Palo Alto school board members supported a much more conservative budget outlook for the next five years during a discussion Tuesday on how to plan for a $3.3 million budget shortfall -- the result of overly ambitious estimates of property-tax revenues -- with at least two trustees pressing for a more comprehensive list of potential areas to cut now rather than put off hard decisions.
At the board's first regular meeting of the school year, trustees agreed that district staff's newest and most conservative five-year budget forecast, which plans for property-tax growth rates of about 4 percent for the next two years and 3 percent in the outyears, is the best scenario to use moving forward. These rates are in stark contrast with the projections the adopted 2015-16 budget relied on: 8.67 percent growth for this year and 7.83 percent for the 2017-18 year. (The district intended to use the City of Palo Alto's estimates, in the 5 percent range, for 2018-19 through 2021-22 on secured property only, according to a staff report.)
Board Vice President Terry Godfrey did express some concern about unanswered financial questions that could affect this scenario, such as the outcome of an initiative on this November’s ballot to extend a personal-income-tax increase through Proposition 30. (If this doesn’t pass, it could result in million-dollar deficits in future years for the district, according to Chief Budget Officer Cathy Mak).
Godfrey said she prefers to "take action" in alignment with another presented forecast, which uses growth rates slightly below the city's 5 percent range, but be prepared for the third, most conservative scenario.
While he supported the third scenario, Trustee Ken Dauber said what is more important than picking the right multi-year scenario is understanding -- and taking action on -- the budget implications before the district now.
"I think the real payoff of choosing a scenario is that it tells you what you need to do right now -- and they all tell us that we need to make some adjustments to our expenses in order to deal with the uncertainty that's in front of us," Dauber said. "I'm less interested in which scenario we pick than being committed to making the most serious and urgent as possible response we can make now."
Both Dauber and Melissa Baten Caswell pressed staff to look where cuts can be made to save money this year, rather than spreading out the pace of decisions in staff's recommended two-year plan for addressing the shortfall. Both also expressed opposition to staff's proposal to borrow money by using $1.2 million from the general fund that in previous years has been spent on technology updates (bond funds would be used instead for the technology upgrades).
Superintendent Max McGee said staff will present at the board's Sept. 13 meeting a full list of potential areas to cut, in advance of the board's scheduled adoption of the 2016-17 budget at its Sept. 27 meeting. (Dauber requested such a list when the board discussed the budget deficit in July, and lamented that it will take until mid-September to get it.)
On Tuesday, there continued to be disagreement between board members, staff and community members over just how urgent a problem the budget shortfall is.
Dauber, for his part, compared the staff's two-year plan to a somewhat toothless commitment to quit smoking: "'I'm going to smoke this year and next year I’m going to quit smoking,'" he said.
"Until we make a serious commitment to actual spending cuts, talking about cutting spending a year from now isn't really a plan," he added.
McGee, a marathon runner, disagreed, countering with a personally relatable analogy: "The only way you complete a marathon is by telling people you’re going to run it ... but you don’t run it tomorrow. You take a year to train for it, and then you run it."
Trustee Camille Townsend and President Heidi Emberling similarly emphasized being "thoughtful," "deliberative" and "inclusive" rather than urgent.
Parent Ritz Tetzlaff urged the board to incorporate the cost of teacher compensation -- which accounts for 85 percent of the school district's expenditures -- into its multi-year budget scenarios, which staff has not yet done beyond the 2017-18 year.
Mak said Tuesday that this is because raises are subject to negotiations, which the district will have to reopen in January with its teachers and classified staff unions given the budget shortfall.
"By not forecasting any raises you're delaying the inevitable hard cuts that need to be made today," Tetzlaff told the board.
Tetzlaff, whose guest opinion piece in this newspaper on class size propelled the topic to the forefront of board and community conversations during the last school year, was worried that, when faced with hard decisions down the line, commitments like hiring teachers to reduce large classes will fall by the wayside.
Parent and school-board candidate Todd Collins similarly cautioned against assuming no raises in the outyears of the budget, which "amounts to balancing the budget on the backs of the teachers," adding that it "seems like a strategy for a district that is in danger of losing its edge."
"A more sensible approach would be to plan for prudent raises, and then re-size non-teacher expenses to fit what we can afford to spend," Collins said.
There remained no support on the board Tuesday for a proposal Dauber made at a previous meeting to rescind "me too" raises for senior administrators and managers, which would save the district an estimated $648,000.
Dauber maintained that doing so wouldn't harm the district's quality of services nor its competitive position in the labor market for such positions, but his colleagues argued that it would deal a costly blow to morale throughout the district.
Mak has made several proposals so far for how to make up for the budget shortfall this year and next, including tapping reserves, reallocating professional-development funding and unused dollars left over from not needing to hire elementary teachers due to lower-than-anticipated enrollment growth. Some board and community members have voiced concern in previous discussions about dipping into the district's reserves to address what they say is a structural budget problem.
After the board packet was published last week, Mak said her office identified further potential savings for the current year, including about $100,000 that would come from rolling back staffing additions to the district office that the board approved in May.
McGee said the district's leadership team has already "developed a rough idea" of adjustments that can be made in the 2017-18 budget and will be sharing them with site administrators at a meeting next week.
The district also plans to solicit community input at a town hall meeting on the budget on Sept. 7, which will be live streamed online. There will also be a board workshop on the 2017-18 budget on Oct. 18.
Also on Tuesday, the board unanimously adopted a set of goals for the 2016-17 year, which all fall under three categories: high-quality teaching and learning; equity and access; and wellness and safety.
The board also unanimously voted to release $60.3 million in reserve funds set aside for elementary facilities upgrades to support current projects or, potentially, the opening of a new elementary school, staff said Tuesday. The board is scheduled to hear a report on an additional elementary or middle school this year.
How would the candidates vote?
As part of the Palo Alto Weekly's election coverage, we will be asking the school-board candidates how they would vote -- and why -- on significant issues that the board takes action on before November.
This week, the Weekly asked the four non-incumbent candidates how they would vote on the release of elementary reserve funds. See their responses below.
Jay Cabrera, yes: First of all, I would do a public citizens poll and get our local communities engaged and voting on the issue. I would want to vote the way the people tell me to, as I am a populist candidate who utilized technology for direct and participatory decision making with the electorate.
For me, I would vote yes, because overall the voters mandated that these funds be used to support our children and students, and it seems time that they are allocated to get the ball rolling and improve facilities and projects for the students.
Todd Collins, yes: I would definitely support the release of the funds. The EMAC's work made it very clear that elementary enrollment is and has been shrinking, and these funds should definitely be put to work. There's a number of projects in elementary schools across the district that need to be done -- MP (multipurpose) rooms, libraries, classroom remodeling -- and we need to get going on them.
Jennifer DiBrienza, yes: I would have voted yes to release the funds. I think if those funds are needed at elementary schools for capital improvements, better to start planning on how best to use them and to prioritize those needs sooner rather than later.
Srinivasan Subramanian, abstain: I think the right thing to do on the $60 million release should be to postpone the vote as there appears to be discussion that still has not happened. It's not clear why $60 million release is needed to start a discussion about whether or not a new elementary school is needed. One option would have been to have amended the transfer to a partial amount, say $10 million, to fund the facilities upgrade of existing elementary schools -- emphasize existing elementary schools.
I'd have abstained as the information presented was not clear or sufficient to make an informed vote.