Hillsboro SD budget outlook: enrollment decline forecast, special‑education costs strain general fund

District financial staff told the Hillsboro School District board the district faces a modest enrollment decline, uncertainty in federal grant funding and continuing pressure from special‑education costs that are not fully reimbursed by state and federal sources.

Scott, the district financial officer, and Jeff Jones, Business Services Manager, presented the current budget outlook and enrollment projections during a work session. Scott said the district is assuming the governor’s recommended budget in its forecasting: “We are assuming the governor's recommended budget level, which is $11,360,000,000,” and acknowledged that final legislative action could change that assumption.

Preliminary enrollment projections use the district’s Dec. 1 submission as a baseline and show a small multi‑year decline in total ADM. Jeff said the district’s three‑year trend is roughly a 1–2 percent total enrollment decline and that kindergarten intakes remain a sensitive near‑term indicator. He told the board the district’s demographer report was pending and could revise projections when received.

The presenters flagged two major budget pressures. First, federal grant programs — notably Title I and school nutrition funding — are material to the district. Scott estimated federal revenue around $19 million (roughly 10 percent of general fund in their forecast year), with about $8.5 million in nutrition services. He said national discussions over federal program reductions mean the district is “monitor and assess” until more clarity emerges.

Second, special‑education funding is a structural strain. Presenters described a long‑running state cap on special‑education reimbursement (the presentation referenced a historical 11 percent cap) while the district’s effective cost rate has been higher; presenters said the district effectively covers millions in unreimbursed high‑cost disability spending from the general fund. Scott said the combination of caps, high‑cost disabilities and distance weighting amounts to “almost $9,000,000 a year” in district expense that requires local absorption. He gave an example that lowering class size by one across the district would cost about $2.3 million.

Board members asked about contingencies and next steps. Scott said the district is holding a 4 percent general fund balance target and will continue to identify sustaining savings and one‑time savings. He said an investment plan that integrates bargaining outcomes, enrollment projections and updated grant assumptions will be presented to the board in about a month.

Ending: District staff emphasized uncertainty around federal grants and the need for continued advocacy in Salem for higher state funding and for recognition of local special‑education costs. The board and staff plan more detailed budget modeling and an investment plan at the next budget update.