Interim school superintendent Paula Radich appeared before the Newberg school board on June 18 with an update on the monumental budget shortfall the district is facing over the next several years.
Radich, who served as superintendent from 1999 to 2013 before retiring, didn’t pull any punches in her assessment of the situation, including on the issues of oversight and accountability, where she found that school administrators had little or no involvement in creating and/or monitoring their budgets.
Radich noted, “the overall responsibility for (the) entire budget was vested in one person” and that there is “no evidence of a consistent, intentional method for allocating staff.” She added that there is, “no evidence of ongoing intentional monitoring of class size, staffing or budget,” and a “perceived lack of understanding as to how the system should function.”
The shortfall for this school year is estimated to be $1.7 million, but the actual number remains unknown.
“And we know that that amount can swing either way by at least a couple million, hopefully the positive way but we don’t know yet,” Radich said.
The predicted shortfall for the 2024-25 school year is much more dire: upwards of $12 million.
“And again, these are moving numbers because of the work we’re doing,” Radich said, adding that the board, the district administration and a representative from the Oregon Association of School Business Officials have been working together to address the crisis.
How we got here
Radich broke down her June 18 PowerPoint presentation to the board into themes, starting with “How We Got Here?”
Looking at the district’s general fund budget and basing their assumptions on reports from the Oregon Department of Education, she determined that steep enrollment declines, staffing increases, over expenditures, budgeting errors and reduced class size ratios had contributed to the shortfall.
On enrollment, ODE figures from 2012-13 to 2023-24 saw an 18% decrease in Newberg school district enrollment from 5,151 to 4,201 students, a difference of 950, and that figure has ticked up to 21% fewer students recently. Radich contrasted that to enrollment in neighboring districts in Forest Grove, McMinnville and Sherwood, which saw declines in the 0.6% to 2.2% range during the same period.
Oregon’s state school funding to school districts is directly tied to enrollment. The state’s funding per K-12 student was $11,920 this school year, meaning the loss of 100 students in the district would result in an estimated $1.2 million decrease in state funding.
The ODE report surmised that some students emigrated to charter schools, some were exclusively homeschooled, while others transferred out of the district, went online or enrolled in private schools.
“So, I’d like to take a look and conduct a very in-depth review of enrollment within the last five years at the Newberg public schools,” Raidch said. “Where did our students go, and why did they go?”
She added that she’s bringing in a retired administrator from the district who will work for free and partner with a specialist to collect the data over the past five years from families who have left the district.
“And the administrator’s job will be to contact families individually and see if the families are willing to share with the district their reasons for leaving,” Radich said.
Staffing expenses
Staffing increases were next up in the presentation, and Radich admitted to being a bit bewildered at the state of affairs in the district. While student enrollment has decreased precipitously, staffing has increased at an unsustainable rate, she said, pointing to a graph illustrating the path of the two.
“Those lines are supposed to intersect as best as possible,” she said. “The last year they did was in 2011-12. We cannot continue to hire staff when we do not have the funds to support it, or the students.”
The escalating costs of operating the district’s schools have further exacerbated problems, particularly through skyrocketing utility costs, teacher leaves of absences, litigation and salaries and benefits.
Radich said that utility costs, for example, saw a 55.3% increase from 2011-12 to 2020-21 (plus $194,000) and a 75.9% increase from 2020-21 to 2023-24 (plus $414,000). The 2023-24 bill so far has topped $959,000.
The district expected utility increases at the schools that saw major expansions, such as Edwards Elementary and Newberg High School, but increases at buildings with no expansion are as high as 71% at Antonio Crater Elementary, with a footprint the same as ever.
“We have got to get a handle on that,” Radich said. “This is not acceptable though, this number, we cannot continue this — the cost is too great. We’re taking money out of the classroom.”
While administrators want school buildings to be comfortable, Radich said they must take a hard look at their systems to see if there is anything that can be done to mitigate the utility costs, which increased by 51% across all district buildings over the past year.
“That’s not sustainable, not with our current budget situation or even if we were in better times,” Radich said.
While benefits (increasing only 0.4% over the past two school years) and salary increases have been relatively modest recently with a decrease of 0.06% from the 2021-2022 to 2022-23 school years, that figure could be somewhat off, Radich said, because a large number of those employees were considered contractors and budgeted in a different manner. However, the savings of the past two biennium were lost by a 11.5% increase from 2022-23 to 2023-24, amounting to the district paying more than $38.76 million in salaries during that time.
Greatly exacerbating the salary paradigm are employee and teacher absences, which went from a 9% decrease from 2021-22 to 2022-23 to a 21% increase from 2022-23 to 2023-24 — including 8,018 absences this school year.
“Of considerable expense and grave concern in not only this district, but across the state of Oregon, is the absentee rate (for all employees),” Radich said. “Twenty-one percent increase in people taking leave; twenty-one percent! That is not sustainable, and it’s not acceptable. Our students deserve to have our staff every single day. And I understand there are exceptions, but this is unacceptable. We have to take some measures. This is costing us money — when they’re on leave they’re getting paid and then we’re paying someone to take their place.”
Radich added that she understands recently passed state legislation makes it easier for people to take paid leave, but, “that doesn’t mean they need to all the time or have to or exhaust their leave. This is the public’s money. This is taxpayer money. We have to be better stewards of these leaves and talk with our employees about what’s it going to take to keep you on the job. What’s going on here that’s creating this huge change in absentee rate?”
Legal costs
The district’s ongoing legal problems — including multiple lawsuits, settlements and tens of thousands of dollars paid in fees to attorneys arguing these cases — are also adversely affecting the district’s bottom line, Radich said. The district spent a total of $137,873 and saw a 40% downturn in legal costs from 2021-22 to 2022-23, but then experienced a 160% increase ($359,362) from 2022-23 to 2023-24.
“That’s money that should be going to the classroom,” she said.
Inaccurate budgets
Radich next drilled down on inaccurate budget estimates for property tax proceeds, state school fund estimates, enrollment, staffing and beginning and ending fund balances.
Class size ratios are particularly troublesome, she opined. Class size ratios in 2011-12 for K-3 students averaged 26 students to one teacher, 29:1 for grades 4-6, 30:1 for grades 6-8 and 30:1 for freshman through senior high school students. In 2023-24 the K-5 average was 18.69 students per teacher, with similar numbers for middle and high school classes. In short, there are too many teachers in the district for the number of students enrolled.
“It doesn’t matter how wealthy a district is — these are not sustainable,” Radich said.
What’s next?
Radich said the process of addressing the budget shortfalls will continue with the help of stakeholders to develop criteria for framework for proposed budget reductions, elicit input from staff on potential budget reductions and opportunities for savings and hold listening sessions to get input from staff, parents and community members on proposed solutions. A regular budget Q&A will also be posted and shared with stakeholders.
“We don’t have all the answers,” she said. “We had some wonderful suggestions today about strategies that we needed to consider when we looked at the budget — things that would help us.”
The timeline forward involves reaching a consensus on budget reductions, creating a potential reduction in force (RIF) list based on the arrived-at criteria, holding listening sessions June 25-26, compiling comments from those sessions on June 28 and then drafting budget reduction recommendations. The district’s board of directors must adopt, by state law, a budget by the month’s end.
Radich left the board with a somewhat optimistic message, albeit tempered with caution:
“I’m excited about the energy that we have, the hopefulness, but I’m worried a little bit that we’re in denial. I think when you move you anticipate everything will be as it was when you return. That is not the case. This is a massive hole. This means jobs, this means peoples’ livelihood, their families … We have had some resignations — I understand that — but it’s a very, very difficult time. … There will be some very difficult days and we have not even gotten close to those yet.”
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