Budget Challenges: What You Need to Know

Introduction

On September 16, 2025, Governor Tina Kotek issued a directive to all state agencies requiring immediate cost-saving measures in response to a projected $372.7 million General Fund deficit for the 2025-27 biennium. This shortfall represents approximately one percent of the current Legislatively Adopted Budget (LAB) and stems from the combined impact of the Trump Administration's economic policies and the passage of federal H.R. 1, which will have significant impacts to the Oregon Health Plan and the Supplemental Nutrition Assistance Program (SNAP). The federal cuts to programs affecting Oregon are projected to reach $15 billion over the next decade, and the implementation costs of H.R. 1 are likely to widen the state's budget gap further.

On October 1, 2025, the Legislative Fiscal Office sent a memorandum directing all state agencies to submit budget reduction options to the Joint Interim Committee on Ways and Means for consideration as part of the 2026 rebalance plan, due by November 3, 2025. The DOC Executive Team met repeatedly over the month to develop these options, which you can view in the "Documents" section of this page.

DOC's 2025-27 Legislatively Approved Budget

The Department of Corrections' 2025-27 budget environment presents both challenges and critical needs. The Governor's budget for DOC totals $2.8 billion, consisting of:

• $2.6 billion General Fund
• $132.6 million Other Funds
• $2.2 million Federal Funds
• 4,971 positions (4,856.99 FTE)

Immediate Actions Required

Effective immediately and until further notice, the Department of Corrections must implement the following cost-saving strategies:

1. Slow Operational Spending: Hold positions vacant longer after turnover, reduce spending on services and supplies, and slow implementation of new or expanding programs
2. Prepare for Reduction Targets: Oregon's Chief Financial Officer will determine agency-specific reduction targets based on operational costs, including 24/7 operations requirements
3. Suspend Non-Essential Out-of-State Travel: All non-essential out-of-state travel for trainings and conferences is suspended

These cost savings will be included in the 2025-27 budget adjustments. However, these adjustments will not close the projected gap, and DOC must also begin preparing for additional reductions in the 2026 legislative session.

May 2026 Update

As of May 5, 2026, DOC is projecting a budget deficit of $55.5 million dollars in its $2.7 billion-dollar General Fund budget, requiring a reduction in our spending over the next 14 months of the biennium.

The drivers of this projected deficit are primarily statewide policies impacting DOC ($34.3M) and escalations in healthcare costs for adults in custody ($21.2M).

To reduce our deficit, DOC is implementing changes to overtime, Health Services contracts, AIC programs, and implementing a hiring freeze for non-security and health care positions. We will be closely monitoring how these changes impact our projected deficit; if additional measures are needed, we are prepared with additional options.

Budget Reduction Suggestions?

To share your ideas for ways DOC could save money, go directly to this form: Suggestion Form