Preschool for All Had $485 Million Left in Its Coffers After Fiscal Year 2024

Multnomah County’s Preschool for All, which seeks to guarantee tuition-free child care to every preschooler in the county by 2030, reported another year of dramatically underspending its budget.

The county’s annual comprehensive financial report for the fiscal year ending June 30, 2024, disclosed that Preschool for All once again collected more and spent less than it had planned.

Because this has been a pattern with the program since 2022, when it started collecting the tax, it has left county officials with wider gaps each year between projected expenditures and what they’ve ultimately spent on the program.

While the county forecasted ending the latest fiscal year with $260 million left unspent for Preschool for All, it instead ended with $485.4 million, about $225.4 million more than expected.

The report was released in November, but hasn’t been reported by any media outlet until now. Bob Weinstein, who ran unsuccessfully for Portland City Council last year, brought the numbers to WW’s attention. He says there has been a lack of public discussion around the Preschool for All balance, even as the county’s been claiming funding gaps in both its general fund and homeless programs.

“With this staggering accumulation of funds—which continues to increase—for a consistently underspent program, is this truly a budget crisis or merely a lack of political will and transparency?” Weinstein says.

To be sure, the county has long projected that anticipated revenue would outpace anticipated expenditures in the program’s early years. The program’s architects also said they would need to raise the tax, currently a 1.5% marginal income tax on single filers who make above $125,000, to 2.3% come 2027 or else suffer dramatic budget deficits.

At a Nov. 12, 2024, meeting, Multnomah County senior policy adviser Hayden Miler said that without a 0.8% increase on high-income filers, the program’s fund balance would dip below zero between fiscal years 2032 and 2033 and never recover, falling to $750 million in the red by 2041.

“From the beginning of the program, we knew we would collect more revenue than needed in the beginning and then face a structural deficit,” Miller said at that meeting. “The money collected in the early years is placed in a dedicated savings account for the approximate nine-year period when it is expected that costs will surpass the amount of revenue received.”

But it’s also the case that the gap between revenue and spending has repeatedly been larger than officials anticipated. Part of the reason? Preschool for All is collecting more money than expected.

A table in the financial report shows the county originally expected to collect $152.6 million in total revenue from taxes and interest in fiscal year 2024. It ended up collecting $201.4 million—$48 million more than expected.

Preschool for All raked in slightly less money last fiscal year than it did the previous year, as WW has reported (in the report, the county attributes this to a decline in capital gains income). But the program was still left with a greater fund balance at the end of the fiscal year than it started with at the beginning. That wasn’t helped by underspending in the previous fiscal year, either. While the county initially projected it would start this fiscal year with $210 million, it actually started with $344 million. (According to county spokesman Ryan Yambra, the county developed its 2024 budget over the spring of 2023.)

Most of the variance in budget seems to come from not spending budgeted human services. The county spent $52.4 million on them—$26.6 million less than it anticipated. Yambra says human services account for most of Preschool for All’s costs, including preschool seats, workforce development, and facilities funds.

While Preschool for All is still not hitting its spending targets, it can point to places where the money is flowing. It spent $60 million last year, almost double what it spent the previous year.

The county attributes that growth to seats it’s added to Preschool for All: 1,700 seats reported in June 2024 has since grown to 2,225 this academic year. Spending will likely increase in the upcoming year as well; the county reported April 7 that it’s expanding the program to 3,800 seats, with the ultimate goal of 11,000 by 2030.

Yambra says the county’s fiscal year 2025 program budget is much more accurate. The Preschool & Early Learning Division has spent 80% of its budget so far this year, compared with 49% at this time in 2024, he says. “Preschool for All is committed to the efficient use of funds, and the massive decrease in underspending rate reflects this commitment.”

Anthony Effinger contributed reporting to this story.