Portland schools need to cut at least 50 teaching positions this month to balance the district's budget, interim superintendent Diana Snowden announced Thursday.

Unless 50 teachers retire voluntarily when second semester begins this month, the district will have to lay off even more teachers, Snowden said.

The district just figured out that it is substantially overspending its income, she said. Enrollment dropped by 800 students this fall and has kept falling, and that means less state aid. But teacher positions haven't dropped accordingly.

Compounding the problem, she said, enrollment in special education programs -- including expensive one-on-one teaching -- has risen.

To balance the budget, class sizes at most schools will have to increase for second semester, she said. Other cuts will be made, too, but cutting teacher positions is unavoidable, she told stunned school board members.

"This is the first heads-up we're giving parents of a probably dramatic change that could happen in their child's classroom this month," school board member Donna Jordan said.

The proposed teacher cuts come after two years of eliminating teacher positions.

The district cut 300 teaching and counseling positions before the 1996-97 school year and 79 positions this school year.

To patch this year's budget, the district used $7 million of state money allocated for next year and relied on a $2.5 million bailout from the city. The district is now projecting a gap of about $20 million to maintain current services next school year.

To plug the budget hole just discovered this week, Snowden recommended deferring about $2.6 million in physical plant costs, and she said some temporary job vacancies and some unexpectedly low health benefit costs could save another $2.8 million.

She recommended cutting each department's nonsalary spending by 6 percent and plans to cut six positions from the district's central office.

But if the district were to stay with its current course, it would end up overspending its income by $7.6 million, Snowden said. So it needs to shave at least $1 million in teacher costs, she said.

The best way to accomplish that, Snowden said, would be for veteran teachers who were planning to retire in February then work until June on short-term contracts instead to agree to leave for good this month. About 200 Portland educators are expected to take advantage of a one-time boost in state retirement benefits.

Forced layoffs, because they would strike lower paid teachers, would require cutting roughly twice as many teachers and would create far more disruption for students, Snowden said.

Richard Garrett, the president of the Portland Association of Teachers, said the union plans to scrutinize district spending to make sure cuts are needed and to seek alternatives to cutting teachers. He said it was too soon to know how the union would respond to Snowden's request that it help her encourage retiring teachers to leave now.

Snowden said she expects the district will have to pay at least a small incentive to ensure the voluntary retirements.

The district has about 80 more teachers than called for by the pupil-teacher ratios in the school board's original budget of $335.5 million for this year.

Snowden, who came aboard Dec. 1 after being recruited from the private sector, said she regrets that the overspending was just detected. She said the miscalculation has renewed her intent to secure a new computer system to handle district finances by the start of the next fiscal year, July 1.

The current computer system is "archaic," she said. Getting monthly reports on expenditures vs. budget projections is virtually impossible, she said. But she assured school board members that they will get such reports from now on.

Snowden said she had been pressing for a reading of the district's financial health ever since she took over from Superintendent Jack Bierwirth. But she said the out-of-date computers and an ever-changing level of state aid prevented a clear picture until this week. The district's new chief financial officer crunched the numbers; that job had gone vacant for a year.

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