View from Silicon Valley- PAUSD's
case for a Parcel Tax
(c) copyright View from Silicon Valley, 2004. All rights reserved.
Silicon Valley added 3,000
jobs in August, which happened to also be California's statewide net. In the face of flat employment and wages,
increased healthcare costs, NASDAQ down 5%+ YTD and declining commercial real estate valuations, the local school systems
continue to push for a new parcel tax.
Full disclosure: I am fundamentally against any new tax in the current
economic environment. Anything which raises the cost-of-living in Silicon Valley is making the jobs and growth problems
worse. A tax which charges the same to homes worth $500K (very low-end in Palo Alto) and $5M+ just further squeezes
the middle class out of the area. (Imagine how I would feel if I actually owned property in Palo Alto.)
In an effort to give the opposite view a wider airing,
below is an e-mail received from the Palo Alto Unified School District (PAUSD) August 30, 2004 laying out their case
for their November parcel tax ballot measure. My
questions about this e-mail, via e-mail,
which were promptly answered, via e-mail, by a senior district official. Since some of the responses contradict my
earlier statements, it seemed appropriate to combine the correspondences in a format which allows point-by-point review.
The original e-mail is in black. The questions are in red
with responses in blue and comments
in purple. A couple summary points are added at the bottom...
* * * * * This is a special E-News edition.
The
School district asked us to forward the following information about the parcel tax you will be asked to vote on in November.
****************************************************** PAUSD
Parcel Tax Information
Since January 2003, the District has cut $6.5 million from its budget and has used approximately
$3 million from its reserves. The 2004-05 budget adopted in June projects that another $1.5 million from the reserves
will be needed to balance the budget this year, and projects a deficit of $2.6 million for 2005-06. The budget is updated
throughout the year as new information is received, e.g. new property tax projections from the County Assessor, enrollment
numbers, union contract settlements, and budget info from the State.
The major factors contributing to the budget deficit
are:
- relatively flat property tax growth due primarily to the decline in commercial property taxes (the district
receives approximately 70% of its revenue from property taxes, and about 35% of that is from commercial property) - loss
of funding from the state Didn't the governor allocate a $2B increase to schools in his 2004-05 budget? What is the current
estimate for PAUSD's share of this $2B? 1) The $2 billion is primarily allocated to revenue
limits. We are a basic aid district and will not see those funds. If there are some additional categorical funds
(like money for textbooks) included, we may see a very modest amount. We will get a budget update at our next meeting
on Sept. 14th and that will include an analysis of the impact on PAUSD of the new State budget.
(Palo Alto's share may not turn out to be $0.)
The link to http://pausd.org/community/downloads/supt/parceltax.pdf says Basic Aid was eliminated. I thought
Gray Davis restored Basic Aid prior to leaving office? 2) The basic aid allocation from the
State of $120/student was cut. The governor backed down on taking money from our local property tax revenue.
-
enrollment growth (the district receives no money for additional students)
How much did student enrollment
increase? 3) We don't have the figures for this year yet - we will have at our Sept. 14th meeting
- my guess is about 100+ additional students. (editor's note: if it's 100 students, it would be a 1% increase)
- enrollment growth (the district receives no money for additional students)
Doesn't the state pay districts
based on ADA? 4) Only revenue limit districts get funding based on ADA. As a basic aid
district, we receive no money from the State for additional students.
Forgive my ignorance, but I'm surprised
to hear ADA is irrelevant to how Sacramento funds Palo Alto. The risk of asking you to over-simplify a complex issue,
how do they allocate funds?
Every district has a revenue limit and it's different for each district.
The revenue limit is the amount/student that you are guaranteed from the State. If your local property tax revenue exceeds
that amount, you are a basic aid district. You keep your local property tax dollars and you receive no additional funding
from the state. If your local property tax dollars are less, then the State backfills your coffers to the guaranteed
level. It's a very complex system, which is one of the reasons we need education finance reform in California. Revenue
limit districts like to see new students because they get $5-6,000 for each one. Basic aid districts don't like enrollment
growth because they must simply divide their dollars between more students. About 6% of the 1000 district in California are
basic aid. (Palo Alto is a prime beneficiary of the education
finance system. Presumably, this is an admission Prop13 has to be changed to improve school funding. While
it's nice to finally have some company in this regard, it's hard to imagine any Prop13/education-funding
reform getting off the ground without a promise to "level the playing field" & equalize finding across
districts. PAUSD should be careful what they wish for since such changes would almost certainly leave
PAUSD with less money.)
- increased costs such as employer contributions to the state retirement system, workers comp.,
utilities, etc.
By how much did employer contributions
increase? 5) We've gone from 0% to about 10% in the last couple of years.
(I was hoping for a number here. Private employees increasingly pay out-of-pocket for increased healthcare
and worker's comp costs. It seems only fair to insist public employs to do the same, rather
than ask taxpayers (read: private employees) to foot their bill also.)
By how much did worker's comp increase? Didn't Sacramento pass a deal to lower
worker's comp costs? 6) The increased cost for this year is $761,250. The State may have
passed a bill, but our rates are still up from where they were. ( You can't
tell if this is the amount of this year's increase, or the whole number. Statewide, the expectation is for a 10%
decrease in worker's comp costs. PAUSD figures to get it next year even if they missed the window this year.)
Aren't
Palo Alto's utilities separate & mostly free from the state's problems? 7) PA owns it's own utilities, but the rates are still increasing.
How does the newly-added "winter break" add to the budget? 8) No impact on the budget. (This hard to believe. Certainly there will be an impact on working
families who do not plan to take off for "ski week.")
The district has reduced its administrative
staff by 13%, teaching staff by 2% and classified staff by 7%. They have examined all facets of operations to look for
efficiencies, including eliminating or reducing outside contracts, combining or eliminating positions and departments, reducing
expenditures for overtime or substitutes, and eliminating the district warehouse.
What do each of these represent as a share of the total budget?
9) We have about 1200 employees, less than 5% are administrators (that
includes principals and ass't principals), 35% are classified and the remainder are teaching staff.
(Editor's note: percentages suggest they cut eight admin, 29 classified and 14
teachers for a net cut of ~4%, presumably shown in this list:)
The budget for this school year includes reductions to: - elementary librarian time -
the Spectra Art budget - elementary reading specialist time - teaching positions at the secondary schools - school
site funds - funding for sports - funding for Camp Anytown - maintenance/landscape staff - technology support
and more.
On June 22, the Board of Education voted to place a parcel tax measure, Measure I, on the November ballot.
The current parcel tax of $293 is set to expire in 2006. It provides $5.5 million annually for PAUSD programs including class
size reduction. If passed, Measure I will renew the current parcel tax and increase it by $19/month ($228/year) for
eight years. The increase will be added to the property tax bills for the 2005-2006 year and will provide an additional
$4.3 million dollars annually. The additional dollars will be used to avoid future reductions, maintain manageable class
sizes, preserve educational programs to attract and retain quality staff, and enhance student achievement.
What is the total PAUSD 2004-05
budget? (With or without parcel tax revenue?) 10) The 2004-05 budget is currently projected
at $108.1 million in expenses and $106.7 million in revenue,$5.5 million of which is from the current parcel tax. (The new parcel tax adds another
$4.3M which is ~3x the $1.4M shortfall. With or without the new parcel tax, PAUSD still spends over $10,600 per student.)
Measure I will be on the November 2, 2004 ballot. All
parcel tax funds stay in the school district and can't be taken by Sacramento.
Further details are available in their 14-page .pdf, but I also add more questions:
-"This is net savings after loss of state funding."
(Appears several times next to a spending item.) Can you help me understand
what this means? 11) The State provides partial funding for some programs like K-3 class size
reduction. If we eliminate the program, we lose the funding for the program from the State. Therefore the savings is
only what we contribute from our general fund to support the program.
-It provides $5.5 million annually for PAUSD programs
including class size reduction. $1.3M seems a small amount to "prevent"
a 37.5% increase in K-3 class size. What am I missing from this point? 12) The State pays
for the bulk of the program in K-3, the $1.3 is just the additional PAUSD cost.
Same for $2.6M to "prevent" increases in 4 -5, 6, 7, 8 & 10th grade classes? 13) Our Grade
4-10 class size reduction program requires about 31 additional teachers and the average teacher costs us, with benefits, about
$80,000. The class size reduction program for grades 6-10 is only in selected subjects and the reduction is just to 24 students.
Are additional operational costs incurred by opening more classes? 14) Yes. You need a teacher for the class and sometimes we need an additional classroom and classroom furniture/
books/supplies/etc. (Where will these new operating expenses
come from?)
-The additional ($4.3M annual) dollars will be used to avoid future reductions, maintain
manageable class sizes, preserve educational programs to attract and retain quality staff, and enhance student achievement. What PAUSD facilities are available to house the extra classes? 15) Some sites have classroom space available. In addition, we own Garland, Greendell, Fremont Hills and
Cubberley.
If 95% of students already go to
college: What additional benefit is expected by reducing middle- & high-school
class sizes? 16) There are a lot of benefits including 1)time for master teachers to mentor
and observe new teachers, 2)more flexibility in the classes that can be offered, for instance this year we had to cancel German
1 at the middle school because only about 20 students signed up - we could offer that class if we had more teaching periods
available, 3) more technology support to teachers and many other similar things that we've had to cut. Also, at the middle
school, team teaching would be possible with the additional teachers. Team teaching allows teachers to know their students
better and to do more interdisciplinary work. (If "German
1" canceled due to lack of student sign-up (interest?), it's not clear more funding
will "fix" this "problem"? Likewise, team teaching and teacher mentoring are good for the teachers but by
"benefit," I meant "for the students.")
What literacy problems are currently
being experienced? 17) We have approximately 10 to 15% of our students who are reading below
grade level. (If 95% of students go on to college, this seems unlikely, or maybe
a statistical anomaly being exploited.)
-
- - - - - - In summary, this Q&A does show PAUSD is experiencing increased costs
and reduced revenues. It is shocking to think even $10K per child
(vs. California's average of "$5-6,000") and 95% college attendance is considered insufficient. (Insert Lake Woebegone joke here...)
You might decide PAUSD laid the groundwork
for winning incremental new funding with the e-mail. You might have
been swayed to neutral or positive on the new tax based on their persuasive arguments.
But then, over the past weekend, a news headline revealed PAUSD would gain $2.9M in additional property tax revenue(*) this
year. (PAUSD said they expected zero growth in this funding.) I foolishly raced
through the article looking for the point where PAUSDcalled off the dogs and decided
to spare people's stretched budgets this year.
Instead, I found, "Basic
aid school districts get more money, but they get more uncertainty at the same time.'' followed by "This ongoing uncertainty
underscores the importance of passing parcel taxes in November." Compounded by, "Julie
Jerome, co-chair of Palo Alto's parcel tax campaign, said, ' They've already cut
something like $6 million from their budget over the past two years. They have a projected deficit of $2.5 million for this
year. You put those two together, and the increase doesn't make up for it.' "
PAUSD officials (see "10)" above) reported
the shortfall at $1.4M, not $2.5M. Similar to Wall Street, Washington and McKinsey spin-meisters,
if it's an honest mistake, it's conveniently in the direction of the desired result.
Bottom line, PAUSD wants $5.5M from
a new parcel tax to combat a $1.4M budget shortfall. Granted, it's probably too late to change the November ballots but they continue to press
for this $5.5M even after they just got a
$2.9M increase in their latest property tax allocation.
"Mo' money" indeed...
* * * * *
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* * * * * *
Here is the original e-mail from PAUSD with the official's
contact info removed.
- - - - - -
This is a special E-News edition.
The School district asked us to forward the following
information about the parcel tax you will be asked to vote on in November.
****************************************************** PAUSD
Parcel Tax Information
Since January 2003, the District has cut $6.5 million from its budget and has used approximately
$3 million from its reserves. The 2004-05 budget adopted in June projects that another $1.5 million from the reserves
will be needed to balance the budget this year, and projects a deficit of $2.6 million for 2005-06. The budget is updated
throughout the year as new information is received, e.g. new property tax projections from the County Assessor, enrollment
numbers, union contract settlements, and budget info from the State.
The major factors contributing to the budget deficit
are:
- relatively flat property tax growth due primarily to the decline in commercial property taxes (the district
receives approximately 70% of its revenue from property taxes, and about 35% of that is from commercial property) - loss
of funding from the state - enrollment growth (the district receives no money for additional students) - increased costs
such as employer contributions to the state retirement system, workers comp., utilities, etc.
The district has reduced
its administrative staff by 13%, teaching staff by 2% and classified staff by 7%. They have examined all facets of operations
to look for efficiencies, including eliminating or reducing outside contracts, combining or eliminating positions and departments,
reducing expenditures for overtime or substitutes, and eliminating the district warehouse.
The budget for this school
year includes reductions to: - elementary librarian time - the Spectra Art budget - elementary reading specialist
time - teaching positions at the secondary schools - school site funds - funding for sports - funding for Camp
Anytown - maintenance/landscape staff - technology support and more.
On June 22, the Board of Education voted
to place a parcel tax measure, Measure I, on the November ballot. The current parcel tax of $293 is set to expire in 2006.
It provides $5.5 million annually for PAUSD programs including class size reduction. If passed, Measure I will renew
the current parcel tax and increase it by $19/month ($228/year) for eight years. The increase will be added to the property
tax bills for the 2005-2006 year and will provide an additional $4.3 million dollars annually. The additional dollars
will be used to avoid future reductions, maintain manageable class sizes, preserve educational programs to attract and retain
quality staff, and enhance student achievement.
Measure I will be on the November 2, 2004 ballot. All parcel tax funds
stay in the school district and can't be taken by Sacramento.
