Our Fiscal Reality

The Medford School District has made significant progress toward long-term financial stability, thanks to strategic planning and community support. While we’re no longer facing a $7.4 million projected shortfall heading into the 2025-2026 year, we continue to navigate complex budget pressures that affect schools across Oregon and the nation.

Our greatest challenge remains aligning state funding with rising costs and student needs. Like many districts, we face:

• State funding that doesn't keep pace with inflation. School funding increases typically range from 3–4% annually, but costs for salaries, benefits, utilities, and curriculum continue to rise faster.
• Increased personnel costs. For 2025–26, bargained cost-of-living adjustments (3%) and step increases continue to impact our budget, as does a $1.75 million increase in employer pension contributions.
• The expiration of federal COVID relief (ESSER) funds, which had temporarily offset expenses such as staff compensation and mental health supports.
• Rising costs tied to Oregon’s Public Employees Retirement System (PERS). Employer contribution rates continue to grow due to the system’s unfunded actuarial liability. MSD’s estimated share of the PERS liability, depending on the analysis method, ranges from $139 million to as high as $450 million — making this a persistent and significant budget pressure.

Enrollment trends remain a key factor. 

Elementary enrollment in the Medford School District has declined by approximately 25.5% since 2019, a reduction of over 1,750 students. This decline is largely attributed to a statewide drop in birth rates and an increase in educational options available to families, including homeschooling, charter schools, and private institutions.

Over the past five and a half years, the number of elementary schools with fewer than 400 students has grown significantly — from three schools in 2019 to all but three as of December 2024. The average elementary school enrollment has dropped from over 450 students to just 342.

As enrollment decreases, so does state funding, which is allocated on a per-student basis. Maintaining equitable staffing and services across multiple smaller school sites becomes increasingly challenging under this model, placing additional strain on district resources and operations.

Special education costs continue to outpace funding. 

Although nearly 17% of Medford students qualify for special education services, the state only provides full funding for up to 11% of the student population. The resulting gap leaves Medford responsible for roughly $9 million in unfunded costs. Despite this shortfall, the district’s commitment to supporting students with disabilities has yielded meaningful outcomes — the graduation rate for students receiving special education services reached 75.2% in 2024–25, exceeding the state average of 68.8%. These results underscore the potential of targeted investment; with adequate and equitable state funding, even greater success is within reach.

Despite these challenges, the proposed 2025–26 budget prioritizes classrooms, student safety, behavior support, and innovation. While the district is projecting a $3.3 million one-time deficit (primarily to replace the aging South Medford High track and field and PERS costs), our ongoing revenue and expenses are balanced—marking an important milestone in our path to sustainable operations.