News

Palo Alto school board opts against any quick action on budget shortfall

Board discusses two-year plan for addressing deficit

Facing an unexpected $3.3 million budget shortfall this year due to overly ambitious estimates of property-tax revenues, a majority of the Palo Alto school board said at an all-day retreat Thursday that it preferred addressing the problem by dipping into reserves rather than rolling back recent pay increases for district managers and administrators.

With the exception of Ken Dauber, board members voiced support for a staff proposal to retain the raises, make one-time expense cuts and dip into district reserves to balance the budget this year.

There was less agreement on how to address the impacts of the budgeting error on future years, in part because staff had not prepared detailed financial scenarios to quantify the potential problem nor prepared cost-cutting options.

About a month after discovering that property-tax revenue estimates came in about 3 percent lower than the district budgeted for, Chief Budget Officer Cathy Mak presented the board with a series of proposed next steps, including using $375,000 in funds allocated for new elementary-school teachers that weren't hired due to lower-than-anticipated enrollment growth; $175,000 from the district's Basic Aid Reserve fund; $1.2 million in bond funds set aside to update computers; empty a $463,000 unrestricted, undesignated fund balance; and spend just over $1 million set aside for professional development.

Next year, $500,000 would be taken out of the reserve and an additional $1.4 million in budget cuts would need to be identified to bring the district out of the red, Mak proposed.

While most board members characterized the budget shortfall as a "structural" deficit with significant implications for future years, Mak did not. She said unless property tax comes in below 4 percent "for a long period of time," the district isn't facing a structural problem. She did not present any financial analysis, however, to show how future budgets could be balanced with a 4 percent increase. Dauber criticized the proposed approach, saying that the staff's plan is fiscally irresponsible and defers rather than tackles head on the "hard choices" that are required to manage an ongoing, multi-million-dollar deficit.

Using dollars that had been budgeted to hire new teachers is inappropriate, Dauber said, especially given a projected increase in high-school enrollment and large secondary class sizes, as well as using rainy-day reserves in today's economically sunny times.

He proposed instead that the district rescind 4 percent salary hikes given this year to its non-represented employees, senior administrators and managers, as "me too" raises attached to those negotiated with the district's teachers and classified unions. Doing so would result in about $648,000 in cost savings, according to the district. The raises are also an ongoing financial commitment -- though the district did not enter into multi-year contracts with its non-represented employees like it did with its teachers and classified unions, the increased compensation would roll forward each year.

"I don’t believe that it's fiscally responsible to proceed along a path where we spend reserves now, rather than cutting expenses," Dauber said. "Spending reserves, borrowing money, not looking at compensation -- those things should be last resorts, not first resorts."

Similarly, school board candidate Todd Collins urged the board to "face the hard choices and discuss them openly, not just kick the can down the road." He opposed spending reserves and "borrowing" by using bond funds, pointing to the multi-million-dollar, cumulative deficit the district faces "under almost any plausible scenarios."

Collins gave the board copies of calculations he had done on his own to show the five-year, cumulative deficit the district faces based on different revenue-growth scenarios and teacher raises. Using the City of Palo Alto's property-tax projections -- around 5 percent for the next five years -- and giving no raises would result in a $12.6 million deficit, according to Collins. Assuming higher property-tax growth, at 7 percent, and giving 1 percent raises in 2017-18 and 2 percent raises for the next three years still results in a $4.6 million deficit, according to Collins.

The scenarios that Mak presented Thursday assumed no raises for the next five years, which Collins said is "just unrealistic, and would in fact be counter to our core values."

The topic of compensation surfaced several times Thursday. Board members requested that at the next budget discussion in two weeks, Mak provide multi-year forecasts that include 1 percent raises so they can better assess the impact.

Despite voting in favor of it in May, board member Camille Townsend again expressed her opposition to entering into multi-year teachers’ contracts because of how late in the year property-tax revenue is determined. (She said that she voted against them in closed session.)

"I cannot ever see us doing a multi-year contract again," Townsend said. "I think it is not fiscally responsible because we don’t know the numbers."

Board President Heidi Emberling defended the contracts, calling them an "innovation" that has helped teachers and staff plan ahead rather than receive retroactive raises, as they have in the last few years. She pointed to the up-and-down nature of property-tax growth that make it difficult to predict with 100 percent certainty.

"Despite the Monday-morning quarterbacking, no one has a crystal ball," she said. "We make the best projections we can based on the data we have."

Chris Grierson, principal of Duveneck Elementary School and president of the Palo Alto Managers Association (PAMA), also urged the board to consider the impact of rolling back raises for senior administrators and staff like himself. This year’s 4 percent increase "helps us support our own families better than we could before and as you are well aware, costs of housing, food and transportation are constantly on the rise."

He noted that administrators received their first paychecks for the 2016-17 year at the end of July and "most of us have made financial plans or commitments with this new compensation rate in mind," from childcare arrangements and college tuition to qualifying for a mortgage.

"A rising tide lifts all boats, and your recognition and gratitude for our collective work and commitment to our Palo Alto students, their families and community raised morale throughout our district," Grierson said.

None of Dauber's colleagues supported rescinding the administrators’ raises, though several expressed an interest in discussing at a future meeting possible changes to the district’s "me too" process for providing non-represented employees with salary increases.

Board members also debated the timing of the district's budget decisions. Dauber expressed more urgency, asking staff to produce a list of prioritized, possible budget cuts for the board to weigh and discuss by its next meeting, but a board majority agreed to wait to have that information by mid-September.

Staff stressed there will be three more public meetings on the 2016-17 budget over the next two months, and a special session in October dedicated to discussing cuts for the following year. Several board members also emphasized that cuts must be considered beyond the dais, with strong, inclusive community participation.

"We are going to need to make budget cuts. No one is dodging that," Superintendent Max McGee said. "Staff recommendation is to do this over two years so we have time to engage and have all stakeholder groups participate, so we can make the best decisions for all students."

And while Emberling said Thursday’s conversation was "thoughtful and deliberate," and Townsend said there is no need to be "alarmist," others urged stronger, swifter action.

"There needs to be a sense of urgency," Collins told the board. "This is not business as usual."

The board will next discuss the budget at its first regular meeting of the school year on Aug. 23.

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Comments

31 people like this
Posted by Blind leading the blind
a resident of Jordan Middle School
on Aug 12, 2016 at 9:44 am

This is doubling down on bad decisions. First give a raise that is far too big, then create a budget deficit, then drain savings rather than face reality. Meanwhile my daughter's classes last year were bigger than ever and what will she find when she gets to Paly next year. What is going on on the school board?


26 people like this
Posted by Election
a resident of Jordan Middle School
on Aug 12, 2016 at 10:05 am

After Mr. Dauber said hope is not a strategy, Ms. Emberling used her comment time to target Mr. Dauber for a "sound bite." It was inappropriate behavior from a Board President toward another member because he disagreed with her. Emberling got everything she wanted. She could have been gracious. She got the 3 year contract she wanted, and after the budget shortfall, she got the Administrator's raise to remain in place. And there was no presentation or data presented on the Senior Administrator's salary setting process, as promised when she got the 3 year me-to raise she wanted.

Ms. Emberling's statement from article above: "Despite the Monday-morning quarterbacking, no one has a crystal ball," she said. "We make the best projections we can based on the data we have." That sounds like a sound bite. Vague, but a sound bite.

Ms. Emberling announced long ago she is running for the Board. She gave a press interview. She posed for campaign pictures that appeared in the Palo Alto Weekly. She requested and received endorsements from community leaders who just happened to be at her events. It looks pre-planned with sound bites.

Board Members, in a democracy representatives are able to state their views on policy issues before them without snide attacks. Using your Board comment time to attack him has never worked. He stays calm and does not respond in kind.


11 people like this
Posted by Election
a resident of Jordan Middle School
on Aug 12, 2016 at 10:22 am

I am glad the principal kept his salary increase. It is not the principal's salaries that are the main concern. It is the Senior Administrators who the Superintendent promoted internally, usually via non competitive job postings with limited public notice provided only at the last minute. The Board must have known about before and discuss in closed sessions. Then he gave his hires enormous up to 20% raises with back pack for the last year. The raises were given with the promise that information on how Administrators receive raises would be provided to the Board to review and the process reviewed at the summer retreats. But once it again wasn't done. So when will this be done and discussed publicly by the Board?

Concerning is this pattern occurred a number of times over the past year. Get a vote you want with a promise to do something, delay it and don't do it. (Remember the 90 day review of the attorney's work? Never happened. Then the District's attorney looked horrible for it's report on a sexual harassment case.)

Neither McGee nor his promoted Administrators look that great after this game playing. It doesn't give us a lot of trust in these highly payed individuals.

The same salary concerns will exist next year, and the year after. The Administrators need to keep their commitment to present the information to the Board. The Board needs to put this on the Board calendar to make sure real information is presented and discussed.


38 people like this
Posted by And a little child shall lead them
a resident of Community Center
on Aug 12, 2016 at 10:23 am

Does Heidi Emberling actually believe this:

"Despite the Monday-morning quarterbacking, no one has a crystal ball," she said. "We make the best projections we can based on the data we have."

The assessor called the error a rookie mistake. Did anyone check with the assessor before building a whole budget on a bad number? No wonder the district is in hot water if the board president doesn't grasp simple facts about why a budget deficit even exists.


36 people like this
Posted by Jordan Parent
a resident of Community Center
on Aug 12, 2016 at 10:57 am

Agree, Heidi Emberling has become the "apologist-in-chief" for this screw up. I can't tell if it is because she doesn't know better or is just hyper-defensive because she is Board president and up for re-election.

Either way, it is pretty appalling to hear her continue to say this is like being struck by lightning, everyone did their best, completely unavoidable, 3 year contracts are a "great innovation", and now this is just "business as usual." It seems really hard to vote for her again - she is actually subtracting value as a board member.


26 people like this
Posted by Kick that can!
a resident of Downtown North
on Aug 12, 2016 at 11:39 am

""We are going to need to make budget cuts. No one is dodging that," Superintendent Max McGee said. "Staff recommendation is to do this over two years."

Haha, good one. "Do this over two years" translates into DO NOTHING this year, and then hope we can avoid doing it next year. At least Cathy Mak had the honesty to admit she was hoping for higher revenue than expected.

How dumb do they think we are? Well, check that - it seems like the Board is buying it.


32 people like this
Posted by Carol Gilbert
a resident of University South
on Aug 12, 2016 at 12:20 pm

With the exception of Ken Dauber, board members voiced support for a staff proposal to retain the raises, make one-time expense cuts and dip into district reserves to balance the budget this year.

YES, KEN DAUBER!

Similarly, school board candidate Todd Collins urged the board to "face the hard choices and discuss them openly, not just kick the can down the road." He opposed spending reserves and "borrowing" by using bond funds, pointing to the multi-million-dollar, cumulative deficit the district faces "under almost any plausible scenarios."

YES, TODD COLLINS

To the rest of you- BOO HISS!


31 people like this
Posted by Susan Das
a resident of Gunn High School
on Aug 12, 2016 at 1:34 pm

I didn't vote for Mr. Dauber but I wish I had. I'm more than disappointed in the ones I did vote for. Mr. Collins has my vote next time. School board members need to represent students, not just employees. Giving big raises feels good but people need to face reality.


35 people like this
Posted by Me
a resident of Midtown
on Aug 12, 2016 at 5:08 pm

"Collins gave the board copies of calculations he had done on his own to show the five-year, cumulative deficit the district faces based on different revenue-growth scenarios and teacher raises. Using the City of Palo Alto's property-tax projections -- around 5 percent for the next five years -- and giving no raises would result in a $12.6 million deficit, according to Collins. Assuming higher property-tax growth, at 7 percent, and giving 1 percent raises in 2017-18 and 2 percent raises for the next three years still results in a $4.6 million deficit, according to Collins. "

Thank goodness we have responsible public servants like Collins and Dauber!! They have my full support.
The rest of the board and Admins. should start doing their jobs and fix the mess they created.
Boo particularly to Townsend, Emberling, McGee, and Mak for their egregious handling of this screw-up. They should be tossed out and fired !


27 people like this
Posted by Marc Vincenti
a resident of Gunn High School
on Aug 12, 2016 at 5:56 pm

I want to second other posters in their gratitude to Todd Collins--whose work in 2012 saved the district $850 million.

Web Link

I think we can put faith in his foresight.

Best,
Marc Vincenti
Campaign Director, Save the 2,008
savethe2008.com


18 people like this
Posted by Irresponsible
a resident of Old Palo Alto
on Aug 12, 2016 at 11:12 pm

This incompetent board cannot dig into reserves forever.

What they are trying to do is act as if nothing is wrong, in order to get reelected.

The next board inherits a money pit.

Terrible leadership.


32 people like this
Posted by Finance Gal, where did you go?
a resident of Adobe-Meadow
on Aug 13, 2016 at 9:19 am

Yes in one of the most bizarre moments of the board meeting yesterday Board member Terry Godfrey, who has never let a meeting go by without saying "I'm a finance gal,") attacked board candidate Todd Collins for making "unhelpful comments' and accused him of politicizing the Board's own massive screw up. Then Heidi Emberling, who I promise you has literally zero idea [portion removed] what the hell is even goign on -- she kept saying that this was just an unforseeable kind of market fluctuation), attacked Ken Dauber for trying to be "quotable" when he said that "hope is not a strategy" in response to Kathy Mak saying that she was hoping for higher revenues.

[Portion removed.]

Here's what happened, despite the crazy on display at this meeting:

1. Cathy Mak made a monumental screw up. She clearly does not have the skillset needed for her job. She did not know how to make budget projections. For years she had been using 2% no matter what. If it was 12% revenue growth, she used 2%. If it was 4% revenue growth, she used 2%. That was Cathy's number. That resulted in giant reserves that were periodically handed over to the union in the form of raises and bonuses rather than in smaller class sizes and program additions like more humanities AP classes.

2. Ken and Finance Gal asked that Cathy use a normal revenue projection model shortly after joining the board. What is this 2% thing. [Portion removed.]

3. Cathy started making up numbers. But she didn't know how. She tried 9% she tried 7%. She tried 11%. What she didn't do was know the difference between gross and net in the Assessor's property value reports. She also didn't call the Assessor to ask "hey what does gross mean?" [Portion removed.]

4. Max took advantage of the fact that Cathy was not competent and pressured her to use unrealistic budget numbers so that he could have a multi-year contract with PAEA for reasons no one knows why he wanted it. That meant backing into the number [portion removed.]

5. Net result: millions in debt, no money for kids, services cut, bigger class sizes, teachers losing the raises they wanted, managers making out like bandits, no accountability for the screw up.

6. Heidi says "no crystal ball, never could have seen it coming." Heidi thinks a meteor hit the district. Heidi is unfit to have any job at all in management, let alone oversight of a 200M organization. Max McGee is the worst manager ever. He can barely keep the lights on. He has charisma and little more. He is unfit to run this district as a manager. PAEA is running the show because no one is home at the board or the superintendent's office. You, the taxpayer, got fleeced with Measure A and your taxes.

7. If your child does not already attend private school, suggest you apply now, because class sizes in the high schools are about to balloon according to Dauber and he's not running for anything so he has zero incentive to lie. [Portion removed.]

8. Oh, and "finance gal" doesn't seem to be.


16 people like this
Posted by Dauber fan
a resident of JLS Middle School
on Aug 13, 2016 at 1:00 pm

Haha, finance gal doesn't seem to be. The other board members keep talking about their corporate experience back in the day, but they keep making dumb decisions. The only skill they seemed to pick up is go along get along.

News flash: everyone in the room is just parroting the boss. Board members need to be independent. Act like elected officials rather than junior staffers. Heidi and Melissa want to be rehired by the voters. They have got to start showing some independent thinking otherwise just apply for a job on McGee's staff and make it official. Right now I'm a Collins voter until I see different.


2 people like this
Posted by the sky is not falling
a resident of Another Palo Alto neighborhood
on Aug 13, 2016 at 2:31 pm

Finance gal,
[Portion removed.]

The budget did not "crater (2x)," the district is not "up to our eyeballs in red ink," the district did not make "a monumental screw up," and things are not "super bad." The net result is NOT "no money for kids" and no one was "fleeced."

The district projected that 3% more would come in than did according to the Weekly. More did come in - $20 million more - so it mis-guessed by $6 million on a $220 million budget. Forecasting is by definition a best guess and most companies miss the mark by a far wider margin. KPMG "Forecasting with Confidence."

There are plenty of new hires and programs that can be re-looked at to capture all that is needed and more, like pulling back on new administrators and finding other ways to pay for free breakfasts and full-time professional trainers for after-school athletes.

[Portion removed.]


17 people like this
Posted by Dauber fan
a resident of JLS Middle School
on Aug 13, 2016 at 3:00 pm

Hmm, I don't see it that way, sky. The mistake in the revenues wasn't about predicting, it was about not checking with the assessor to confirm net property values after exemptions. That's a failure to send an email or pick up the phone, not a bad Oiuja board.

The district has a structural deficit of some millions of dollars. So far except for Dauber the best thinking of board members has been to give a very large multiyear raise and defer any cuts until next year, except for some teachers. In my opinion that's dumb. It risks large cuts later that will affect students.

There is an election coming up. I'm sure board members would rather that not be the case but it's a democracy so they will have to deal with the consequences of their choices. I for one am disappointed in them particularly Terry because I expected better from her.


24 people like this
Posted by Voter
a resident of Crescent Park
on Aug 13, 2016 at 3:15 pm

Wow @sky, that's a good point - we should be giving Max, Cathy, and the Board citations for doing such a great job - they were close! Of course, we found our forecast was wrong about 6 weeks after we made it, and Cathy telling the Board repeatedly that it was almost impossible to be surprised, and the cause was labelled a "rookie mistake," and in the meantime we signed the biggest, longest labor contract we had ever signed, but those are just details. You're more of a big picture person, am I right?

Plenty of ways to solve the problem - yes, of course, but we won't actually do any of them for another full year (maybe), per Max's recommendation and the Board's concurrence. In the meantime, we'll use reserves and borrowed money to make up the difference. No biggie, it is just "business as usual" as Ms. Emberling put it.

The first step to recovery is to admit you have a problem. Emberling for one seems to think this as a random accident and we should just sweep up the broken pieces and move on. Not sure the voters will see it that way; I sure don't.


20 people like this
Posted by Can this get worse?
a resident of Another Palo Alto neighborhood
on Aug 13, 2016 at 3:33 pm

The answer for the past three years has been to vote against the parcel tax, but Glenn McGee boasts to staff that it passed overwhelmingly which meant 100% approval of PAUSD. The second answer to not vote out Heidi Emberling and Melissa Beaten Caswell because they have nothing to show for their work, on fact it is the opposite, a bona fide disaster. The third answer is to move along Scott Bowers. [Portion removed due to inaccuracy] [H]e has not shown any leadership during his lengthy stint as the top HR guy. The fourth answer is to not renew Glenn McGee's contract. Did they do that in June already? If not, make sure they don't renew it. You don't have to buy him out, just don't renew it anymore. The fifth answer is do not donate to PiE or PEA next week. Mcgee is certainly counting on an increase from to indirectly make up for the new $4.000,000 shortfall created by Cathy Mak and McGee. Sixth is that its time for Mak to move along. No one has to be fired, just not renewed or reelected. Certificates and thanks can be given out and new folks can come in and give their best, too. I assume that this has been the best of Bowers, Mak, Baten, Emberling, and McGee have given their best, but it simply not been good enough.


Like this comment
Posted by the sky is not falling
a resident of Another Palo Alto neighborhood
on Aug 13, 2016 at 3:55 pm

Voter and Dauber fan,

Did we listen to the same school board meeting? Web Link

As for "the best thinking of board members has been to give a very large multiyear raise," that is not so. [Portion removed due to inaccuracy.] Management employees are different but I am pretty sure I heard several board members say that they wanted to get more information on those raises and asked to see all the options available [portion removed due to inaccuracy.]

Teachers are not being cut. Ken Dauber started off thinking that was what was being proposed but later said he was "mistaken." The only "teacher" thing mentioned is a savings of $375,000 for money that was set aside to hire new elementary teachers who, it turns out, are not needed because elementary enrollment is down.

As for the timing of cuts, you are right - Ken Dauber kept pressing to cut ASAP. The board sent the district back to list things that can be cut at the district office right away, but other board members wanted parents, teachers, staff, and students to be consulted about what they wanted to keep and cut at their own schools before making decisions that directly affect them; that is happening this month and next. For that, I am thankful. Once identified, it is possible, I suppose, that some of those cuts could start mid-this-year too.



18 people like this
Posted by Dauber fan
a resident of JLS Middle School
on Aug 13, 2016 at 4:09 pm

Sky, did you read the article for these comments? The staff wants to save $375k by not spending money that was budgeted for elementary schools. If it's not needed there spend it in middle or high school where it is needed. That's what I believe Dauber said based on this article. As it is the only cut in the budget is for teachers.

If you see something in this article or anywhere else that says that other board members are interested in rolling back the management raise where is it. This article says the opposite.

I guess you don't remember that 4 board members voted for a large multiyear raise which it what put the district in the brink in the first place.


20 people like this
Posted by Edward
a resident of Downtown North
on Aug 13, 2016 at 5:01 pm

The headline might as well have read; "Most of School Board determines that 'me too' raises are more important than PAUSD student programs".

How about inviting 'leadership at Churchill to fully fund the activities that PA Pie is now soliciting donations for. It's a several million dollar fund raising goal, similar to the "surprise" budget shortfall that was back-filled almost immediately by re-directing funds intended for other PAUSD programs. The goals for PA Pie are exceptionally worthy; teachers aids in the classroom, more teacher aid time in the classroom, classroom enrichment, and many other programs that improve the PAUSD experience for every student.

No doubt, leadership at Churchill would insist that funding the programs Pie helps to finance would be an insurmountable financial hardship for PAUSD. However, 'me too' raises, it seems, are not a financial hardship for PAUSD. I would invite leadership at Churchill to fully fund PA Pie, and then go out and solicit donations to fund their 'me too' raises. Make their best case, elaborate just how much that raise will directly benefit kids in the classroom, and let the donations roll in.


17 people like this
Posted by Voter
a resident of Community Center
on Aug 13, 2016 at 5:32 pm

@sky, apparently we did not listen to the same meeting, since at this time portions of your comments have been removed "for inaccuracies."

As of now, the only plan of record is "wait till next year" to make cuts, and use reserves and borrowing to fill this year's hole. It is naive to think that McGee will merrily serve up a number of thoughtful, tough but fair, cuts at 25 Churchill, much less that there might be other cuts "that could start as soon as mid-year." Maybe we did not see the same meeting - at the one I saw, it was very clear McGee intended to make no cuts till next year, if then, period.

At this point, we are over $3M in the hole, plus our teachers will not get paid a 1% bonus they were expecting to get a few weeks ago, or any raise next year. Great for morale and recruiting, that.

And no one at 25C is being held accountable - everybody gets their raise or promotion (or both), everyone keeps their job, the board rubber stamps what Max proposes, and we borrow money and use up reserves to keep things going. And Cathy Mak still says "no structural deficit."

If you want to maintain, like Emberling, that this is just "business as usual," well then, our business stinks.


4 people like this
Posted by the sky is not falling
a resident of Another Palo Alto neighborhood
on Aug 13, 2016 at 6:26 pm

Voter,

Go to the board meeting and bring your friends. Push for mid-year cuts, reduced management raises, and retroactive 1% bonuses for teachers if revenues pick up this time next year or you can find places to make other cuts to fund it. That's how democracy works.

People who just post to online blogs their assumption that the sky is falling and that there is nothing anyone can do about it because the system is rigged or stacked against them have zero chance of changing anything.

Dauber fan,

I am just going off what I heard on the MidPen video of the school board budget discussion that I shared the link to in my post.

That's where Scott Bowers said something about management raises not being "commitments" like the multi-year board-approved collectively bargained raises are. That is also where a board member instructed the district to bring all options relating to the management raises to the next budget meeting.

As for the $375,000, the best use of those savings very well may be to invest them in new teachers for the upper grades. But that could not have been decided at that meeting, as you imply; it wasn't approved for that use so 1. someone has to put it on the agenda, 2. it needs to be discussed at two school board meetings, and 3. at least 3 board members need to agree. If the board prefers that, then $375,000 will need to be taken out of something else like, as I posted, not filling new administration job openings. BTW - Not hiring someone who doesn't work here yet, for a spot that is no longer needed because of declining enrollment, is not a "cut" in my book.

On the multiyear management raise, it is true, 4 board members voted for it BEFORE they knew there would be a deficit. They did not knowingly put the district's budget in the red.

[Post removed due to inaccuracies.]


17 people like this
Posted by Voter
a resident of Community Center
on Aug 13, 2016 at 6:39 pm

@sky - [Portion removed.] What makes you think that I don't already go to board meetings, reach out to board members, reach out to staff, work on campaigns, and vote, as well as post here? Save your lecture on "how democracy works" for some unlucky 3rd grader.

As for that $375K, McGee had a chance to pitch re-purposing it at the most recent meeting. He didn't. Instead he pitched using it to fund the admin raises (along with reserves and borrowing), which he recommended retaining in their entirety. Only in your fantasy board meetings will McGee come up with a list of tough cuts far from the classroom that can be implemented "as soon as mid-year."


Like this comment
Posted by the sky is not falling
a resident of Another Palo Alto neighborhood
on Aug 14, 2016 at 8:24 am

Voter,

[Portion removed.]

The bottom line is that everyone, including Superintendent McGee and the board, wishes that revenues had come in as high as projected.

But they didn't.

So the task ahead is straightforward: fill the $3 million hole (again IMHO much of that can be easily captured by cutting out some of the new administrative hires), double check and tighten up expenses, add some more procedures, and lower growth assumptions.

Adding below a few explanations that the district gave to address your worries about a budget fix that you say will "borrow money and use up reserves."

Borrowing. The district is not going to go to the bank and fill out a loan application to pay for technology updates.

It was explained at the budget meeting that there is $3 million left of bond proceeds that, awhile ago, was set aside for tech refresh. This is money that the district borrowed from bondholders in the 2000s. The Weekly endorsed and 78% of voters voted to use that bond money for a variety of things including technology, so this is an approved and legitimate way to spend those proceeds.

Before that bond, schools constantly scrambled to find their own money to replace their slow, outdated, and broken computers, often taking what they needed out of the fund that otherwise would have paid for more classroom aides. It is doubtful that schools are eager to go back to that.

The district mentioned that if the board wanted to refresh tech out of the district's general fund instead - the fund used to pay for more teachers needed to lower class sizes - it could, but the board would need to ID more to cut out of the general fund to balance the budget.

Reserves. It is district policy to have 10% set aside in reserves for a rainy day they explained. None of the district's proposals propose depleting or even dipping below that 10%, so the district is not going to "use up" its reserves.


14 people like this
Posted by Board watcher
a resident of Community Center
on Aug 14, 2016 at 8:59 am

Emberling and Caswell are in a tough situation running for reelection having voted for a big raise that led directly to a structural budget deficit. It's no wonder that they have decided to minimize the problem until after the election and delay painful choices until mid-year at the earliest, and most likely next year.

All of the funds held by the district are reserves, not just the 10% minimum set by policy. The district budget calls for computer purchases using operating funds rather than long term borrowing, because it's less expensive for taxpayers. Borrowing money rather than making expense cuts to close the budget gap is a decision that the incumbents are going to have to defend.

Emberling's attack on Dauber is just politics. He is a problem for the incumbents, because he represents the road not taken and adds legitimacy to Collins's message of fiscal responsibility.


16 people like this
Posted by Voter
a resident of Community Center
on Aug 14, 2016 at 9:30 am

@sky, [Portion removed.]

I agree this is about how to handle our situation, not assigning blame. I do fundamentally disagree with you, the staff, and the Board, about how we are handling it. We are showing insufficient urgency and putting off what needs to be done. We are hoping things will be better, when in fact they will probably get worse. In my experience, this is how organizations get into trouble.

You are wrong about borrowing. The money was not "borrowed during the 2000s" - the borrowing was authorized, but the bonds not yet sold. These new bonds will be sold (i.e., the money borrowed) next year, with average maturity of 12 years and longest maturity of 25 years. To pay for assets with life of 3-7 years. Umm, really? The District did use bond money for IT assets in the past; they also issued capital appreciation bonds, which paid zero interest, with very long maturities (which are now, for the most part, illegal). So to say, "they did it before" is a the weakest argument I can think of - it was a bad idea then, and it is a bad idea now. They sensibly stopped doing it for a few years, when they felt flush. Now it's back to borrowed money. Because, you know, we want to make sure we don't have to cut those administrator raises!

Side note: you can go to the bank or to the bond market - the result is the same - you borrow money, and have to pay back later with interest. It is odd that people try to paper that over - it is the same thing, and it is what it is.

Reserves - [portion removed] Money was set aside a few years ago for teacher development. The Board, in its wisdom, felt that it needed to put aside a pot of dollars for that. Ok, fine. So now that times are tight, we propose drawing down THOSE funds. Developing teachers - not so important, when there are administrative raises, and communication directors, and new HR people, and 25 Churchill promotions, etc., etc., to be paid for. So let's spend that money. So you are right, we aren't spending the "rainy day fund" - just the "teacher development fund." To pay those raises.

Your posts illustrate the problem nicely - it is always easier to rationalize doing nothing than face the music and do what needs to be done. Always - not just for PAUSD, but every organization. That's why good boards insist on urgency and action. But our Board didn't - we spend reserves, borrow money, pay the raises, and "wish up" the revenue forecast. Max just leads them by the nose [portion removed] and they follow (except for Dauber so far).

Sorry to deliver the bad news. No one is saying "the sky is falling" - we are saying there is a multi-million dollar long-term structural deficit (btw, in the meeting you watched, did Cathy Mak deny that? In the real one, she did), and we are making bad financial decisions to put off dealing with it. The Board should know better, and hopefully the voters will vote in Board members who do.


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Posted by Voter
a resident of Community Center
on Aug 14, 2016 at 9:34 am

[Post removed.]


17 people like this
Posted by common sense
a resident of Midtown
on Aug 14, 2016 at 9:59 am

To earn my vote, the incumbents will need to fix before the election, the deficit problem without dipping into reserves, reduce class size, and reduce the unreported unfunded liabilities of the pensions for school district employees.

The incumbents created this mess by rushing to vote in May the labor agreements and budget in June, rather than wait until July; So what they broke in one month, they can have four months to fix.

I urge everyone else to hold the incumbents accountable - no fix, NO on incumbents.


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Posted by the sky is not falling
a resident of Another Palo Alto neighborhood
on Aug 14, 2016 at 10:28 am

Common Sense,

Take a look at the California rules on when school districts must adopt their budgets. The deadline is June 30 so they can't wait, as you suggest, until July to adopt it.

Board Watcher,

The community is fortunate that this happened during an election year.

People will learn about what goes into preparing the district's budget, get a sense of each candidate's fiscal experience and conservatism/optimism, and see how they propose to sort through competing and often compelling interests.

[Portion removed due to inaccuracies.]


Voter,

You say this is about "not assigning blame" but at end of your post you assign blame.

We have a very different take-away from the same school board meetings. You say that they "rationalize doing nothing." The board met in a special session on this in July, just a few weeks after it found out about the shortfall. Web Link It met again to discuss it this week. Web Link. There were lots of "to dos" assigned to the district that will be brought back to the board later this month. It also plans to work on solutions at already scheduled meetings on this topic throughout the fall.

It would be hard to be more diligent and act much quicker than that.


12 people like this
Posted by Board watcher
a resident of Community Center
on Aug 14, 2016 at 10:42 am

Sky, I agree with you about Dibrienza's issue with supporting the new high school. Emberling also supported it, you're wrong on that point. Opposed were Dauber, Godfrey and Caswell, and Collins. Caswell did say though that she wanted to spend "millions" on innovation in the high schools, which she then made impossible 3 months later with a pay raise that soaked up the surplus.

The fact that the Board majority is good with McGee not providing any ideas for cuts, beyond teachers, over a month after finding out about the deficit suggests to me a lack of urgency. I think it stems from a desire to put off admitting the size of the problem until after the election. Maybe it's just a remarkable amount of cautiousness. If so, that would be a recent development indeed.


19 people like this
Posted by Eileen 1
a resident of Midtown
on Aug 14, 2016 at 3:02 pm

Eileen 1 is a registered user.

A couple of observations.

1. If you don't approve of this Board and their decision making abilities, this is your lucky year as there are 3 seats up in this coming election. It's not enough to use your vote to get rid of the incumbents - these elections are very difficult for non-incumbents to win. Give money or time to the candidates of your choice. As it currently stands, two incumbents are running for re-election, they have an advantage simply by being incumbents. It's not enough to just make nasty comments from the sidelines about Heidi Emberling and Melinda Caswell. Spend your money and use your time to work against them and FOR the candidates who are opposing them.

2. I find it shocking that there were more parents at the Board Meeting that discussed the change to full day kindergarten than there were at the meeting that discussed the budget shortfall. Parents must take a greater interest in the activities of the Board. As it is few people attend the meetings and board members are free to go on their merry way with no concern of reprisals, such as losing an election or enduring public criticism.

3. I value the district's teachers greatly, and I believe many, perhaps most, of them are very good at their jobs. However, I am extremely critical of the way the raises have been discussed by the teachers and the administrators of the district. My household has not had any sort of raise in several years, despite working at a well known software company. When we do get extra money it is as a result of a bonus. These bonuses are not a sure thing and cannot be planed on - our income is not that different from many teacher's households. Why do teachers believe that they have a right to regular salary increases? Why do they believe they should be treated differently and, in my opinion, better than many other workers who live in Palo Alto? When the teacher's retire they will get a pension and I am happy about that for them. When/if retirement happens in my household retirement will have been almost entirely self-funded. I am not asking for anyone's pity about my life, I just wonder why the teacher's feel free to guilt trip the citizens of Palo Alto. Not all of us are wealthy. Many of us are not able to browbeat our employer's for raises.

Just a thought, if the Board continues to make decisions that primarily benefit staff and administrators and fail to be financially responsible with the taxpayer's money, it would not be at all surprising to see many of Palo Alto's seniors opt out of paying the the district's parcel tax.


17 people like this
Posted by Voter
a resident of Crescent Park
on Aug 14, 2016 at 5:27 pm

@sky, I'm not assigning blame for how we got here (it was clearly a group effort), but certainly it is appropriate to look at who is - or is not - contributing toward solutions.

The Board couldn't possibly be more diligent - are you joking? So far they have met twice and done nothing, and gotten nothing from the Superintendent. The first meeting where we "seek to understand" was notable only by the fact that despite still "understanding," the district had already rolled out its solution - use reserves, borrow money, and don't spend on extra teachers. They didn't even present a revised forecast, which probably half the board members had already done for themselves. Now at the second meeting, it's the same again, except let's confirm we're giving those admin raises, that's important!

In any well-run organization, when you have an alarming revenue shortfall, you immediately start looking for cuts, and then shortly after, you make them. Max's proposal was to WAIT A YEAR before making ANY CUTS. The board generally approved it, but wanted to get a list of something they might be able to cut sooner - like in October. We'll see what gets served up - based on what we've seen so far, I expect next to nothing.

Weekly, you removed my early post about this, but I'm not sure why - @sky, you come across like someone is may be working for the District. I hope not, but if you are, I urge you to stop posting. It would be horrible for the district if it turns out they are using a paid anonymous shill.


2 people like this
Posted by Bonds
a resident of Jordan Middle School
on Aug 17, 2016 at 4:27 pm

@Voter - are you saying technology refresh funding, a daily operating expense of the District, are going to be paid by issuing of new bonds, which is a long term debt? Technology purchases are short term assets almost out of date by the time they are purchased. They lose value daily. I thought bonds were to pay for major expenses of long term or permanent assets, such as building construction.


11 people like this
Posted by Voter
a resident of Crescent Park
on Aug 17, 2016 at 9:05 pm

@Bonds - yes, that is exactly what the District is proposing and Board appears to support - using bonds with an average length of 12+ years (longest 25 years) to fund buying short term assets. The bond was worded to allow this use, but as you say, it is just a bad idea and they shouldn't do it. It is especially bad since they are using it to make up the deficit in their budget, and then don't admit to the public that they are using borrowed money to fill the hole.


13 people like this
Posted by Disgusted
a resident of Midtown
on Aug 21, 2016 at 9:49 pm

The school board went into the 3 yr contract KNOWING that there might be a shortfall and ignored it. They are fiscally irresponsible and need to go. None of the incumbents should be voted back. I agree with the comments by Eileen 1 - “my household has not had any sort of raise in several years, despite working at a well-known company. When we do get extra money it is as a result of a bonus. These bonuses are not a sure thing and cannot be planned on.” That this more the norm then you think. The teachers and staff received a huge raise and it needs to be cut back. What happened to getting a raise based on a job well done? Not all teachers/staff are doing a great job. The board should not be cutting into reserves as there will be no reserves when they really need it.


Sorry, but further commenting on this topic has been closed.

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