4J Forecasts Cloudy Finances, More Layoffs for 2027-28

Eugene School District 4J faces a financial shortfall of $30-$35 million in early projections for 2027-28, Superintendent Miriam Mickelson shared with the board of directors on Oct. 21.

The board unanimously approved a resolution directing the superintendent to plan for a balanced budget with necessary reductions, including authority for another year of reduction-in-force, or layoffs.

"I just want to say how indescribably hard it is to be having this conversation again, especially after the significant budget reductions we made last year," Mickelson said. "We have funding challenges and addressing them will take time and regrettably and painfully require more difficult decisions."

The district made around $30 million in reductions heading into the current year, including reducing staff by some 265 full-time equivalent positions. The district carried around $16 million in structural deficit into the year, which will be covered by using one-time funds including a transfer from the facilities reserve, the sale of the Wells Fargo building and remaining financial reserves of unspent funds. The carry-over of more than $16 million is ballooned by projections of inadequate revenue and increasing costs to continue to provide the same services next year.

A host of unknowns make projections difficult and subject to change in the months ahead. The largest question mark is the eventual amount of the State School Fund, the primary source of funds for Oregon schools. The state is entering a new biennium, and who the governor will be is not certain, let alone what a governor's budget will propose for K-12 education or what the Oregon Legislature will ultimately approve as part of the state's budget, next June. 4J's budget for 2027-28 must be planned and adopted before staff will know what it can expect from the state for the next two years. 

Also unknown is exactly where the district's enrollment will have fallen, but with hundreds fewer students this year than last, further declines related to dipping birth rates are expected as in districts across Oregon. The state funds schools on a per-pupil basis, and 4J is declining faster than other districts, so the district gets a smaller slice of the funding pie. 

Costs are also on the rise, and the eventual rate of inflation (including escalating fuel costs) is a question mark. The full scope of employee costs can't be known yet as negotiations for a new licensed contract have not yet begun. 

Acknowledging the many variables sure to change, Mickelson and Interim Finance Director Bob Blyth have presented a range of $30-$35 million for the deficit, with the lower amount produced by a possible 8.5% increase in the State School Fund, and the higher shortfall using a more conservative 4.5% projection. Districts around the state are using different estimated increases for their planning, with no reliable clues yet as to what the legislature may do next spring. 

The superintendent on Oct. 21 also shared her plan to introduce possible cuts in phases, as she did last year, with a change to the high school schedule as well as non-school-based reductions to be delivered in December. Building-based licensed and classified reductions would be shared in February. School closures are not expected in advance of 2027-28.

Mickelson and her staff will soon schedule in-person and virtual opportunities for students, families, staff and community members to ask questions and share thoughts about the financial planning process. News will be posted in district newsletters for families and staff, as well as 4J's financial planning web pages.