Salem’s school system needs to cut spending by $25 million next year, which could mean layoffs and more turmoil in schools a year after the district posted its first academic gains in years. 

Salem-Keizer School District Superintendent Andrea Castañeda announced the reductions in a news conference Wednesday, Nov. 5, saying they are needed because staffing costs continue to rise faster than state funding.

Personnel costs, including salaries, health insurance and pension payments, make up 95% of the district’s budget and grow by about $50 million per year, she said. The district employs about 5,600 people.

The district’s general fund, which pays for most day-to-day operations, will spend about $619 million this year. The district forecasts needing about $640 million to sustain current operations next year, Castañeda said. The district doesn’t anticipate having that money without dipping into savings.

She said district leaders will first look to reduce district main office operations and look for other cuts that won’t affect students and classrooms directly. Finding millions in savings will be difficult, she said, especially following the cuts made in the spring of 2024.

“We are all going to have to have both the compassion and the courage to say the quiet parts out loud, and the quiet parts out loud include recognizing that the costs of people, the most important part of our system, are also the parts that are pushing our system to the edge of economic viability,” she said. “It isn’t a devaluation of the people or the fact that they need and deserve the money that we give them. It just comes down to some basic arithmetic that we cannot escape as leaders.”

The Salem-Keizer School Board is set to discuss next steps during an evening work session just hours after the superintendent’s announcement.

“In the coming weeks or months, we will start conversations with our labor partners about the likely difficult choice between future cost-of-living rate increases and staff reductions. We are deeply aware that both options are harmful to our staff and schools,” the school board said in an open letter to the community released Wednesday evening.

The letter was signed by all seven school board directors: Lisa Harnish, Cynthia Richardson, Jennifer Parker, Satya Chandragiri, Karina Guzmán Ortiz, Krissy Hudson and Mel Fuller.

State cuts possible

The $25 million target for cuts reflects current conditions. If state lawmakers and Gov. Tina Kotek cut the state school fund in 2026 to balance the state budget, the district will have to make deeper reductions, Castañeda said.

Kotek has directed state agencies to prepare for budget cuts given declining federal spending on education and declines in state revenue. A new state revenue forecast expected on Nov. 19 will give state leaders more clarity on the size and scope of cuts ahead.

Castañeda joined other state education leaders in a Tuesday news conference urging state leaders to tap Oregon’s Education Stability Fund. That fund helps the Oregon schools to  weather recessions and funding challenges without deep cuts of their own.

The fund had about $1 billion as of June. It’s replenished by lottery funds.

Umatilla School District Superintendent Heidi Sipe, among the state’s longest serving superintendents, told reporters that it took years for her district to recover from deep budget cuts imposed during the 2008 recession.

“We were forced to eliminate key staff, significantly reduce and cut programs like secondary social studies and music and institute staff furloughs simply to keep our doors open. These cuts resulted in lost learning opportunities and a measurable decline in student success that took years to reverse,” she said. 

By 2013, Oregon posted the lowest graduation rate in the nation, with just under seven in ten students earning a diploma. Sipe attributed that directly to cuts.

Castañeda said with districts like hers already facing cuts, school leaders need clarity as soon as possible on whether the state intends to reduce funding further.

“The longer it takes for people to tell us the target, the weaker our decisions will be, the more rushed our dialogue will be, and the more contentious the process will be,” Castañeda said.

Labor concerns

The announcement is likely to again put the school board and district administrators at odds with employee unions over how best to save money.

District leaders shared the impending cuts and the $25 million target in a staff meeting Wednesday morning.

Castañeda said furlough days, which cut employee pay by closing schools, are last on the list of options she’d consider given Oregon’s already short school year and the state’s near-botton ranking in school performance.

“Salem-Keizer had some of the first academic gains that we’ve seen since the pandemic, and we have to keep the main thing the main thing, and that means protecting the length of the school year against emergency reductions. It also means helping ensure that our teachers have the tools they need to continue leading the instructional work in schools,” she said.

Maraline Ellis, president of the Salem Keizer Education Association, which represents the district’s teachers, said union leaders are urging employees to be patient and wait for the state forecast.

“This was an effort on the part of the district to be transparent and provide information as it is available. Please keep in mind that it is early in the budget cycle, and we do not yet have all of the necessary information,” she wrote in an email sent to members.

Ellis said the union supports furlough days as the best tool to reduce school spending. That means educators wouldn’t work or be paid for the day, and students would be home with parents.

“It conveys the message that we’re short on funds, and we don’t think the community is really able to understand that until their kids are at home and not at school,” Ellis said.

Given the choice between asking employees to accept pay freezes or cutting jobs, Castañeda said that’s a decision for educators to make through their unions.

School board Chair Cynthia Richardson, a retired longtime district administrator, appeared alongside Castañeda to address the cuts. She said reducing cost-of-living increases was the best move to save the district money while minimizing the impact to students.

Castañeda said the district will also review school staffing, schedules and consider other ways to run schools more efficiently.

The district’s enrollment dropped by about 1,000 students this year, even as spending per student continues to grow.

“As much as I know that our students need every adult that’s in our building, we cannot look objectively at a condition where we’re losing students and gaining staff and say that that is a sustainable business model or a trajectory for schools. So we’re going to have to start making those adjustments this year, bringing those two trajectories into not exactly alignment, but at least in concert with one another,” Castañeda said.

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

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