Palo Alto Unified, a well-resourced district that has set ambitious and costly educational goals for the next several years, is facing a financial squeeze: There is no ongoing revenue to pay for budget additions in the next school year, staff said Thursday.
This prompted board President Ken Dauber to ask Interim Superintendent Karen Hendricks to come up with $3 million to $5 million in administrative cuts, an amount he warned "may not be ambitious enough" to address an ongoing deficit.
The school board discussed the 2018-19 budget at a special session on Thursday morning. The district is projecting deficits for the next three years: $3.5 million deficit this year, $500,000 next year and $1.6 million in the 2019-2020 school year.
The district has been grappling with budget woes since summer 2016, when staff's misestimate of property tax revenue caused a multi-million-dollar shortfall. And this past fall, the district realized that a contractual error would result in paying out $4.4 million in unbudgeted raises to teachers and classified staff, with a potential additional 2 percent bonus now under negotiation.
Meanwhile, school leaders have requested $1.68 million in additions for next year, from reading specialists for the elementary schools to campus supervisors to support school safety at the middle schools. Board members expressed support for funding some of these requests but did not take any concrete action.
Big-ticket items that the district has committed to pursuing also loom on the horizon, with no price tag as yet determined: closing the achievement gap, reforming special education and implementing new social-emotional curriculum at the middle and high schools, among other items. The board requested Chief Budget Officer Cathy Mak provide dollar estimates for these initiatives at a future meeting.
Board members made their own requests, too, including hiring a general counsel (which board members have speculated could cut down on the district's ballooning legal consultants' costs), reducing large class sizes and continuing to invest in compliance with federal law Title IX.
Absent from Thursday's budget projections were two items that will have a significant impact on the district's bottom line: 41 additional teachers who the district estimates it will need to hire over the next five years to address an increase in enrollment, and the impact of families moving into new housing to be built at Stanford University. Without a cost estimate for the teachers, "We're kind of shooting in the dark," Board Member Todd Collins said.
Board President Ken Dauber asked Mak to estimate how the additional teachers would impact the district's bottom line in the next few years; she said she would provide the information after the meeting. When the Weekly requested the information, she said it would not be available until the board's next budget discussion in February.
Several trustees urged a rethinking of the district's financial approach, which historically has been to roll over the budget each year and to look to one-time state funds and property taxes to fund additions. (A "strategy" to avoid significant budget cuts in 2018-19 "may be to use the one-time state grant as bridge funding in anticipation that more property tax revenue will be available in August," Mak wrote in a staff report.)
"We can't occupy ourselves with the peanut butter on top of this large budget," Dauber said. "If we try to cram all of our needs into the tiny amount of dollars that we might get from a one-time payment from the state or an increase in property taxes then we're going to miss the opportunity to make more significant changes that would enable us to do the things that we actually need to do."
He asked Interim Superintendent Hendricks to return to the board with the list of proposed administrative cuts. Hendricks is also preparing, at the board's request, to conduct an operational review of the human-resources and business departments, with an eye toward efficiencies that would save the district money. Board Member Melissa Baten Caswell said she's unsure that the district has the "expertise" in-house to conduct such a review and urged Hendricks to take advantage of community members who would be able to help.
She also advised against the district's historical methodology for streamlining: doing the same amount of work with fewer people, often causing things to to fall through the cracks.
"We can't just say less people, more hours," she said. "That's not efficiency."
The board plans to hold another budget study session in late February.