The news that Preschool for All may only need to fund about 7,600 seats to reach universality means the program’s $610 million stockpile could grow to $2 billion over the next two decades, economists told the program’s advisers this month. That’s raising questions about whether a planned increase to the tax rate is as necessary as previously touted.
The backdrop to that question: Multnomah County’s universal preschool initiative has a volatile revenue stream. That’s because it’s funded by a marginal tax of 1.5% on incomes over $125,000 for single filers or $200,000 for joint filers, and an additional 1.5% on incomes over $250,000 for single filers or $400,000 for joint filers. Those high incomes tend to be erratic. So even as the program sits on a $610 million nest egg, county officials have fretted about how to keep the program financially stable enough to withstand future economic shocks.
On Dec. 10, the program’s seven-member technical advisory group, or TAG, learned the county has been vastly overprojecting the number of 3- and 4-year-olds who would participate in the program. That’s further complicated the TAG’s already messy job of making recommendations to ensure the program’s revenue remains sustainable. The group currently defines an economic scenario as sustainable if it meets two criteria: The fund balance in year 10 must be above zero, and cumulative revenues must exceed expenses between years 11 and 20…