News

Palo Alto school district offers two-year plan to manage budget shortfall

Board to discuss options at Thursday retreat

Palo Alto school district staff will present a two-year plan for how to mitigate a budget shortfall now estimated at $3.3 million, the result of misbudgeted property-tax projections, at an all-day school board retreat on Thursday.

Staff are proposing that the district manage the shortfall in part this year by using $375,000 left in the budget from three elementary-school positions that didn't need to be filled due to lower-than-anticipated enrollment growth; $1.2 million in technology-refresh funds; and by transferring $175,000 from the district's Basic Aid Reserve Fund, about $85,000 less than was originally proposed.

The district anticipates receiving approximately $90,000 in "interest money" in the Reserve Fund that will allow the district to meet a requirement to maintain a reserve equal to at least 10 percent of its general fund, according to a staff report. Some board members expressed concern at a special budget study session two weeks ago about using reserves to backfill what looks to be a structural rather than temporary budget deficit.

The "short answer" to whether or not the district faces a structural deficit is "it depends," the staff report states.

"It depends primarily both on tax revenues and compensation increases. We generally need about a 4% tax increase for a rollover budget so tax increases below that amount — without reductions in compensation or staffing — result in a structural deficit," the report reads.

Staff are not recommending to roll back a 4 percent pay increase for senior administrators and managers this year, which would provide a savings of $648,000. The salary hikes — which the board approved in May as "me too" raises for non-represented employees, along with those negotiated with the teacher's union — are already being paid and to rescind them would mean a salary decrease, a staff report notes. The board packet does include, however, an alternative version of the two-year plan that shows the impact of cutting back administrators' raises this year.

In January, the district plans to reopen negotiations with its teacher and classified unions for the 2017-18 year to discuss a 3 percent raise promised in the third year of new multi-year contracts. The change in property-tax revenue also automatically triggered a safety-net condition in the contract that eliminates a 1 percent bonus for teachers when property-tax revenue is less than the district budgeted by 1.5 percent or more. (This saved the district $1.5 million, reducing the initial $5.2 million budget gap to $3.7 million. A budget surplus of $418,000 results in the latest estimate of a $3.3 million shortfall.)

Next year, staff are suggesting the district transfer $500,000 from its reserve and find an additional, unidentified $1.4 million in budget reductions to make up for the remaining deficit. Some of these reductions will "likely" include cutting staff additions that the district has made over the last four years, a staff report notes. Any changes to teacher, classified or administrative compensation plans or even furlough days could also be used to reduce the shortfall, the report reads.

The district is also eyeing potential instructional changes for its special-education model, based on recommendations from a Harvard University researcher that visited the district last year, which could also result in cost savings.

The process for determining these reductions "will be transparent and inclusive as well as deliberate and thoughtful," the staff report states.

The board and staff will discuss options for these reductions at a special workshop on Oct. 18.

At Thursday's retreat, staff will answer board and community members' calls for multi-year projections that show the longer-term impact of the tax shortfall. Staff will present two sets of five-year projections for future property-tax revenue, both much more conservative than initially planned for in the 2016-17 budget, and will ask the board to agree on one set or range of forecasts.

One set relies on the City of Palo Alto's forecasts, which project 5.23 percent growth in 2016-17 (the amount provided on July 1 by the Santa Clara County Assessor's Office), 5.26 percent in 2017-18, and between 5.10 and 5.34 percent from 2018-19 to 2021-22.

A more conservative projection, approximately 75 percent of the city's, is included in a presentation to be given by Chief Budget Officer Cathy Mak. It estimates the same revenue growth for this year, slightly under for 2017-18 and then dropping from 4 percent to 3.81 percent from 2018-19 to 2021-22.

The board will continue to discuss the budget at its first regular meeting of the school year on Aug. 23, and again at two meetings in September.

In other business at Thursday's retreat, the board will discuss goals for the 2016-17 year and operational items. The meeting will run from 8:30 a.m. to 2 p.m. at the district office, 25 Churchill Ave. The board will convene in closed session from 2-4 p.m. to conduct an evaluation of Superintendent Max McGee, among other items. Read the full agenda here.

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Comments

28 people like this
Posted by yeah right
a resident of Midtown
on Aug 10, 2016 at 11:17 am

So the same people who created the mess are now going to fix it.

Uh huh.


42 people like this
Posted by Shame on PAUSD administrators
a resident of Midtown
on Aug 10, 2016 at 11:24 am

They deserve no "me too" raises. Period.


4 people like this
Posted by Annie B
a resident of Palo Verde
on Aug 10, 2016 at 12:05 pm

If you look at the legal and bureaucratic issues, the number of staff they manage, and erratic budgets these guys manage, the uncertainties they face every year in funding, school population, teachers willing to teach at the small amount they make compared to other jobs they could get at a higher salary, and the abuse heaped on them by community, these guys earn every penny. School district administrative salaries are not much compared to management in other fields - tech, engineering, bio-tech, hospital management... The administrators are not living in wildly opulent housing, or driving crazy cars, or anything. You could pay a lot less, and get people who are really not up to the job. Look how schools in areas in the state where they are paid less are faring, dismally. Our students compete nationally in grades and scores, on half the budget per student other like districts have, due the excellent management of our school district, our excellent teaching staff, and administration. It's not like there are thousands competing to work at these jobs. We have trouble filling these positions, and there is a lot of turnover, because they are hard jobs for not a lot of money for the work they do, and little support from a portion of the community. We are lucky to have them, and I, for one, am very grateful for them and for our school board.


56 people like this
Posted by Ben Rumson
a resident of Barron Park
on Aug 10, 2016 at 12:12 pm

"Staff are not recommending to roll back a 4 percent pay increase for senior administrators and managers this year, which would provide a savings of $648,000"

There it is....


46 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Aug 10, 2016 at 12:34 pm

This is not a budget shortfall or a property tax shortfall. It is a mismanagement of anticipated funds. Please call it what it is. "Shortfall" is not what it is.


14 people like this
Posted by Pinocchios
a resident of Jordan Middle School
on Aug 10, 2016 at 12:48 pm

[Post removed.]


16 people like this
Posted by Special Education Cuts
a resident of Jordan Middle School
on Aug 10, 2016 at 12:49 pm

The budget plan states there will be reductions in Special Education:

"Additionally, one area we are already planning to examine is making improvements in our Special Education system delivery model based upon the recommendations of the Harvard Program Review. We intend to follow through on Dr. Thomas Hehir’s third recommendation: “Build capacity to provide universally designed curriculum and instruction to all students.” He and his team made a compelling case for making the transition from co-teaching to Universal Design for Learning, which has proven more effective and fits with our inclusive philosophy. As we make this transition, we anticipate teachers will have the capacity to make universal accommodations in their general education classes, resulting in some reduction in co-teaching sections and classes at the secondary level in 2017-18."

1. This is interesting, as all previous Administration documents said they were setting aside funds for unknown costs to implement this study. Guess they changed their minds and the study will not reduce costs.

2. 14 months after it was started, this study is not complete. If it is complete, it is not available to the public. But the District is citing this not-available study as the basis for this budget plan. Budget plans cannot be made or discussed based on this fuzzy information.

2. The contract management shows horrible contract management skills and a lack of Board supervision in approving a contract without a firm delivery date. We were told it started when chosen by Holly Wade when she went to a conference. The fact that this study would be completed was given as a reason for her promotion. There is also the concern she choose her own evalauter and manages the contract.

4. The budget plan states this not-available report makes a "compelling case" on a major policy change. It sounds like the District has already decided and accepted this as Board policy. Again, it would be great to see the written report. UDL is a vague, broad term. It can mean anything, including saying you are doing something when you are not.

5. Why do we need to "transition" to a program which we were told has been in place for years? Not only in place, but 100% effective. Emberling said all teachers were trained from elementary to high school. We were told all students were supported under full inclusion from Day 1. In was in the LCAP two years ago.The Board said retreats it was completely implemented. There should be no cost increase or reduction based on transiting to a system already in place.

6. This is saying Special Education will implement changes next year, not this year. That makes it two years since the Assistant Superintendent was promoted to a $212K job. What has been happening all year? The reorganization and new positions had to be approved in a rush at summer with the Assistant Superintendent given the job before the Board voted to approve the position. Her $212K job was not open to competition and only open to internal hires. After that, the new Assistant Superintendent only opened jobs to current contractors and employees. Contractors? There has been unprecedented increases in hires and supports to this new Assistant Superintendent.


37 people like this
Posted by time to reconsider
a resident of College Terrace
on Aug 10, 2016 at 1:08 pm

"Staff are not recommending to roll back a 4 percent pay increase for senior administrators and managers this year, which would provide a savings of $648,000. The salary hikes — which the board approved in May as "me too" raises for non-represented employees, along with those negotiated with the teacher's union — are already being paid and to rescind them would mean a salary decrease, a staff report notes. The board packet does include, however, an alternative version of the two-year plan that shows the impact of cutting back administrators' raises this year."
Seems like this would be the most fair and straightforward way to close the budget gap without unduly impacting students. Parents (voters/taxpayers) take note.


10 people like this
Posted by Special Education Cuts
a resident of Jordan Middle School
on Aug 10, 2016 at 3:22 pm

Does this mean the Board will not be discussing the way raises for management and senior administrators raises are set, as promised in the Board meeting when the management salary increases were voted in? Are the Administrators now not providing the information requested in the previous Board meeting on the topic? In his weekly Dr. McGee said Administrators will address it at the Retreat, we are now on the second Retreat. All we see him submitting is one statement saying he doesn't recommend cutting management salaries because they were already awarded.That still leaves the topic of how they get raises to be presented.


13 people like this
Posted by Woops!
a resident of Palo Alto High School
on Aug 10, 2016 at 5:02 pm

It truly looks as if the asylum is being run by the inmates. Nothing will get "fixed", they will pass it on to the residents!


11 people like this
Posted by Marc Vincenti
a resident of Gunn High School
on Aug 10, 2016 at 6:01 pm

As staff, the board, and the superintendent struggle with this thorny issue, what leaps out at me is the proposal for saving "$1.2 million in technology-refresh funds."

If, as a district, we're far enough ahead on the technology curve that we can postpone upgrades and updates, forgo the newest generation of "bells and whistles," then perhaps we can build such savings in, structurally, beyond one year.

Not to deny the value of high tech--indeed, I believe it's the waiting solution to our lingering homework problem--but in a situation where we're all desirous of more connectedness and "touch points" and belonging in our high schools, perhaps an investment in smaller class sizes should take precedence over technology-refreshment for a couple of years.

The District has projected 600 new students to arrive at our high-schools by 2020, and those kids will need teachers. And perhaps those kids, as much as they need the latest in technology, need also those understanding teachers who discern the moods of their students (and adjust the day's lesson accordingly), spot the particular trouble they're having with a math equation, have an ear for their French or Chinese pronunciation, realize students' passion and design a classroom project to tap into it, read an essay with special attention and jot out an alternative thesis statement that could strengthen the paper's focus.

Reducing our largest classes to a friendlier size (last semester, 425 classes at Gunn and Paly had 30 or more teenagers in the room) is a key proposal of Save the 2,008--the community initiative (now with 510 supporters) that I hope many will consider joining.

Best,
Marc Vincenti
Gunn English Dept. (1995-2010)
Campaign Director (savethe2008.com)


9 people like this
Posted by Special Education Cuts
a resident of Jordan Middle School
on Aug 10, 2016 at 6:24 pm

We need the Superintendent to explain why he allowed the public to be mislead by statements the Labor Negotiator would not receive the same increase as he negotiated with the Union because he was on a separate contract. He neglected to say the Labor Negotiator would automatically receive the same increase he negotiated because it was in his separate contract. Ha ha.

We need to know that we can trust your highest paid Senior Administrators. At least 3 of the highest paid Administrators were internal promotions requiring creation of new, higher paid jobs and Board approval. These had to be long planned, but the public only learned about it at the last minute. Ha ha.

We need confidence in your hiring practices of Senior Administrators. Board, please review them. Please open jobs to competitive job applicants, including jobs of people who report to the Superintendent. This looks too much like Max planned to stack the Administration with his own personal hires, getting them huge salary increases retroactive to a year ago. Then when all the facts came out, he said "too late, can't change it now." Ha ha.

The Board had to know about these plans long in advance. Ha ha.

Board, please explain why we should trust you again.


10 people like this
Posted by Taxpayer
a resident of College Terrace
on Aug 10, 2016 at 7:58 pm

Dauber said in the Weekly that he wants to rescind the raises. McGee now says no. How will the other board members vote? Any guesses?

What about other cuts? The board asked for a list. McGee have them a blank piece of paper. Will they roll over?


10 people like this
Posted by Charles Wilson George
a resident of Downtown North
on Aug 10, 2016 at 9:41 pm

Charles Wilson George is a registered user.

Let's not forget that school district employees will receive lavish pensions when they retire. At up to 72%, that's a minimum of 472,000 for each $100,000 of exit year salary. COLAs increase this amount yearly. Most teachers exit the system at/between 24-27 years, giving them many good working years to enjoy a second career and, over time, see monthly pension checks that are greater than those they saw when they were school employees.


Like this comment
Posted by PAUSD retiree
a resident of Midtown
on Aug 11, 2016 at 12:30 am

While I find is almost comical that the only time I read the word LAVISH in this publication is when it's used to described educators' pensions, I would like clarify the COLA increases, at least for those of us in the STRS (not CalPERS) system. Year One there is a 2% increase, however in all subsequent years the COLA increase is 2% of the Year One pension amount. Therefore, the COLA amount edges towards the 1% level the longer one is retired.


4 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Aug 11, 2016 at 12:42 am

PAUSD Retiree, the word "lavish" is used often in Town Square to describe the "lavish" perks and salaries awarded to many city employees including but not limited to the City Manager, the 2 Assistant City Managers and the fact that "lavishly paid" employees get over-time pay even when they're making more than $150,000 in straight salaries. "Lavish" has also been used to describe consulting contracts given to former city employees and housing subsidies for the very top city employees.


5 people like this
Posted by midtown mom
a resident of Midtown
on Aug 15, 2016 at 4:29 am

"Yeah Right" and Ben Rumson said it all very succinctly....
Bad decisions by those at the top -followed by more bad decisions doing damage control.......
The **** continues to trickle down and taint everyone below.... poor students


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