Salem school leaders look ahead to tough spending choices as funding drops

Just seven weeks into her new job, Superintendent Andrea Castañeda faces the prospect of cutting tens of millions of dollars in expenses from the Salem-Keizer School District’s 2024 budget to address a “significant” forecasted shortfall.

The challenge comes as the district, like many across the U.S., experiences declining enrollment in the years since the Covid pandemic, while also adding hundreds more employees to address academic challenges, student mental health needs and behavioral concerns following a return to class.

The impact on 39,000 Salem students won’t be clear until district leaders propose specific positions to eliminate, but the move signals a shift from a period of significant expansion where local schools have added counselors, security guards, graduation coaches, mentors and other positions intended to get students re-engaged in school following a period of turmoil and upheaval.

The gap won’t affect the current school year as students return to class starting Sept. 5. Castañeda said she wants to seek feedback from parents, community leaders, school employees and other stakeholders to identify the district’s priorities. Those will guide budgeting and needed cuts, she said.

“This year is gonna be fine. Our focus now is opening well and running a great year for everyone. But we’re starting a conversation about next year now so that we have a whole year to have this conversation together,” she said in an interview with Salem Reporter.

To prepare, Castañeda said district leaders are also seeking reductions through attrition this school year, and aren’t filling some vacant administrative and district-level positions. The district previously had two curriculum directors and consolidated them into one position this year, she said.

Castañeda’s goal is to focus on employees working directly with students in classrooms.

“Our team is looking hard at every vacancy that is not student-facing,” she said.

Budgeting will be guided by targets the Salem-Keizer School Board is outlining. 

The board on Tuesday discussed five likely targets: 

  • the share of students reading at grade level in third grade
  • high school graduation rates
  • regular attendance
  • the share of freshmen on track to graduate high school 
  • students’ reported “sense of belonging” in school

Castañeda said once the board decides such outcomes, her job is to focus on using the money the district has to drive improvements.

Since the 2021-22 school year, Salem-Keizer has spent more in its general fund than it’s taking in. The remaining costs have been covered by tapping the district’s reserves.

The general fund makes up a majority of the district budget and pays for most teachers and school employees. The money comes largely from the state school fund.

Federal Covid relief funding, which currently pays for 155 district employees, is also set to expire next year. The district has no other funding in place now for those jobs.

The extent of the budget gap for the 2024-25 school year isn’t known, because it depends in part on how much the district spends this year, and any increased costs from union contracts now under negotiation.

Castañeda presented budget forecasts to the school board Tuesday night. She also discussed them with school principals and administrators on Aug. 4.

Currently, she’s projecting general fund expenses to hit $602 million next year, while revenue would be $552 million. This year’s budget projects district financial reserves to decrease to $27 million – not enough to cover the gap.

The district spends about 87% of its money on people, Castañeda said, with a monthly payroll of about $40 million.

The projections assume a 2.5% cost-of-living increase for employees, which was the district’s initial offer during bargaining. The Salem-Keizer Education Association, which represents teachers, sought a 15% cost of living adjustment.

Negotiators for the union and district discussed budget projections and pay at a June bargaining session, where union leaders said the district has failed to prioritize pay for teachers.

“Every dollar Salem Keizer spends should be in line with its mission of providing quality education and care for the students in our community. The teachers and other educators who work with these students on a daily basis are the most powerful force for achieving these ends, and it is time for Salem Keizer to demonstrate the value they place on licensed staff through their budget allocation process,” a union statement said.

Union leaders have criticized the district in recent years for what they describe as an expansion of people overseeing programs or initiatives at the district level over hiring more teachers to work with students.

Castañeda told Salem Reporter her goal as superintendent is to ensure employees are being paid competitively.

“If we had many, many more resources the first thing we would do is pay our staff more, because we know they deserve it. But our job is to live inside of our real economic constraints and those prevent us from doing some of the things that, with larger budgets, we would like to do,” she said.

The upcoming budget challenges aren’t a surprise to the school board. 

Former Superintendent Christy Perry warned of upcoming budget shortfalls when presenting the 2023-24 budget to the board in May, calling budgeted contingency funds “dangerously low.” Perry said then that she wanted to preserve as many jobs for as long as she could to help students struggling to recover from the pandemic. 

This year’s budget eliminated some district-level positions while holding teachers and other school employees constant.

The board ultimately adopted a $1.3 billion budget June 13.

“We don’t have a choice other than to confront and overcome the challenge that is facing us,” said board Chair Karina Guzmán Ortiz following Castañeda’s presentation Tuesday. 

She asked fellow board members to commit to listening to the community and keep students in the focus of their decisions.

Castañeda said district leaders will plan public events this fall to talk about community priorities. Bargaining should conclude in the fall or winter, at which point she’ll know the likely size of the budget gap.

Contact reporter Rachel Alexander: [email protected] or 503-575-1241.

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Rachel Alexander is Salem Reporter’s managing editor. She joined Salem Reporter when it was founded in 2018 and covers city news, education, nonprofits and a little bit of everything else. She’s been a journalist in Oregon and Washington for a decade. Outside of work, she’s a skater and board member with Salem’s Cherry City Roller Derby and can often be found with her nose buried in a book.