The First Rule of Holes

The school board had our first substantive discussion of PAUSD’s budget deficit on Thursday, August 11. We didn’t get much closer to a solution, unfortunately.

holes2.jpgAs I wrote in a blog post a few weeks ago, the district is facing a revenue shortfall of $5.2 million this year and $9 million next year, compared to the original projections. This year, we need to plug a hole of around $3.3 million, after adjustments and cancellation of a planned 1% bonus to employees. Unless we see extraordinary increases in property tax revenues in the future, this deficit will continue in coming years even with no raises. Even modest raises in the future would produce large multi-million-dollar deficits under any but the most optimistic property tax revenue projections.

The first rule of holes is that when you’re in one, stop digging. The combination of an unnecessarily costly multi-year raise, granted by the board in May, and the mistake in estimating property tax revenues for 2016-17 has left the district with expenses that are higher than revenues. Cutting non-educational expenses should be the first response, because it protects the district’s ability to retain and hire teachers. This is even more important now, as PAUSD high school enrollment will swell by 600 students over the next several years.

Despite this challenge, my board colleagues indicated their support for a staff proposal to plug this year’s budget gap by spending district reserves and borrowing, via bond funds, to cover IT expenses. The only cost saving is funding for 3 teachers, which makes no sense when we know that we need to increase the number of teachers, not reduce them.

My proposal to roll back a 4% pay increase to managers and administrators for this year, which the district clearly can no longer afford, was rejected. It’s important to note that over the previous 4 years these employees have received pay raises amounting to 18.7% plus bonuses totalling 4% of salary, compared to a 12.2% increase in the Consumer Price Index. This is an obvious if unfortunate savings that won’t affect services to students.

It’s not fiscally responsible to put off hard choices that are needed to put the district’s finances back into order. The May decision on raises showed the same desire to avoid unpopular decisions now in the hope that the future would take care of itself. In fact, it’s far more likely that delay in facing reality will leave the district with less flexibility in the future. Spending savings and borrowing now, and putting off until another day the hard work of cutting spending, may well leave us with increasing class sizes and cutting classroom services to students as the only remaining alternatives.

The board will take final action on the 2016-17 budget on September 27. We will also discuss the budget at the board meetings of August 23 and September 13. I was able to persuade a majority of board members to direct the Superintendent to bring a list of possible cuts to the September 13 meeting. (I’ve been asking for a list for over a month to no avail, including at a meeting on July 27, and my proposal to require at least a preliminary list by August 23 was rejected).

I’m confident that there is room for significant savings in the district budget that will not affect classroom teaching for our students. Good candidates are staff positions that have been added in the last several years, including the district’s PR officer, and staffing in central district offices like HR. In fact, this is an opportunity to make changes that will improve efficiency in operations.

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