Portland superintendent shares budget proposal amid declining enrollment and rising costs

On Tuesday, Portland Public Schools Superintendent Kimberlee Armstrong shared her new proposed budget of $2 billion for the 2025-26 school year, her first budget proposal as the leader of Oregon’s largest school district. But with rising costs, limited revenue and declining enrollment are putting pressure on a district that is now facing a financial shortfall of $40 million. Supt. Armstrong joins us to share the details.

Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.

Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. Oregon’s largest school district is about to hit a fiscal cliff. That’s the way Portland Public Schools Superintendent Kimberlee Armstrong described the district’s finances in the budget she proposed to the school board this week. Rising costs, limited revenue and declining enrollment have combined to create a $40 million gap between the current level of services and the money available for the coming school year. The proposed cuts would be deep enough that they would be felt by students, parents, teachers and administrators – 157 school-based positions would be eliminated, along with 85 central office employees. Fourth and fifth grade classes would be combined in more than a dozen elementary schools and class sizes could increase district-wide.

Superintendent Kimberlee Armstrong joins us now to talk about the fiscal cliff and the future of Portland Public Schools. It’s good to have you in the studio.

Kimberlee Armstrong: Thank you for the invite.

Miller: I want to start with the big picture. What has been your North Star as you’ve considered how to approach this $40 million hole?

Armstrong: Yeah, I would say that we can’t compromise in the classroom. We need to make sure that our students continue to receive high quality instruction and that they’re supported in their educational journey.

Miller: You can’t compromise in the classroom, but classroom teachers are going to be cut. So how have you thought about those particular cuts, the ones that would most directly affect students?

Armstrong: Well, this is our third straight year in a structural deficit. We know that we can make reductions with those funds that are considered one time, but to really address the structural deficit we have to look to reduce those ongoing expenses – and that’s our employees. It’s our largest investment and it’s the only way that we’re gonna be able to address the structural deficit. So making reductions in schools, fewer students means that we have fewer staff.

Miller: How have you been thinking about individual positions to cut? Say, a language specialist who maybe works across a couple of different schools, someone in IT, who helps solve tech problems, maybe district-wide or in a bunch of schools, a special education teacher. I can imagine all of these jobs are crucial in their own ways, some maybe have more direct interactions with students, but this is in front of you all right now. This position’s going to stay, this one’s going to go. How are you making those decisions?

Armstrong: Yeah, every single one of those positions that you mentioned are important and they matter, and we have to have the conversation. So early in January, I began talking about the $40 million deficit and I really wanted to ripen the issue and make sure that our community understood what was at stake, and also a call to action for advocating at the highest level with our elected officials. So when we began that journey in January, we had stakeholder engagement, we turned to our principals for feedback and then we used the feedback to really look at how we would make those reductions.

Miller: Since January, you actually increased the percentage of proposed cuts from the district office and decreased the percentage of cuts that would be happening in schools. What changed?

Armstrong: Well, the feedback. The feedback that came in, and hearing from educators and hearing from our leaders about supports that they deemed critical and that they need to be able to run schools successfully. So we had to go back and examine some of those reductions at the central office level. Anytime we increase the reductions at the central office level, based on the $40 million, we decrease then what was happening in schools.

Miller: You talk about feedback from principals and others. How much discretion, though, did principals have to make staffing decisions at their own individual schools, for the proposed cuts for the coming school year in particular?

Armstrong: Well, let me tell you, part of the feedback process, one of the things that we heard from them was the importance of autonomy and flexibility, so that they can make some local staffing decisions that they felt was best for their community. So we did provide some flexibility there. Now, not all together. We have a staffing handbook that sets staffing minimums, or I would say standardizing the staffing that we have in schools. And then we were able to name some of those things that they had flexibility and choice with.

Miller: The combination of fourth and fifth grade classes, if I’m not mistaken, that is a district-wide policy. Why not say to principals, you have to cut X number of full-time equivalents, or at least you have to suggest to us how you think you could do this, propose it and if we think it’s a good idea, then we’ll say yes, as opposed to saying this is what you have to do?

Armstrong: Yeah, so that was part of our feedback. So I will say the blending of the classrooms at the fourth and fifth level wasn’t initially on the list. We had some of our other investments on the list. And when we had the conversation with leaders, we heard loud and clear that there were some investments that we had on the list that they weren’t excited about and felt that it would be impactful. So …

Miller: When you say investments, let me make sure I understand. You’re saying that you heard from more than one school principal – or, in this case, elementary principal – saying we don’t like this cut, we’d rather you combine our fourth and fifth grade classes?

Armstrong: Right. No, they didn’t offer up the combination of classes.

Miller: Oh, they didn’t. OK, so that did come from the district.

Armstrong: That came from the district and when we found that, as a potential cost-saving solution, we needed to make sure that we were prepared to support a model like that. We wanted to know a little bit more about what research says about blending classrooms. We also talked to some of our schools that already have blended classrooms and wanted to hear a little bit more about their successes and maybe some potential unintended consequences.

Miller: Will teachers who haven’t run blended classes before have training between now and August for how to do it in an effective way?

Armstrong: Yes. So, we will make sure that our teachers receive the professional learning support. We also are supporting with lesson planning and the unit planning cycle. That means that you know you’re planning for two grade levels in your classroom.

I will say that not all schools in Portland Public Schools will have blended classrooms. And not every fourth and fifth grade in every setting will have a blend, right? So we were strategic in looking at, where do we have low numbers of fourth grade, low numbers of fifth grade, or even high numbers, and combining … and we knew that we wanted to make sure that our class sizes weren’t extremely high. So where were there opportunities to blend? And then we went back and spoke with the leaders about it and then talked about ways in which we can support it.

Miller: There’s no way, it seems to me, that you can make all of these changes, including larger class sizes overall, without having some impacts on the classroom experience of students. What kinds of effects are you expecting and are you planning for?

Armstrong: Well, I will say when thinking about classroom size – and I showed this graph in the budget presentation on Tuesday – that our class sizes at the elementary level range from seven to 34. And most of our classes, I would say, if you look at our graph and see where the concentration is, those classrooms are between 23 to 24. Now, you maybe …

Miller: Some are 32. I looked at that today. Selfishly, I think like every parent, I looked at my kids’ school.

Armstrong: Some are 32 and that’s high, and we want to continue to look for ways that we can balance. Then we have some that are really low, right? So those really high classrooms and those really low are the outliers, so we do want to address that.

Miller: PPS’s student enrollment declined nearly 11% just since 2020. It’s almost twice the state average. How much of the drop in enrollment is because families have taken their kids out of PPS … stayed in Portland, but put them into online schools, charter schools, private schools?

Armstrong: That’s a hard data point to track. It is a conversation that we’re engaging in. We have a department for enrollment and transfer, and I do have a request and a call to action to be responsive in really collecting information about how our students are moving in and out of our system. Now, we know that most of our decline is due to birth rates dropping. We can see that trend happening at the lowest level right now and that bubble of low enrolled kindergarten, first grade classrooms will make their way through the system. And we also know that families are choosing different options. They’re choosing different cities, they’re looking for affordable housing and where they can access the most amount of resources. So that impacts us as well.

Miller: So for that part, where theoretically the district would have more control, you can’t change, as a district, birth rates, and you certainly can’t change them from six years ago. But how worried are you that larger class sizes, combined fourth and fifth grade classes, other knock-on effects of these cuts, could lead more families who are making decisions to pull their kids out of PPS, that more families could make that decision? Is that something that you talk about at the central office?

Armstrong: It absolutely is a part of our daily conversation. How do we continue to make Portland Public schools, every single one of our schools, an attractive option for folks in our community? I mean, of course we want to be able to attract people from outside of the area, but our number one commitment and priority are our Portland city residents. So we need to examine that. Now, that may lead to conversations down the road on consolidation, some boundary adjustments. Some of those places where we see high numbers of students, we also see specialized programs. So there are some root causes that we’re examining.

Miller: You are getting to an issue that maybe we can get to now: talk about consolidation. I mean, that is a gentle way to say a neighborhood school is closing and kids who were going there will now go to a neighboring one. This is something that has been talked about as a real possibility. What is the timeline for that, first of all?

Armstrong: Yeah, well, I will say that it’s a community conversation, right? So I am looking to have a team lead in a recruitment effort to be able to bring in community, families, students and as many partners as we can to start that conversation this June. I will have an application process and how folks can get involved. Even if they’re not on the committee, [there are] ways in which we’re going to push information out publicly and update our community, because we really want to know where our community stands on some of our schools that are low enrolled. But I think that they’re going to want information, right? Like, what is the resource pool?

Miller: I mean, am I wrong in thinking you want to know where people stand. But my gut here is that, in general, where people stand is, “Don’t close my neighborhood school. Yeah, I recognize it’s under enrolled, but don’t close it, close another one, not mine.” In general, isn’t that what you’re expecting to hear?

Armstrong: I am expecting to hear that.

Miller: OK.

Armstrong: And then oftentimes the tradeoff in that conversation is that, well, if this school is going to stay open, then what resources will not be available, because it costs more money to fund schools that are low enrolled. You heard me say that there’s a spectrum in class size, from seven students to 34. Just as difficult as it is for our educators to navigate class sizes of 34, it’s also operationally difficult for us to have class sizes at seven, eight and nine.

Miller: To go back to the way you described your desire in January to, I think you said socialize, or just to get people ready for what was coming, that these cuts are going to have to happen and you want people to be aware of it early enough so they could plan and give you feedback … What can you tell Portlanders now about the likely timeline and the likely reality of school closures? I mean, I guess what I’m most wondering is for the school year starting ‘26, ‘27, will there be fewer open schools in Portland? Is that your best guess right now, that it’ll happen that quickly within the next school year?

Armstrong: Well, it could be, potentially. I mean, as I mentioned, the financial cliff that we’re on and needing to access funds, so that we are able to lessen the reductions that we’re making in our schools … and so potentially. I mean, it’s a community conversation and I think it needs to be handled with care. It needs to be a humanizing experience and then also an experience that pulls in different opinions so that our board, when they take action, can be as informed as they should be when making a final decision.

Miller: A part of your plan, your proposed budget, is to use one-time options to help cushion some cost savings, including using, I think it’s $23 million in savings, to cover the deficit in PERS, employee retirement plans. What is that going to mean for the coming years?

Armstrong: That means that we’ll need to find another way to save, right? So when we found out about the $32 million PERS deficit, or the cost, we had a savings where in previous years that administration was able to contribute. There were no funds contributed last year and I’m sure it’s because of the financial situation. So ideally, it would have been nice to be able to pull like, $5 [million], or $7 [million], or even $10 million out and then save the balance for other years, but we needed to access the whole $23 million. And that’s a one-time fund. That doesn’t address our structural deficit, which is why we predict ourselves to be in a state of further deep reductions next year.

Miller: Just briefly, what is the projection right now? So it’s $40 million this year. What is the projection for how much you’ll have to cut next year?

Armstrong: Yeah, we’re looking at at least $30 million.

Miller: Kimberlee Armstrong, thanks very much.

Armstrong: Thank you. It’s been a pleasure.

Miller: That’s Kimberlee Armstrong, superintendent of Portland Public Schools.

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