Guest Opinion: School parcel tax doesn't add up in terms of dollars or sense Guest Opinion: School parcel tax doesn't add up in terms of dollars or sense (October 20, 2004)

by Wayne Martin

The proposed $521 per year parcel tax for Palo Alto schools (Measure I) is too much tax for far too long a time.

Prudent spending coupled with historic property-tax growth rates should provide the Palo Alto Unified School District sufficient funds to make this tax unnecessary.

My analysis of district finances indicates the revenue shortfall has been overstated. The district receives about 70 percent of its revenue from local property taxes. While the district's property-tax revenue doubled in the past 12 years, the economic downturn in Silicon Valley resulted in slower growth over the past two years.

Expenses associated with the downturn in the California economy resulted in a deficit of $3.5 million for 2003-04. The district predicted a similar situation for the 2004-05 school year, making another $3 million in cuts to balance its budget.

Yet times have changed since this year's budget was prepared last spring. The district's June budget predicted a less than 1 percent growth in property-tax revenue. But when the tax rolls closed in July, the district learned that growth in property value for 2004-05 was more than 6 percent.

That means the District will now receive several million additional funds this year, and there is no reason to expect that this will not continue.

Moreover, future property-tax revenue will continue to grow. Property valuation in Palo Alto has doubled over the past 12 years, averaging increases of almost 7 percent yearly. The district's budget has grown by about the same amount. Property assessment rolls grew by about $200 million annually over the past 10 years.

Developments such as the Classic Retirement Community under construction on Sand Hill Road, 800 High St. in downtown Palo Alto, Park Avenue development, the Elk's Club and several other sites around town will add hundreds of millions of assessed valuation in the coming years, and will bring the district millions in new revenue.

In addition, Proposition 13 increases assessed property values by 2 percent a year and that the valuation increases generally 90 percent when a pre-Proposition 13 home is sold, there is every reason to believe that a 5 to 6 percent yearly growth of property value is more likely than the much lower growth predicted by the district.

The district did make some cuts last school year: reduced cell phone use, less travel to conferences, suspension of teacher sabbaticals, removal of lead-teacher stipends, and reduced staffing for groundskeepers and warehouse personnel. Those reductions, called "staggering" by promoters of Measure I, would be restored with new parcel tax money -- even though many of the items are more discretionary than "mission critical."

Labor costs also are too high. The approximate $90 million in combined cost for salaries and benefits this year generally runs about 85 percent of the district's budget. Full-time teacher salaries now average more than $70,000, with a generous benefits package. Older, tenured teachers easily make between $80,000 and $90,000 for a 186-day work year.

Yet salary increases beyond a given point do not increase the productivity of teaching staff, which makes ever-increasing salaries difficult to justify. Moreover, administrator salaries typically exceed $100,000.

At the rate of increase of the past 12 years, average teacher salaries could easily exceed $100,000 by 2011. With average salaries that high, the district will have to turn to new parcel taxes whenever a business-cycle downturn results in a pause in property-tax growth. High salaries could also force higher teacher-pension contributions, possibly requiring additional parcel taxes.

Better management of reserves would avoid the tendency to raise taxes during future business downturns.

In similar circumstances, Sunnyvale's Fremont Union School District lowered its labor costs via a 5 percent rollback of salaries. Palo Alto's school officials want to raise taxes instead of lowering costs.

Moreover, Measure I's vague ballot language provides no clear idea how the $77 million to be raised over the next eight years will be spent, nor has the district identified the "structural deficits" that this money will erase.

Information technologies can also lower costs. Some possible ways to reduce costs include printing-on-demand to reduce textbook costs; distance learning; classroom networks (wired and wireless); courseware servers; and software for online homework and testing.

Distance-learning technology would allow specialty classes such as music and art to be taught on one campus while students on another teleconference, using high-speed networks.

Voting "NO" on Measure I will send a message that the district must live within its means, as we all do. Great schools are not created by uncontrolled spending. Effective use of money, and appropriate technology, will provide our kids a great education while not burdening Palo Alto homeowners with new parcel taxes every few years.
Wayne Martin is chair of the Palo Alto Committee Against Measure I, which he emphasizes is not affiliated with the group that wrote the anti-Measure I ballot arguments in the official Voter Guide. He is a Palo Alto resident who also opposed the 2002 library-bond measure. He can be e-mailed at No_on_i@yahoo.com or wmartin46@yahoo.com.

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