The Palo Alto Unified School District is back in the black following Gov. Arnold Schwarzenegger's Oct. 8 signing of the state's $87.5 billion budget, the Board of Education was told Tuesday night.
A deficit in the district's general fund was eliminated after the final state budget restored $2.9 million in "fair share reductions" the district had braced for.
The district had dipped into reserves back in June to balance its $154.5 million operating budget for 2010-2011.
About 120 special-education students in Palo Alto still could be "significantly" affected by Schwarzenegger's veto of county mental health funds, the district's Co-Chief Business Officer Cathy Mak said. But the veto is being vigorously protested and at least one lawsuit has been filed, she said.
"In the final version, (the state budget) restores virtually all the proposed school funding cuts proposed in the governor's May revise," Mak told the board Tuesday night.
"So the final budget brings very good news to education, but the big question is, can the additional revenue be sustained?
"There's general doubt that the state will be able to continue to fund all these additional revenues and programs in future years," Mak said, citing "very rosy revenue projections" in state budget assumptions.
Advice from legislative advocates in Sacramento is, "Open the planning books, but close the checkbook" until the financial projections materialize, Mak said.
School officials earlier this year made $3.8 million in cuts to balance the current budget, allowing K-3 class size caps to go from 20 to 22; and fourth- and fifth-grade caps to 24.
The second-largest chunk of cuts came from reducing principals' discretionary funds from $105 per student to $70 per student. But much of that reduction was offset by donations from Palo Alto Partners in Education, an independent foundation that raises money for district schools.
School board members Tuesday praised Mak for her "careful planning."
"I've heard the state budget referred to as a house of cards built on a fault line," board member Dana Tom said, thanking Mak for her analysis.