How Can Portland Public Schools Afford Its New Teacher Contract? With These Taxes and Layoffs.

Union leaders rolled the dice that the district could afford it without cuts to their ranks. That may depend on Salem—and the mood of taxpayers.

The first rule of Portland Public Schools budget cuts: Don’t call them budget cuts.

“We refer to it as a ‘gap,’” says Will Howell, a PPS spokesman.

So, the school district faces a $130 million gap because of the labor contract it signed last week with the Portland Association of Teachers—an agreement that was largely a tremendous victory for educators. Now the district will need to find $10 million in savings this school year, $41 million next year, and $79 million the year after that.

That last number assumes that school funding remains flat; it could change depending on what, if anything, happens on the May 2024 ballot and at the spring 2025 session of the Oregon Legislature.

But at least one official is saying the C-word.

“The size of the cuts we need to make are going to require cuts to direct services,” Portland School Board member Andrew Scott says.

The district will likely find the $130 million in the following places, starting with your wallet:

TAXES

Some of the cost of the PAT contract could be passed along to Portland taxpayers. In 1999, the Oregon Legislature granted school districts the right to present voters with property taxes, known as local option levies, but placed a cap on the tax rate. Portland voters have reliably renewed a local option levy for schools every five years, which pays for about a quarter of the district’s teachers. The current tax rate is $1.99 per $1,000 of assessed value.

Scott and a few parent and teacher advocates went to Salem last legislative session to ask unsuccessfully for the cap to be raised.

Five months and one nasty teachers’ strike ago, the idea of increasing the amount of the levy polled at 64% of voters in favor, according to Scott: “a remarkable number when you’re talking about increasing taxes in an already too-high taxed jurisdiction,” he says. He and fellow board member Julia Brim-Edwards acknowledge that public sentiment may have changed since then.

“That would be a tax increase, and that would be a more challenging conversation with voters than a simple renewal,” Brim-Edwards says.

Scott is also eyeing the state’s income tax kicker, the rebate of unexpected revenue that remains popular with voters who get it. (He mentioned the idea at a Nov. 28 public hearing, and the hate emails have already begun, Scott says.) Sending some of the kicker to schools and raising the levy cap, along with other lobbying in Salem, is “the fight that we should have been having all along,” he adds.

ADMINISTRATIVE CUTS

Portland Public Schools spends about $60 million annually on administration—accounting, payroll, legal counsel, human resources, information technology and more—out of its approximately $877 million annual operating budget, Howell says.

This is the area where the teachers’ union suggests the district could save some coin: “PPS can…find savings in administration, central office management, and outside contracts—and from their general fund balance, which has grown year after year,” PAT president Angela Bonilla tells WW.

Scott disagrees and thinks PPS administration is already lean. A 20% cut to admin would mean an additional $12 million a year—”but I think families would feel it,” he says.

The district’s communications team is also targeted by the union. PPS has a comms team of nine, with an annual budget of about $2.3 million.

The school district could also examine out-of-state travel, conference attendance, subscriptions, and freezing senior administrator salaries, Brim-Edwards says—all those expenses are part of the administrative budget and cutting them, she says, is on the table.

TEACHER LAYOFFS

One way to make the contract pencil out is to pay teachers more but employ fewer of them. That makes some sense, given that PPS is losing students.

Before the pandemic, nearly 47,000 children attended Portland Public Schools and the district employed about 3,400 teachers, according to the district. Those numbers stood at about 43,000 students and 3,600 teachers for the 2022-23 school year.

Those numbers are crucial because funding follows the students—each child walks into the classroom with a figurative dollar sign over their head.

Brim-Edwards says the school district already started reducing the number of classroom teachers during the last budget cycle through attrition, in response to enrollment declines. (Despite the three-year numbers that reflect an increase in teachers, the district projects it will end this school year down 100 educators.)

The budget process to try and fill the “gap” formally begins early next year when the district asks families and staff for feedback. Superintendent Guadalupe Guerrero proposes a budget in April, the School Board votes on it in May, and it’s formally adopted in June.

With a contract this size—$175 million over three years—union leaders rolled the dice that the district could afford it without cuts to their ranks. “It’s a calculated risk that they’re taking, and we’ll see how it plays out,” Scott says.

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