Under pressure over their plans to close schools, and facing another year of steep budget reductions, leaders of Oregon’s largest school district pushed state leaders to dip into a stability fund to ease painful cuts to public schools across the state.
Portland Public Schools officials used a Monday afternoon press conference to remind the public of its financial challenges.
“I want to begin by being very clear about the financial reality facing Portland Public Schools and what it means for our students, our staff and our community,” PPS Superintendent Kimberlee Armstrong said.
FILE - Portland Public Schools Superintendent Kimberlee Armstrong introduces a school closure proposal during a Portland Public School Board meeting about closing up to 14 schools, at Dr. Matthew Prophet Education Center in Portland, Ore., on Oct. 6, 2026.
Eli Imadali / OPB
District officials project a $65 million deficit for next school year, and say about two-thirds of that is driven by increased retirement and labor costs through the Public Employees Retirement System, or PERS.
What this means for students is a “potential reduction” of up to 450 full-time equivalent positions: 223 at schools, 60 in support roles and 167 central office and administration positions.
PPS officials bring up the budget as they manage another tough conversation: proposals to close up to 14 schools to “rightsize” the district. Later this month, Armstrong will present a recommendation to the school board, which will vote on a plan in December. The district’s two current proposals include closing either 11 or 14 schools and making dozens of boundary and program changes.
Armstrong said the district’s “rightsizing” conversations aren’t just about saving money or closing schools.
“We cannot continue to spread fewer resources across the same number of buildings and expect to deliver the educational experiences our students deserve,” Armstrong said.
She said the district estimates saving $1 million per building in operational and program costs “over time.”
One solution district officials presented Monday is to tap into the state’s Education Stability Fund, a $1 billion account funded through lottery dollars.
PPS Chief Financial Officer Michelle Morrison put it this way: “PPS has saved the state $500 million since 2002, when those pension obligation bonds were originally sold. The market does not allow that strategy today.”
“The Governor should consider accessing $500 million from the Ed Stability Fund to buy down the PERS rate for schools across the state,” Morrison said.
For almost a year, the ESF has been floated as a potential tool to help Oregon’s public schools. With Portland considering closing schools, dipping into the fund has come up again.
When OPB asked Gov. Tina Kotek in October about past calls to use stability funds to help schools, Kotek said it wasn’t up to her.
“That is up to the legislature. There was no interest from legislative leaders to do that. I would bring it up, and it was summarily dismissed,” Kotek said.
“I think their argument —which I can understand why they’re making this argument — is if you use one-time dollars, which is what a reserve fund is, that will have a greater cliff down the line when you’re using one-time dollars to fill an ongoing budget hole because then you’re going to have challenges.”
A 2011 document from the Legislative Fiscal Office outlines the process for using the ESF. It can be tapped if the Governor makes an emergency declaration and three-fifths of legislators approve it.
Recently, Portland City Council member Mitch Green introduced a resolution asking Gov. Kotek to declare an emergency with regard to school funding, but it did not receive enough votes to come to council. Last Friday, city councilors all signed a letter asking PPS to pause its process to close schools.
According to the Oregon School Boards Association, the ESF has been tapped nine times since it was created in 2002. Most recently, $400 million was withdrawn in the 2019-2021 biennium.
During the PPS press conference, Morrison and Armstrong acknowledged that the district is in a tight spot, with all signs pointing to a crisis. District and board officials have been out at schools for weeks now, hearing about how closures might affect students, staff and families.
“I have been so encouraged and so inspired to see the energy that has ignited across our community with a chant of ‘save our schools,’” Armstrong said.
“The reality is that we do need saving.”
