K-12 Funding – Districts Preparing for an Uncertain and Troubling Financial Future

How Is This Happening Statewide?

It was only a few months ago that Oregon made a historic investment in K-12 education, so how can school districts already be in financial trouble?

There are three big reasons:

• First, Oregon’s economy is less healthy than it was just a few months ago
  Since June 2025, Oregon’s economy has been faltering. Unemployment is up, and state revenue is down. Because the State of Oregon pays for a share of public schools, when Oregon’s economy falters, school funding can falter too. The State of Oregon has started planning for a possible mid-year funding reduction, and this hasn’t happened since the recession.
• Second, pension costs are growing quickly, and school districts are struggling to keep up
  For every dollar in a school district’s annual operating fund, a portion automatically goes toward pension-related expenses. School districts have little control over pensions, which are the benefits owed to Oregon retirees. Over the next two years, many school districts’ pension costs will spike, placing additional pressure on school budgets.
• Third, expenses are rising quickly and outpacing what the state and school districts can afford
  The vast majority of school district operating funds are spent on staff. Over the past few years, wage and benefit costs have been rising rapidly. Right now, neither the state nor school districts have enough money to keep up with these rising costs.

How Will This Impact Salem-Keizer Public Schools?

Salem-Keizer is one of many districts that will be making important financial decisions in the coming months. Our schools are improving academically, and we need to protect that momentum.

Financial Implications for Salem-Keizer Public Schools

Just two years ago, Salem-Keizer reduced our budget by $70 million, which included a difficult reduction-in-force. So, why are we preparing for another budget challenge?

• Our student enrollment is shrinking, but staffing expenses are growing
  Salem-Keizer’s enrollment declined by over 1,000 students this year. Even though our enrollment is falling, the needs of our students are rising. Our schools provide more than an education. We also provide food, clothing, medical and dental screening, and social services. Our staff provide these important services.
• Operating costs continue to increase rapidly without adjustments to our state funding revenue
  Ninety-five percent of our district’s annual operating funds are budgeted to staff. This is because schools are student-centered and people-powered. The rising costs of salaries and benefits are increasing the district budget by $50 million this year.
• Oregon’s economy is less healthy than it was just a few months ago
  In September, our district lost $2 million in state funding because of Oregon’s weakening economy. And now, the state is planning for a possible mid-year reduction in school funding. This hasn’t happened since the recession, so we need to start planning now.

How Is Salem-Keizer Public Schools Preparing?

Salem-Keizer will not let a predictable financial challenge distract us from our work. We are starting to plan for a minimum $25 million reduction next year. Salem-Keizer has five core values, and this financial challenge requires us to live into all of them. Our response must keep students at the center with decisions focused on equity. We need to navigate this challenge by prioritizing relationships with one another, strengthening our community. And through it all, we must protect the conditions for teaching, learning, and academic excellence.

State Revenue Update Expected November 19

The next new information about our state economy and future school funding is expected on November 19. That will be an opportunity for district leaders to learn more about impacts to school district budgets, which could mean reductions beyond $25 million. Starting this conversation now gives us a head start on our planning.

Your Clarity Matters – Frequently Asked Questions & Submit Your Questions

In this moment of financial uncertainty, what we need most is to remain strong in core values and our community, sharing only accurate, verified, and up-to-date information about our financial future. We encourage our community to come along in this process with us and share where there is confusion or questions.

We are collecting questions to help us communicate more clearly and to add responses to common themes to our FAQs on the website. It is important to us that everyone has as much clarity around the financial challenges that school districts are facing.

Review our current FAQs and submit your questions regarding our upcoming financial planning