I Have A Question
What is a Parcel Tax?
A parcel tax is commonly used by school districts to provide locally controlled, secure funding that is used for operational costs such as books, teaching materials, classroom equipment, vulnerable elective programs and teacher salaries. A parcel tax requires a two-thirds vote approval in California. Parcel taxes are most frequently levied as a flat rate per parcel. However the tax is assessed, it must be uniform and be applied to all property owners. The only exception is for senior citizens age 65 or older who annually apply for an exemption.
When will Measure A be on the ballot for our schools?
Measure A will be decided by a special mail ballot election this Spring. There will be no polling places for this election and ballots must be cast by mail. Ballots will be mailed to all registered voters on April 5th and must be received by the County Registrar of Voters office by May 4th. Postmarks do not count, so mailing by April 30th is advisable. If you do not receive a ballot or lose your ballot, the Registrar of Voters will provide a replacement ballot. Postage is included with the ballot.
Why is it so important to renew the parcel tax for Palo Alto’s public schools now?
The parcel tax now in place, which provides $9.4 million in critical funding for Palo Alto Unified School District (PAUSD) schools, expires next year. In addition, PAUSD is projecting a loss of State funding of $7 million over the 2009-10 and 2010-11 fiscal years, while enrollment growth is projected to be over 2% annually over the same period. In these uncertain economic times, it is vital that Palo Alto protect its locally funded parcel tax to help maintain the quality of education in our school district.
Didn’t Palo Alto already approve a parcel tax for schools in 2005?
Yes. A six-year parcel tax was approved in 2005 by 74% of Palo Alto voters. It expires next year.
Didn’t Palo Alto recently approve a school bond in 2008?
Yes, a Palo Alto school bond was recently passed (June, 2008), which raises funds for infrastructure improvements and new facilities for our schools. By law, bond proceeds from bond measures may only be used for capital expenditures such as constructing or renovating school buildings, repairing school grounds and purchasing equipment and furnishings. Bond funds may not be used for operational expenses such as minimizing teacher layoffs or funding core instructional programs.
Bond = Buildings | Parcel Tax = Programs and People
Would this new parcel tax on Measure A replace the existing parcel tax?
Yes, should Measure A pass this Spring, it would replace the current parcel tax, and go into effect June 2010 for six years.
How much will this measure cost?
Property owners currently pay $493 per year. Measure A would increase the current parcel tax by $96 ($8 per month), and renew the term of the measure by six years. The measure also includes a 2% annual (beginning in the 2nd year) escalation, to help mitigate for enrollment growth, inflation, and state funding reductions.
How much revenue would this measure raise for PAUSD?
It would raise approximately $11.2 million annually for six years.
How would PAUSD use the $11.2 million in school parcel tax funds?
Funds from Measure A will be used to:
- Preserve excellence in core academic programs such as reading, writing, math, and science
- Minimize class size increases in all grades and layoffs for dozens of teachers and school employees
- Continue teacher professional development by providing training programs and activities that support high quality teaching
- Help protect critical high school course offerings and electives, including art and music, that challenge students, allow students to be highly competitive for colleges and university admissions, provide career vocational education that prepares students for the workforce, and provide instructional support for those struggling with the basics
How soon would school parcel tax revenue help our schools?
Immediately. All of our schools would benefit beginning in the 2010-11 school year.
Can the state seize school parcel tax funds if they face a budget crisis?
No. Given state funding fluctuations one of the most compelling reasons so many school districts have adopted parcel taxes is to insure predictable, secure funding. By law, all parcel tax funds stay local to benefit PAUSD schools. No funds from Measure A may be taken away by the State or other school districts.
How will a school parcel tax benefit residents who don’t have children in PAUSD schools?
Most realtors agree that quality schools are one of the key drivers for the “Palo Alto premium” in home values. The quality and nationally recognized success of our schools makes Palo Alto a very desirable place for young families to live. This creates demand for our homes and helps protect our property values. When the very modest cost of this measure is compared against the value of protecting the value of your home, supporting our schools makes good investment sense for the entire community.
How would PAUSD be affected if a parcel tax is not passed?
Without this revenue, PAUSD would have to cut $9.4 million in expenditures for the 2011-12 school year – on top of increased projected State funding reductions. With the latest State budget deficit at $20 Billion, further State funding cuts beyond the current level are highly probable. Given the scale of PAUSD reductions already made, it would not be possible to balance the budget without severe cuts at the classroom level that would directly impact student instruction and the quality of our schools.
What would our schools lose if a parcel tax is not passed?
To eliminate $9.4 million more in funding from our schools, PAUSD would be forced to consider closing an elementary school and laying off as many as 105 teachers (14.7% of the teachers in the District – out of a total 720). Teacher layoffs of this scale would result in increased class sizes at all grade levels and the elimination of many electives.
Does funding from the current parcel tax keep pace with the cost of providing quality instruction for our students?
No. Each year the cost of educating children and operating a school district increases due to inflation, enrollment growth, and the same rising costs confronted by the private sector such as utilities and maintenance. The current parcel tax is not adjusted annually for inflation, which means that over the life of the tax, the fixed funding becomes insufficient to sustain a consistent level of programs.
The economy appears to be is improving. Why not wait to see if property tax revenues grow enough by next year?
The District is projecting 0% property tax revenue growth for 2010-11. Housing values as a group have decreased and this resulted in a massive number of appeals and reductions in assessed property values. Assessed value is a trailing indicator on the economy – in other words the poor economic conditions of late 2008 and 2009 will not be felt until months later. It is about 18 months behind the overall economy. With a projection of 0% for 2010-11 and modest gains in the following year, property tax increases would not be enough to make up for the increased expense due to enrollment increase, the ongoing State funding cuts and the loss of $9.4 million if the parcel tax is not renewed.
What if property tax revenue growth exceeds PAUSD projections?
PAUSD won’t receive complete property tax revenue data for 2009-10 until July 2010 – after the end of the current fiscal year. Property tax revenue would need to have increased by 7% in 2009 in order to offset the projected $5.1 million structural deficit and the additional expenses due to enrollment increases. Property tax revenue in actuality is projected to grow 0% in the current budget.
Aren’t there other ways to restore funding to PAUSD schools?
Under Proposition 13, the only action a school district can take to increase operating revenue is to ask local voters to approve a parcel tax. Measure A is the only certain way PAUSD can avoid further cuts and restore some of what our schools have lost through locally-controlled funding that cannot be taken away by the State.
What has changed in state funding for PAUSD schools?
Because of recent shortfalls in the California budget, state funding for our school district has been cut sharply and the District is projecting a $7 million state funding cut over the 2009-10 and 2010-11 fiscal years. Continuing state deficits are expected to force further cuts in public education and PAUSD revenue.
Since homes are so expensive in Palo Alto, don’t property tax revenues make up for state cuts?
Unfortunately, no. Property tax revenue is budgeted to increase by 0% in the coming fiscal year. There are many factors that cause this, one is because 36% of PAUSD’s property tax revenue comes from commercial property, where values have dropped sharply due to low growth, high vacancies, reduced rents and property reassessments. Another factor is the increased number of requests by residential owners for property reassessment as a result of the continuing down economy.
What are PAUSD’s enrollment growth trends and projections?
In the past three years, PAUSD enrollment has grown by 743 students – a 6.7% rise. While future growth is unpredictable, five-year medium forecasts estimate additional growth of 1,166 students – a 10% increase over this year.
If PAUSD enrollment grows by 1,166 students as projected, how would it impact our school district’s budget?
PAUSD would need to hire at least 70 more teachers (using the average medium enrollment growth projections), which would cost over $6.2 million in today’s dollars. This does not include the cost of more classrooms, supplies and support staff. PAUSD estimates that the 743-pupil growth over the last three years adds approximately $9 million in ongoing annual costs.
Doesn’t PAUSD receive additional funding to cover such expenses when enrollment grows?
No. Some school districts are funded through a formula called the revenue limit mechanism, which pays an amount per student and therefore automatically funds growth in enrollment. PAUSD is a Basic Aid district, which means that our schools receive essentially the same amount of funding without regard for the number of students the school district must teach.
Can our school district control increases in costs?
Two factors our school district can’t control — inflation and growth in enrollment — are responsible for most of the increased costs. Nonetheless, PAUSD has taken aggressive action to control costs. For example, seeing the economic downturn over the past year, PAUSD implemented a “soft” hiring freeze, increased some class sizes, and reduced staffing which currently resulted in savings of over $2 million.
What has PAUSD done to reduce costs beyond the classroom?
This year through careful control of expenditures, cut-backs in legal services, consultants, conferences, and supplies, the District saved an additional $250,000 in expenses.
What about PAUSD students who don’t live in our school district?
About 139 out-of-district students attend our schools at PAUSD’s discretion; almost all are children of District employees. This serves as a very effective teacher retention program for PAUSD. Approximately 573 additional students transfer to our schools under a 1986 court order that requires PAUSD to accept a set number of students from East Palo Alto and portions of Menlo Park. PAUSD receives partial funding from the state for these 573 students.
How good is PAUSD’s track record for budget management?
PAUSD has a stellar record for balanced budgets. For the past seven 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 California. In addition, each and every year since our first local parcel tax passed in 2001, an Independent Citizens’ Oversight Committee has reviewed the use of funds and reported that the funds were spent as promised.
Why is a parcel tax a flat fee per parcel instead of a fee proportional to assessed property value?
Under state law, public schools may not levy “ad valorum taxes”. Meaning, the tax is on real estate parcels, not the value of those parcels
How can I be sure the funds will be spent as promised?
These funds must be spent as defined in the ballot measure. Annual audits are mandatory and an Independent Citizens’ Oversight Committee will review the use of funds and report to the community to ensure the funds are used as promised.
Can seniors request an exemption to the parcel tax?
Yes. Senior citizens, age 65 and over, will continue to be eligible for an annual exemption upon request. And if they forget, for a period of time they can apply for a refund during the year the taxes are paid.
What is a structural deficit?
A structural deficit is an ongoing annual deficiency in the District budget as opposed to a one-time loss of funds or a one-time expense.
What does it take to pass a parcel tax measure?
California law requires a two-thirds super majority or 66.7% of those who vote on a parcel tax measure.
What can we do to enhance local control of our schools and reduce our dependence on Sacramento?
Passing Measure A enhances local control of our schools by providing local funding for our schools that must be spent locally and managed locally. This local source of funding that can’t be taken away allows our community to ensure that our local schools and our kids don’t become the victims of the state budget crisis
How can I learn more about local school financing and Measure A?
For more information, visit www.SupportPaloAltoSchools2010.org or e-mail contact@SupportPaloAltoSchools2010.org
