Albany schools project $6.1 million shortfall for 2025-26 amid enrollment decline and rising costs

The Greater Albany Public School District presented a preliminary budget projection showing a projected operating shortfall of about $6.1 million for fiscal 2025-26, driven largely by declining student counts and rising personnel costs.

Finance presenter Jane (finance presenter) told the board the district’s funded student count (average daily membership, or ADM) has fallen across five years by roughly 308 pupils and that district funding depends on the ADM. Using current inputs, Jane said the district’s beginning fund balance would fall from about $16 million for 2024-25 to about $13 million in 2025-26 and roughly $11 million in 2026-27 under the scenario shown to the board. She described the projection as provisional and said the Oregon Department of Education (ODE) will provide updated statewide ADM and tax estimates in coming weeks that could change the outlook.

The projection attributes the shortfall to several cost increases: health-insurance changes estimated at about $527,000, a 3% collective-bargaining-based COLA that adds roughly $3.8 million, estimated step increases around $600,000 and an assumed PERS cost increase of about $2.5 million above current expense levels. Jane said some revenue offsets are expected — for example, projected ESD transit funds of about $600,000 over the next two years — but not enough to close the gap under current assumptions.

Board members pressed for clarity on the inputs and possible responses. One board member summarized the problem as a “classic squeeze,” saying, “We’re reducing revenue while increasing expenses and the red ink is the only possible outcome,” and several trustees urged staff to continue refining estimates as ODE updates statewide figures.

District leaders also flagged two one-time timing issues that affect later years: bond levy expirations that reduce tax capacity even while the district may still owe debt-service payments for a year, and the uncertain statewide allocation of a recent gubernatorial funding proposal (the presenter showed a scenario using a state funding factor the presenter referred to as 11.37). Staff said those timing and allocation items will inform the 2026-27 projection.

Next steps the board heard included continued review of non-salary budgets, meetings with principals and grant managers, consideration of a hiring freeze, and targeted review of substitute and unemployment costs. Jane said she will bring updated numbers — including more explicit PERS calculations and the bond-debt-service timing — to the district’s budget committee when ODE provides statewide data.

Why it matters: Albany’s classroom funding is largely formula-driven and depends on ADM and state funding levels. The board was presented with an early, conservative scenario that indicates the district will need to consider expense reductions or new revenue assumptions to avoid drawing reserves to an unsustainable level.

What the board said next: trustees thanked staff for early warning and asked for follow-up detail on PERS, the capture rate for incoming kindergarten classes and scenarios that would soften the impact on classroom services and employees.

Provenance: presentation and Q&A began with the district finance presentation at the board packet review and continued through the subsequent discussion with board members and superintendent staff.