October 11, 2001 11:00 pm

The Observer begins a series of stories today on how finances and declining enrollment are making it difficult for some rural schools in Oregon to stay open.

By Jason Moore

The (Bend) Bulletin

Grant County schools Superintendent Newell Cleaver suspects this may be the year one of his schools will be condemned.

He hopes it wont there is no room elsewhere for the students but the building is nearly 100 years old and is literally falling apart.

Theres far less guesswork concerning another school, where $500,000 in roof repairs and a new $50,000 boiler will have to remain on hold. Grant County is timber country, and like so many other timber-dependent communities, when Oregons logging industry went south over the past decade it took the communitys financial tax base with it.

Nevertheless, the district asked voters this year to approve a bond for new schools.

The economy is so bad, no matter how much people agreed with us, the ability to pay that additional $10, $15 or $20 per month just wasnt there, Cleaver said. The chance of our schools operating at the quality were at now is pretty remote unless we solve our financial problems. And its not just a John Day problem, its a state problem.

Its been 10 years since a controversial overhaul of the states education system, when responsibility for school funding was shifted away from local communities to state agencies. Key parts of the sweeping reform package were designed to help small and rural school districts.

And, school officials say, some of the measures have helped. The Robin Hood-style funding equalization formula, in particular, has helped prop up several small, isolated districts that might have been forced to consolidate or shut down otherwise.

Of the 198 school districts in Oregon, 98 enroll 1,000 students or less. It is many of these smaller districts, dotting rural Oregon, that continue to face chronic financial woes. Their problems are complex and varied, but school officials often point to a troubling recipe: A crumbling local economy mixed with flat or declining enrollment and a one size-fits-all state funding formula that can ignore the unique difficulties of life in a small, rural school district.

The natural resources industry in this state is taking a hit. In my district, were basically dependent on that industry, said state Sen. David Nelson, R-Pendleton. But if you dont have jobs, you dont have families. And if you dont have families, you dont have children. When your budget is based on the number of students you have, that means problems.

To be sure, some small districts are doing just fine, and many larger ones, including Portland and Eugene, have severe problems of their own. In fact, schools are closing across the state in reaction to demographic shifts and a changing economy. Funds are stretched thin just about everywhere. But in rural Oregon, the stakes can be woefully high.


Grant County is an apt case study for the plight of small districts. The John Day School District, the largest of five in the county, lost about 100 students over the past year. In recent years, so did the small districts in Curry, Baker, Lake and Wasco counties, among other areas.

Increasingly, districts such as John Day find themselves in a downward spiral as their communities grapple with stagnant economies.

Grant County, for example, relied heavily on revenue from the timber industry, which took a nose dive in the 1990s when environmental restrictions and lawsuits drastically reduced logging on federal lands. While urban pockets around the state prospered greatly from the last decades technology boom, rural Oregon was largely left behind.

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Like other communities, many families in Grant County followed the timber jobs out of town, and the school district now receives less state revenue because of declining enrollment. By comparison, losing 100 students would hardly be a blip on the radar screen at the Portland School District, which enrolls more than 60,000 students and has a $361 million annual operating budget.

But at roughly $5,133 per student the amount the state now gives a district for each student it enrolls those 100 empty classroom seats in John Day mean the now 900-student district will have to pay teachers and heat schools with at least $500,000 less in the bank.

Half a million is a lot to lose out of the districts $8 million operating budget.

It means the leaky roofs will have to stay.

I dont have the luxury of taking any classes or teachers away or any state requirements away," Cleaver said. At the same time, we're being told, you must have foreign languages, you must have physics, you must do this, you must do that. So, to make things work, I dont fix the buildings. I move kids out of the corner of the building because it leaks."

Other districts have their own ways of coping.

In Burns, hardly a parent can escape time on the school fund-raiser circuit. New paint for the classroom, new football uniforms. We have to do fund-raisers for anything and everything, says Cathy Swisher, a hair stylist and mother of 15-year-old Savannah and 11-year-old Garrett.

Despite parents efforts, the district is close to using up the last $1 million of its cash reserves, so theres talk of cancelling sports programs.

That would be a huge blow to Swishers daughter, who plays just about every sport, she said.

A lot of time you cant educate a child if they dont have a reason for being there. And sports does that," she said. You can keep cutting and keep cutting, but when does it stop? Elsewhere around the state, other small districts have switched to four-day school weeks.

The school board in the tiny Burnt River School District in Baker County decided to open a boarding school for international students to stave off consolidating with another district.

Exchange students also help the remote Ukiah School District in Umatilla County stay in the black. Like many small districts, the Ukiah school system is one of the largest employers in town and the focal point of the community, residents say.

If we consolidated, you might as well shut the town down, said Dan Korber, who doubles as superintendent and principal of two schools. Its something you need to fight for. You do whatever it takes to keep the doors open. But there just has to be an acknowledgment of what small districts are going through. I dont know how much longer we can hold on."


Although it's been 10 years, talk to a superintendent or school board member at just about any small district in Oregon and you still get an earful about Measure 5. Oregon voters passed the measure in 1991, the first of three ballot measures which severely limit the amount of property taxes local schools and governments can levy.

The measures reversed the way Oregon schools are funded. Before Measure 5, school districts received about 70 percent of their revenue from local property taxes. The state, through income taxes and lottery revenues, now accounts for about 70 percent of each districts revenue.

Although local education leaders sometimes begrudge the loss of local control, many districts have gained financially.

Lawsuits following Measure 5s passage forced the state to come up with a scheme to fund schools equally regardless of how property-wealthy a district is. Equalization has rerouted money originally raised from incomes in Portland and Eugene to poorer rural districts. This school year, each district in Oregon gets about $5,133 per student enrolled, plus extra money for special education students, students living in poverty and those who speak English as a second language.

In communities with faltering economies, equalization means a steady revenue stream to local schools.

But as many small districts are finding out, equalization also has fallen far short of making up for lost revenue as the timber mills, aluminum plants and canneries in their communities close down.

We absolutely need equalization. If we did not have that, we would drown. But we are still barely keeping our head above water, said Judy Graham, superintendent of the Lakeview School District in Lake County. We would not be able to pass a local option tax. We dont have much of an economy here right now. My frustration is having to let people go and letting people retire and not filling positions and still not being able to stay on top of maintenance.

While the state formula provides some extra money to cover the costs of doing business in a small or rural district, it does little or nothing to help a district build new schools or renovate existing ones. Local communities are expected to cover those costs by passing construction bonds and local option tax levies.

But thats an awfully hard sell in a one-industry town hard hit by financial troubles, especially when the tax base is constantly shrinking.

Steve and Susan Horn had hoped to raise their two boys in John Day, but theyre not able to live the life they envisioned. Steve worked for years at a local timber mill, now closed. He now drives nearly four hours away to work on a windmill project in Molalla, near Portland.

As a result, he misses football games, parent-teacher meetings and family dinners.

We want more than anything to raise our kids here, but I dont know if we can last that long. I dont know why we try so hard to stay now, said Susan.

She grew up in John Day and attended what was then a kindergarten-through-12th grade Mount Vernon school, only to see

that school consolidate with schools in other towns 15 years ago. Thats still a very raw subject around here, she said. Our school was our identity. Everything we did revolved around that school.

And she fears more consolidations are not far off.

Theres no way we can avoid it, and we already have problems we cant take care of now, she said. Everyone feels like something has to happen, but no one has a clue what it will be.


Despite the concerns, there are signs that Salem is hearing the case for small and rural schools. For the second consecutive session, the Legislature this year approved $9 million over the next two years to help the roughly 50 districts in the state that have high schools of 350 students or less.

And when a state task force last summer recommended consolidating the states 21 education service districts (ESDs) down to 14, legislators killed the idea largely because it would have folded many smaller ESDs into larger ones. Service districts are regional agencies that assist individual school districts, especially smaller ones, with behind-the-scenes tasks ranging from bulk purchasing to special education.

However, small school districts and ESDs also received two major blows at the hands of the Legislature this session, and, ironically, the concept of equalization played a key role in both.

Until this year, ESDs in small, rural communities tended to net more money from the state because, the theory went, it costs more for them to provide support services than their urban counterparts. Teachers in Pendleton, for example, often must drive to Salem for a training, taking them out of the classroom for days and forcing the district to pay more for a substitute teacher.

In the wake of recent lawsuits brought on behalf of several low-funded ESDs, including the Crook-Deschutes ESD, state lawmakers approved a plan this year to equalize ESD funding just as they did regular school districts a decade earlier. That means many small, remote ESDs actually stand to

lose money to their larger, urban counterparts.

By far the biggest blow to hit rural school districts this year came when they lost a battle to keep $28 million in federal aid to make up for reduced timber revenue. Traditionally, a portion of the log sales off national forest went directly to local schools in counties where the timber was cut. Congress set aside the money specifically for rural counties with national forests to make up for the reduction in timber production of the last decade, but existing law made the money part of the statewide education funding


It was then sent to the giant state pot to be doled out like any other tax revenue, based on student enrollment.

Urban lawmakers argued successfully that equalization applies to any funds headed for public schools in Oregon, including the federal aid.

The bottom line is we would have gained $1,000 per student with that money, said Cleaver, the John Day superintendent. Now, we get $24 per student. You tell me how to buy a $50,000 boiler or fix a $500,000 roof with $24 per student. I cant do it. I dont get any money from a Nike or Intel.


Around individual districts and in state offices in Salem, its often referred to only as the c word. Most officials don't want to talk about it, yet it seems to lurk in the shadows nonetheless.


Nearly half the states school districts have fewer than 1,000 students. More than a third have fewer than 500 students. With escalating battles over a finite state funding pot, state and local officials are debating whether to consolidate smaller districts and ESDs near one another into larger districts to save money and increase efficiency.

School districts are still recovering from a round of consolidations in the early 1990s that reduced the more than 300 school districts in Oregon to near the 198 in place today.

As with other issues, consolidation in rural areas comes with a heavier impact than in urban


Local schools are often the main source of a towns identity. If they close, kids often must be bused to the next town, in some cases to the next county. Meanwhile, in what can be a vicious cycle the town continues to dry up as families decide against moving into a town with struggling schools.

And those concerns are accurate. We have the luxury of being able to close a couple of elementary schools and move students to another school thats not that far way. We dont have to bus students 30 miles away, said George Russell, who as head of the 20,000-student Eugene School District is surprisingly sympathetic to the plight of smaller districts.

While some small districts are suffering, so, too, are many larger ones. Eugene has closed three schools in as many years and is looking at closing more in part because younger residents with school-age children are moving to the more affordable suburbs. Eugene is also one of the districts hit hard by equalization, but Russell still doesnt begrudge his rural counterparts for fighting to keep their schools.

Such a fight is raging up in The Dalles, where residents in the 1,000-student Chenowith School District have resisted repeated attempts to consolidate with The Dalles School District three miles across town. Residents got a preview of what happens when the now-defunct elementary school in the nearby small town of Rowena closed down in a consolidation with Chenowith years ago.

Rowena died when they lost their school, said Merry Holland, principal of Chenowith's lone high school. We dont want to lose our identity. We dont want to be swallowed up. We think we do some pretty good things here we couldn't do at a larger school.

Yet, both districts have seen a decline in enrollment since two local aluminum smelter plants made severe cutbacks last year.

As a result, the Chenowith School District has deferred major maintenance projects and cut 12 teaching positions.

While small districts with declining enrollment are being hit the hardest, even districts with steady enrollment are experiencing their share of problems.

The Central Curry School District on the coast has seen its lumber mill industry wane, replaced, however, by a growing tourism sector. Enrollment has remained steady, and the local community is highly supportive of its schools.

But the financial support the district once received from the community is now thrown into the state pot as a result of Measure 5, and Superintendent Bob Snyder says he expects enrollment to begin dropping as older retirees continue to replace younger families.

A former official at the Dade County School District in Florida, Snyder said in most states even small, dwindling school districts can count on one of two options adequate local funding or dependable funding from the state.

Here, the funding isnt adequate, but its not dependable either, he said. There just arent easy solutions.

Saturday: Dealing with declining enrollments.