District Budget Development Update

February 13, 2024

Dear PPS community,

This is the time of the year when the budget begins to take shape for the coming fiscal year. We want to provide you with an initial, high-level context that foreshadows more specific communications that will be forthcoming.

A year ago, we shared this financial outlook as we faced:

• Rising costs of goods, labor, and services

• Increased student academic and nonacademic needs

• Insufficient level of investment in K-12 schools by the State of Oregon

• Decreased student enrollment, though maintaining similar number of staff, level of educational programming and services, and quantity of campus buildings

We shared that we would need to make adjustments to right-size our school system. We are at that point now.

Each year, we at Portland Public Schools do our best to support our students within our available resources. In recent years, we focused one-time pandemic-relief dollars on additional student supports. Our student outcomes demonstrate something different from many other Oregon districts: our students are closing learning gaps. We have been thrilled to see this, and still, we have much more work to do to ensure every student achieves excellence.

Despite these positive indications, our financial outlook has not improved. Indeed, it has worsened. We cautioned in November that this would mean millions of dollars in cuts in the coming years. We propose to soften the severity of cuts for the coming year by reducing our reserves to the minimum required balance.

However, even with that reduction, the 24-25 budget will include $30 million in cuts. Since 90% of our budget pays for the costs of operating schools, the impact on schools is unavoidable. We intend to minimize cuts to schools, and cover half of the overall budget gap, by reducing $15 million from central operations. This represents about 6% of overall central office budgets, and follows $40 million in previous reductions over the last two years. The remaining $15 million in budget cost reductions will be shared among our 86 schools (or about 2% of school-based budgets).

What these reductions will mean for our schools is taking shape, and the team will share more of these details with you in the coming weeks. For example, we anticipate some schools will see teacher-to-student ratios increase by one or two students on average (returning us closer to our 2021-2022 school year ratios). And with few exceptions, we will preserve students’ access to visual and performing arts classes, physical education, and libraries.