The Salem-Keizer School District will have to dip deeper into its savings to cover the cost of running schools next year after officials learned they would not receive $14 million expected from the state.

That change is based largely on a state determination that local schools are serving fewer students in poverty, district leaders said. The surprising reduction almost guarantees district leaders will again have to make cuts next school year to balance the budget.

Superintendent Andrea Castañeda didn’t mince words about the change before the Salem-Keizer School Board on Tuesday, April 14.

“I have zero confidence, zero confidence in Oregon’s measure,” Castañeda said. “I am furious that this has been going on for over a decade.”

Education department officials didn’t dispute the total budget figure, but said their analysis concluded a larger share of the decrease was due to enrollment declines.

At issue is the way Oregon calculates student poverty, a technical process with millions at stake to serve some of the neediest students in the state. It’s a topic Castañeda has previously been vocal about.

Oregon uses federal Census data to determine how many students in a district are in impoverished households. The numbers are several years old by the time they reach education officials, and Castañeda said they’re prone to inaccuracy and random changes.

The state concluded based on that data Salem-Keizer has 4,696 students in poverty, down from 6,553 previously.

A district-commissioned analysis in 2025 obtained by The Oregonian/OregonLive concluded that Oregon’s method undercounts poverty rates in districts with large shares of low-income students, and in rural districts. That effectively means those districts get less state money to help address student needs.

The state collects data Castañeda said would be more accurate that measures the number of Oregon children who receive federal benefits tied to income, like food assistance or welfare payments.

“Alternative measures … have historically varied significantly from district to district, year over year, making them less reliable for a statewide approach,” said Liz Merah, ODE spokeswoman, in an email. “ODE continues to work with districts and policymakers to ensure the formula is implemented as intended and reflects the best available data within current legal requirements.”

District leaders learned of the funding change from the Oregon Department of Education two months ago, Castañeda said. They worked with state officials over the ensuing weeks to understand the reasoning behind the decrease and verify data, she said in an interview.

Merah said the state education department only received the federal data in February because the federal government shutdown delayed publication.

About $9 million of the decrease is because the federal data concluded the district is enrolling fewer poor students, Castañeda said. The remaining $5 million is because the district’s enrollment is declining faster than that of other districts in the state. 

Castañeda said the development emerged after district officials already had planned much of the district’s next budget. That included proposing $23 million in cuts to expected spending levels.

“It was gravely late to receive that kind of news,” Castañeda said.

Cutting another $14 million could have meant resorting to unpaid furlough days or a hasty layoff. She said the best option will instead be to draw on savings kept as a reserve against emergencies.

With that change, district officials have about $49 million in reserves in 2027, down from about $72 million at the end of this school year.

“That will leave us in a more fragile position,” Castañeda said.

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

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