Preschool fund balance raises questions about oversight, priorities

Program's total blows past $600 million, far more than the county can spend

Multnomah County’s just-released FY 2025 Financial Report confirms what some of us have been warning about for more than a year: The Preschool for All (PFA) fund balance continues to swell far beyond what the county can reasonably spend.

The balance now stands at nearly $610 million—a jump of roughly $125 million in a single year from FY 2024’s total of about $485 million. That represents an increase of more than 25% in a program that was sold to voters as urgently needing new revenue to provide universal preschool.

When I first learned several years ago that the fund balance was growing in leaps and bounds—outpacing both spending and program capacity—I raised concerns. The latest financials show those early warnings were not only warranted, but understated.

Revenues rises, spending falls

The latest figures reveal a significant disconnect between projections and reality. Revenues came in $60 million—or 37%—higher than budgeted, while expenses fell $23 million—or 20%—short of projections. This isn’t an anomaly; it’s a recurring theme that has characterized the Preschool for All program’s financial reports year after year.

That dynamic—large revenue surpluses combined with chronic underspending—has produced what is now one of the largest—if not the largest—dedicated fund balances in the county’s entire financial structure.

General Fund faces cuts

This year, county leaders announced a projected $10.5 million general fund shortfall for FY 2027—including potential cuts to frontline services. Yet the PFA fund balance is growing so rapidly that its annual interest earnings alone is twice that gap. The fund balance’s year-over-year increase alone is more than 10 times that projected deficit!

PFA was intended to be a transformative education investment—not a county-run sovereign wealth fund. But under current policy, that’s effectively what it has become.

Time for a hard talk

It is increasingly difficult to justify maintaining a massive, ever-expanding surplus while other core county services struggle. The county has multiple options that could preserve the credibility of the program while ensuring sustainable budgeting:

• Temporarily redirect a small portion of the surplus to stabilize critical county services.

• Index the PFA tax to inflation, preventing runaway revenue growth and keeping the tax burden aligned with what voters were told in 2020.

• Align expenditure targets with realistic program capacity, instead of allowing structurally baked-in underspending to accumulate.

This isn’t an argument against preschool nor against the goals of PFA. It is an argument for responsible stewardship, transparency and ensuring the county’s tax structure reflects real-world needs rather than unchecked revenue accumulation.

The fund is now more than $600 million. It is growing faster than the county can spend it. And the county is simultaneously projecting service cuts elsewhere.

If this isn’t the moment to reassess the PFA tax structure and spending priorities, what is?

Bob Weinstein is a former mayor of Ketchikan, Alaska, and a retired teacher. He also ran for Portland City Council, District 4 in 2024.