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May 18, 2005

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Palo Alto Online

Publication Date: Wednesday, May 18, 2005

Guest Opinion: No on Measure A -- a bail-out for poor stewardship Guest Opinion: No on Measure A -- a bail-out for poor stewardship (May 18, 2005)

by Wayne Martin

Measure A should be rejected by the Palo Alto Unified School District voters because the district has refused to manage within its means and demonstrated poor stewardship of the public's trust and money.

Education is big business in the United States. This year almost $1 trillion will be spent on education (about 7.5 percent of the gross domestic product). Locally, the school district will spend over $1.1 billion in next 10 years, and the community will be paying the remainder of the $400 million in Building-4-Excellence bonds on their yearly property taxes.

After studying the district budgets, I came to the conclusion that technical arguments are of little use to voters trying to understand Measure A.

I have come to the belief that the district is not a good steward of our money, based on its current spending practices. It does not seem to have a realistic strategic financial plan that looks at revenue and expenses for the next five to 10 years. Nor does it use any modern tools for projecting revenue from property tax. Since 2001, it seems to see special taxes (primarily on homeowners) as the only way to bail itself out of its spending problems.

The district has received almost $90 million in "excess property taxes" during the past five years. Had the District increased its reserves to only $20million to $30 million, it would have easily been able to draw down from these funds to avoid the threat of layoffs during the past two years.

"Excess property taxes" could also have been used to repair school sites and infrastructure, saving the taxpayers from future construction bonds. Adding the "excess property tax" and the current parcel tax funds, the district currently receives over $23 million more than "Revenue Limit" districts of similar size. Yet, the district wants to spend more.

We are told that over the past few years, Food Services lost about $600,000 because of bad management. Until this loss is controlled, ultimately an estimated $865,000 transfer from the General Obligation bond fund would be needed to subsidize Food Service operations. How this money will be repaid to the Bond Fund is not clear; no obvious administrative action was taken until parents complained about poor nutritional quality in the food served by the district.

The district has made claims about expecting almost 1,000 new students to be enrolled over the next five years, further claiming it will not receive any funding for these students. In 2000, the district signed an agreement with Stanford University to accept $10 million to help reopen Terman Middle School. For this "contribution," the district agreed not to request any more money from Stanford for the life of the "amended General Use Permit" (up to 15 years).

Stanford forecasts that there could be upwards of 1,000 new students added to district schools from its new housing. It is not known if any of Stanford's new students -- or the costs to educate them -- are included in the increased enrollment forecast by the district.

As costs grow from the $10,000-plus per student today, the district will have to find at least $10 million per year extra to educate these new Stanford students. Since Stanford does not pay property taxes on most of its lands, there is every reason to believe another parcel tax might be needed to educate the new students or build additional classrooms to accommodate them.

Currently, the Voluntary Transfer Program (VTP) -- formerly known as the Tinsley Program -- contains just under 600 students. Over the next ten years, the district can be expected to spend around $80 million subsidizing these San Mateo County residents' education. Based on shifting demographics and increasing district costs, the district should return to court to seek termination of Palo Alto's participation in VTP.

The district authorizes more than 100 non-resident staff inter-district transfers access to district schools, costing more than $1 million yearly. These students bring no funding from their home districts with them.

From 1990 to 2010, the leasing of the Cubberley site to the City of Palo Alto will bring the School District about $100 million. This money could have been used for maintenance and building recession-proof reserves. The district spent it on staff salaries instead.

With utilities rates beginning to rise through the roof, with storm drain fees doubling, and new taxes being proposed for City of Palo Alto projects, ordinary people are beginning to wonder if they will be "nickeled-and-dimed" out of their homes within a few years. If Measure A passes, and the cost of utilities goes up yearly, as well as the cost of other city-provided services, Palo Alto will not be very affordable for people on fixed incomes.

The examples above are typical of the poor stewardship of our money that can be found in the district. Rejecting Measure A will send the strongest message to the district to put its financial house in order, live within its means, return to educating district students and to consider taxpayer interests in its future decisions.

Wayne Martin, a self-employed software engineer, is founder and chair of Palo Altans Against Measure A, and was a leading opponent of the earlier parcel tax proposal, Measure I. The Web site is, and Martin can be e-mailed at [email protected]

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