BY RACHEL CHEESEMAN

SALEM - The allotment reduction strategies of Oregon’s state agencies were made available on the Department of Administrative Services website Wednesday.

The Department of Corrections reduced its budget by $52 million and will close three correctional facilities – the Mill Creek Correctional Facility and the Santiam Correctional Institution in Salem and the Powder River Correctional Facility in Baker City. In addition to layoffs, the cuts will result in the release of 966 minimum-custody inmates and the elimination of “a substantial component of the Alternative Incarceration Program.”

Nathan Allen, the Planning and Budget Administrator for the Department of Corrections, said the inmates to be released would pose very little to no risk to public safety.

“These are folks who are, in all reality, not that far from their normal release date,” he said, adding that they would go through all of the standard post-release processes.

Allen said the department began setting aside money early in the biennium, so some of those were included in the savings. Other cuts were made by restricting administrative travel and training. Allen said they wanted to preserve programs like vocational programs and drug and alcohol programs as much as possible.

“We consciously did not make reductions in those programs,” Allen said. “It’s very difficult to restore those at a later date, so we tried to preserve that infrastructure in this process.”

The Department of Education, which was asked to reduce its budget by $259 million, reduced the State School Fund allotment by about $238 million. Due to Oregon’s system of local control, the department does not have information as to how different school districts will manage this reduction in funds. That information will be made available later.

Suzanne Smith, Communications Manager for the Department of Education, said the formula for reductions is based on enrollment, so larger school districts will have larger cuts. The Portland School District, for example, will have to reduce its budget by about $19 million, while the Tillamook School District will have to reduce its budget by $821,000.

Matt Shelby, spokesperson for Portland Public Schools, said a variety of options were on the table from tapping reserve funds to layoffs and reducing the number of instructional days.

“I think when you’re talking almost $19 million, that’s a big hole to fill,” he said. “You don’t get there by simply belt-tightening at the central office. It’s going to have to take some pretty significant measures.”

Shelby also said that the fundraising activity of different schools varied widely, with more affluent districts tending to raise more money. However, one-third of the money raised went into an equity fund that could be tapped by other schools with less fundraising capacity.

Additional cuts in the Department of Education included $5 million in Pre-Kindergarten grants. The funds for the Oregon School for the Deaf were reduced by $500,000. The Blind and Visually Impaired student fund was reduced by $138,000.

To cut costs in the Department of Human Services by the necessary $158 million, various salary freezes were implemented. Benefits were increased five percent instead of nine for many employees. In addition, the Department of Human Services no longer will cover healthcare-acquired infections.

The Oregon State Hospital’s budget has been reduced by $4.8 million, and the Community Mental Health Program was reduced by $4.9 million. The department plans to limit the employment-related daycare program to save $17 million. The allotment reduction detail says that this reduces the number of families with access to the program by 4,685.

The Department of Human Services could not be reached by deadline.

BY RACHEL CHEESEMAN

SALEM - The $562 million dollar budget shortfall was a heavy blow dealt to agencies across the state, but it was not the last.

An accounting error resulted in an overestimation of projected revenue from tobacco taxes and resulted in an additional $15 million shortfall in the general fund, explained Mazen Malik, a senior economist for the legislative revenue office, raising the final number to $577 million.

Tobacco taxes were calculated to bring in 22 percent of sales from tobacco products, when they actually bring in only 22 cents per pack of cigarettes. This error changed the revenue from tobacco taxes from $480.9 million to $396.4 million, a difference of about $84.5 million and an overestimation of about 21 percent. In addition to the general fund, revenue from tobacco taxes goes toward smoking cessation programs and advertisements, public transportation and the Oregon Health Plan.

Economists were quick to catch the error. Agencies were notified the day after the original forecast, Wednesday, May 27.

Patrick Cooney of the Oregon Department of Transportation said ODOT receives only 2 cents per pack in tobacco tax revenues, so the effect of the miscalculation was “very minimal.”

This shortfall will be added to the current deficit, and agencies statewide will have to factor this in as they attempt to rebalance their budgets.

While this will increase across-the-board budget cuts needed to balance the budget by only two-tenths of a percent, from 9.1 to 9.3 percent, it does increase the current budget deficit by 2.6 percent. Certain agencies that rely heavily on general fund money, like the “big three” departments of Education, Human Services and Public Safety, will have to find ways to further trim their budgets.

The Department of Education will have to cut approximately an additional $6.6 million from its budget, after already being asked to cut $252 million. This will result in cutting another $6 million from the money appropriated by the state for kindergarten through twelfth grade education.

The Department of Human Services will have to cut an additional $4 million from their budget, after cutting $158 million.

The Department of State Police will have to cut another $260,000, and the Department of Corrections another $2 million. At $84.46 to house one inmate per day, that translates to the cost of housing 65 inmates for one year.

Jeanine Hohn, communications manager for the Department of Corrections, said that the additional $2 million was a “drop in the bucket” compared to the $52 million they now will have to cut.

“Obviously, the agency is going to have a challenging time making any kind of cuts,” Hohn said. “We will work closely with the governor’s office and legislative leadership to have the least amount of impact on our correctional system as possible, if that is possible. “

Ann Snyder of the Oregon Youth Authority explained that her agency might take one of several steps to reduce spending in the agency by the necessary $11.9 million, originally forecasted at $11.5 million.

“Some of the options would be we hold additional vacancies, we delay program implementation, we reduce services somehow,” said Snyder. “It means an additional $400,000.”