NEWBERG, Ore. — For those close to the Newberg School District's trials and tribulations since 2020, the sudden news that it's running millions of dollars in the red came as a shock, but perhaps not a surprise. It's the culmination of unprecedented instability and scrutiny for a relatively small community south of Portland.
Newberg was one of many U.S. districts to see candidates with particularly conservative political platforms turn out in hyper-local nonpartisan elections post-2020. Those candidates won a majority on the school board, and they promptly passed a ban on Black Lives Matter and Pride displays at schools.
Since that decision rested on tenuous legal footing, the board later extended the ban to include anything they deemed a political symbol.
The ban drew a major backlash and a string of protests. The superintendent at the time, Joe Morelock, suggested he would not enforce the ban, citing concerns about its constitutionality. The conservative majority on the board unceremoniously fired him without cause, skipping any attempts to overrule him.
Again, that decision drew a backlash, including protests outside district headquarters. The board's more liberal minority spoke out against it.
"I am certain that this will have rippling effects for months and years to come, and I doubt that all four of you will even be here when the rebuilding really gets to beginning and when it really starts to happen," said Brandy Penner, then a member of the board. "This is going to set our district back decades, and not only that, but like I said in my opening statements, it is our children who will suffer. And it feels that that is the point. I fully expect that this will just be added to the mountain of litigation that these four board members have currently got us into."
Penner's statement proved to be near prescient. As she and the other remaining liberal school board members resigned one by one, citing the majority's thinly-veiled hostility, the Newberg School District eventually lost several lawsuits over its policies — with a court finding that its political symbols ban was indeed unconstitutional.
But before those court decisions, the board's majority hired on a new superintendent to replace Morelock. There were signs that the board's majority was fishing for a superintendent with a more conservative pedigree at least a month prior to Morelock's firing.
Stephen Phillips was a controversial choice from the beginning. He'd previously been superintendent of the tiny Jewell School District, where he was placed on administrative leave pending an investigation into his handling of abuse claims. Before that, he was forced to resign as deputy superintendent of the Beaverton School District after sharing derogatory social media posts about immigrants.
In May 2023, voters swept out the school board's conservative majority. But Phillips, their handpicked administrator, remained in place.
Now, as the district suddenly faces a budget crisis, members of the Newberg School District's community are calling for Phillips to step down.
Newberg's budget cliff
In May, an independent auditor told the Newberg School Board that they were almost $4 million in debt, and they have until the end of June to find a fix. The biggest areas identified for overspending were special education and transportation, but the school board itself and the superintendent's office were also hundreds of thousands of dollars in the red.
There's still some ambiguity around how this happened and who's responsible. But the district is most certainly suffering from legal fees left over from the previous board majority's losses in court, and the fact that they were contractually obligated to cover Morelock's salary and benefits for a year after his firing.
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Those were known quantities. But the overspending on education, according to members of the current school board, came as a shock. They said they'd been told repeatedly by Phillips that the district would end the year with a budget surplus.
"I guess I'm more curious about how we got here with the numbers that we've been having compared to — all of a sudden — this," one board member remarked in May after listening to the auditor's presentation. "I just .... I'm confused. I think I'm not alone. I don't know if there are answers or if this is the time or place, but this is bad. This is really not good."
But Brandy Penner, the former board member who resigned after Morelock's firing, said she saw the writing on the wall back in 2021.
"If there was ever going to be something to be completely wrong about, I desperately wish it had been this, but it was incredibly clear from the beginning that the majority four board members were not making decisions in the best interests of children," she told KGW. "They were not making decisions in the best interest of our financial standing as a district, and I knew that that was going to continue. There was nothing necessarily to stop them while they were in those positions and they had free reign to do that — and I think what's happening now is the ripple effect and the repercussions of all of those actions that were put in place, you know, in 2021."
This isn't the first time the Newberg School District has been in financial trouble in recent memory. Penner said that she and her colleagues on the board prior to 2021, together with then-Superintendent Morelock, had worked for years to make sure it wouldn't go off a financial cliff again.
"When I joined the board in 2017, we did not even have an ending fund balance policy at all," Penner said. "And so, every year it was kind of like, 'Well, whatever's left over, that's our ending fund balance.' So, when I joined in 2017, I think our ending fund balance that year was like a little over $100,000, which is horrible for a district budget."
At the time, Penner said, she believes the overall budget was around $60 million. During her tenure, the board created a policy to ensure that the district held on to a substantial ending balance and began to grow the fund. Unfortunately, those sound decisions unraveled quickly.
"When I left, both the appropriated and non-appropriated ending balances were (well into the millions of dollars)," she said. "And to see it go so quickly ... I think that is what has been a little bit shocking to me in all of this. The level of ineptness and mismanagement is just glaring."
Now, the district faces a potential budget deficit of nearly 24%, according to Penner.
"I mean, it's unconscionable. There's no way that in any other setting there wouldn't be mass resignation from leadership in this situation," she said.
To fill the gaps, there's no question that Newberg students will see significant cuts to their educational resources over the next school year, including fewer teachers and staff. There are already discussions underway about potential furlough days for staff.
Battleground in an ongoing culture war
Although the legacy of the Newberg School District's status as a battleground in the culture war has moved on to a new phase — namely, dealing with the fallout of decisions made since 2021 — there are signs that the community is still mired in it.
On Wednesday, the Newberg Public Library reported that someone shot one of the building's windows with a BB, shattering a layer of protective glass that was installed early this year. According to the library, the original layer of glass installed circa 1912 remains intact.
Hanging in the window on the inside of the glass was a Pride flag.
It wouldn't be the first time that Newberg has seen vandalism tied to Pride flags. In November 2022, a homeowner's surveillance camera captured a masked person setting the Pride flag hanging outside their home on fire, then giving a Nazi salute to the camera.
Back in September 2021, shortly after the school board passed its ban on political symbols, the news broke that some students at Newberg High School had participated in a virtual "slave trade," where they joked about how much they would pay for their Black classmates in a slave auction. The group chat was rife with racist and homophobic slurs.
Later that month, a staff member at Mabel Rush Elementary in the Newberg School District was placed on leave after showing up to work in blackface. The teacher's aide reportedly came dressed as Rosa Parks in order to protest vaccine mandates for school staff.