Palo Alto schools are bracing for their third round of budget cuts in as many years.
By February, school administrators said they will recommend between $1.2 and $2.8 million in cuts to the current year's $162.4 million operating budget.
That would get this year's "structural deficit" down to a manageable level of $4 million or $5 million, Co-Chief Business Official Cathy Mak told the Board of Education Tuesday (Nov. 29). That deficit could be covered by the $12.9 million in "unrestricted, undesignated fund balances" the district has held to plug that gap as well as additional deficits anticipated in the next few years.
The prospective cuts come atop $3.8 million in cuts made in 2010-11 and another $2.7 million reflected in the current year's budget. Much of that was achieved through incremental increases in elementary class sizes, which have risen from 20 to 22 in grades K-3, and from 23 to 24 in grades 4-5.
"In the last two rounds we could shield our instructional programs from deep cuts, but this may not be possible for the upcoming cuts," Mak said. "We'll have tough decisions to make."
In recommending where to cut, school managers will adhere to "budget balancing values" approved by the school board in 2009 as well as a 2009 PTA survey on budget tradeoffs, she said.
Several factors, including the state budget crisis, enrollment growth and lower-than-budgeted county property tax receipts, are behind the grim economic news.
The $3.7 billion state budget gap reported by the California Legislative Analyst Nov. 16 triggers a $2.5 million "fair share" cut for Palo Alto, Mak said. Since 2006-07, Palo Alto's share of state categorical funding has plummeted from $13.6 million to just $527,000 this year, after the anticipated "fair share" cut.
"As a result of state funding cuts, enrollment growth and relatively flat property tax growth, the district now receives $939 less per student compared to three years ago (excluding locally raised funds from the PTA and Partners in Education)," she said.
As a so-called "basic aid" district funded primarily through property tax, Palo Alto does not collect revenue based on headcount, so enrollment growth means less money per student.
"We can expect state funding to be minimal for the next few years and, locally, we can also expect property tax growth to be lower than enrollment growth," Mak said.
In the past three years, enrollment has grown by 7 percent and property tax revenues by only 4 percent, she said.
Mak already has delivered the budget news to the board of Partners in Education, the independent foundation that raises funds for Palo Alto public schools.
School board President Melissa Baten Caswell also requested a "communication plan of what the reality is for principals and staff and PTAs.
"We need to warn people ahead of time that we're going through this process, and remind them we have values we collected two years ago from the community and will be using them to make the best decisions we can possibly make," Caswell said.
"This is going to be a bad surprise, but if we can get at least some people ready for it it will help tremendously."