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Preschool For All update: county presents two financing scenarios and warns of modeling sensitivity
Summary
County budget staff presented updated Preschool For All (PFA) revenue analysis, showing a baseline that assumes 11,200 seats (fund balance dips in the early 2030s) and an alternative 8,500‑seat scenario with a delayed tax increase; staff cautioned small assumption changes materially alter long‑range outcomes.
Jeff Renfro (budget office) presented a focused update on the Preschool For All (PFA) financial model, concentrating on revenue assumptions and scenario analysis derived from state tax‑return data. He reminded the board that the PFA tax applies to Multnomah County taxable income above specified thresholds and that the model assumes a scheduled 0.8 percentage‑point tax increase on Jan. 1, 2027.
Renfro said the county’s analysis uses state returns and noted a roughly 2,000‑filer decline in one year of the data set, but he cautioned that late filing and data updates historically change totals and that subsequent updates could show growth once late filers are included. He stressed capital gains and Schedule E (pass‑through/rental) income matter more for higher earners, while wages drive most of the tax base for lower tiers.
Modeling scenarios: staff presented two principal scenarios. The baseline assumes 11,200 seats at universality and the 0.8% tax increase in 2027; under that scenario the projected dedicated fund balance dips below zero in fiscal year 2033 in the office’s baseline projection. An alternative scenario using the TAG baseline assumes 8,500 seats and delays the 0.8% tax increase until Jan. 1, 2029; that scenario shows a shallower drawdown and a fund balance bottom above $200 million before recovery.
Board reaction: several commissioners urged clearer public communication about which baseline is being shown. Commissioner Brim Edwards said continuing to use the earlier 11,200 baseline in public slides while new TAG numbers exist “somewhat harms the county’s credibility” and pushed staff to more clearly label slides; staff and the chair said they will present a fuller TAG/PAG report next month and that FY27 budget choices would not be materially affected by the population assumption.
Why it matters: the modeling shows the program’s long‑run fiscal profile is highly sensitive to population, participation rates and the timing of the tax increase. Staff emphasized the county will receive a more detailed public presentation and the TAG/PAG findings in April and that assumptions will be updated prior to final decisions affecting FY28 and beyond.
