Local school districts view positive state budget update with mix of caution, optimism

Local school districts are still anxiously awaiting February’s legislative short session, when lawmakers’ rebalancing of the state budget can affect education funding. But last week’s financial forecast provided a bit of hope.

The Nov. 19 forecast from the state’s economists projected Oregon has a much smaller budget deficit going into 2026 than previously expected.

“We’re cautiously optimistic that the impact of the forecast will not mean a midyear adjustment,” said Kraig Sproles, superintendent of Bethel School District.

The economic update said that Oregon received an additional $309.5 million, largely through adjusted corporate income tax receipts. The additional money shrinks the budget gap to $63 million.

The gap formed after federal lawmakers passed the GOP’s tax-and-spending bill this summer, decreasing the amount of federal and state tax revenue bound for the state.

Before the November financial forecast, the Legislative Fiscal Office was working with state departments, including the Department of Education, to prepare budget scenarios with up to 5% cuts for the Legislature’s consideration in February.

“We were expecting the worst,” Sproles said. “I was relatively nervous that we were going to have to cut positions.”

It’s still unclear what the economy will look like in February and how the Legislature will right-size the budget, but Sproles said he was pleased with the update.

Regardless of whether money from the State School Fund is clawed back in February by the Legislature, Superintendent Miriam Mickelson of Eugene School District 4J and Bethel’s Sproles have said they have enough money saved to preserve current staffing to the end of the school year.

The question is what a midyear adjustment would mean for the 2026-27 school year. 

Bethel, 4J and Springfield Public Schools are preparing next years’ budgets and already planning to make large cuts due to declining enrollment, the end of COVID-era relief funding and heightened employee costs. Kelly McIver, 4J’s director of communications and intergovernmental relations, is less optimistic than Sproles about the state’s financial realities.

“With the overall economic picture this year, and the volatility of everything related to government funding and education, there is still serious concern about potential cuts to state funding after the February forecast,” McIver said.

Sproles said he will be pushing lawmakers to use any reserves they possibly can to avoid cuts to the State School Fund.

Economists have cautioned that recent forecasts are incomplete, in large part because employment data has been missing due to the recent federal government shutdown. While Oregon’s chief economist, Carl Riccadonna, said he expects the state’s economy to moderately improve in 2026 due to lower interest rates, he added that decisions made at the federal level could change the economy in a short period of time.

Springfield is relying on a longer-range view to inform its budgeting.

“The November financial forecast did not alter the budgeting process for our teams,” said Brian Richardson, director of communications and community engagement for Springfield schools, adding that officials are continuing work on next year’s budget.

“The finance team is more closely watching the long-term economic forecast and the potential impact on state budgets,” Richardson said.

Both Springfield and Bethel school districts are still bargaining with their teachers’ unions, and 4J with its classified staff union. The results of these negotiations will also affect the districts’ budgeting and staffing levels.