Report Highlights

At the Oregon Department of Education (ODE) and Portland Public Schools (PPS), monitoring of spending and evaluation of performance is limited and inconsistent, even as student performance continues to lag. This lack of sustained focus limits achievement gains and affects students at high-poverty schools the most. Oregon’s K-12 education funding has fallen into the lower half among states and retirement costs are rising quickly, increasing the importance of ensuring effective education spending.


Since the 1990s, K-12 education funding has shifted substantially to the state, which spends about $4.3 billion a year in addition to local property taxes collected for education. Despite some recent improvement, the state as a whole and PPS specifically still face low graduation rates and large achievement gaps, underscoring the need to improve returns on this investment. However, improving K-12 education requires navigating multiple layers of government, from local to state to federal. PPS’s new leadership has taken important steps toward developing a uniform core curriculum, improving training, and adding student support, but still has substantial work to do. The state is also transitioning to the latest in a series of accountability systems. These challenges increase the risk that a sharp, unified focus on improving student achievement will be further delayed.


The purpose of this audit was to examine spending at ODE and PPS, the state’s largest school district, including transparency, controls, and priorities, and determine additional steps these agencies could take to improve returns on the state’s education investments and increase achievement. As a component of the audit, we honored a request from the Oregon Legislature to audit ODE grant management.

Key Findings

  1. ODE does relatively little to support and monitor efficient district spending. The Legislature has not required detailed reviews of school district efficiency outside of narrowly focused initiatives.
  2. PPS has more money to spend per student than many of its state and national peer districts, but the district is spending proportionately less on instruction and more on support services than many of its peers. Potential savings areas we identified include executive administration, substitute teacher use, health benefits, bus service, and legal costs.
  3. PPS needs to develop a more transparent budget, publicly report on the results of its investments in student achievement, and detail how its revenues and spending compare to peer districts. The district also needs to better control increasing employee use of purchasing cards.
  4. ODE and PPS are not adequately evaluating whether grants, contracts, and other dollars, often intended for Oregon’s most vulnerable students, are improving student performance. At PPS, contract issues include poor oversight of alternative education contracts and limited scrutiny of non-competitive contracts. ODE has not adequately evaluated its school improvement efforts under the federal Title I program, focused on some of the most vulnerable children in the state. The lack of sustained focus at PPS and statewide has the most detrimental effect on schools serving high numbers of African-American, Latino, and economically disadvantaged students.
  5. At PPS, inequities affecting these students include relatively high rates of teacher turnover and absences at high-poverty schools, a disconnect between teachers and administrators on managing student conduct, and a teacher hiring and transfer system that contributes to high-poverty schools having less experienced teachers. The district has also not prioritized principal or teacher stability at high-poverty schools, adequately supported principals, or developed a consistent and effective performance evaluation system.
  6. In comparison to students in peer districts, PPS does relatively poorly with African-American, Latino, and economically disadvantaged students. Conversely, the district does relatively well compared to peers with white students and students who are not economically disadvantaged.
  7. ODE’s limited enforcement of district standards, a new K-12 accountability system at risk of delays, a reliance on short-lived improvement initiatives, and a disjointed system of education funding all increase the risk that the state’s student performance will continue to lag. ODE enforcement of standards designed to improve student achievement is limited, and education leaders and the Legislature have not resolved how best to improve districts without infringing on local control.


We made 26 recommendations to help improve return on education investments at ODE and PPS.

Among the key recommendations for ODE:

  • Coordinate with the Governor’s Office, the State Board of Education, the Legislature, and districts to develop a plan to align education investments for the long-term.
  • Work with the State Board and stakeholders to evaluate Division 22 district standards for clarity and enforceability and ensure that ODE has adequate resources to review compliance and enforce standards when districts fall short.
  • For key grants, incorporate best-practice performance management, including setting quantitative and qualitative performance expectations in contracts, establishing baseline measurements, and providing timely and constructive feedback to grantees.

Among the key recommendations for PPS:

  • Investigate and report on potential savings areas in depth, including the level of executive administration, use of substitute teachers and educational assistants due to educator absences, health benefits, bus services, legal services, and building utilization.
  • While working to improve instructional quality, address other obstacles that create inequities at high-poverty schools. Strategies include changes to attendance rules, boundary changes, and practices that could encourage retention of high-quality principals and teachers at high-poverty schools, such as additional pay, enhanced training, and additional classroom support.

We also made a recommendation to the PPS school board. In general, the board should ensure that district administrators prioritize key steps to improve the efficiency and effectiveness of district operations. These steps include developing a strategic plan that focuses on long-term investment and measurement of results, and addressing inequities at high-poverty schools.

ODE and PPS agreed with all of our recommendations, with agency leaders detailing steps the agencies have already taken and providing timelines for completion. The auditees’ responses are at the end of the report.

Read the full report here.