Salem-Keizer school district announces upcoming layoffs, budget cuts

There will be hundreds fewer people working for Salem-Keizer Public Schools by the start of next school year.

Salem-Keizer Superintendent Andrea Castañeda announced looming budget cuts and layoffs at a quarterly update to the school board Tuesday evening. This is the district’s first reduction of its kind in more than a decade.

The Salem-area community has known for months that something like this was coming. Castañeda said in August, shortly after she became superintendent, that the district was already looking at a tough financial picture in 2024 if they didn’t act soon.

Since then, the district has frozen hiring for most positions, which Castañeda said has been the primary way they’ve reduced spending projections. There’s still the question of how much new contracts for the district’s unions could further complicate the budget moving forward.

The district is currently in mediation with its teachers union, the Salem-Keizer Education Association, SKEA, and its classified union, the Association of Salem-Keizer Education Support Professionals, or ASK ESP.

Mediation sessions were delayed earlier this month as Gov. Tina Kotek intervened to ensure the state’s limited pool of mediators was available to help end Portland’s ongoing teachers strike, which hit day nine of canceled classes Wednesday.

Salem-Keizer has three mediation sessions with the teachers union set for early and mid-December. They have one scheduled with the classified union in late December.

Bargaining decisions will have a large impact on the district’s expenditures next year, but Castañeda said cuts will be required regardless of future bargaining outcomes.

It’s not a question of whether cuts will be needed, she told reporters Wednesday: “It is already true.”

“The negative ending fund balance is just a symptom of the $73 million gap between how much we spend and how much we bring in,” Castañeda said. “Seventy-three million dollars is the challenge that Salem-Keizer faces even if we settled our contracts today.”

How did we get here?

Salem-Keizer has about 2,300 fewer students enrolled since 2019-20, Castañeda explained in August. It continues to lose about 400 per year.

Year over year, this September showed a decrease of 641 students in Salem-Keizer from last September.

Districts nationwide are grappling with the end of federal COVID relief funds while also facing substantial enrollment declines since the height of the pandemic. Oregon’s public schools’ population has seen a 5% decrease since 2019-20. Some districts this year are finally starting to see increases again.

Some Salem-Keizer leaders worried the declining enrollment would mean decreased state funding to the district. However, Oregon’s per-pupil funding formula factors in how individual districts fare compared to the state average.

So, although enrollment continues to decline in Salem-Keizer, the state’s revenue for the district actually increased with the new biennium allocation.

Still, officials say it’s not guaranteed that funding and enrollment trends will continue that way, and revenue is not enough to keep up with inflation and increased needs.

In the last four years, the district also has added more than 450 full-time-equivalent employees. And as of August, it increased staff pay by an average of 14%.

These moves are meant to address growing student needs since COVID, and they hope it will allow the district to attract and retain highly qualified educators. But it also puts the district in a financial bind.

How much has the district saved in recent months?

Salem-Keizer’s projected budget for the 2024-25 school year has shown a $73 million gap between what the district spends and how much money it brings in.

The gap has been covered in years past by reserves in the district’s general fund. Castañeda has likened this pot of money previously to a savings account. But as of the July projections, the district’s savings were set to go into the red by about $23 million.

Since then, the district has reduced the shortfall to $17 million, mainly by implementing a nearly total hiring freeze on positions, with the exception, Castañeda said, of “critical school-facing, student-facing roles.” About 87% of the district’s budget goes toward salaries and wages. The district employs about 6,000 people.

What can we expect with the first round of cuts?

Come Dec. 12, the district will announce the first round of cuts.

Castañeda said this first round is going to focus on reducing services, programs, people and contracts that “have a limited impact on students in schools,” which she confirmed means it will focus heavily on administration and central office staff.

Their goal is for the reduction total to save no less than $12 million. Castañeda would not comment at this time on what positions and programs are being considered or other specifics regarding the Dec. 12 cuts.

Those let go in December can keep their jobs through the current school year. It’s also possible, depending on individuals’ qualifications, that they could move to another position in the district.

“[Once] we announce these proposed reductions, we will reset the graph again to see how it changes our trajectory,” she said.

And though they won’t know until the end of bargaining, Castañeda said the overall savings needed to have a balanced budget for the 2024-25 school year is about $70 million. Another round of cuts is expected in late winter or early spring.

Community members have attended public events in October and earlier this month to talk about budget priorities. This feedback, Castañeda said, will be used when making more school-level changes.

This is the first time since the 2011-12 budget year — in the aftermath of the 2008 recession — that Salem-Keizer leaders have cut people from staff.

In the more recent past, the district has been able to make cuts by not filling open positions and moving people around. In 2012-13, the district had budget reductions and employee concessions but not a reduction of force.

Officials said that isn’t possible this time around.

Other districts have funding issues too. Why is Salem-Keizer’s so bad?

Castañeda said Salem-Keizer is in a very different position than Portland, which is now in its third week of the district’s first-ever teachers strike.

“Portland went into mediation and [the] strike trying to hang on to their positive fund balance,” Castañeda explained to OPB. “We are entering mediation already in a serious structural deficit.”

Part of that, she argued, is because of the state’s “flawed” funding structure. Unlike Portland, she said Salem-Keizer is a district “unable to access additional designated education funding from property taxes.” She argues education leaders need to work with lawmakers to update these underlying policy issues.

Though Salem-Keizer’s students have the highest poverty levels out of the state’s three largest school districts, they don’t have the same revenue streams.

The latest statewide data — from the 2022-23 school year — shows Portland serves about 44,185 students, of which 56% qualify for free and reduced-price meals based on low family income.

By comparison, Beaverton serves about 38,240 students, with 44% qualifying for free and reduced-price meals.

Salem-Keizer serves about 38,490 students, with more than 95% of them qualifying.

Yet it’s believed property values in the state’s capital of Salem — a city filled with many government buildings and agencies that don’t pay taxes — wouldn’t generate enough revenue for a local levy to benefit schools.

Because of this distinction, Castañeda said Portland Public Schools gets $2,300 per pupil more than Salem-Keizer. Beaverton receives just shy of $1,000 more than Salem-Keizer.

“And yet, we compete in the same labor market,” she said.

“Our property tax system is broken in many regards, but it is certainly, deeply flawed as it relates to the way public education is funded,” Castañeda said. “And the poverty density in Salem-Keizer means that our students are the ones who suffer for that policy decision.”

Castañeda said the district has been meeting for months with elected officials to discuss Salem-Keizer’s current budget issues and the broader systemic issues. She believes most superintendents are interested in discussing Oregon’s funding formula in the coming years, looking at it as both “a policy instrument and as an equity instrument.”

But that fix won’t help them in the short term.

“We believe that we have to act urgently and independently in order to be responsible,” Castañeda said.

What is Salem-Keizer learning from Portland’s ongoing teachers strike?

Castañeda said Salem-Keizer has been actively planning for months for a potential strike. But as with dozens of other districts across Oregon with contract negotiations this year, all eyes are on Portland.

When the district called for mediation with SKEA in September, local teachers union leaders said they felt the call was premature. Some accused the district of doing this to try to get the previously open bargaining conversations behind closed doors.

SKEA President Tyler Scialo-Lakeberg told OPB at the time that the union was not surprised by the call for mediation since they knew the district wanted to move the process along more quickly. However, union members weren’t expecting it, and they were disappointed.

Castañeda said the district is committed to doing everything possible to avert a strike.

“One of the things that I think is extremely important for us as southern partners and observers of the Portland strike is that a strike is terribly damaging to schools, to relationships, to students, and to the community,” she said.

“And though we always knew that was true, watching our colleagues go through it in Portland makes that even more apparent.”