PORTLAND STATE'S LAST SUMMER GRADUATION

Oregon voters defeated a measure that sought to allow the state to borrow for college financial aid.

(Doug Beghtel/The Oregonian/2012)

Oregon voters soundly defeated a measure that would have allowed the state to borrow money to endow a fund for college financial aid.

Measure 86 was championed by Oregon Treasurer Ted Wheeler, who proposed creating the endowment as an out-of-the-box way to help more young Oregonians afford college.

The measure trailed by a 3-to-2 margin with nearly two-thirds of votes counted on Tuesday.

Measure 86 was widely endorsed by business, labor and pro-student groups, and there was no organized opposition to the measure.

Steve Buckstein, of the Cascade Policy Institute, emerged as the measure's most critical opponent and submitted the sole argument against the measure in the Voters' Pamphlet. He said he was not surprised by the voters' decision.

"Having taxpayers go in to debt to fund some college students' cost was not good public policy," he said.

Oregon currently provides only about $250 a year of need-based financial aid per student enrolled in public universities and community colleges. That is 60 percent below the national average.

With the measure's defeat, the Oregon Legislature will be left to fund college financial aid using money from the general fund, not by borrowing money and funding scholarships with the investment proceeds. Oregon's higher education commission has requested the state increase its spending on financial aid by 60 percent, or about $66 million, in the next two year budget.

Wheeler had hoped lawmakers would seed the fund with $100 million, to be repaid by Oregon taxpayers over the next 30 years. A $100 million endowment would generate $5 million a year worth of college scholarships, with investment returns above 5 percent used to grow the endowment, Wheeler has said.

Wheeler, who spent and raised about $90,000 to promote the measure, said it sparked a "vibrant conversation" about higher education that he is committed to continuing even after the defeat.

Measure 86 was endorsed by the Salem Statesman-Journal, the Eugene Register-Guard, the East Oregonian and Willamette Week. The Bend Bulletin and The Oregonian both urged a "no" vote on Measure 86.

-- Betsy Hammond

The Oregonian's Molly Young contributed to this report.