Page 17 - 2019-20 CAFR

In the near-term Oregon’s economy is impacted by COVID-19 and the wildfires that destroyed our communities.

Over the long-term Oregon’s ability to attract and retain skilled, working-age households is one of our
comparative advantages. To the extent the pandemic, wildfires, drought, or protests and clashes of violence
impact this advantage remains to be seen, but they all represent downside risks to the outlook. On the other

hand, should telecommuting and remote work increase because of the pandemic and changing business
practices, Oregon stands to take advantage as migration to Oregon is less dependent on job opportunities. As

of September 2020, the seasonally adjusted unemployment rate is 8.7% for Jackson County and 8.2% for

Josephine County. This is a 4.4% and 3.6% increase, respectively, from the prior year.

Despite the sharp reduction in economic activity, Oregon’s primary revenue instruments have continued to
grow. Collections of Personal Income Taxes and Corporate Taxes both set record highs over the post-shutdown
(March-to-September) period this year. This is due to the positive impact on tax collections associated with

federal aid for businesses. Forgivable loans associated with the Payroll Protection Program, together with even

larger industry bailouts for major corporations, have led to a surge in business tax liability. Another factor

supporting strong tax collections is the fact high-income households have been relatively spared from economic

losses to date. Given widening economic inequality, high-income households have an increasingly

disproportionate impact on aggregate economic indicators like spending and income. This dynamic is even more
pronounced for Oregon’s Personal Income Tax revenues given our relatively progressive rate structure.

However, even though high-income households have fared relatively well to date, the 5% net job losses we have

already seen among high-wage industries are more than large enough to strain tax collections. Due to the

unexpectedly large flow of collections seen over the past year, the General Fund revenue outlook for the 2019-

21 biennium is now no different than it was before the recession hit. If the September 2020 forecast proves

accurate, not only is the General Fund in very good shape for the current biennium, but there will be additional
revenues available to apply to 2021-23. Following the June 2020 revenue forecast, the Oregon Legislature met

in a special session and enacted measures that filled the expected budget hole for 2019-21. As a result, the

additional revenues in the September 2020 forecast are not needed immediately. Instead, an expected General

Fund ending balance of $1.7 billion will be available to apply to the 2021-23 budget period.

The existing Board approved financial policies provide guidance for planning of resources, capital needs and

adequate reserve levels for revenue shortfalls or unforeseen expenditure needs. Budgets are built on the basis

of maintaining the financial stability of the College. Goals set for financial stability enable the College to manage

revenue shortfalls and cash flows, ensuring continued operations and providing for unforeseen contingencies

without impairing service quality. Additional detail regarding next year’s budget and economic factors is

available in the MD&A in the Financial Section of this report.

Long-Term Financial Planning

The College conducts long-range financial planning for five fiscal years forward with the goal of maintaining

financial sustainability and flexibility. The forecast is updated and reviewed for changes in any of the primary

revenue sources, personnel and other operating expenses. The most significant issues expected to impact the

College include COVID-19 the uncertainty of state funding, the unprecedented drop in enrollment levels, PERS
rates and unfunded mandates.

In May 2016, voters of the district approved a $20 million ballot measure for the College to issue general

obligation bonds for the acquisition, construction, renovation and improvement of facilities. The bond sale

provided an additional $3 million in premium proceeds. Passage of the bond levy allows the College to make use

of $14 million in matching capital project funds awarded by the State of Oregon, raising the total amount of

funds available for capital projects to $37 million. The projects completed, underway or planned for the near
future include:
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