Posted by teacher, a resident of the Barron Park neighborhood, on Jun 22, 2012 at 9:12 am
PAUSD doesn't need money! They have more money than they know how to spend. When I was a teacher there I was encouraged to use up in full allotted budget even though I didn't really need to buy any additional things.
Posted by Chris Kenrick , a resident of the Old Palo Alto neighborhood, on Jun 22, 2012 at 9:23 am
The bond money does not go for classroom supplies. It is for updating old buildings and adding classroom space, possibly even a new school, to deal with enrollment growth. The rate increase won't create more money for PAUSD. It will make the repayment period on the bonds already authorized by voters shorter and cheaper.
Posted by David Pepperdine, a resident of Another Palo Alto neighborhood, on Jun 22, 2012 at 10:42 am
This whole argument is soooo bogus!
First, off if the district has a surplus in one area, they should redirect the excess funds towards buildings and classroom space, rather than asking taxpayers to pay more in these austere times.
Second, I don't buy the argument that we'll save all this money by taking advantage of the low interest rate environment. Once we accelerate the expenses (arguing that we'll save money), what do you think the district is going to do after that? Sunset the higher taxes? Wanna bet that they'll put another measure on the ballot right after the higher tax rate pays off the current dues?
Posted by neighbor, a resident of the Greenmeadow neighborhood, on Jun 22, 2012 at 10:53 am
The non-rich residents are going to get taxed right out of Palo Alto.
@Chris Kenwick -- the teachers DO get raises, automatically, every year for the first 12 years (step increases), with added raises for continuing ed completed. Additional raises are given at years 13, 16, 20, 25, and 30 after positive evaluations. Special credentialing and a Master's degree also earn raises (as they should), so it's not really accurate to say teachers have not received raises. It is accurate to say they have not (yet) received a raise from the 1% "surplus" this year and have not received COLA for 3 years. I'm a state employee and have not received a COLA for 5 years and step increases were halted 5 years ago as well. While I believe that good teachers are worth their weight in gold, I also believe any surplus in precarious times is best placed in reserve -- it is the fiscally responsible thing to do.
Posted by Crescent Park Dad, a resident of the Crescent Park neighborhood, on Jun 22, 2012 at 11:01 am
To all the negative comment people: Please re-read the analysis.
Key quote: "The higher tax rate now also means substantial savings later -- in the neighborhood of $1 billion in financing costs -- because of a sharply shortened repayment period and a lower-cost type of bond."
This is the equivalent of doing a re-fi on your home, getting a lower rate and getting a 15-year loan instead of a 30-year loan. Lower interest rate combined with a faster pay-off. It will cost less money in the long run.
You pay a little more now, but in the end you will pay less overall when it comes time to retire the bond.
Pay me now or pay me much more later.
The 2011-12 surplus is operational and should go towards those types of items - salaries, maintenance, etc. Even if someone were able to move the surplus over to the building bond --- it is a drop in the bucket compared to the huge savings we'll see from changing to the higher tax rate and paying off the debt faster.
Posted by JIm H., a resident of the Duveneck/St. Francis neighborhood, on Jun 22, 2012 at 11:05 am
I'm a little confused as to how the rate can just be raised, without voter approval. Was that built in to the bond measure? If we voted the measure in assuming one rate, how can you go back and raise the amount we're paying? Isn't that a bait and switch?
Looks like all of the people voting for the increase are "financial professionals" so I'm thinking they can afford whatever increase there is. How about we have some "average citizens" on the panel.
Posted by Wayne Martin, a resident of the Fairmeadow neighborhood, on Jun 22, 2012 at 11:09 am
The fact that the bond rate is being raised is totally predictable, based on the claims of the PAUSD’s bond consultant (a unit of the Royal Bank of Canada), who claimed that the rise in housing prices for the PAUSD would increase at 7.5% a year for about 30 years, and then slack off to about 5.5% for the next ten years, or so. This projection was not cut from whole cloth, as there was ample data to justify the doubling of housing prices over the previous decades.
The data below is for 1994-2004 is real, taken from on-line sources, for home sales here in Palo Alto. The data from 2005-2025 is projected, based on the real data--
Year| # |Ave. Price | …%...|
As a reality check on the projected data, it seems that the median price of a home in Palo Alto has crossed the $2M mark recently:
The problem with the RBC scenario is that everything has a natural cap, a limit to its intrinsic value, so that the future buyers of Palo Alto real estate were not likely to pay the overly-inflated prices that their predecessors did, since the price of many single family homes would double every ten years, putting the prices into the $3M-$6M range. It is very difficult to believe that anyone is going to pay $3M-$6M for an old Eichler in 2025, and beyond. But that’s what the Royal Bank’s people said, and the elected school board was “sold”—they endorsed the Royal Banks projections, and ignored the community that said” “No way!”.
So .. here we are. The claim that the PAUSD could finance its bond debt on the backs of the old Measure B bonds, that will be retiring over the next decade has turned out to be false. Yet, no one on the school board seems to want to acknowledge the Board didn’t do its homework, and that this failure sits squarely on its shoulders.
Given how poorly this school board has managed capital projects in the past, is it any wonder that they screwed this up too?
> "The higher tax rate now also means substantial savings later --
> in the neighborhood of $1 billion in financing costs
What? The latest Measure A bonds were only in the 375M range. Before the meltdown, when bond yields for this sorts of bonds were in the 4%-6% range, the financial costs would NEVER have been in the $1B range. Generally, for 30 year bonds, a simple rule of thumb is 2 dollars back for every dollar borrowed.
Posted by Crescent Park Dad, a resident of the Crescent Park neighborhood, on Jun 22, 2012 at 11:24 am
@ Jim H: Yes - the rate adjustment mechanism was part of the bond.
Here is the detail - from the 7th paragraph, 1st page:
"WHEREAS, based upon a projection of assessed property valuation and a proposed schedule of bond issuances, the Board has determined that, if approved by voters, the tax rate levied to meet the debt service requirements of the bonds proposed to be issued will not exceed the
statutory limit of $60 per year per $100,000 of assessed valuation of taxable property, pursuant to Education Code Section 15270;"
Essentially the committee recommended and the BoE approved increasing the tax up to the voter approved maximum of $60/$100K assessed value.
Posted by GougedInMidtown, a resident of the Midtown neighborhood, on Jun 22, 2012 at 12:38 pm
Mom and neighbor have it correct. Why spend a budget surplus on increases and then raise the taxes on local residents? Either the majority of residents are significantly more wealthy than I am or are not paying attention to the many different ways in which they are being repeatedly soaked.
Posted by natalie, a resident of the Midtown neighborhood, on Jun 22, 2012 at 1:32 pm
I feel the same as Jim H. He wrote:
"Looks like all of the people voting for the increase are "financial professionals" so I'm thinking they can afford whatever increase there is. How about we have some "average citizens" on the panel."
Not all are financial professionals, butaccording to the article, most are and the others are probably well off financially.
As a fixed income senior, I find it hard to swallow any increases to my property tax, which I pay with savings. Luckily, I bought my house so long ago, that it's assessed value is limited by Prop 13. Otherwise, I probably could not afford to live here.
Posted by Jim H., a resident of the Duveneck/St. Francis neighborhood, on Jun 22, 2012 at 1:33 pm
One last question/point CPD. If it is such a "no-brainer" and will save nearly $1,000,000,000 then why didn't they start out with a $60/$100,000 tax rate? The shortened pay back period would have saved money back in 2008 just as it does now. So, why wait 4 years to increase the tax rate?
Dana Tom said, ""Given the huge change in the financial landscape since the (2008) bond election, the question is whether to bear a larger burden now from facilities we'll benefit from soon, or push off the payments 35 years,"
So, he's saying, let's spend money that we don't have now, because things will get even worse???? Essentially, the district is spending an increased amount of money now, which they claim not to have, during a fairly hearty recession, a time when most people/companies/cities are trying to find ways to put off expenses to a later date when the economy gets stronger.
Seems to me that the district messed up somewhere.
Posted by Crescent Park Dad, a resident of the Crescent Park neighborhood, on Jun 22, 2012 at 1:55 pm
I think Wayne Martin has part of the reasoning in his post above --- the assessed property values (and/or turnover of properties, which substantially increase) have not increased at the planned/anticipated rate. So the pay off rate wasn't going to work long term.
But I would also hazard to guess that the low interest rates available today were not available in 2008.
I'm not on the committee or the board. I'm not a "finance professional" nor do I play one on TV :-) Just an educated guess or two.
Posted by Wayne Martin, a resident of the Fairmeadow neighborhood, on Jun 22, 2012 at 2:31 pm
> "Looks like all of the people voting for the increase
> are "financial professionals"
No .. not all are. In fact, not all actually own property in Palo Alto, and/or have any "skin in the game"--meaning that at least one of these people lives in a tax exempt property here in town.
> At least we know that they can't raise it anymore.
Actually there is something to this. If you understand the fallacy in the RBC (Royal Bank) model--which requires the aggregate property value of the PAUSD (Palo Alto, Los Altos Hills and Stanford/Residential properties) to increase by 7.5% a year--and this doesn't happen, then the PAUSD will have to increase the bond rate yearly in order to retire the bonds. They have already raised it once, and will likely have to do so every year from now until the end of the 40-year pay-down period is over. That means that each year, they will have to admit to the public that they didn't know what they were talking about back at the time they were pushing the Measure A onto the ballot.
If the bond rate is pushed to the limit, then the bonds will be paid down sooner than 40 years, and the PAUSD will no longer have to discuss this matter in public. Within a couple of years, it will all be forgotten--except for a few of us who would like to believe in the integrity of government--but are always disappointed.
The key issue here is the "aggregate property assessment" of the PAUSD jurisdiction, which has doubled every ten years or so, for the last 30 years, or more. (I have met a number of senior citizens who moved in prior to 1950 who paid in the $10K-$12K range for their homes.) It really stretches the imagination that homes will continue to double every ten years in price. If there is ever a drop in property values, then this will create a real problem for the PAUSD, because it will have pushed the bond rate to the maximum. Of course, they could push another bond through that would be used to cover the unmet revenues of the Measure A bonds. But if that happened, there would have some sort of regional deflation of property also--which would make for a lot of unhappy people.
Oh .. and keep in mind that if the PAUSD wants to re-open Cubberley, we are probably talking about $300M-$500M (just an guess) to rebuilt the site to meet the higher-than-normal expectations of Palo Alto parents for school facilities. This Cubberley rebuild is not on the table at the moment, nor is the $500M to $2B that the City of Palo Alto wants to spend for its "infrastructure".
All-in-all, Palo Alto is becoming a very expensive place to live.
Posted by Wayne Martin, a resident of the Fairmeadow neighborhood, on Jun 22, 2012 at 2:53 pm
> turn around, claim an exemption for the bonds tax since
> they are seniors, and end up not paying a dime.
Actually, it doesn't work that way. There is no senior exemption from base property taxes--unless you happen to live in places like Channing House, Lytton Garden, or Stephenson House, to name a few of the many tax exempt housing properties around town.
The problem turns out to be Prop.13. Anyone who has been living in Palo Alto in a home since before 1976, is likely paying $1,500 a year in property taxes, or less. (Homes could have been remodeled, so the 1976 initial assessment might have been updated to something closer to market values; however, without such remodels, the older folks are living in homes that were assessed in 1976.)
So, the bond consultants suggest to their clients that they target seniors--who don't pay a lot, and renters, who don't pay property taxes directly-- to vote YES on all bonds/parcel taxes because they won't be seeing the bill for the new taxes, like people who have recently moved in California.
In Palo Alto, these two groups make up perhaps 70% of the population, although it's not exactly clear that they march to the tune of the Vote YES consultants, and their local supporters of increase taxation and increased government spending. Many renters are not qualified to vote, or just don't.
Seniors are only exempt from parcel taxes, if they choose to request an exemption.
Posted by Annoyed mom, a resident of the Adobe-Meadows neighborhood, on Jun 22, 2012 at 4:28 pm
Thanks Wayne Martin. I knew seniors had an exemption. So, it's for the parcel tax instead of bonds... I still think it is not fair to be able to vote for a tax you don't have to pay.
Prop. 13 should be reformed but cautiously and starting with commercial properties. As someone who's owned a home in Palo Alto for 20 years, and lives modestly I'll add, I don't think we could stay here if all of a sudden our house was reassessed to its full value. Our property taxes would about triple and we could not afford that.
Posted by Thank you Chris Kenrick, a member of the Ohlone School community, on Jun 22, 2012 at 5:41 pm
Thank you Chris Kenrick for your added comments on this .... you have taken so much time to not only research the subject, to talk DIRECTLY to those involved, to FURTHER research and come to understand, and then you take the time to write up your extensive and long term (i.e. you have seen this city go through cycles and phases and stages) (and yet you are still young!!) knowledge for the benefit of the rest of us.
You are a much admired, much appreciated and much respected member of my Palo Alto community.... Thank you and keep it up!!
Posted by TK, a resident of the Barron Park neighborhood, on Jun 22, 2012 at 6:08 pm
Well What happens when your child does not go to Gunn High this year and just graduated this year? I'm sooooooo sick of bonds! we have spent them all to the school's and the money does go to remodeling the school's! now next year I get to pay for for my parcel tax to go up again? Now that I have a Daughter that is no longer at Gunn Tx God!
My paying parcel tax which is a nice way of saying "BOND passed" is going up again! have parents that work in P.A BUT does not live in P.A! drop there child off to go to school in P.A. pay something!I'm sick of paying for non P.A resident's they are not stuck with the parcel tax! gee maybe because they don't live here! or maybe they don't like there neighborhood school's or maybe they are really glad they get a Free ride!and I bought my house 23 year's ago! I'm sick of it! no teacher at gunn will tell you the money goes to them! Can't wait to LEAVE! barron park now that will be sad! sick of paying for non-residents also!
Posted by Parent, a resident of the Charleston Gardens neighborhood, on Jun 23, 2012 at 7:42 am
Ok, so my property tax bill is going up by $500 or more this year? Because the irresponsible arrogant school district can't manage to STOP SPENDING MONEY?
Okay, well in the real world we have to cut to make ends meet, so ... Lets see how I'll manage to make ends meet on this.
$200 to PIE
$100 per year for two tickets to the high school Sports Boosters auction
$100 pe year for the elementary school auction
$50 spent at the harvest fair
$50 for beginning year supplies donations
So that's how I'll find $500 this year. And that's a PROMISE.
And if they think I'll EVER vote for another school bond, for ANY reason, they are so sadly mistaken, its not even funny. In fact, I'll make it my life's mission to make sure the next one gets defeated.
Posted by Mom, a resident of the Fairmeadow neighborhood, on Jun 23, 2012 at 8:07 am
In REAL WORLD, say for renters, they pay discounted rent during major constructions of their rented house.
Use of school is almost like rental. We need to apply this concept to decide who to pay the price.
Last year, my Gunn student suffered construction dust and noise during classes every day. We needed to go to PAMF to treat. I am not sure if I could ask for compensation for this. I hope some parents form a class action or something.
Anyway, I don't understand why current residents need to pay more tax to save money for the future residents. We suffer and pay more so that future students can enjoy beautiful buildings and relatively less tax???
I thought we'd get some tax break due to annoying construction and a lot of delay.
Posted by Actually..., a resident of the Adobe-Meadows neighborhood, on Jun 23, 2012 at 12:38 pm
CPD, I think, at least for some people, the idea is that they get the rate lower, then sell their house to the unwitting family, and have that family pay substantially more over time. If earlier residents had taken that view, we'd be paying now for buildings put up in the 1970's.
Posted by common sense, a resident of the Midtown neighborhood, on Jun 27, 2012 at 8:07 pm
Palo Alto Mom of Duveneck/St Francis, the median assessed value of homes at $850,000 is NOT 1/3 of the market value... That would make the median market value $2,650,000. There are alot of condominiums that have been built in the last 15 years which lowers the median price.
Resident of Another Palo Alto Neighborhood - our city council keeps granting PC zoning to developers, and keeps donating land and loaning money to Below Market Rate housing projects, all of which adds kids, and in the case of the Below Market Rate housing, don't pay any property taxes.
Lastly, PAUSD pays it's staff much better than other districts; for example, an elementary school principal in Cupertino has a salary range from $97,000 - $127,000, and will have a school with 600 - 750 kids. A Palo Alto Elementary School principal's salary range is from $107,000 - $144,000, and will a school with 400 - 550 kids. And Cupertino schools test scores are just as high or higher than Palo Alto schools.
Posted by Wayne Martin, a resident of the Fairmeadow neighborhood, on Jun 28, 2012 at 11:02 am
> So if I'm getting this straight - the majority of the people
> complaining about this decision would rather keep the tax rate
> lower, but end up paying substantially more in total over time.
Without actually seeing the calculations, we don't know that we will be paying more. However, the Measure A bonds were supposed to retire in forty years. So, how many people paying today expect to be here in forty years?
What sense does it make to pay off the taxes of the people who will be living in the PAUSD jurisdiction forty years from now?