Parkrose SD 3 budget proposes $70.9 million plan, $3 million shortfall to be covered by transfers and staffing cuts

Parkrose School District staff on a budget-committee meeting presented a proposed FY2025–26 operating budget of $70,874,187 and said the district faces a roughly $3 million shortfall that the proposal covers with one-time transfers, staffing reductions and other adjustments.

District presenter Michael said the district built the proposal on the governor’s proposed $11.36 billion state school fund for the 2025–27 biennium and that, as required by Oregon budget law, the proposed budget is balanced between total resources and requirements.

The district’s proposed total and the general fund: the full proposed budget is $70,874,187 and the general fund is $36,772,577, according to the presentation. The proposal assumes an increased property‑tax collection rate and uses $1,000,000 in transfers from other district funds along with staffing reductions and other changes to reach balance.

Why it matters: district leaders said multiple, compounding pressures are driving the shortfall. Parkrose has lost students — more than 300 over four years and about 40 since December 2024 — reducing state funding tied to enrollment. At the same time, special‑education costs, PERS (public employee retirement) rate increases and rising operating expenses outpace the revenue the district receives per student.

Key elements of the proposal

- Shortfall and balancing steps: presenters said the district cut roughly $3,000,000 across all funds. Those cuts include approximately $1,000,000 in transfers into the general fund (from funds such as Thompson and transportation), about $1,400,000 in staffing reductions, and adjustments to beginning/ending fund balances and contingencies totaling roughly $600,000.

- Staffing and days: the presentation listed a plan that the district estimates will save about $1,300,000 from eliminating about 4.5 certified positions and 5 classified positions. The district is negotiating a separate proposal to cut two school days districtwide (a savings estimated at roughly $332,000) and has discussed, with teacher negotiators, replacing one professional‑development day to reduce staff reductions at the teacher unit level. Presenters emphasized that any reductions to days would be negotiated with the unions and are reversible if the state provides additional revenue.

- Use of one‑time funds and transfers: the budget book and presenters show $1,000,000 in transfers budgeted to balance the general fund, and presenters said they will not move money from other funds to the general fund unless absolutely necessary during the fiscal year.

- Portland Clean Energy Fund and capital: the proposed total budget increases largely because the district included about $11 million in facilities and capital projects funded by the Portland Clean Energy Fund (a restricted grant with a five‑year spending window). Presenters said that fund is largely capital and restricted to energy‑efficiency and related projects.

Special education and high‑cost students

Finance staff and the district presenter described special education as a major driver of the gap between revenue and costs. The district reported spending in the special‑education program at roughly $10,400,000 in the most recent year while receiving only about $4,500,000 in special‑education–specific state revenue.

The district said special education represents about 23% of district expenditures, while approximately 15% of students have individualized education plans (IEPs). Presenters said 42 students with the highest needs account for about $2,000,000 of the district’s high costs; state reimbursement for those high‑cost disabilities, the district said, is projected to be less than $400,000 next year. Sherry, the district finance official, said there is currently no waiver that closes this gap and that the state’s high‑cost disability pool is limited (the district cited about $55 million statewide available for high‑cost claims).

Other fiscal details and assumptions

- Per‑student figures: the district reported it receives roughly $10,882 in state funding per student but estimates total expense per student of about $16,000.

- Property tax and equalization: staff said Parkrose’s assessed value is high because of commercial property in the district; that structure means the district receives more property tax revenue but less equalized state school fund support than districts with lower assessed values, increasing pressure to ask local voters for operating levies.

- PERS and fringe: presenters said PERS rate increases are a significant cost driver. The presentation showed Tier 1 and 2 employer rates rising (from the prior figure of 9.17% toward a projected 13.48%) and OPSRP rates increasing (from 6.33% toward 10.3%); district staff estimated that proposed state legislation reducing PERS rates could save the district about $332,000 if enacted. The district’s PERS debt carrying cost was identified as another multi‑million‑dollar pressure.

- Grants and federal funds: the district reported a reduction in federal ESSER funds that previously subsidized technology and other onetime items; federal grants in the proposal reflect an across‑the‑board 5% reduction compared with the prior year.

Process, next steps and staff notifications

Staff told the committee that impacted employees had not yet been formally notified and that required notifications under collective bargaining would occur next week. District staff asked committee members and board members to submit questions by May 2 so staff could prepare answers before the committee reconvened on May 7; presenters said the committee will consider approving the budget after that question‑and‑answer step.

What was not decided

There was no formal vote recorded in the meeting transcript. Committee members discussed whether to approve at this meeting or reconvene after receiving staff responses to submitted questions; no final action was taken.

Ending

District leaders closed the session by asking the budget committee to submit questions by May 2 and by scheduling follow‑up work for May 7. The budget book and presentation materials will be corrected where staff identified numeric entry errors before any adoption vote.