Financial Stewardship

Dear Medford Families,

As we close out the year, we want to update you on Oregon’s state budget situation and what it may mean for schools. While the state's financial outlook continues to evolve, we know the state's total revenue will be lower in the coming years, and there are competing priorities across our state for state funds. The upcoming budget planning period for our district is important, and we want to make sure you have clear, timely information.

What’s Happening at the State Level

• Oregon continues to face a budget shortfall tied to reduced state revenue and federal changes, including cuts to programs like SNAP and Medicaid that support many Oregon families.
• In November, state agencies, including the Oregon Department of Education, presented potential reduction options as part of a statewide budget planning exercise.
• The State’s December Revenue Forecast showed some improvement, but the state still anticipates an overall shortfall going into the 2026 Legislative Session in February.
• It is important to note: these are planning scenarios only. No cuts have been approved or implemented at this time.
   

What This Means for Medford Schools

Right now, nothing about our day-to-day operations has changed. We are proactively reducing our spending this year in areas that do not directly impact the classroom.

We continue to monitor state updates closely and assess how different scenarios could affect school funding. Our priority remains the same: protecting the services and supports students rely on every day.

We will continue to be thoughtful with hiring and non-essential spending as we prepare for possible changes in the spring.

Looking Ahead

The next major update from the state will come with the Revenue Forecast on February 4, 2026, which legislators will use to balance the state budget. We will share what we learn and how it may affect our district.

We remain committed to keeping you informed, being transparent about what we know, and doing everything we can to protect student learning and well-being. Be on the lookout for our informational sessions coming out of our Financial Stewardship Committee in January. As always, information will be regularly updated on our Financial Stewardship page here.

Thank you for your ongoing partnership with our schools.

Sincerely,
Jeanne Grazioli
Interim Superintendent

Over the past two weeks, school leaders across Oregon (superintendents, business officials, and school board members) have received updates from the Oregon Department of Education and state fiscal analysts. The message: Oregon’s economic outlook is shifting, and schools should begin preparing now for possible mid-year budget cuts and into the next several years.

What’s driving this change?

There are two major factors:

1. A declining state revenue forecast. Oregon is bringing in less money than expected, which directly affects funding for public services, including schools.
    
2. Decreases in federal support. Key federal programs like Medicare and SNAP are expected to send fewer dollars to states, including Oregon, not just this year, but likely into the next several years.

Why isn’t the state using reserves?

While Oregon does have reserves (called the Education Stability Fund and Rainy Day Fund), those are limited and are typically used in major recessions. Right now, the state is being cautious, choosing to wait until the economic picture becomes clearer before drawing from reserves.

What does this mean for districts like Medford?

We’re being asked to plan ahead and potentially make difficult budget decisions this year to stay financially healthy in the long run.

We know families care deeply about how resources are used to serve students. Our commitment is to remain open and transparent about our financial situation and the steps we’re taking to ensure fiscal sustainability. We will continue to provide updates as more information becomes available from the state.

Anticipating Budget Adjustments to Ensure Fiscal Stability 

Where We Are in the Budget Process

As a reminder, at the May 22 Board Meeting, we recommended to the Board to postpone the adoption of the 2025–26 budget until the June 26 meeting. This decision was made in light of the latest state Economic and Revenue Forecast, which indicated that Oregon lawmakers will have approximately $755 million less to allocate over the next two years than previously expected.

Because state funding accounts for the majority of our budget, we needed additional time to assess the impact of this outlook before finalising our plans.

At last night’s meeting, the Board received an update on the evolving financial picture. Based on the most recent information from the state, we are now anticipating that our upcoming budget will need to include some reductions. This is a reality being faced by districts across Oregon, and while it is not the outcome any of us hoped for, we are preparing for the likely need to adjust.

What We Know

The state’s overall revenue outlook has declined, and the legislature has not yet finalised the K-12 education budget. This lack of clarity makes decision-making especially challenging. As of today, below are the key developments shaping our planning:

• The legislature has affirmed Governor Kotek’s recommended $11.395 billion State School Fund for the 2025–27 biennium.
• Our incoming kindergarten class includes a high number of students with special education needs, which will increase required special education investments.
• Recently passed PERS reforms are expected to help offset some of the anticipated gap in the State School Fund allocation.
• Student Investment Account (SIA) funding is expected to be lower than the levels approved by our district committee.
• We are anticipating reductions in federal funding, which will result in lower Title program allocations.

What’s Next

• The School Board is scheduled to adopt the 2025–26 budget at its June 26 meeting.
• We will continue tracking developments at the state level and adjusting our planning accordingly.
• We will provide timely updates as more information becomes available.

We remain committed to transparency and open communication as we navigate these changes together. Thank you for your continued support, patience, and partnership.

For more information on our budget planning process and the broader financial landscape, please visit our website.

Gratefully,
Jeanne Grazioli
Interim Superintendent

Budget Update: Hopeful News…

Last school year, we faced a $15 million budget shortfall over two years, which led to $7 million in cuts during our June budget process. Over the summer, we received promising news that could help prevent further reductions. Governor Kotek's proposed "reset" to Oregon's school funding system could add $515 million for 2025-2027, potentially addressing rising costs and allowing MSD to remain status quo for now. However, this plan still requires legislative approval. Advocating for sustainable school funding is crucial, and we are gauging if there is interest in forming a parent/citizen team to support this effort.  If you’re interested in a parent/citizen team, please click here.

June 21, 2024

Here is a brief update on our budget situation. 

Budget Adopted

Last night, the MSD Board of Directors adopted the 2024-25 school year budget, which includes $7.5 million in reductions. While these cuts are difficult, we are grateful they only resulted in three layoffs. We held tight to our priorities of:

1. Preserving our high-quality classrooms, including the educators who support them, as well as our curriculum

2. Safeguarding student wellness

3. Ensuring continuing innovation

4. Keeping safety and security as our foundation

You’ll recall the cuts are a result of financial distress experienced by districts across the state and are due to several factors, including:

• Inadequate funding to keep up with inflation 

• Inadequate funding to meet student needs, such as the continued lack of funding for special education, while costs increase significantly

• Declining enrollment

• Unfunded state mandates

At the Board meeting, the Board discussed several options moving forward, as we’re still left with another $8 million deficit next year, given the current state funding. Options under consideration include elementary school consolidation and asking voters to approve a local option levy.  In the fall, we will present a plan to the Board, and if we do move forward with consolidation or a local option levy, we will ensure that the public has opportunities to provide feedback. Note: There will be NO changes to schools in the 2024-25 school year.

While we won’t know the amount provided by the state until next Spring, we believe it’s important to do everything we can to improve the state funding model for public education. 

Legislative Priorities

We are working with members of our unions and other districts across the state, calling on state legislators to prioritize properly funding public education. Our legislative priorities are:

• Fund sustainable, high-quality public education. 

State School Fund allocations simply must account for a higher percentage of the state’s budget to support the needs of Oregon students adequately. 

• Increase the cap on special education (SPED) funding. 

The cap on funding special education was created in 1991 at 11% and remains at that level today. Statewide, 15% of students qualify for SPED services. MSD’s funding gap in SPED is $7 million this year alone.

• Stop passing unfunded mandates. 

New laws, without consideration of money to comply with those laws, means required increased spending. Examples: SB 819, Paid Leave Oregon, and new unemployment laws.

You can learn more about our budget, including frequently asked questions, by visiting our fiscal stability website. 

Thank you, 

Bret Champion
Superintendent

Transparency is one of our shared values, and in the midst of the funding issue affecting Oregon School Districts, we want to make sure you saw some updates we presented to our Board last night. View this video or read on!

One report centered on enrollment trends, how new apartments affect enrollment projections, and information on MSD facilities. Another report focused on our Coherency Plan and the staffing added to support it. You can read the highlights below.

For more details on the budget process, background, and proposed reductions, visit our fiscal stability website. 

Thank you for supporting our students!

Bret Champion
Superintendent 

Enrollment & Class Size

As you’ve heard from us a few times now, our enrollment at the elementary level is declining due to moving sixth graders to middle school, families making other choices (particularly homeschooling), and a decrease in births. Not everyone will notice the decreased enrollment in their classrooms, especially at the middle and high school levels. Why does enrollment matter? For several reasons. We are funded on a per-student basis. Part of our strategy to balance the budget is to adjust staffing to align with the number of students we have. Because of this, our current projections are that the proposed cuts WILL NOT impact class sizes. We currently have class sizes that are historically low and are within the threshold agreed upon by our teachers’ union. Click here to view class size projections for the 24-25 school year. It also matters because, as we look to be responsible fiscal stewards and potentially consolidate schools, we need to look at the additional capacity we have at each building. 

We’ve had a third-party demographer conduct a long-term study on our enrollment. If you’re interested in reading the long-term study, click here. 

New Apartments in Medford & Enrollment

We’ve received a few questions about new apartments popping up in Medford and whether that will impact enrollment. According to the City of Medford Planning Department, although Medford is seeing a surge in new apartment construction, it's important to note that most of these units are tailored toward smaller households, with a limited number of larger units suitable for families. Additionally, the demographic landscape of our community is evolving, with a significant portion of new residents being retirees who typically do not have school-aged children.

Even in traditional single-family neighborhoods, there's been a noticeable shift. Middle-aged couples, often with children who have already graduated, are increasingly attracted to our area due to the rise in remote work opportunities. Many of these individuals have relocated here after selling their homes elsewhere, drawn by Medford's relative affordability, and therefore have no ties to our school systems.

View a report from the City of Medford on this topic here. 

MSD Facilities & Spending

We’ve received a few questions about which buildings we own and which we lease. Here’s a list of our properties. Some important points:

• We renovated the old South Medford High School on Oakdale Ave. and turned it into a middle school based on community-led 2018-19 Facilities Optimization Committee input. At the time, our elementary schools were overcrowded, and moving sixth graders to middle school was an effort to create space, lower class sizes, and provide more opportunities for sixth graders. The committee wanted MSD to use all of its buildings before going to voters for additional funds. The work at Oakdale was phased over multiple years and self-financed by the MSD with a full faith and credit bond and an allocation of elementary and secondary school emergency relief (ESSER) funding to help offset the total cost.  

• When construction began at Oakdale, district offices and the old Central Medford High School were located there. We entered into several leases to relocate Central and the district offices (the latter spread over several buildings). 

• In 2023, we purchased the property on Center Dr. to create Innovation Academy. Innovation Academy is intended to fill the needs of students and families who desire something different from traditional high school education. The investment in the IA property was made with funding from our reserves. Our reserves remain healthy and are above the Board's set level of 5% of our total general fund balance. 

• In 2021, we purchased the building on Bartlett Street using ESSER funds. It was originally used for online school, reaching its peak enrollment immediately after the pandemic. Medford Online Academy is now co-located with Innovation Academy at the Center Drive location. We use the building on Bartlett today for Special Education Administration and services. Our Medford Opportunity School is also at this location.

Coherency Plan & Staffing

In 2019, we convened a group of staff, families, and community members to help guide our work. We created this document, which is our strategic plan. We’ve received several questions about staffing increases over the last several years. This document outlines the staffing we added since 2019 and how their roles support the work.