Jackson County school officials face prospect of harsh financial decisions.

A worsening state economic forecast sent shock waves through Jackson County schools Friday, with the prospect looming for almost three years of drastic cuts in education.

School districts in the state are expected to drop an average of about five days from the current school year, but some local districts are predicting more serious reductions, unless the state dips into its rainy day fund or federal stimulus funds are released immediately.

The Medford School District says 13.5 days would have to be cut to offset the expected revenue loss and Eagle Point school officials say they could close for 10 to 12 days.

School districts say they have few options to make it through the remainder of this school year.

"We're talking about cutting days or people," said Central Point schools Superintendent Randy Gravon, who said his district is looking at the loss of five days. "There's no other way to save money."

State Economist Tom Potiowsky said Friday the Oregon budget deficit has grown to $850 million for the current biennium, which ends June 30, and will reach nearly $3 billion for 2009-11.

He predicted a decline of about $100 million more for the current biennium than his preliminary forecast last month.

Gravon said his school district anticipated a state shortfall of between $800 million to $860 million this year, so there were no big surprises in the latest announcement. But he said, "It leaves a whole lot of questions."

The biggest question for schools is whether Gov. Ted Kulongoski and the Legislature can come to an agreement over the use of state reserves to lessen the impact of the budget problem.

School administrators are disheartened to hear Kulongoski say he would veto any efforts to tap into rainy day funds

Gravon said if Salem falls doesn't find a find a way to plug the funding hole, it could mean more than five days that school would have to be closed this year in his district, or an equivalent reduction in staff.

Gravon said Central Point schools already have cut the current budget by $500,000, leaving three teaching positions unfilled and cutting back on purchases of textbooks, supplies, maintenance and staff training.

Medford schools Superintendent Phil Long said he thought it would be better to tap into state reserves this year rather than holding off until the next biennial budget.

He said the district is running out of options as the state runs out of money.

The school district already has committed most of its $90 million budget this year, while faced with slashing $7.5 million in the fourth quarter.

Long said the Medford district has already tapped into reserves and made cutbacks to reduce the potential lost days to 13.5. Long said that figure did not factor in any money from the federal stimulus package because the district does not know if it will receive it in time to cover this year's expenses.

A legislative compromise would have tapped into state reserves to lessen the financial blow to schools for the current year. Long said the number of days that would have been cut out of the school year under that proposal would have been six or seven for Medford schools.

Long, who expects more bad news when the state releases its May economic forecast, said he doesn't understand the governor's position.

"It just seems absurd to put that burden on schools when there is a school fund to help in instances like this," he said.

Eagle Point schools Superintendent Cynda Rickert said things change so quickly at the state and federal level that it is difficult to predict the kind of financial help schools could receive.

"I'm hopeful we will get some help," she said, "but I think our responsibility is to make our own plans for ourselves and our districts."

Rickert said without any help from the state rainy day fund and questions remaining over the federal stimulus, her district is looking at cutting 10 to 12 days from the school year.

She said the financial crisis facing Oregon in the coming years appears to be far worse than 2002 to 2004, when districts shortened school years because they ran out of money.

"We're three times worse," she said.

Proposals are already in the works to reduce staff levels by 10 percent in the next biennial budget, Rickert said. The district earlier this week announced plans to cut 36 positions.

Rep. Peter Buckley, an Ashland Democrat who is co-chairman of the Legislature's Joint Ways and Means Committee, said that while the latest economic report paints a worsening picture, he still hopes to hammer out a legislative solution to ease the blow to education.

"We are still work to find a way to minimize the impacts to K-12," he said. He described the economic crisis as "extremely challenging for all of us."

Rep. Dennis Richardson offered another possible solution to the funding problem in his newsletter released Friday.

The Central Point Republican suggested using ending fund balances from different agencies could help fill the budget hole. The Public Employees Benefit Board alone has a $131 million ending balance for the current biennium, he said.

"By using funds sitting in the ending balances of state agencies to back-fill selected portions of the current budget shortfall, no days of school will need to be canceled, no services will be lost by our most needy citizens, and no promises will be broken to the families of our DD (developmentally disabled) and mentally ill patients," Richardson said.

Reach reporter Damian Mann at 776-4476 or dmann@mailtribune.com. The Associated Press also contributed to this story.