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Much of the taxes and other revenue that come to the state is actually sent out directly to another entity to spend. Some of this money goes directly to the other entity and is commonly referred to as "shared revenues." Shared revenues are dollars that are collected by the state, but a portion is sent directly to local governments for use in providing services in their communities. For example, 2.5 percent of video lottery proceeds are transferred to counties. Each individual community determines how best to allocate shared revenues to meet its unique needs.
The remaining revenue not spent directly by the state constitutes "special payments." Special payments go through the traditional budget process, during which the Legislature authorizes a state agency to send that money to another entity. The other entity actually employs the staff and makes decisions on how the money is spent within general conditions. All of these dollars are used to provide services and programs to Oregonians.
Most of the General Fund – the state’s discretionary dollars – is special payments and is "passed through" a state agency, but the state agency does not keep any of the money. The largest single special payment is the transfer of $5 billion to 198 school districts and 20 Education Service Districts for operating elementary and high schools throughout Oregon. This is commonly referred to as the State School Fund. Other large special payments include those to providers under the Oregon Health Plan and to local cities and counties for mental health services and community corrections. The chart below identifies how much of the state General Funds and lottery funds are sent out in the form of a special payment and the largest recipients of those funds.
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