News that the Newberg-Dundee school district has a nearly $4 million deficit elicited quick response from a number of groups, including the school board that must take steps to address the issue by the end of June.
The board, as well as the superintendent and a local education advocacy group, released statements this week on the issue.
Board issues statement
Following the first round of meetings the school board issued a statement alerting the citizenry that the district is $3.7 million in debt for the current fiscal year.
“This stunning disclosure is as much a shock to members of the school board as it is to you,” the statement said. “Despite frequent inquiries of the superintendent on the status of the district budget, the school board was regularly assured that any potential budget shortfall would be managed through savings from staff retirement and resignations. Last week at the May 14 board meeting, the board was told there were new concerns about the current year and proposed 2024-25 budget.”
The statement explained that the district was required to return $1.1 million to the Oregon Department of Education for overpayments and that “according to a recent independent budget review, the district is short over $10.7 million to balance the 2024-25 school budget.”
During the meeting, a board member wondered how it came to pass that the district was required to pay back the state for some of the funding it received.
“I think it’s a combination of things,” Bixby said. “I think the lower enrollment. I think part of it has to do with how the state calculates where you’ve carried on a higher enrollment for two years, so when that high year drops off it can really affect your state school fund even if you didn’t notice the year before. So, you have two years of decline that can hit you all at the same time. It was a bad estimate of what I anticipated our revenue being.”
The statement went on to acknowledge the board has about a month to adopt a new budget for the next school year and that the next step is to fully understand the budget crisis and formulate a plan, then share that plan with the taxpayers.
Superintendent responds to controversy
Superintendent Stephen Phillips issued a statement soon after the board, explaining that the shortfall emanated from a sharp and sudden decrease in funding from what it projected the state would issue and what it actually received.
Phillips added that increased funding for larger school districts in the state meant unexpected decreases in funding for smaller districts this year.
“For instance, Portland Public (School’s) allocation increased by $5,825,766, impacting the funds available statewide,” he said. “This adjustment process has contributed to our current revenue shortfall. Moreover, on May 9, we were informed of a $1,247,985 negative adjustment from the previous fiscal year, increasing the total SSF shortfall for 2023-24 to $4,361,154.”
The district’s ending fund balance came up short due to state funding adjustments as well, Phillips said, adding other general fund revenues — such as student fees, interest, rentals and others — are projected to fall short by more than $421,000.
“These revenues are highly variable and depend on external factors beyond the district’s control,” Phillips said. “When the 2023-24 budget was built the district was still adjusting to post-COVID conditions, leading to overestimated projections for these items.”
A total revenue reduction of more than $5.54 million, expenditures over budget by more than $2.91 million and an unsustainable ending fund balance contributed to the dire straits the district finds itself in, Phillips concluded.
“The combined projected revenue reductions and over-expenditures, totaling $8,475,977, have resulted in the district’s budget shortfall,” he added. “We are actively seeking solutions to address this financial challenge and ensure the continued provision of quality education for our students. I understand the angst, the confusion and the anger. At this time we ask for your support as we move through this process together towards 2024-25.”
Advocacy group calls for resignations or firings
Newberg Neighbors for a Better School Board has initiated a petition on Change.org seeking to force the resignations of school district leadership.
“News about the staggering deficit in the Newberg school district budget should compel its leadership to resign,” the group said in a prepared statement. “After hearing persistently this year that ‘finances are great!,’ a financial analysis discovered that our schools are facing a $3.7 million deficit this year, with significantly more deficits on the horizon for 2024-25.”
“A lack of transparency, combined with incompetence, accounting errors, an unwillingness to change, lucrative contracts for administrators — these are all actions, taken by leadership, that put our district and its students in financial peril. For these reasons, Superintendent Stephen Phillips, Deputy Superintendent Scott Lindenberger and Director of Finance Heather Bixby should resign.”
The statement went on to say if the administrators remain in their positions the district will suffer more calamity.
“The community’s children have already suffered disruptions in their education, alongside the loss of beloved teachers and severe budget cuts will affect them most,” the group said. “Continuing on this pathway will ruin our district for a generation, if not more. … We need competent leadership in Newberg who can right this sinking ship. We need leadership who will be transparent about where we are, so we can know where we need to be. We need leadership who put children first.”
According to officials form Change.org, the petition had gathered more than 1,200 signatures as of May 30.
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