New Portland Public Schools Superintendent Kimberlee Armstrong hands out pens to students at Woodlawn Elementary in northeast Portland, Ore., Aug. 27, 2024. Armstrong began her day by riding the school bus to Woodlawn.
Anna Lueck / OPB
Superintendent Kimberlee Armstrong is proposing a $2 billion budget for the 2025-26 school year. She presented the package at a meeting of the Portland Public Schools governing board Tuesday night.
The budget proposal is based on the assumption that voters will approve the 2025 bond on the May ballot. The $1.83 billion bond would renew the existing tax rate and be used for school building repairs and improvements. The bond money can’t be used to fill gaps in the district’s overall budget for classrooms and programs.
This is Armstrong’s first budget proposal since taking over as superintendent last summer. It represents a 15% decrease from the current year’s budget, with $43 million in reductions. That’s about $70 million in cuts for the biennium.
Armstrong said this year’s budget cycle isn’t the beginning of financial difficulties for Oregon’s largest school district. Rather, it marks its continuation.
“For the past three years, Portland Public Schools has been navigating a persistent structural deficit — an imbalance between our revenues and the actual cost of delivering a high-quality, equitable education to every student,” Armstrong wrote in her executive summary of the budget.
“These challenges existed before I stepped into this role, and now, with the rising cost of education, limited funding to operate schools, and a decline in enrollment, we face a sobering fiscal cliff.”
She told reporters in a press conference on Wednesday that part of the cost-saving measures this year were cushioned by one-time options, such as using the district’s $23 million savings to cover a deficit in public employee retirement plans, or PERS.
Without “new revenue,” Armstrong said PPS will likely face at least another $32 million shortfall in the 2026-27 school year.
Factors leading to budget shortfalls
According to Armstrong’s report to the board, inflation has led to higher costs of goods and services, as students’ needs continue to increase. The district has invested in its employees’ compensation and teacher planning time, she said, and the cost of PERS has continued to rise at the same time.
Meanwhile, enrollment has declined. After hitting a recent high of more than 48,000 students before the COVID-19 pandemic, PPS has steadily lost students. According to the budget presentation to the board, PPS’s student enrollment has declined nearly 11% since 2020. Oregon as a whole is losing students, too, but at a slower rate of 6.5%.
The state’s largest district is projected to keep shrinking. And since public school funding is largely dependent on the number of students they enroll, this downward trend affects how much money Portland can expect from the state.
Additionally, the district has less special revenue. Federal pandemic aid has ended, and leaders in Washington, D.C., are threatening to reduce future federal education spending — cutting what’s typically considered a more secure foundation to build on for individual district budgets.
Armstrong said in her proposal’s executive summary that the national political climate is becoming “increasingly unpredictable,” going so far as to say it’s “threatening the very ideals of equity, inclusion, and public education itself.”
As one example in the presentation to the board, Armstrong’s team noted that federal Title I programs, which serve students facing more risk factors such as poverty, have been reduced by 25% due to uncertainty in funding streams.
“We are not immune to these pressures,” Armstrong said. “But we are not powerless, either.”
Proposed investments and cuts
Through listening sessions in recent months, Armstrong said district leaders received strong feedback to help form their priorities for this budget, placing a focus on the fundamentals, protecting classrooms, and investing in “what we know works.”
In practice, she said that means prioritizing early literacy investments, math acceleration strategies, instructional coaches, culturally responsive curriculum, and targeted interventions to boost attendance and engagement.
Still, the district faces a $130 million forecasted gap over the next three years.
Armstrong announced back in January the district’s early plans to cut roughly $40 million for next school year. Cuts have been falling in districts across the region, including Eugene, as ongoing conversations about school funding persist in the Oregon State Legislature this session.
Armstrong’s budget proposal reflects those “difficult but necessary reductions,” as she described them, with more coming out of the district’s central office than originally planned. The proposed cuts include eliminating about 85 positions from central administration.
As she laid out the cuts Tuesday evening, Armstrong said the budget would cut the equivalent of more than 200 positions from schools. She revised that estimate downward on Wednesday to a cut of 156 positions from school campuses, for a total reduction of about 240 jobs.
Portland Public Schools Director of Construction Armand Milazzo, left, leads new superintendent Kimberlee Armstrong through the remodeled cafeteria of Benson Polytechnic High School, Portland, Ore., Aug. 27, 2024. In the foreground, repurposed lumber from the building's old gymnasium has been repurposed into seating. Care was taken throughout the renovation process to preserve as much of the century-old building's original character as possible.
Anna Lueck / OPB
For some employees, this will translate to layoffs, Armstrong explained on Wednesday. However, some will see their hours reduced. There will also be vacant positions that remain unfilled, as well as regular attrition, including people resigning or retiring, which are all factored into those numbers. She encouraged anyone who loses their job and is interested in another position in the district to apply.
Some plans for how to deal with school-level changes include sunsetting programs like the elementary International Baccalaureate program, combining some upper elementary grade levels into blended classrooms and setting minimum class sizes for middle and high schools.
“What’s at stake is more than dollars,” Armstrong said. “It’s our future.”
She said that means the district needs to “think bigger.”
“That means fighting for adequate funding from every level of government. It means reimagining how we operate to survive a tough year while building a stronger system for the long haul,” she said. “And it means holding tight to our values in the face of uncertainty: equity, excellence, and the unwavering belief that all children — all children — can thrive.”
The school board will hold a session on April 29 to hear public comment on the superintendent’s proposed budget. The board is scheduled to approve the budget on May 19 and have its final vote on the adopted budget on June 10.
