Response to PAUSD Parcel Tax FAQ
The PAUSD has placed a Frequently Asked Questions (FAQ) document on its WEB-site which provides its answers to questions about Measure A: http://www.pausd.org/community/downloads/brd_ed/parcel_tax.pdf
Responses to the answers provided by the PAUSD can be found in red
italics below:
PALO
ALTO UNIFIED
Information
About the PAUSD Parcel Tax
1. Why
are
PAUSD Answer:
The
parcel tax now in place, which provides $5.5 million in critical funding for
Answer Response:
In 2001, the School Board passed
a resolution to increase the District’s revenue by 10%, without any approval by
the voters, or notification to community.
This resolution led to Measure D, which was billed as necessary to
increase the salaries of teachers by 25% above the regional average. This $4M salary increase created a
“structural deficit” which most likely will require a parcel tax to fund these
increased spending forever.
Moreover, claims of “enrollment
growth” include non-resident students which the School Board has authorized
access to
This issue is whether the PAUSD
should live within its means or seek new parcel taxes whenever it overspends
itself into a new “crisis”.
2. How
have these previous cuts affected the quality of our schools?
PAUSD
Answer:
Among
other things, these cuts have reduced course offerings in the middle and high
schools – from Shakespeare to AP Physics; reduced elementary reading, art and
math programs; reduced library hours; and reduced funding for instructional
materials, athletics, technology support, custodial support, etc.
Answer Response:
The PAUSD has not provided a complete
list of “programs” that have been cut by the reduced revenue; much of the
funding loss was from the state and federal programs which are not critical to
the core mission of the schools. Had the
Last year in spite of a 3%
revenue loss, students’ API scores rose six points, while SAT scores and the
percentage of college-bound seniors stayed about the same as the previous year.
The District’s 2003-04 SAT scores
remained virtually the same from the 2002-03 SAT scores. The number of PAUSD
college-bound graduating seniors remained virtually the same as last year at
93%. The District claims that for
2003-04, only four students dropped out of high school, one student less than
the year before. (Note, the state average is around 30% total dropout). The
3. What
is the effect if a stable source of funding is not secured?
PAUSD
Answer:
The District
would have to cut $5.5 million in expenditures for the 2006-07 school year – on top of the $6.5 million previously cut. Given the
scale of reductions already made, it would not be possible to balance the
budget without serious cuts at the classroom level. Restoring previously cut
programs would not be possible.
Answer Response:
The PAUSD does not seem to be
considering reducing its staffing level, currently at about 1 staff member per
14.5 students, by an amount proportional to its reduced income. Nor do across-the-board pay reductions of 3 –
4% seem to be considered. In fact, the PAUSD has promised pay raises when money becomes available from growing property
tax revenue.
4. What
would be the impact to our schools?
PAUSD
Answer:
To
eliminate $5.5 million more in funding from our schools, the District would be
forced to consider closing an elementary school and laying
off as many as 107 teachers (16% of the teaching force). Teacher layoffs of
this scale would increase class sizes in kindergarten through 10th grade by as
much as 18-40% and eliminate one elective class each semester for all middle
and high school students.
Answer Response:
The District did not provide state-required layoff notices in March,
2005, so it would not be able to terminate any of the 107 these people until
2006-07.
The PAUSD has not shown any studies that Class Size Reduction will
affect grade point averages, graduation rates, or API growth. Further, a recent study released by the
Institute of Education of the University of London reports that on a study of 4th
through 6th graders in the UK, the effects of Class Size Reduction
is not seen to be beneficial enough to warrant its costs.
5. Are
current property tax revenues expected to grow by next year?
PAUSD
Answer:
Property
tax revenue growth is unpredictable but rarely dramatic. To replace $4.4
million in state funding; $5.5 million in existing parcel tax revenue; and fund
next year’s estimated $1.2 million cost of enrollment growth; property tax
revenue would need to grow 15% over this year’s projected sum.
There is
almost no chance of such a surge, as 2004-05 growth is expected to be 5-6% and
2003-04 growth was about 1%.
Answer Response:
The yearly property tax growth
average over the past twelve years has been about 6.88%. The PAUSD claimed that the property tax
revenue growth would be only 1% for 2004-05 in its published budget, yet claims
that it will be 5%-6% here. The PAUSD has
not shown any understanding of how to manage a Basic Aid District during volatile
economic times.
6. What if property tax revenue exceeds
projections next year?
PAUSD
Answer:
The
District won’t receive complete property tax revenue data for 2005-06 until
July 2006 – after the end of the fiscal year. If revenue exceeds projections,
the District would focus on securing existing programs (based on projected
financials), and then consider restoring more of the programs cut in recent
years.
Answer Response:
This answer seems to ignore its promise to raise salaries and
benefits as soon as property tax revenues return to at least their “historic”
average of 6.88% per year.
7. Are
there other ways to restore funding to schools?
PAUSD
Answer:
Under
Proposition 13 the only action a school district can take to increase operating
revenue is to ask voters to approve a parcel tax. This is the only certain way
the District can avoid further cuts and restore some of what our schools have
lost.
Answer Response:
There clearly are other legal
ways for a school district to increase its operating revenues. For instance, it can increase the revenue
from leasing property that it owns, such as the Cubbereley
site. Property owned by the District
could be modernized to increase the lease revenue, as commercial landlords
would do.
8. What
has changed in state funding for schools?
PAUSD
Answer:
Because
of recent shortfalls in the
Answer Response:
The PAUSD has lost about 3.5% of
its last two year’s State and Federal funding. This funding reduction was in
areas called “categoricals”, and other non-essential
areas such as “Site Improvement” and “Economic Impact Development”. The PAUSD did reduce its spending in a small
number of areas based on this loss of funding; however, since most of this targeted
funding is not critical to student core curricula, the impacts of this reduced
funding should have been easily absorbed if the PAUSD had just recognized that
it has to live within its means.
9. Will
the state’s financial crisis to further erode funding for our schools?
PAUSD
Answer:
Unfortunately,
yes. The Governor’s proposed budget shifts certain pension costs to local
school districts, which would add up to $1 million to PAUSD’s
expenses next year.
Answer Response:
The current State budget crisis has shifted certain pension
costs to local school districts to help pay for pensions available to teachers
via CALSTRS. However, there is no reason
to believe that these costs will be shifted to the school districts permanently.
10. Do
property tax revenues make up for state cuts?
PAUSD
Answer:
Unfortunately,
no. Despite the rise in home values, last year’s property tax
revenue growth was the lowest since 1993. This is because 36% of the District’s
property tax revenue comes from commercial property, where values have dropped
sharply due to low growth, high vacancies, reduced rents and property
reassessments. Also, state law limits property tax increases even when home
values rise.
Answer Response:
In the 2003-04 Budget, the PAUSD
claimed that the future property tax growth would be about 2.25% for the next
five years. In the 2004-05 Budget, the
11. What
are enrollment growth trends and projections?
PAUSD
Answers
In the
past three years, The District has grown by 594 students – a 6% rise. While
future growth is unpredictable, five-year forecasts estimate additional growth
of 942 students – a 9% increase over this year.
Answer Response:
The
12. If
enrollment grows by 942 students, how would it impact our budget?
PAUSD
Answer:
The
District would need to hire 47 more teachers based on current staffing. This
would cost over $4.1 million in today’s dollars. This does not include the cost
of 40 more classrooms, supplies and support staff. The District estimates that
the 594-pupil growth over the last three years adds approximately $3 million in
ongoing annual costs.
Answer Response:
The requirement of 47 more
teachers to handle the proposed 942 students is based on a 20:1 student:teacher ratio -- which is
very expensive and not proven to be productive.
Higher student to teacher ratios would reduce the number of teachers
considerable, and the cost to hire these teachers.
13. Does
the District receive additional funding to cover such expenses when enrollment grows?
PAUSD
Answer:
No.
Unlike most school districts in
Answer Response:
While this PAUSD answer is
technically correct, the reality of Basic Aid District funding is far more
complicated than this simple answers leads one to believe. For instance, when homes which have been
owned by people living in Palo Alto prior to Prop.13 are sold, there generally
is a re-assessment of that property by up to 90% -- bringing new money to the
PAUSD (whether there are children in the new family or not). When new residential and multi-family homes
are built, both generate new property taxes, as well as one-time impact
fees. Over the past twelve years, the PAUSD’s revenue from property-based taxes has doubled.
14. Can
the District control increases in costs?
PAUSD
Answer:
Inflation
affects almost everything the district purchases but staff makes painstaking
efforts to control costs. For example, the increase in the cost of health care
benefits has been held to about 6% per year since 2002 – far below the
Answer Response:
This answer demonstrates the
non-responsive nature of the PAUSD when it comes to dealing with its spending
problems. With 85% of its budget being
spent on people costs, the real solution is to look at reducing its costs by
reducing the number of people on Staff.
Class Size Reduction has become
a very expensive “program”, with very few documented results beyond K-3 grades.
15. What
is being done to reduce costs beyond the classroom?
PAUSD
Answer:
Over the
last two years, administrative has been reduced staff by 13%, cutting these
positions to 4.9% of District staff. The district has examined all facets of
its operation to implement efficiencies, such as combining or eliminating
positions, managing the use of utilities at all sites, and cutting expenditures
for overtime and substitute teachers.
Answer Response:
The PAUSD is to be congratulated
for these cost containment measures. However,
it has failed to consider across-the-board pay cuts. The reason for this is that the PAUSD
negotiated away its ability to reduce salaries when the District is undergoing
economic downturns. The PAUSD did not
consider the possibilities of reduced property tax growth, and promised its
teaching staff guaranteed salaries -- even though the District has no control
over its source of funds.
16. How
many students attend our schools but do not live in our district?
PAUSD
Answer:
Only
about 130 out-of-district students attend our schools at District discretion;
almost all are children of District employees. This serves as a very effective
staff retention program. Approximately 560 additional students transfer to our
schools under a 1986 court order that requires the District to accept a set
number of students from East Palo Alto and portions of
Answer Response:
The District’s claim that
increasing the cost of compensation for some teachers who do not live in Palo
Alto is not borne out by the history of
teacher turnover -- which reached about 35% at the height of the DOTCOM
boom. This “program” has been in place
since about 1992; paying to educate staff members’ children did not have any
demonstrable effect of the retention rate of teachers during this most recent
period of economic volatility in Silicon Valley. The District also claims 91 students who are
attending classes under an “affidavit of residence”, which means that the
student’s parents (and home) are not in
17. How
do our teacher salaries compare to other districts?
PAUSD
Answer:
To
attract and retain highly qualified teachers, the District pays salaries in
line with other districts in
Answer Response:
There are only 180 teacher
(Full Time Equivalents -- FTEs) employed in the
The PAUSD also provides salary
augmentation in a number of ways -- such as stipends for being a “lead
teacher”, or for other roles, such as teaching in the Regional Occupational Program (ROP),
which offers tuition-free career and technical training to students. Teachers can easily be paid more than the
salary schedules indicate. Thus, comparisons between various school districts are
not easily made.
18. What
is the District’s track record for budget management?
PAUSD
Answer:
PAUSD
has a stellar record for balanced budgets. For the past 6 years, PAUSD has
received the Meritorious Budget Award from the Association of School Business
Officials International. Last year, PAUSD was one of only three districts so
recognized in
Answer Response:
Of the 1,000 school districts in
19. What
is a parcel tax?
PAUSD
Answer:
It is a
flat assessment on each parcel of land. A parcel tax requires two-thirds
approval in
Answer Response:
The answer is true.
20.
Isn’t there a parcel tax currently in place?
PAUSD
Answer:
Yes. A
five-year parcel tax was approved in 2001 by 75% of
Answer Response:
The answer is true.
21. What
is being proposed?
PAUSD
Answer:
Property
owners would pay $493 per year for six years – about $1.35 per day. The expense
is eligible for deduction on state and federal income tax returns.
Answer Response:
According to the IRS,
Publication 17, Chapter 24, Page 160, parcel taxes are not deductible from
Federal Income Taxes.
Parcel Taxes Not
Deductible/Page.161:
http://www.irs.gov/pub/irs-pdf/p17.pdf
Taxpayers are warned not to
follow PAUSD claims that could lead to disallowances by the IRS at a subsequent
audit.
22. How
much revenue would this raise?
PAUSD
Answer:
It would
raise $9.3 million annually for six years and provide about 8% of PAUSD’s total projected revenue for the 2005-06 school year.
Answer Response:
The tax is being proposed for
six years, yet this answer focuses only on the 2005-06 projected budget, which
is based on a fictional one percent property tax growth. The 2004-05 property tax growth is already
over 6% for this school year, which is close to its historic 6.88%.
The PAUSD has no idea how much
money it will receive from property tax revenue over the next six years because
the Santa Clara County Assessors’ Office only provides property assessment data
that is valid for about ninety days.
23. How
would these funds be used?
PAUSD
Answer:
About
43% of the funds would be used to maintain current class sizes. Another 31%
would help PAUSD prevent teacher layoffs. The remaining 26% would restore about
one-third of the programs cut since 2003, including some elementary reading,
art and math programs, middle and high school course offerings, librarian
hours, counseling services and instructional materials.
Answer Response:
Letting class size increase
would reduce the need for more parcel tax money. There is no evidence that these smaller
classes are cost effective. Further, the
claim that the Measure A funds would “help to prevent” teacher lay-offs
demonstrates that even with these funds the PAUSD admits that teacher lay-offs
are still possible. The nature of a
school system is that its offerings are dependent on demand. How the PAUSD can make claims like the one
above without knowing what its student demands will be is difficult to
understand.
24. When
would the effect of these added funds be seen in schools?
PAUSD
Answer:
Immediately. All of
our schools would begin to see the benefits in the 2005-06 school year.
Answer Response:
This PAUSD’s
answer contains no substance or specificity.
25. Can
the state seize parcel tax funds?
PAUSD
Answer:
No. By
law, all parcel tax funds stay local to benefit PAUSD schools.
Answer Response:
With the passage of Prop.1A on
the Fall 2004 ballot, parcel tax money is probably
safe from State “raids”. However, the
State could change this in the future.
Using millions of dollars of parcel
tax money to educate non-resident inter-district transfers can hardly be
considered as benefiting the PAUSD schools.
Yet, the PAUSD will do exactly that with its parcel tax money!
26. How
do District residents who don’t have children in our schools benefit from a
strong public school program?
PAUSD
Answer:
Quality
schools mean a quality community. Also, most realtors agree that quality
schools are the key driver for the “
Answer Response:
The following tables contain the number of home sales, and the
average home sale prices for the cities of
|
|
|
|
|
Los Altos Hills |
||
|
Year |
Number of Sales |
Average |
|
Number of Sales |
Average |
Total Home Sales |
|
2004 |
569 |
$941,113 |
|
68 |
$2,383,419 |
637 |
|
2003 |
507 |
$1,019,064 |
|
52 |
$2,151,003 |
559 |
|
2002 |
401 |
$844,369 |
|
33 |
$2,103,333 |
434 |
|
2001 |
278 |
$847,827 |
|
27 |
$2,958,519 |
305 |
|
2000 |
411 |
$818,331 |
|
59 |
$2,309,475 |
470 |
|
1999 |
610 |
$616,625 |
|
120 |
$1,311,908 |
730 |
|
1998 |
572 |
$614,370 |
|
97 |
$1,268,010 |
669 |
|
1997 |
552 |
$491,401 |
|
75 |
$1,025,813 |
627 |
|
1996 |
410 |
$451,861 |
|
44 |
$1,176,102 |
454 |
|
1995 |
447 |
$440,954 |
|
27 |
$913,907 |
474 |
|
1994 |
603 |
$425,064 |
|
7 |
$858,143 |
610 |
In the last ten years, the average price of a