Chief Business Official Diane White joked that she should have come dressed as "the goddess of gloom and doom" as she presented the budget for the 2009-2010 school year to the board of the Menlo Park City School District. It's belt-tightening time in the district, for several reasons.

Reason No. 1 is California's budget crisis. Uncertainty caused by the state's money troubles virtually guarantee that the district's budget will be obsolete long before school ever starts, Ms. White said. Despite not knowing how much money the state will take away from the district to patch up its own financial problems, the board approved the $28.7 million budget on a 5-0 vote at its June 9 meeting.

The district budget includes a "placeholder" for a $480,000 loss in state funding, "but it could absolutely be $1 million (more than that) for us," Ms. White said.

The district must pass a balanced budget before June 30, so officials can't wait to see what the state Legislature will do with education funding.

The state's fiscal crisis isn't the only reason Menlo Park is trying to make do with less next year. The student body is increasing and property tax revenue isn't rising enough to keep pace. The $1.82 million raised by the Menlo Park-Atherton Education Foundation is also down slightly, compared to last year's grant to the district.

As a so-called basic-aid district, Menlo Park doesn't receive additional funding when the student body swells. Basic-aid districts get to keep their entire share of local property taxes, while revenue-limit districts get per-pupil funding from the state. When enrollment goes up in basic aid districts like Menlo Park, the amount of money to spend on each student goes down.

As a result, the district's per-pupil spending will decline from $11,700 this school year to $11,200 in the year starting July 1. Class sizes will be larger, some staff -- but not teachers -- have been cut back, and about $395,000 will have to come out of the district's reserve fund.

However, Superintendent Ken Ranella warned that if the budget situation gets worse there's only one place left to trim.

"In the next round of cuts, if we have to go there, it has to be people, predominantly people," Mr. Ranella told the board. "We do not have soft stuff to cut."

Salaries and benefits account for 89 percent of the 2009-10 budget, while supplies account for less than 4 percent, said Mr. Ranella.

The district is planning for a very small increase in property tax revenues in the next fiscal year, only 2.5 percent, said Ms. White. While it may not be quite so bleak, as property in the district is currently tracking at about a 6 percent increase, San Mateo County has about $12 billion in pending property reassessment appeals that could drag those numbers down, she said.

The district always has to plan for some successful appeals of property tax valuations, but there have never been so many before, Ms. White said. "This is on a grand scale."

Board member Jeff Child complimented Mr. Ranella on the budget. "Ken, way to be in front of this (situation)," he said. "We're as in front of this as we can be."

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