Contracting budgets test school boards’ values

Published: April 16, 2024

Although the State School Fund has increased over the years, it has fallen significantly as a percentage of the Oregon budget, according to Legislative Fiscal Office data compiled by Beth Graser of the Hillsboro School District. (Graphic courtesy of Beth Graser)

Dropping enrollment and the end of federal emergency pandemic funding is forcing the Hillsboro School District to take a hard look at its staffing and programs. Negotiations with teachers could push finances into a shortfall if the union demands more than the district has budgeted, according to Michelle Morrison, the chief financial officer.

Aliannah Shalikar, a Hillsboro School Board student representative, has confidence district leaders will make good decisions.

"HSD has done so much for me, I trust they will know where to cut," said the Oak Street Campus alternative school senior. "I hope they just don't leave students and parents and everybody who is part of this school in the dark about what is happening. … That is when the mistrust happens."

Students, staff and school leaders from around Oregon say communication and community relationships are key when budget season rolls around. School board budget committees, which mix community members and board members, have begun meeting this month, an opportunity to open the dialogue.

They are facing tight budgets for 2024-25, the likes of which have not been seen since the aftermath of the 2008-09 recession. Districts such as Portland, Salem-Keizer, Medford, Bethel and Silver Falls are already reporting major reductions for the next school year.

Roseburg School Board Chair Rod Cotton tells fellow board members to trust the professionals who prepare the budgets but be in constant communication with the superintendent so there are no surprises.

Every budget decision should be based on the strategic plan the board has created but the board shouldn't be setting the budget line by line, Cotton said.

"We tell new board members, 'We're not looking at the cost of pencils,'" he said. "That's not our job."

District-level budgeting for 2024-25 is uniquely challenging. Persistent declining enrollment is sapping some budgets, program and staff costs dependent on Elementary and Secondary School Emergency Relief Fund money must fold into the general fund budget or be cut, and the State School Fund allotment isn't keeping up with educator salary increases.

The Roseburg School Board and Superintendent Jared Cordon made sufficiently sustainable choices with ESSER funding, which was designed to support schools through the pandemic and its aftermath, so the district is not facing a fiscal cliff this year, according to Cordon. The district won't have to lay off staff but will cut some positions through attrition to better match its enrollment, he said.

All budget decisions incorporate two hard facts: Enrollment determines funding, and staffing is more than 80% of most districts' expenses.

"If we're going to keep our teachers, we have to pay them," Cotton said. "If you don't have a good staff, you're not going to keep your kids."

Cordon said careful budget planning will also allow the district to offer what he hopes are salaries competitive enough to recruit good talent and keep current staff.

"Our school board has been an incredible partner throughout this process, taking the time to learn how school budgets function in relation to state and local funding," Cordon said.

Cotton, who has been a board member for 30 years, says budgeting always must come back to community connections and the strategic plan.

"There is never enough money for public education," he said. "There is always something you want to do but you just have to prioritize."

Regina Sampson, the Baker School District chief financial officer, said the school board's goals focus the budget preparation. In her district, the school board's desire to recruit and retain good teachers led to budget decisions to increase base teacher pay in 2023.

School board members need to listen closely to their community for what they want and their business managers for what they can actually do, Sampson said.

Jackie Olsen, the Oregon Association of School Business Officials executive director, advises new board members to review past budgets to look for funding patterns that reveal a district's goals and its strengths.

Olsen said the uncertainty of school funding from the Legislature every biennium, though, makes it difficult to build future preparation into budgets.

"I can only make projections based on what I actually know," she said. "I can't guess what the Legislature will do."

La Grande Superintendent George Mendoza said it's important for school board members to have a general understanding of the national and state economies and the local effects.

Mendoza said board members also need to know how a district can use grants and other special funds to supplement the state funding.

Mendoza called school board members the "guardians" of putting budget resources to district goals while also ensuring staff are treated fairly.

Beth Graser, the Hillsboro School District communications officer, helps prepare data-heavy budget presentations for school board meetings.

She said one of the goals is to be clear about how the money is being spent and what is having the most impact. Graser also keeps one eye on supporting legislative funding advocacy, a crucial part of school board members' role.

The labor struggles related to teacher pay this school year at Portland and Salem-Keizer public schools prompted Graser to delve more deeply into Oregon education funding.

Her research shows that education funding, as a percentage of total state spending, has dropped from nearly 45% of the state budget in 2003 to a little more than 30% last biennium, even as schools are increasingly told to provide students with additional learning opportunities while supporting their mental and physical health.

Hadley Brathapan, a Hillsboro School Board student representative, said students need the financial information he is learning in meetings presented in their schools.

"School is a second home to me," said the Hillsboro High junior. "One should know what is going on in their home."

David Williams, senior vice president of public finance for Piper Sandler & Co., said board members, especially new ones, should look at how their budget has grown and changed over the years. Those changes can help identify what matters to a community.

"The budget is a reflection of the values of a district," said Williams, who previously worked for the Northwest Regional Education Service District and the Beaverton School District. "That is easier to say in an expanding budget than a contraction."

- Jake Arnold, OSBA
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