committee has been reticent to tap those funds too deeply, as it anticipates funding difficulties for years to come. State economists say the state could take in $4.4 billion less in the next two-year budget than what was expected before the virus.

Also unknown is whether Oregon and other states will see a new influx of federal aid, a possibility Gov. Kate Brown has held out hope for while declining to convene lawmakers to address the budget. The possibility of more money from Congress has seemed increasingly likelyin recent days, as the virus spikes in states around the country.

"The scale of this crisis highlights the critical need for further federal action to support state investments in essential services," a statement from House Speaker Tina Kotek's office said.

Lawmakers plan to hold a series of three hearings next week to hear testimony on the proposed budget package.

Dirk VanderHart is JPR's Salem correspondent reporting from the Oregon State Capitol. His reporting is funded through a collaboration among public radio stations in Oregon and Washington that includes JPR.