July 01, 2005

Back to the table of Contents Page

Classifieds

Palo Alto Online

District forecasts sunny skies ahead

by Alexandria Rocha

Less than one month ago, officials with the Palo Alto district had a cloudy forecast for the upcoming school year's budget. Dozens of teachers, an elementary school and the small-class program were on the chopping block.

Now, things couldn't be sunnier. The school board earlier this week approved a 2005-'06 budget that has grown by $11 million over the last school year's budget. Measure A, the annual $493 parcel tax voters approved June 7, and additional funds from property taxes are the two main reasons behind the increase.

Tuesday night's discussion of the budget was the first without furrowed brows in a while. Although board members are still concerned about the reserve account balance, which took a hit last year, the overall mood was one of relief.

It is "the first time since 2002 that we adopted a budget where we weren't doing budget cuts," said board member Cathy Kroymann. "I really hope we've turned the corner and that we'll see an upswing in our revenues now and that it's not just a temporary change."

The district's business office was prepared for both scenarios regarding Measure A. Business manager Gerry Matranga said there were two versions of the budget written -- one included significant cutbacks; the other with a brighter picture. The slimmed-down draft was tossed out soon after the election.

When the measure passed, the '05-'06 budget ballooned to $119 million. This past school year's was $108 million.

"This is very significant that the community came forward to support the schools in this way," Matranga said.

The district, in fact, has already started restoring some of the programs and staff cut in the last few years with funds from Measure A -- which kicks in today to annually generate $9.3 million.

For example, about $25 per student has already been added to each school's general fund. Additional librarians, counselors and support staff have also either been hired or the process is underway, said Kroymann.

"When kids come back to school in the fall they'll see the additional staff there," she added.

Besides the parcel tax, which will expire in six years, the district also heavily relies on revenue generated through local property taxes. Palo Alto Unified is called a "community-funded" district because it receives more money through local property taxes than from the state. Districts that are mostly state funded are known as "revenue limit."

For the next school year, the district is projecting a 3.46 percent growth in local property taxes, which would generate about $2.6 million for PAUSD.

Although the Santa Clara County Assessor's Office has a higher projection, Matranga budgets conservatively because of uncertainty.

"They need to look at their economic climate because each city is different," said Irene Lui, a county property tax manager.

However, the lower projections have not always been well received in the community. Some critics of the district, such as anti-tax resident Wayne Martin, have accused the district of ignoring the county's higher projections and budgeting conservatively to make its situation seem worse.

As the district updates its budget with more information from the county, Matranga is planning to tackle that misconception.

"We're refining our model so that we can better communicate to the community the projections," he said.

With its programs and staff safe from cuts, the school board has turned some of its focus onto replenishing its reserve accounts. After slicing $6.5 million from its budget in the last two years, the district also had to use $3.4 million from its safety net.

That left its reserves at $6.7 million, or 8 percent of the district's budget, which Matranga said is not ideal.

"If you look at the reserve balances of (revenue limit) school districts, an 11 percent balance is not out of the ordinary," he told the board Tuesday night.

Matranga added that he would like to return the reserve account to $10 million, but it is uncertain when that will happen.

The other major factor on the district's budget are contract negotiations with the classified and certificated employees' unions. Salaries are 80 percent of the district's budget. Opening proposals have already been conducted, but actual negotiations will not happen until more information about property taxes come from the county, according to Kroymann.

"There's an expectation that they would like to get a cost of living raise," she said. "I think it will be difficult, but we have a little bit more money to work with than we have had in past years."

E-mail a friend a link to this story.