Portland Public Schools projects $4.1M state funding drop; roll‑forward model shows large levy pressure

Superintendent Skallon and senior director of finance Lisa Beck framed the FY27 budget process on Feb. 10, saying the meeting’s goal was to explain assumptions and invite community input ahead of a recommended budget presentation on March 10.

Skallon emphasized the forum was informational, not a proposal. She said the district’s roll‑forward model — which calculates the cost of carrying current programming into the next fiscal year while factoring in contractual salary increases, utilities and projected grant changes — shows a revenue shortfall driven principally by a reduction in the state subsidy. "Our roll forward budget was negatively impacted by that significant reduction in state funding," Skallon said.

Beck told the board the district had received a FY27 state subsidy statement showing a $4,100,000 reduction compared with the prior calculation and explained the decline is largely the result of a 15% increase in the state’s valuation used in the Essential Programs and Services (EPS) formula. She said other drivers included a 2.8% decline in a two‑year average enrollment measure and a roughly 8% reduction in multilingual learner counts used in the state calculation.

Using conservative assumptions for salaries and benefits, a 9% bump in insurance premiums and modest nonpersonnel inflation, the roll‑forward projection showed about a 3% increase in overall expenditures. To carry the district’s existing programs without change, Skallon said, the district would need about $8.67 million in additional local tax revenue — an illustrative baseline, not the superintendent’s recommendation.

The presentation also highlighted offsetting factors: the scheduled expiration of the district’s pension‑obligation bonds will reduce debt service by about $2.7 million in FY27, and the district expects an approximate general fund balance entering next year of $12.3 million — funds that board members discussed as a possible short‑term mitigant. Skallon cautioned the board against using one‑time savings to underwrite recurring costs.

Officials flagged adult‑education and certain federal grant declines (including Title funds) totaling roughly $478,000 and noted food‑service revenue adjustments. Beck said some federal COVID funding has ended and will not recur.

Skallon outlined next steps: the superintendent’s recommended budget will be presented March 10, followed by finance committee review and joint city/district committee meetings late March and early April. The board’s first read is scheduled for March 31, with a second read and potential approval on April 14 — the timeline driven by the city’s deadline to set the levy.

Board members pressed staff on timing for healthcare premium notices, the pace of the PERS payroll review, and how close the district might be to a state “minimum receiver” floor in the EPS funding formula; staff said premium notices usually arrive in April, the district is doing a labor‑intensive employee‑by‑employee review while the state side remains slower, and reaching the EPS minimum is likely several years away and hard to predict.

The board and superintendent stressed that these numbers are a starting point for policy choices the community and board will make in March and April, and that public engagement meetings scheduled across March will be opportunities for community input on any proposed levy or program changes.