Superintendent Castañeda’s 2024-25 Budget Message

Proposed Budget

Salem-Keizer's 2024-25 budget reflects a predicted moment in Oregon and across the nation: the final, grim intersection of flawed and failing school funding policy and school systems attempting to meet the rapidly escalating needs of their students.

As such, I believe that Salem-Keizer is simply one of the early and most visible examples of the hardship coming to many other Oregon schools in the next twelve months.

The 2024-25 Salem-Keizer budget problems are the result of compounding mismatches – gaps between what is and what is expected. The sum of these mismatches is systematically driving Oregon schools into a budget crisis.

Mismatch One: what schools are funded to do and what they are expected to do

Today, public schools are expected to identify and address a staggering array of youth and family needs. We are funded to provide an education. But we are expected to provide medical care, solutions for food and housing insecurity, social work, laundry, crisis intervention, mental and behavioral health services, and more. In 2024-25, Salem-Keizer is budgeting $48 million on mental and behavioral health services, the largest amount in district history. These services are critical for healthy students and schools. And they are a largely unrecognized obligation within the State School Fund, Oregon’s largest and most important source of funding for schools.

Mismatch Two: COVID funding is gone, but the pandemic remains visible in nearly every classroom in Salem-Keizer

Our students and their families continue to deal with the academic, behavioral, and emotional aftermath of the pandemic. By September 2024, Salem-Keizer will exhaust the $151.8 million in federal COVID relief funding, also known as ESSER. We used a portion of ESSER to pay for staff to provide services upon which our students and families now rely. The funding is disappearing, student needs are as significant as ever, and the community is counting on school systems to maintain the same level of service.

Mismatch Three: the difference between what Oregon believes schools cost to operate and their actual costs in the 2023-25 biennium

Grave errors in Oregon’s system of funding public education leave Salem-Keizer underfunded and struggling to maintain our current level of services. Consider two simple examples. First, the state forecasted school district labor costs – every school system’s single largest expense – to increase by 5.45% between 2023-25. Salem-Keizer's actual increases in labor costs will increase by more than 14%. Across the state, this forecasting error leaves Oregon schools with no choice but to dip into their reserves or begin making reductions.

Second, the state funding formula has arbitrary rules that understate the true costs of providing special education services. In the 2024-25 budget, Salem-Keizer will spend approximately $100 million in general fund dollars on special education services. The percentage of special education students and the complexity of need grows every year. Oregon's special education funding caps shield the state and pass the growing financial burden directly to school districts. If the state removed the special education cap and funded the full cost of special education weights, Salem-Keizer would be eligible for an estimated additional $20 million per biennium.

Mismatch Four: we have fewer students, but the students we have need more services and support to succeed

In 2006-07, Salem-Keizer had 38,600 students, a number roughly comparable to today’s enrollment. However, over that seventeen-year period, staffing levels have grown by 47%. Including sizable increases in licensed, classified, and administrative employee groups. This data story matters in Salem-Keizer and throughout Oregon, a state that is facing aggregate declining enrollment. While we have fewer students every year, we have spent the vast majority of all new revenue on additional staff and we have increased the proportion of our total revenue dedicated to personnel expenses. The general fund proposed budget dedicates 93% of our current year revenue to personnel. And even with this investment, our schools struggle to meet our students’ complex and significant needs.

These four mismatches set the stage for the 2024-25 budget and the painful reductions we face. We acknowledge and grieve the pain of this budget, but we cannot allow ambivalence or hesitancy to interfere with our fiduciary and ethical responsibilities for Salem-Keizer Public Schools. Salem-Keizer's 2024-25 budget is a story of proactive and protective action. And our story, like many others, is a warning for the rest of the state.

Communication and Development of the 2024-25 Budget

In August 2023, we started sharing information about the budget challenges we face. In that first message, we said, “We are going to have a challenge that we will rise to as a community. We are going to have a significant gap. I want to take this opportunity to start a conversation that will last for the whole year.” That is exactly what we have done. Our process has been continuous, inclusive, transparent, and progressive.

Our budget engagement began in earnest in the fall of 2023. We hosted in-person community conversations and engaged 700 stakeholders and several hundred more in a survey. We shared information about our upcoming budget challenges and collected feedback about preliminary priorities.

In March 2024, we started small group engagement and launched a community-wide digital survey to seek more specific feedback about budget priorities.

Between the Fall 2023 and Spring 2024 engagements, we received feedback from over 6,000 stakeholders. Their feedback was settled into a few clear patterns. The majority of respondents prioritized student sense of belonging as the most important of the board-established district priorities. Beyond that, a few school programs and offerings proved to be amongst the most valued by our community. These include student safety and security, fine arts, mental health supports, and athletics and extracurricular activities.

Early Action to Minimize the 2024-25 Budget Gap

In July 2023, the district took decisive action to minimize the 2024-25 budget gap. This included a near-freeze on hiring and elective spending. We also began developing conservative financial forecasting scenarios to help us size and prepare for the reductions that were coming.

In every forecast, a reduction in force was necessary.

To help ease the transition, we announced a first round of $31 million in recommended adjustments and cuts focused on reducing the burden on the general fund. The February and March conclusion of bargaining delivered certainty about current and future personnel costs and allowed us to complete budget forecasting for 2024-25.

The 2024-25 budget includes $70 million in reductions and adjustments, or a 5.34% reduction across all funding sources. The general fund has a budgeted ending fund balance of 9.29%, or $60 million, which falls within the targeted financial policy range of seven to 12 percent.

However, we have left an estimated $27 million general fund gap between our budgeted expenses and our anticipated revenue. The reductions required to close our revenue/expense gap are more than we can make in a single year. We will closely monitor this $27 million gap and work to close it through vacancy and spending savings.

Concluding Statement

It is my privilege to serve as superintendent of Salem-Keizer Public Schools. In my first ten months, I have had an opportunity to learn about the vast talent, commitment, and excellence within our community. We have weathered challenges, some of which will change the future of our district. I look forward to the opportunity to creatively, tirelessly, and fiercely advocate for the needs of Salem-Keizer students and for fair funding for students throughout Oregon.

Respectfully,
Andrea R. Castañeda
Superintendent

Proposed Budget

The full proposed budget is available on the Budget web page of the district website. The full recording of Superintendent Castañeda’s Budget Message to the Budget Committee is available on CC: Media's YouTube channel.

Timeline for the Budget Process

• May 7, 2024: Proposed Budget presented, no public comment received
• May 14, 2024: Deliberations, public comment*
• May 20, 2024: Public comment* and deliberations on the proposed budget until approved/recommended to the school board for adoption
• May 21, 23, 2024: (Tentative – meeting(s) will only occur if the budget is not approved May 20): public comment* may or may not be received; deliberations on the proposed budget until approved/recommended to the school board for adoption. Additional meetings may be necessary if the budget is not approved/recommended to the school board for adoption by May 23.
• June 11, 2024: SKPS Board of Directors to vote on budget adoption

*For meetings where public comment will be received, it will be accepted using the public comment sign-up form; instructions to submit public comment will be provided on the agendas for those specific meetings.

Meetings will begin at 6 p.m. Meeting details and viewing opportunities are on the Budget Committee web page.