Editorial: PAUSD should implement measures to prevent future budget shortfall

The weak financial situation from 2008 onwards led to some of the worst circumstances for basic aid districts, specifically Palo Alto Unified School District (PAUSD). Funding from local property taxes and the parcel tax declined as a result of the economic downturn and brought a deficit. The district has been using money from the undesignated reserve to fill this, but will deplete this reserve by 2014.

The weak financial situation from 2008 onwards led to some of the worst circumstances for basic aid districts, specifically Palo Alto Unified School District (PAUSD). Funding from local property taxes and the parcel tax declined as a result of the economic downturn and brought a deficit. The district has been using money from the undesignated reserve to fill this, but will deplete this reserve by 2014.

Because of this, the district should ratify precautionary measures to ensure future years have access to a sufficient budget that covers basic costs. In addition, efforts should be made to recreate a similar isolated budget surplus to serve as a last stand.

At the end of the 2010 school year, the district board approved a three–part resolution to deal with the budget situation. Firstly, they passed a hike on the parcel tax from $493 to $589 per household, with 2 percent annual markups. Next, they made $3.8 million in budget cuts for the 2010-2011 school year.  Finally, they approved the use of undesignated reserves to supplement the district for upcoming years. Similar installments must be made and updated to prevent a drastic economic outcome when it comes to creating the budget for 2014.

Although the district acknowledges this, the plan of action is currently undecided. According to PAUSD chief business officer Cathy Mak, the school board chose not to take action because many things may change over the course of the next three years. In addition, the board does not want to approve drastic blind cuts that simply aren’t worth the money saved.

[pullquote]Although the district acknowledges this, the plan of action is currently undecided. According to PAUSD chief business officer Cathy Mak, the school board chose not to take action because many things may change over the course of the next three years. In addition, the board does not want to approve drastic blind cuts that simply aren’t worth the money saved.
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While this may be true, PAUSD should nevertheless adopt more conservative fiscal policies—that take effect without delay—to counteract the current situation. Their deluded and misguided conjecture that property tax revenues will bounce back up in two years just feeds false hope into themselves and the community, and has no actual basis to be deemed fact. Saving money, whether it relieves the deficit, rebuilds the surplus or alleviation of the parcel tax, undoubtedly has a positive effect.

The budget surplus is meant to be an emergency fund for situations that leave the district monetarily pinched; the fact that PAUSD needs to take and use this money tells the The Oracle staff, as well as the community, that the district is in fact in an emergency–worthy position. This either gives a misleading impression or points to the right direction: that PAUSD needs to be more responsible with their spending.

To solve this issue, the district needs to employ a tighter hold on the current budget. One way of doing this is carefully going through the programs PAUSD currently supports with funding, and picking and choosing which programs should be kept and which need to be let go. It is hard to argue for keeping every program that the district has enacted over the years.

Since PAUSD has no direct authority over the parcel tax, it’s a unrealistic to propose another hike on the already excessive toll.

Even if the economy does rebound before a true fiscal crisis slams the district and the community, the extra money would provide for another emergency fund for future years. The much –needed money would ensure fiscal security, and possibly bring back programs that were scrapped or deplenished from a financial standpoint.

To simplify the issue, PAUSD needs to address this matter at the next district board meeting; by deciding what expenditures and programs can be cut, where funding can come from, and how to plain save money.

—Unsigned editorials represent the majority opinion of the staff (assenting: 29; dissenting: 7)


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