½ûÂþÌìÌÃ

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Breaking Down The Annual Budget Process

In our personal lives, each of us makes hard choices – and sometimes agonizing compromises – when we plan household expenses. Imagine doing that for a district community that includes roughly 43,500 students and their families, 8,200 staff members, and over 100 buildings.

Each spring, ½ûÂþÌìÌà makes a budget for the following school year. The budget estimates what money we have available, and then plans how to spend it. The spending plan starts with five big categories called “funds,” then identifies general categories within each (examples include instruction, support services, or cafeteria). At its narrowest, the budget describes the specific objects being paid for (such as salaries or supplies).

Between February and April, staff members from across our district build school and department plans. In late April, the Superintendent submits their proposed budget to the Board and the public. After public input and outside analysis, the Board amends and provisionally approves the budget in May before finally adopting it in June. (Full calendar here.)

Let’s walk through how it happens.

First, Where Does Our Money Come From?

Most years, we have the same three largest sources of operating revenue:

1. Property taxes
2. Oregon’s State School Fund
3. Our local option levy (which will be up for renewal in May)

(It’s important to know, too, that . The state also . And as enrollment declines, , too.)

We also get money from a mix of federal/state/private grants, donations, and fees.

A major source in recent years are the one-time federal funds to support pandemic-related learning recovery (ESSER funds). With this money, we have extended summer learning, hired early literacy specialists and tutors, and supported a variety of other critical learning resources. But in September, student needs will continue.

ESSER funds are also “restricted” – meaning they have to be spent on specific things. The state’s Student Investment Account, too, restricts our spending of those funds to spend money based on a plan. On its face, that isn’t a problem – our plan tightly aligns with our priorities. But requirements such as these also lock the district into funding certain programs even as costs extend beyond the given funding.

Second, How Do We Pool Revenue?

These various sources funnel into five different “funds.” Most of what you see in your school communities comes from two funds: the Special Revenue Fund and the General Fund.

Most “restricted” funds go into the “Special Revenue Fund” (1). Major examples include federal funding to feed students, serve students with disabilities, or support students experiencing homelessness, and funding we get from Oregon’s . Two significant shifts affect the 24-25 Special Revenue Fund: , and our will be stretched across more eligible schools.

Unrestricted funds go into our “General Fund” (2). (It also includes some restricted funds, too, but they’re a fairly small portion.) The General Fund is what it sounds like: it holds most of the funding for day-to-day operations. Three sources make up about 80% of the General Fund: Oregon’s State School Fund (30%), property taxes (38%), and our local option levy, which will be up for renewal in May (12%).

We then have two funds that are largely set in stone. Our “Debt Service Fund” (3) holds all money that pays down principal and interest on our debts (like a car or mortgage payment). The money from our bond goes into our “Capital Projects Fund” (4). While the Superintendent’s budget includes this, the expenses in this fund are, in a sense, already budgeted by the voters when they passed the specific projects on the Bond.

The fifth fund is our Internal Service Fund. It only pays for .

Third, How Do We Decide What to Pay For?

Myong Leigh, ½ûÂþÌìÌÃ’s interim deputy superintendent of operations, and the district’s finance team shepherd the budget process each year. Their goal, says Leigh, is to ensure the budget is balanced.

In December and January, the team works with the district’s senior leaders to determine budget priorities and staffing needs. That involves weighing several elements, beginning with some hard-and-fast givens. Our budgets will reflect:

• our strategic plan, community vision, and the Board’s goals
• growing and shifting student needs
• restrictions on certain revenue
• settled costs of staffing (set by Board policy, labor contracts, insurance rates, etc.)
• settled costs of operating each school building

Our budgets will also reflect enrollment. As noted above, lower enrollment means less money from the state, . Each year, we must align staffing with the students enrolled at each school. Every year, staffing will shift based on the number of students in a building and at each grade level. When enrollment drops at a school, for example, teachers may be “unassigned” from their current school and given a new assignment somewhere else where they are needed.

Our Human Resources team works with the Finance team to prepare a districtwide skeletal budget structure in January, and then to distill that down to “individual school reports.” Each report includes that specific school’s initial staffing estimate, and the principal will flesh that out throughout February and March. This is an opportunity for school leaders to flag school-level needs that might not have been known, or to request additional staff to meet core requirements.

Our Current Budget Context

This year, it is a plain and simple truth that we do not have enough money to operate as anyone – educators, staff, school leaders, senior leaders, Board members, families, or students – believes we should.

State funding hasn’t matched students’ needs. It also hasn’t matched inflation, and it has also , which identifies funding levels “necessary for Oregon’s children to meet educational goals.”

This means the district budget ends up not including investments that would provide Portland students with a truly “quality education” because we lack sufficient funds. It also means that anything that goes above and beyond to bring us closer to that “quality education” model represents a trade off with other valued programs.

Summer schooling is a great example. The pandemic caused learning gaps and, in 2022, . Last year, because , ½ûÂþÌìÌà paid for our program from existing district funds. District leadership decided that summer school was important, especially for students who were behind in their learning, so we made that investment – but it was an investment that many other regional districts did not make. ()

“Hopefully there will be more discussion, more education, more public input, and more attention put on how the state funds preK-12 education, because these aren’t one-time challenges,” Leigh said. “If there was meaningful progress in building a more realistic picture of the costs of education, and we all worked together on behalf of students, I think we could get a lot closer to the Quality Education Model.”

Oversight Is Critical

As a public entity spending taxpayer dollars, our budgeting process and finances are subject to rigorous scrutiny and oversight.

Finance program manager Alexandra Martin notes that some of this is external – particularly from agencies at the state and federal level – but we also conduct internal audits. She aptly names the consequence of any major irregularities or questionable expenses: “we continue to receive funding based on our responsible stewardship of public dollars.”

Another layer of internal scrutiny comes from a group of Portlanders who volunteer their time to review each year’s budget. The Community Budget Review Committee (CBRC) consists of two students and twelve adults representing the community. They meet monthly, study the budget as it comes together between February and April, and offer feedback directly to the Board and public in May.

Every CBRC member gets a crash course in ½ûÂþÌìÌà budgeting, and they have put such knowledge to good use over the years. In 2019, they played a key role in revising our strict reserves policy that ensures the district remains solvent in the face of emergency expenses, and unpredictable shifts in the economy.

Parent Mariah Hudson is in her second year as co-chair of the CBRC. She joined the committee because she wanted to play an active role in holding the School Board accountable for how public tax dollars are spent. She said she’s particularly proud of how diverse and inclusive the CBRC has become.

“One thing that has been especially valuable the last couple years is that our committee is the most diverse it’s ever been. We have the broadest representation of communities across the district and that is really positive. We want to continue that.”