Wendy Gibson of the Legislative Fiscal Office told the joint committee on public education appropriations that the 2024 Quality Education Model (QEM) does not consistently include corporate activity tax revenue created by the Student Success Act (SSA), and that omission inflates the model's reported funding gap. "Representing it that way I believe to be extremely misleading," Gibson said during the informational presentation.

Gibson described how the Fund for Student Success, established by ORS 327.001, collects CAT proceeds and transfers them into three subaccounts: the Student Investment Account (SIA), the Statewide Education Initiatives Account (SEIA), and the Early Learning Account (ELA). She said the SIA alone represents about $1.1 billion in the 2025'27 biennium, and that the fund has produced roughly $6.6 billion in new investments for K'212 programs since 2019.

Using the QEM methodology'prototype school costs multiplied by enrollment and adjustments for districts and high-cost disabilities'Gibson noted the 2024 QEM lists a total estimated cost of about $25 billion and a calculated state need of roughly $13.5 billion. She said that in the 2024 exhibit, some SSA funding was excluded from the state funding line, which raised the reported gap compared with earlier exhibits. Gibson illustrated the change by comparing the 2022 and 2024 QEM exhibits and said the reported gap increased (for example, a prior reported gap of $557 million rose to $1.87 billion in the later exhibit) after SSA-funded amounts were omitted.

Lisa Geselter of the Legislative Policy Research Office, presenting a co-chairs' nine-point list of opportunities, emphasized that the legislature must still meet the constitutional requirement in Article VIII, section 8 to publish a report on insufficiency. "This is the only immovable object in front of you as you consider options for a path forward," Geselter said, noting that other technical and statutory elements of the QEM can be revised by legislation.

Committee members praised the analytic work but pressed for modernization and clearer treatment of all revenue sources. Several lawmakers emphasized distributional issues across districts and urged models that reflect variation in school size and fixed versus variable costs. "When you're at the bottom, you have nowhere to go but up," one member said in the discussion about long-standing underfunding.

After discussion, Co Chair Ruiz moved to adopt the draft report ("draft revision 2") with an added sentence recording the outcome of the meeting. The committee took roll call and the motion carried. Roll-call answers recorded in the transcript were: Senator Frederick (Yes), Senator Weber (Aye), Representative McIntyre (Yes), Representative McLean (Yes), Coach Harry Wiese (Yes), and Co Chair Solman (Aye). The committee closed the work session and signaled plans for further action.

Why it matters: The committee's discussion highlights a technical but consequential accounting difference in the QEM'whether SSA/CAT revenues and specific grant-in-aid programs are treated as state funding in the model'that affects the headline size of the reported funding gap. That in turn informs legislative debates about budget priorities, distribution formulas and whether to change how the QEM is managed.

Next steps: The co-chairs indicated the committee may introduce a committee bill in January to pursue reforms described in the presentation and the co-chairs' nine-point plan. The adopted committee report will be part of that work.