Palo Alto schools may face Draconian budget cuts due to the state budget crisis, school board members were warned Tuesday night.
Even after Palo Alto Unified School District staff met with the School Services of California Jan. 12 to discuss the status of the state budget and Governor Arnold Schwarzenegger's recommendations, the district remains in the gray area for determining its budget over the next couple of years.
The state currently has a $40 billion deficit, a number that increased by $2 billion within the last two months. K-12 education is facing a proposed mid-year cut of $1.86 billion.
"The legislature proposed to make cuts from categorical funds rather than revenue limit funds," Cathy Mak, co-chief business officer, said. In other words, if the proposal passes, the main part of the district's funding from the state would be abated.
To combat potential loss, Schwarzenegger proposes that the school district enhance revenue, increase sales taxes by 1.5 percent and borrow from human services.
Without a finalized state budget cut, the school district is left with several variables. Employee compensation will not be settled until mid-year cuts are finalized. Also, the district will not know its property tax revenue until July.
"At this point we still have a lot of unknowns," Mak said. "We sound like a broken record, but these are really unprecedented times we're facing. We need to be careful of our resources."
Despite looming budget cuts, several board members expressed confidence in the school district's financial fortitude.
"This district is in a strong financial situation," board president Barbara Mitchell said. "We've weathered financial crisis before."
"We have the capacity to give that money back to the state," Superintendent Kevin Skelly said. "It is not on our agenda to cut staff. … Adding folks, adding costs is a big issue for us."
Board member Melissa Caswell warned the community: "I think a lot of people thought Palo Alto was in a bubble and we wouldn't be affected, but … we will be affected," she said.