On August 23, the Board again talked about how to handle the surprise $3.3 million budget deficit, mostly repeating what had been said the last time. I delivered these comments at the meeting:
I want to continue to express my concern about the Board's handling of this budgeting mistake and resulting deficit. As I said at the last meeting, I'm concerned that the Board is not approaching this issue with the appropriate urgency, especially for a public agency entrusted with the taxpayers’ money.
I hear Board members say that we should not rush to make cuts without community input. For some cuts - in school site programs for instance - that is certainly a reasonable approach. But in our budget of over $200 million, are there no cuts at all that you can look at for this year, for NOW, without a thorough community review? Half of the $3.3 million? A million dollars? Half a million? Anything? Why does the Board not even want to see a list of options before using borrowing and reserves instead of cutting costs?
To the many Palo Altans who stretch their finances to live in our community, who pay a steep premium to access our schools, I'm sure it comes as a surprise and disappointment that the District would overspend its revenue by millions and not even look for expenses that could be cut.
My experience is primarily on private sector boards, where a faster response and higher sense of urgency would be the norm. But public sector or private, I think that borrowed money and reserves are not the right way to take on a structural deficit.
I continue to also be surprised that the District has not provided forecasts to the Board and the community that reflect the impact of future raises on the budget. The view seems to be that raises will be optional if we don't have money to spend.
But great teachers are the single most important asset of our district - that's where the rubber hits the road. The Board just granted out-sized raises to teachers - more than what I would have supported - based on that principle, to make sure we can hire and retain those great teachers.
Our thinking on this seems to swing from guardrail to guardrail, which usually signals trouble. 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.
The average raise in the data that Ms. Mak provided is 2.9% a year. 2-3% a year seems like a reasonable planning assumption. But assuming no raises at all amounts to balancing the budget on the backs of the teachers, which seems like a strategy for a district that is in danger of losing its edge.
I urge the Board again to insist on options for expense cuts that can be made this year, and for forecasts that reflect realistic scenarios. We need to face up to our problems, not just kick the can down the road.