Palo Alto schools will be hit with a "structural deficit" of $5.7 million -- about 4 percent of its operating budget and bigger than earlier projections -- in 2010-2011, district budget officials said Tuesday night.
The extra budget hit is due to flat property-tax growth and state budget cutbacks, Co-Chief Business Officer Cathy Mak told the Board of Education.
Moreover, the county assessor has been flooded with homeowner requests for downward reassessments, an ominous sign for the property-tax revenue that comprises 68 percent of the Palo Alto schools' $154 million operating budget.
Mak delivered the projections based on the latest reports from Sacramento and dismal estimates on 2009-2011 property-tax growth from the Santa Clara County Controller-Treasurer's Office.
The school district already has taken steps to conserve funds, including imposing a "soft" hiring freeze and slightly loosening the 20-student cap on K-3 class sizes.
Pending future budget updates in November and December, Superintendent Kevin Skelly said he will continue to watch every penny.
"We'll do whatever we can do make our budgets more scaled back. I can do things like change the food we serve at different events."
With various reserve funds and federal stimulus money that will plug a $2.6 million deficit in the current year and help in future years as well, board members said Palo Alto is far better off than many other school districts.
"Clearly we have a challenge here, but so do districts all over the state," Skelly said.
Board members vowed to approach cost-cutting decisions with openness about the challenges, collaboration with parents, teachers and other employees, and a continued priority of academic excellence.
Also Tuesday night, the board approved "conceptual designs" for about $50 million in expansion and renovation projects at JLS, Jordan and Terman middle schools and discussed with architects details of major renovations of Palo Alto and Gunn High Schools.