Silver Falls School District

In early 2024, the Silver Falls School District faced a serious financial crisis. A projected $4 million budget shortfall and an anticipated cash deficit of $1.29 million meant the district would not be able to make payroll without a loan. An in-depth analysis revealed that years of overspending, declining student enrollment, and an overreliance on temporary federal ESSER (Federal COVID relief funding) funds had led to unsustainable staffing levels and dozens of accounts starting the year over budget. Newly selected Interim Superintendent Kim Kellison, who began her role in July 2024, immediately launched a district-wide fiscal turnaround plan focused on transparency, accountability, and student-centered decision-making.

Under Kellison’s leadership, the district office team began the difficult process of completing staffing reductions of 20% to align with student enrollment, tightened procurement processes across all departments, and froze hiring across the district. The district paused out-of-state travel for employee conferences while continuing to allow student travel for competitions and events, which are typically supported through student fundraising rather than district operational funds. The district also tightened the process for overtime approvals. School building budgets decreased, with all purchases subject to new oversight measures. The district reintroduced monthly financial reports, conducted a detailed review of vendor contracts, and examined staffing overtime and stipend amounts to reduce costs and build reserves.

By the close of the 2024–25 fiscal year, the district had exceeded expectations with a $3 million ending fund balance, paid off over $595,000 in past debt, and set aside $800,000 for capital improvements and future PERS obligations. Silver Falls School District is now on a more stable financial footing, thanks to a shared commitment to fiscal responsibility and student success.

Beginning in the 2024–25 school year and continuing forward, Silver Falls School District is proud to offer free breakfast and lunch to all students at all schools through Oregon’s Community Eligibility Provision (CEP). This program ensures every student has access to nutritious meals at no cost to students, families and the district, supporting both health and learning.

Additionally, the district recently ended its nutrition services contract with an outside vendor to begin running the program in-house. This move allows the district to have more control over menu items, quality, and costs. By increasing control, The district is able to significantly reduce expenditures and save the district money.

In 2022, Silver Falls School District completed a state-funded seismic assessment through a Technical Assistance Program (TAP) Grant. This assessment made the district eligible for a $1.72 million Seismic Rehabilitation Grant, which was awarded to strengthen the Silver Crest Elementary School library addition. These improvements ensure the facility is better prepared to withstand an earthquake, enhancing safety for students and staff. The project was completed in August of 2025. 

State funding is the primary source of revenue for Oregon’s public schools. The State of Oregon allocates money for K-12 education from several state sources, including:

• State General Fund: This is largely funded by state income taxes paid by individuals and businesses. The General Fund provides the bulk of the state’s contribution to schools.
• State Lottery Funds: A portion of Oregon’s state lottery proceeds is dedicated to public education each year.
• State Business Taxes (Student Success Act): Oregon’s Corporate Activities Tax (a business tax) – created by the Student Success Act – generates additional revenue for schools. These funds support the State School Fund and specific education grants.

All of these state revenues are combined into the State School Fund, which is the main pool of money for K-12 education. The State School Fund dollars (together with local funds) are then distributed to school districts through a formula based on the number of students in each district. This means the state’s money is allocated in such a way that every district gets a similar base amount per student, regardless of local wealth, helping to maintain fair funding across all Oregon schools. State funding typically makes up around two-thirds of the total resources for Oregon school districts, making the state government the largest contributor to public school funding.

Local funding comes mainly from resources within each community. The most important local revenue source for schools is local property taxes. Every school district in Oregon has a permanent property tax rate, and the taxes collected on local properties provide a substantial portion of that district’s school budget. On average, these local property taxes account for roughly one-third of Oregon’s school formula funding. In practical terms, the taxes homeowners and businesses pay on real estate in a community go directly toward the public schools in that community. In addition to property taxes, there are a few other local sources that contribute to school funding on a smaller scale:

• Common School Fund: Oregon has a state-managed trust fund (originating from public land assets) that distributes money to school districts statewide. Each district receives a share of Common School Fund earnings each year, which adds a small boost to their local revenue.
• County & Other Local Funds: Some counties provide funds to districts from sources like timber harvest receipts on county lands. These County School Funds and other miscellaneous local revenues are included in the funding formula, though they make up only a small portion of overall funding.
• Local Option Levies: In some communities, voters choose to approve an additional property tax levy (called a local option levy) to give their local schools extra funds beyond the permanent tax rate. These levies are temporary and capped by state law (limited to a certain amount so that districts with a local option don’t far outspend others). A local option levy can provide valuable additional money for a district’s programs, but not all districts have one, and those that do must renew them with voter approval periodically.
• General Obligation Bonds: When approved by voters, school districts may issue general obligation (GO) bonds to fund major capital improvements such as building new schools, modernizing classrooms, or addressing critical repairs and safety upgrades. These bonds are repaid through a separate property tax rate and cannot be used for daily operations or staffing. GO bonds provide a vital local funding mechanism for long-term investments in school facilities.

All local funding – especially the revenue from the standard permanent property tax – is taken into account by the state’s formula. If a district raises more money locally, the state School Fund formula will contribute relatively less state money to that district, and if a district raises less locally, the formula provides more state aid. This approach ensures that total funding (state + local) per student remains fairly balanced across Oregon’s school districts.

Federal funding makes up the smallest share of K-12 public school financing, but it is targeted to support important programs and student needs. Oregon’s school districts receive federal education dollars primarily through special grants. Key federal funding streams include:

• Title I – Education for Disadvantaged Students: The federal government provides extra money to schools and districts with a high concentration of low-income students. These Title I funds help schools offer additional support and resources to raise the achievement of disadvantaged students.
• Special Education (IDEA) Funding: Federal law authorizes funding to help cover the costs of special education services for students with disabilities. While the federal government typically pays only a part of these costs, these funds (under the Individuals with Disabilities Education Act, IDEA) assist schools in providing required special education programs.
• Child Nutrition Programs: The federal Department of Agriculture supports school meal programs like the National School Lunch Program and the School Breakfast Program. These funds reimburse schools so they can provide free or reduced-price meals to eligible students, ensuring children have access to nutritious food at school.

Federal funds generally account for a small portion of a school district’s total budget (often around 10% or less of overall funding). Despite their smaller share, these dollars are critical because they are specifically aimed at helping vulnerable student populations and maintaining important services (such as meal programs and special education) that might otherwise strain local budgets. In this way, federal support complements the state and local funding by targeting areas of need and supporting the education system’s overall mission.

Summary: In combination, state, local, and federal funding provides the financial foundation for Oregon’s K-12 public education system. The state’s contributions (from taxes and lottery) and local community funds (like property taxes) cover most of the day-to-day costs of running schools – paying for teachers, facilities, and instructional programs. Federal dollars, while smaller in amount, ensure that specific programs (especially for high-need students and nutrition) are adequately supported. Together, these funding sources enable Oregon’s public schools to serve students in every community and to uphold a quality education for all.