Wednesday: School board ponders budget, parcel tax choices

I was disappointed in Caroline's lack of thoughtful input. She campaigned on being an educator, has been a regular attendee at Board meetings for years, and has spent the last five months campaigning for a Board seat while the topic of imminent cuts was being discussed so clearly she should have had enough runway to have some quality thoughts on this. I can understand if you want to wait to have a half day training on parliamentary procedure before you sit at the table, but come on whether you like it or not you wanted to sit there and regardless you have some crucial decisions to make right away affecting people's lives! You could be laying off people in three months! Are you prepared to do that? I would consider that a big responsibility worthy of some hard work and preparation and sorry you have had plenty of time to know this was coming.

For example, one of her first suggestions was to take extra time and district resources to go back through the list of proposed reductions that the Board, Superintendent, Assistant Superintendent, Chief Business Officer and Accounting Staff, Principals, and teaching leaders have been agonizing over for months now to edit the list to make it “more palatable for those most effected by it.” Huh? The district has already cut $900,000 this year including $320,000 in salaries. Without any further parcel tax revenue, the district will have to cut another $4,500,000+ with the bulk of that coming from laying off teachers and staff and class sizes going up. There is simply no way around this.

So what suggestions does Caroline have to make these cuts somewhat more “palatable for those most effected by it?” I'm not sure we heard any. If she does have some, why wait to bring them up now? Let alone to wait all this time within weeks of having to make a decision to now question the team’s exhaustive review and work of the situation? And now suggest they go back through that and spend their valuable time and district resources to amend this list to find a pie in the sky answer? The district is a public government organization and has been transparent and excessively communicating with the community for months. Whether on purpose or through her own lack of preparation, I don't think we heard anything and I certainly hope its not just a stall tactic perhaps encouraged by antiquated anti-parcel tax supporter arguments which will only hurt those she is contending to want to protect - the ones "most effected by this."

She then asked the question, “what is the district’s amount of current unfunded pension liability and how does this plan address that?” Really? Oh boy, this is scary. Surely as an educator and Board member elect she knows the district does not have its own pension plan right? I hope she meant something else. No California school district has its own pension plan to my knowledge. Teacher retirement plans are run at the state level through CalSTRS and CalPers. There is no district unfunded pension liability (also called debt). District and teacher contributions are taken out every paycheck. You would think for reasons cited above she would know this or be prepared to know this? Is there a district "obligation" on behalf of its employees? Well yeah, and that is why the district has been talking about it and planning for it since the Pension Reform Act was passed in 2013 and that is one reason why we are forced to look at teacher cuts without any further parcel tax revenue. Since 2013 Caroline this has been a discussion across the state. Surely as an educator and board member elect you know that right?

As a Board member you are asked to make decisions and these decisions effect people’s lives. I hope Caroline comes more prepared to do that and these are not just political stall tactics. She will be one of our elected officials, and I respect her for that, and I hope she serves well and can provide some leadership we can all be proud of.

"I was disappointed in Caroline's lack of thoughtful input."

You have four years of disappointment to look forward to with Caroline. Great job Menlo Park voters....

Caroline Lucas is not yet a member of the governing board of the school district and until she is officially seated on the board, she has no obligation to engage as a board member which is clearly what the board was trying to get her to do.

Caroline posed thoughtful questions which the District and the Board should address so the public can make informed decisions. This crisis is self induced by the board. They awarded salary increases AFTER the parcel tax had failed and they were advised to wait until they had addressed their structural deficit prior to awarding raises. They chose not to do so and as a result they will likely punt the decision to the new board members.

This board should take responsibility for their actions by voting on November 30th about their parcel tax initiative as planned.

This is their ordeal, not David Ackerman's nor Caroline Lucas'. The new board will have to live with the consequences of the prior boards actions.

The list of cuts lacked creativity and did not take into consideration any reductions that could be made through natural attrition. My understanding is there are approximately 10 teachers who may retire next year which creates an opportunity to save substantial sums of money through attrition without having layoffs.

The cuts were designed to create an emotional reaction to meet their objective of gaining support for increased taxes to help solve their pension crisis. The costs were not designed to maintain quality programs through reshuffling some deck chairs.

Reorganizations, while not simple, are possible. Companies do it every day.

In terms of the $900,000 in budget cuts, it is unclear that these are actual budget cuts. The District only reported budget cuts of ~$26,000 to the County Office of Education. when they were justifying how they proposed to pay for the increased salaries and benefits which will cost ~ $1,431,00 in increased cost this year alone. There would not have to be layoffs contemplated had they not approved these raises.

As far as the pension is concerned, the district is liable for mandated contributions to CalSTRS and CalPERS. I am sure this is to which she was referring. As a teacher, Caroline is a participant in the State Teachers' Retirement Plan (STRP) which is administered on behalf of plan participants and school districts by CalSTRS.

MPCSD's audited financial statements for FYE 6/30/2015 shows a $32,722,000 unfunded pension liability on it's balance sheet. If this is not debt, than what is it? Please see Note 7 which begins on Page 35.

Web Link

Caroline's questions and concerns are completely valid and she is trying to bring focus to a very big issue that is here and now and should not be deferred or dismissed.

Further, the $32,722,000 unfunded pension liability is grossly understand.

The liability is calculated using a discount rate of 7.60% which represents the expected return on the investment portfolio.

For every 1% decrease in expected return, the pension liability increases by ~ $15 million.

CalPERS has earned an average return of ~ 3% for the last 10 years and for the past year, earned only 0.68%.

Therefore, the unfunded pension liability is dramatically understated.

If not curtailed, employee salaries and benefits (including pension and retiree healthcare benefits) will consume 100% of the operating budget for MPCSD.

Parcel taxes alone will not solve this problem.

Nice to meet you, BROWN EYED GIRL. Well, your screen name anyway. Happy to break this down for our readers, though, bear with me, this is a long one.

"Caroline Lucas is not yet a member of the governing board of the school district and until she is officially seated on the board, she has no obligation to engage as a board member which is clearly what the board was trying to get her to do."

No, she did not have an obligation to sit with them. The Board invited her to participate in the discussion (as clearly evidenced by the name plate that was made for her), as she will likely be a part of a very important decision that was being discussed by the Board. Her remaining in the audience served only to perpetuate the "us vs. them" mentality. Had she joined the table, the message could have been much more of a "here I am and I have ideas and the voice of the group of voters that elected me to share, so let's work together" message. If I had voted for her based on her platform and saw what went on at the board meeting last week, I’d have felt duped.

“They awarded salary increases AFTER the parcel tax had failed and they were advised to wait until they had addressed their structural deficit prior to awarding raises. They chose not to do so and as a result they will likely punt the decision to the new board members.”

Were advised by whom? No one whom the board considers an "advisor" (e.g., the county or the district’s Long Range Financial Advisory Committee) made such a statement that is on record.

The salary increases did not create this situation. The deficit is a long-term situation that the Board is tasked with addressing. It fundamentally has to do with the difference between what the district receives from state, federal, and property tax revenue and what it actually costs to educate students. MPCSD receives $9,400/student in property tax revenue. Our neighbors get, on average, $13,900/student in property tax revenue. We make that up through private giving (MPAEF) and, yes, parcel taxes. District spending is not the culprit here. Yes, of course any system can be refined (and actually, they have; see $900k cuts discussion below), but parcel taxes are and will always be (until a time that enrollment drops) a necessary element to how our schools are funded. There is no other answer to overcome a gap this large.

Moreover, our teachers received less than the cost of living adjustment and the lowest raises of any school district in San Mateo County. During one of the most difficult teacher shortages of our time (have you heard about the signing bonuses being offered by other districts?), our Board has ensured that teacher salaries remain competitive during this very tight job market. Salary increases near cost of living are part of our budgeting process as they are in the 5-year projections. Cut teacher salaries and lose quality teachers.

“This board should take responsibility for their actions by voting on November 30th about their parcel tax initiative as planned.”

I suspect that this is exactly what you and other district detractors would like them to do so that you can turn around and claim the district didn’t wait for the input of the new board members in the decision-making in your campaign against a new parcel tax.

“The list of cuts lacked creativity and did not take into consideration any reductions that could be made through natural attrition. My understanding is there are approximately 10 teachers who may retire next year which creates an opportunity to save substantial sums of money through attrition without having layoffs.”

The reductions can be addressed through attrition in part; however, there is no way of knowing on March 15 (deadline the state mandates that teacher must be notified if they might be laid off) the exact number of teachers who will not return. Moreover, whether teachers leave due to retirement, resignation, or layoffs, the effect of larger classes and cut programs remains the same. If/when teachers retire, they would have to be replaced or class sizes would increase. Increasing class sizes is even something that Caroline Lucas agreed should be avoided. (Review the video of the meeting if you doubt this.)

"The cuts were designed to create an emotional reaction to meet their objective of gaining support for increased taxes to help solve their pension crisis. The costs were not designed to maintain quality programs through reshuffling some deck chairs."

I don’t even know where to start with this. This is just not true. Stating that the list or proposed cuts is a scare tactic (indeed, that is what Caroline Lucas indicated at the board meeting as well, almost verbatim to your words) and that some sort of magical reshuffling could instead solve the deficit is simply incorrect. When asked about her ideas, she had none. Well that’s not quite true. She had several that had already been discussed and decided against, and none that would solve a $5+ million dollar deficit (e.g., “the busses”, as she said). Re-orgs happen with consolidation and layoffs. In a school district, consolidations and layoffs mean larger classes. In a district where 90% of the budget goes to staffing, shuffling around doesn't solve a $5.3 million dollar deficit (about 12% percent of the total budget). Only reducing staff would solve a deficit this large. It is Caroline's and your portrayal of our district that is a scare tactic.

“In terms of the $900,000 in budget cuts, it is unclear that these are actual budget cuts. The District only reported budget cuts of ~$26,000 to the County Office of Education. when [sic] they were justifying how they proposed to pay for the increased salaries and benefits which will cost ~ $1,431,00 in increased cost this year alone. There would not have to be layoffs contemplated had they not approved these raises.”

The stated $900K in cuts are absolutely cuts. Review the financial statements. Some were cuts of planned growth and some were cuts of ongoing expenditures, but they are all cuts and a list of those cuts is in the Board packet from November 9 and November 17.

“As far as the pension is concerned, the district is liable for mandated contributions to CalSTRS and CalPERS. I am sure this is to which she was referring. As a teacher, Caroline is a participant in the State Teachers' Retirement Plan (STRP) which is administered on behalf of plan participants and school districts by CalSTRS.”

Well, again, if you watch the video of the Board Meeting (isn’t it awesome how completely transparent our district is and always has been for those who care to dig into the details?), she clearly did not have any idea what she was talking about.

“MPCSD's audited financial statements for FYE 6/30/2015 shows a $32,722,000 unfunded pension liability on it's balance sheet. If this is not debt, than [sic] what is it? Please see Note 7 which begins on Page 35”

Off the top of my head, I don’t know what specifically this refers to, but I’ll find out. The district clearly is not carrying a $32m or larger debt. If they were, there’s no way they’d have been the first in the state to receive AAA credit rating from Moody’s Analytics for bond issuance.

To the pension question -

Short answer to this question is in 2014 the state required local school districts to adopt a new accounting rule called GASB 68 which essentially just passed the $176 billion in CalSTRS pension liabilities from its balance sheet proportionally to individual school districts. No one likes $176 billion in debt and it would make it really hard to get loans so the state divvied it up. For example, Palo Alto Unified's reported net pension liability as of 2015 is $147,365,220. See their 2015 annual report here - Web Link

When the state passed the CalSTRS funding plan in 2014, the plan was to mandate increased pension contribution rates across employee, employer and state organizations so that the plan would be fully funded in 32 years. That seems to be going according to plan, at the detriment to passing along increased pension costs to individual school districts though for example. Just about every Nobel prize winning economist and Warren Buffett have had the universal opinion that pension investment earnings expectations have been too high. In 2003, our Governor tried to reign in pension costs but was voted down but the legislature. In 2012, Jerry Brown succeeded in at least persuading the legislature to raise the retirement age a bit and decrease benefits slightly.

Nevertheless, we are where we are with state mandates. If Caroline thinks she has the answers to this problem or expects our school district board to have the answers to this problem, well then we should rewrite history and replace the faces on Mt. Rushmore.

In the meantime, and like we always have been, we are a community funded school district. We are the Menlo Park City schools. The state has cut funding to us before and we have responded because these are OUR kids and OUR town. I'm more than happy to take our argument to the state, but in the meantime, our kids education shouldn't suffer.

A big part of the reason that we're in the financial bind in front of us is because of the mentality that describes any reduction of an planned future increase as a "cut."

As noted by Ms. Dearing above, too many of our elected leaders actually believe that, "...Some were cuts of planned growth and some were cuts of ongoing expenditures, but they are all cuts ...." This misguided perspective is not unique to our school district. It permeates far too many of our tax-and-spend government agencies.

To describe a decision to not grow the staff or buy more iPads as being a "cut," is simply conflating very real cuts (loss of something) with the loss of some future planned, incremental expense. They are NOT the same. But by lumping them together, it allows governing boards to sound the alarm AND fan the flames of fear since the typical reader will assume that a "cut" means that the school has less money than it used to.

Spending is being redirected to fund pensions (that oh-by-the-way, don't usually get reported as increased compensation when we talk about pay raises for staff). With more of the pie going to compensate our district employees, there is less left for other expenses. But that is not a "cut" to the budget. It may require a "cut" in a program, but let's stop creating misinformation. The budget isn't being "cut." It is still growing with property taxes, bonds, parcel taxes, donations, etc. If we have to "cut" some program or activity, it is because our tax dollars are being redirected to pensions, not because anyone is being asked to do more with less....

Address the pension issue. Brave cities and regions around the state are already finding ways to do so. Maybe it's time for our school district to find creative ways to do the same.

At the end of the day we ALL want whats best for OUR kids, we are in a unique position to make a positive impact on the lives of over 2,000 kids

Interesting. I voted for Caroline Lucas for School Board based on her platform of increased transparency and because she's a teacher. At this meeting she spent her time asking the existing board members what they are doing about fighting the state's teacher pension system (!?!).

When asked for clarification about whether she was asking to use district resources to research and fight the state on this, she insisted on asking her questions in private and all along it looked like a gentleman was feeding her questions. I thought she was our transparency candidate.

It was the the soon-to-be superintendent that asked to have the answers to her questions added to the public FAQ. I didn't realize I was voting for someone who would put her state pension crusade before our school system - and before transparency.

I guess I didn't pay enough attention during the school board election. Well I'm paying attention now.

[EDITOR'S NOTE: I changed the poster's handle to "Voter" from "Menlo Voter," a name used by another poster who frequently comments on Town Square.]

I watched the school board meeting the morning after it happened thanks to the district's new system of videotaping. It's nice to see that the district is responding to our call for more transparency.

My friends and I are perfectly willing to walk the Menlo Park City School District off a cliff in order to further our crusade against the state's teacher pension reform system - even though the district has no control over what they have to pay into it. Hey, we all have to pick our priorities and these are ours.


EDITOR'S NOTE: Someone else used the "Another Parent" name in this thread, so I am changing this name to "Parent #2."

No tongue-in-cheek -- just listening with amazement to the four long hours of the November 17th board meeting on Vimeo (link below). I'm awestruck by how focused and dedicated the Board is, for hours on end. (And thinking, who'd want to pick up that burden one minute earlier than they had to? And marveling, once more, at how much the current Board has done. And their incredible willingness to keep holding these meetings now ... I could imagine Jeff Child and Maria Hilton wanting to kick the can down the road. Instead, they're working 'til the final minute of their terms to sort it out.)

Actually, I would hope that EVERYONE interested in this topic would listen to each of the videotaped Board meetings to see how complex these issues are. And how much detailed attention each Board Member has given them.

Having done so, whenever I see attacks like "All the cuts could have been avoided if no salary increase had been given," I see red.

We elect local Boards to make judgement calls. That's how our democratic system works. These MPCSD Board members were fully aware, when they negotiated the 2016-17 contract, of the parcel tax loss and the types of cuts they would have to make if the expiring tax were not renewed.

So the Board members made a judgement call -- that the District would be in a stronger position with a 2.5% raise for 2015-16 and 2016-17 AND cuts, than it would without raises AND no cuts.

Let's review the Almanac's reporting on 25 September:

“[MPCSD] board president Jeff Child said the district lost a number of teachers last year who could no longer afford to live in the area, and without raises the district would find itself unable to recruit new teachers or retain current employees.

Joan O'Neill, the district's human resources manager, said that 11 teachers resigned and two retired last year. The district hired 22 new teachers for the 2016-17 school year.

Mr. Child said that many of the teachers who left either could no longer afford to live in the area, or deal with the commute if they lived elsewhere. "I'm not sure we have seen that before the last year or two," he said.

Mr. Child said that by not giving a raise to district teachers last year, the district put itself at a disadvantage in competing for teachers with all other local districts that did give raises, ranging from 2.5 percent in Hillsborough to 4 percent in Woodside and 5 percent in Palo Alto.

"We're losing ground against our competitors" in the midst of a teacher shortage, Mr. Child said. "We did look at this salary in light of our funding issues," he said, but also in light of a teacher shortage.”"

Many of you did not have the opportunity to watch the MPCSD Board members in action before videotaping began. Now you can. I think you will arrive at the same conclusion I did -- they are honorable people doing their very best.

And I think you'll realize that, if Jeff Child says they weighed the decision and decided on 2-1/2% raises to optimize the ongoing condition of the district, then that was the best decision reasonable people could make.

Web Link

JENNIFER BESTOR~ I truly appreciate your exhaustive research and culling of information to share with the Town Square forum. I also believe our School Board are honorable people trying to do the best job they can with a difficult set of complex issues. I have attended many of the school board meetings, or watched them on video, and their patience is admirable.

ANOTHER PARENT - Look at the San Jose Police Department as an example of a town that decided to double-down on a group of service providers (police) and reduce pensions in their community. San Jose voters loved it and voted it in, and now they have voter's remorse indeed! Today San Jose can't get a full academy to stay, and are completely understaffed and paying many officers OVERTIME to cover barebone shifts. Many people attend the academy, and move on to other towns with better pay and benefits after they graduate. If that is the model you want Menlo Park to follow, good luck keeping teachers in the classroom. The teacher shortage is real.

How does your plan to "walk the Menlo Park City School District off a cliff in order to further our crusade against the state's teacher pension reform system" help you, your children, or the Menlo Park community as a whole? If that is your crusade, you need to take it to your state legislature. By taking a stand against a school district (which apparently your children attend?), you only weaken your own community.

I understand Menlo Park's desire for transparency, controlling costs, and providing a quality education. I believe that a modest parcel tax can accomplish all of these. The transparency is on the district website. In addition, as teachers - we are all aware we need to keep our expectations modest, and I believe the board has truly heard the communities desire to control costs.

I truly appreciate the passion and energy people are expending towards our schools, and I hope for a positive, thoughtful outcome for the board next month.

Caroline Lucas doesn't need to have answers to the problem but at least she is bringing the problem to the surface and is suggesting that we not delay addressing the problem just because it's not an overnight fix. Thank you Caroline for suggesting fiscal discipline and for not ignoring the fact that the employer contribution requirement is leading us to search for more money quickly. All the parcel taxes in the world won't solve this one folks. March, May, June measures are just band-aids. We need to face this head on and thank goodness we are moving in this direction.

I don't want the kids to suffer either but what about the kids of the next generation..... Who is thinking about them? That's the problem when folks are short sighted. We need to think about all generations, not just today's students, today's teachers, today's taxpayers. Those are the ones who seem most upset that Caroline Lucas isn't willing to ask the taxpayers for more without educating them first. Let's stay the course and work together to find a way to ease the impact on today's students AND be responsible about our expenses and build reserves for tomorrow's children and community members.

Unfunded pension liabilities are a ticking time bomb in this state. And not just the state, ALL municipalities have this time bomb. Year after year politicians kept kicking the can down the road hoping that the economy would eventually pay for the outrageous pensions they were handing out or, figuring they would be out of office when the bomb went off so it didn't matter to them. This needs to be addressed NOW. Economists have said this bomb will likely go off in 2020. We can either start to address it now and understand that we can't have a gold plated public education thanks to years of political misfeasance. We can either start making smart cuts now or do it in a panic four years now. Whichever, we will HAVE to make cuts. ACTUAL cuts, not just reductions in future planned added expenditures. Those are not actual cuts. Increased parcel taxes are not going to solve this problem either. They may ease the pain but they are not cure.

Sleeping Tiger –

(and you are obviously Sleeping)

1. If you were at the board meeting or watched the video, you would have realized Caroline did not even know what she was asking. Someone planted it for her. She was asking in the tone of assuming Menlo Park had its own pension plan. When asked for clarification, she couldn’t expand on what she was asking about, or if it was in reference to a pension plan Menlo Park has, or what even CalSTRS or Calpers was. According to the resume she provided voters, she has a doctorate AND a masters in education for pete’s sake. How does someone with a doctorate and masters in education not know this?
2. And why is she now raising these questions? To my knowledge there is no public record of her bringing this up once during her campaign or the 10+ years she has been an educator and parent in this district. The need for pension reform has been around since at least 1999, and she waits until after HER campaign is done but two weeks before she is suppose to take office to bring this up?

She is suppose to be an educator. She did not run on a platform of pension reform. If you want to fight for pension reform, run for Govenor or State Senate or Assembly or fight the other state employee unions, but don’t bilk our community who voted for you on your campaign promises of being an educator from Menlo Park with the kids best interests in mind then all of a sudden turn into the answer to CalSTRS' $176 billion dollar debt. You are going to do that from one board seat in the Menlo Park City School District?

No, what I fear is she is bringing this up now as a result of being pressured from the anti A & C crowd to stall, vote no, or abstain from a parcel tax vote. If you want to do that, that is fine, but don’t tell me you have the kids’ best interests in mind as an educator when you can’t even make your own decision and don’t know your stuff. I look forward to her vote, but either way I hope she has some solid reasoning behind it rather than coming up with another excuse not to be a leader.

Anybody who does not understand that the cost of public agency pensions does and will always fall on the employing agency is sadly uninformed.

The employee agency makes the fundamental decison to hire an employee and to set their pay - all else derives from those two decisions. Hence the employing agency has ultimate control over its pension costs.

The big problem with the California public pension system is that the State overseers do not charge the local agencies the true current cost of the pension laibilities which they are incurring every year that they employ someone at a specific salary. In a despicable act of political cowardness the State overseers understate the real cost and defer that real cost to some future date. Wise public agencies charge themselves each year MORE than the State mandated current pension cost and then reserve the extra for that totally predictable date when the State will come demanding more.

Karen Dearing,

Welcome to the conversation. Since you are a recent addition, I will excuse your factual errors and lack of research and due diligence. It appears you have bought into the District's narrative hook, line and sinker and are regurgitating the information that the school district has disseminated. Your offer of "Happy to break this down for our readers" is an insult to the intelligence of this community.


I will continue to use this forum to share factual information drawn from public records.

Brown Eyed Girl: “They awarded salary increases AFTER the parcel tax had failed and they were advised to wait until they had addressed their structural deficit prior to awarding raises. They chose not to do so and as a result they will likely punt the decision to the new board members.”

Dearing: Were advised by whom? No one whom the board considers an "advisor" (e.g., the county or the district’s Long Range Financial Advisory Committee) made such a statement that is on record.


Response: The MPCSD admitted they had a structural deficit prior to awarding raises. They were fully aware of the consequences and acknowledged it in their board meetings held in May and June. During those same board meetings, members of the voting public advised the board to delay awarding raises until the budget situation was stabilized. Caroline Lucas in particular asked the board directly if they could live with the consequences if a 2nd parcel tax attempt failed and they said they could.

Further, as to third party notice, in a letter dated September 16, 2016 from the San Mateo County Office of Education to the MPCSD Board and Superintendent, the school board was advised that if any collective bargaining agreements result in additional ongoing costs to the district, such costs MUST be supported by additional recurring revenue or permanent expenditure reductions. The district was advised by the county office of education to be cautious in their negotiations and to conduct thorough pre-settlement analysis of any proposed collective bargaining agreement and that increases in CalSTRS and CalPERS contributions must be considered to ensure affordability of proposed settlements.

These cautionary words went unheeded and now the District is proposing drastic cuts to cherished programs in order to coerce the public to continue to agree to increased parcel taxes.

Dearing: The stated $900K in cuts are absolutely cuts. Review the financial statements. Some were cuts of planned growth and some were cuts of ongoing expenditures, but they are all cuts and a list of those cuts is in the Board packet from November 9 and November 17.

Response: Reductions in the planned growth rate of expenditures (their wish list) are not cuts. The school district has reported budget cuts of ~$26,000 to the County Office of Education. It is not clear to me how they can say they have made budget cuts of $900,000.

Dearing: There is no district unfunded pension liability (also called debt).

Brown Eyed Girl: “MPCSD's audited financial statements for FYE 6/30/2015 shows a $32,722,000 unfunded pension liability on it's balance sheet. If this is not debt, then what is it? Please see Note 7 which begins on Page 35”

Dearing: Off the top of my head, I don’t know what specifically this refers to, but I’ll find out. The district clearly is not carrying a $32m or larger debt. If they were, there’s no way they’d have been the first in the state to receive AAA credit rating from Moody’s Analytics for bond issuance.

Response: So you criticize Caroline Lucas and state she "clearly didn't have any idea what she was talking about"

Please complete your research and due diligence before smearing someone.

Go see the Big Short so you may fully appreciate how dependable rating agencies may be. All those mortgage bonds rated AAA, not so.

"Advised to wait" (your words, BEG) does not mean the same thing as "advised...to be cautious ... and conduct thorough ... analysis" (SM County). Taking one to mean the other is a nice way to imply that the district is not proceeding prudently. Indeed, you directly say as much ("cautionary words went unheeded"). Presenting facts is a wonderful service to all. Twisting facts reveals your agenda.

It’s a bird … it’s a plane … it’s … pensions?!

Before wasting my time at this hour of the morning explaining the California teacher pension system, I’d like to insist that everyone read the Legislative Analyst’s Office 2016 “Review of the CalSTRS Funding Plan.” Web link at bottom of this post.

When you are done, answer the following questions:
1.) Has the State, in fact, put in a program to address unfunded teacher pension liabilities?
(Hint: was the district was suddenly presented with a steep schedule of pension contribution increases 18 months ago?)
2.) Does this mean that the district already has a plan for paying down the number shown on its balance sheet as “unfunded pension liabilities?”
3.) If the district were to divert current funding into paying down its “unfunded pension liability" now, how would that liability change?
(Hint: would the State/CalSTRS say thank-you-for-the-extra-cash but you get to pay the same amount going forward as anyone else, because this is not how we are addressing this issue?)
4.) Do you have any actuarial information that is different from that used by the State?
If so, please calculate the difference between the State’s plan to pay down unfunded teacher pension liabilities and your plan, for MPCSD. Please suggest how the district should deal with this difference in light of the predicted timetable and actions the State will take to do so.
5.) Is the statewide unfunded pension liability overhang a function of new hires and the current pension plan commitments, or a function of not having funded the pension commitments and formula effected in 1999?
6.) If we create a sufficiently toxic educational environment in Menlo Park that no teacher is willing to teach here, hence no children enroll, will we cut pension costs and the unfunded pension liability to zero?
(Hint: search for local California agencies that have tried to do shutdown and the size of the bills with which they've been presented.)

Web Link

Bottom line:

"Addressing CalSTRS’ Unfunded Liabilities Will Continue to Be Challenging. No matter what the Legislature decides, tackling this very difficult issue will continue to require billions of dollars in contribution rates ABOVE what the state, districts, and teachers will make to CalSTRS this year. "

Any school district that fails to establish a reserve for these liabilities or fails to adequately fund such a reserve every year is simply borrowing from a certain future of unavoidable assessments by the State.

Karen Dearing:

You are entitled to your own opinions but not your own facts.

Brown Eyed Girl -

I am the one that made those claims you cite below, not Karen Dearing. So yes, in the words of your own advice, "Please complete your research and due diligence before smearing someone."

To your first question, you are conveniently taking your point out of context. Look at the video recording of the Board meeting and you will see Caroline was asking/assuming the district had an unfunded pension liability to its OWN pension plan. MPCSD does not have its OWN pension plan.

To your second point, do your own research as you would contend others to do. Or you can see my answer above to the post you ignored where I did your own research for you.

To your third point, this was my observation that Caroline clearly did not have any idea what she was talking about. Were you at the board meeting? Did you watch the replay?

Lastly, suggesting to Karen she go watch a movie with a guy that use to be the lead in the tv sitcom "The Office" and another guy that played "Batman" would not be the best way I would suggest someone educate themselves on financial analytics, but maybe that is how you did it. Further, to insinuate that a movie with Batman in it would be a reason to question the AAA rating MPCSD has shows the lack of independent thought or research you yourself are demanding of others.

Regardless, MPCSD does have its own AAA rating. If you are so inclined to disprove this rating from an analytics organization that has been in the business for over 100 years and provides coverage to over 120 different countries, thousands and thousands of corporations, and thousand and thousands of financial issuances, then I look forward to your research disputing their conclusion.

Your dialogue below:


Dearing: There is no district unfunded pension liability (also called debt).

Brown Eyed Girl: “MPCSD's audited financial statements for FYE 6/30/2015 shows a $32,722,000 unfunded pension liability on it's balance sheet. If this is not debt, then what is it? Please see Note 7 which begins on Page 35”

Dearing: Off the top of my head, I don’t know what specifically this refers to, but I’ll find out. The district clearly is not carrying a $32m or larger debt. If they were, there’s no way they’d have been the first in the state to receive AAA credit rating from Moody’s Analytics for bond issuance.

Response: So you criticize Caroline Lucas and state she "clearly didn't have any idea what she was talking about"

Please complete your research and due diligence before smearing someone.

Go see the Big Short so you may fully appreciate how dependable rating agencies may be. All those mortgage bonds rated AAA, not so.

"MPCSD does not have its OWN pension plan. "

MPCSD paricipates in a State run pension plan and offers that plan to its employees as a MPCSD benefit.

As a participating agency it is ultimately responsible for any shortfall in that pension plan. MPCSD has total control over how many employees it has and how much it pays those employees and those two factors are the principal factors in determing the amount of MPCSD's pension obligation.

Peter -

So are you suggesting MPCSD cut their amount of employees or cut their level of compensation? If so, by how many or how much?

The emphasis in that sentence is:

"... billions of dollars in contribution rates above what the state, districts, and teachers will make to CalSTRS THIS YEAR."

The context, for those who do not like to read the sections on history, is that this was written in the 2015-16 fiscal year. That was the second year of the 30-year pension-overhang catch-up plan, when the district pension contribution had been increased to 10.73%. That increase had already been a shock to K-12 district budgets statewide (after the contribution rate had been under 9% for over a decade previous). And it was (is!) increasing annually, up to 19.1% in 2020-21.

Thus, the comment about billions MORE was a warning to the LAO's target audience: Legislators and staffers. The increasing bite of the education dollar for pensions was already well understood by MPCSD and other school districts, but perhaps not so obvious to the elected officials who are the LAO's target audience.

FYI, this fiscal year (2016-17) it is 12.58%.

And the passage continues, "The basic structure of the plan—-full funding in 30 years—-is still the right approach. However, we think tweaks to the funding law could help ensure the plan’s long-term viability."

The tweaks (discussed at length) have to do with the portion of the plan's costs and unfunded liabilities falling on the districts vs. the state. The Legislative Analyst's Office has concluded that the districts are currently bearing MORE of the costs than the initial Legislative intent, and had been handed more of the unfunded liabilities. Interestingly, however, they also conclude, "As implemented, districts would be largely insulated from large unfunded liabilities under ... bad investment scenarios."

If your point is that the District has to budget these planned pension plan contribution increases for each new hire AND for the existing employee base, you are correct. But, as is clear from the EXPLICIT pension discussion during the parcel tax deliberations, the District knows what the increases will be, and has clearly built them into its fiscal model.

Indeed, the harder you beat this pony, the clearer it becomes that, no, unfunded liabilities per se are not the issue for MPCSD ... the district doesn't have to invent its own actuarial calculations, create new reserves or go through additional second-guessing. Its job is to do as it has been doing -- work out how to pay for the already-defined schedule of increased contributions that resolve the pension overhang. As bitter as the medicine is, CalSTRS may now be the best positioned of all the components of the statewide public pension debacle to fund its obligations.

Present: MPCSD can manage its total compensation and benefits through attrition.

They may not need to have layoffs. Portola Valley School District has reduced its compensation by offering early retirement.

This can also be explored by MPCSD.

The unfunded liability of CalSTRS calls for a statewide, if not national, freeze on teachers wages. This would eliminate the "teacher retention" argument used by districts to justify unsustainable increases in compensation. Return of class size to that existing prior to the campus expansions fueled by state matching funds would mitigate the teacher shortage. This would relieve another upward pressure on wages.

When voters defeated Measures A & C, they were telling the District to live within their means. No more parcel taxes!

While my turkey roasts…

BEG, for someone who is so quick to attack another for "factual errors and lack of research and due diligence" (your words), you're lacking in your own research here. MPCSD is exploring offering early retirement (as can easily be seen in, for example, the transcript from the 10/24 board meeting) as a way to cut staff if needed. As Jennifer Bestor noted in her last post, MPCSD is discussing the increased financial burden related to pensions (again, as can easily be seen in board meeting transcripts and documents).

Those belaboring the pension conversation appear to be doing so to perpetuate an impression that our district leadership and board are fiscally irresponsible. The board faces an immense challenge to maintain the exemplary education being offered, to continue on the path of success that they have achieved over the last decade, and to do so with increasing contributions to pensions and with a funding situation that works against them. The imbalance in regular funding received by MPCSD cannot be ignored. MPCSD gets $9,400/student in property tax revenue. Our neighbors get, on average, $13,900/student in property tax revenue. As a basic aid district, the state does not provide any additional funds as enrollment increases. Our district is left to make up the difference between what it receives from the state and what it needs to deal with increasing enrollment and provide a high quality education from private donations and parcel taxes.

Whether you argue the dollars are to provide reserves for pension payments, for staffing and programs, or both, parcel taxes are and will always be (until a time that enrollment drops) a necessary element to how our schools are funded. There is no other answer to overcome a gap that large without significantly compromising programs.

Differences of opinion and local politics aside, Happy Thanksgiving to all.

It is strange that posters claim that the MPCSD financial crisis( yes it is a crisis) has been caused by the pension costs/liabilities and yet those same posters posit that MPCSD can do nothing about its pension costs.

Pension costs are driven by the number of MPCSD employees and the total annual compensation of those employees - both of these elements are in the total control of MPCSD.

Yes Peter Carpenter, "Pension costs are driven by the number of MPCSD employees and the total annual compensation of those employees - both of these elements are in the total control of MPCSD." And yet, if you manage pension costs by number of employees and total compensation, you directly affect the student experience and quality of education. Fewer teachers = larger classes. Freeze wages = teachers will leave the district. The hiring market for teachers is phenomenally competitive.

"And yet, if you manage pension costs by number of employees and total compensation, you directly affect the student experience and quality of education"

OR:
And yet, if you manage pension costs by number of employees and total compensation, you directly affect the cost to the taxpayers.

A Rolls Royce has a better driver experience and quality of transportation than does a Cadillac but buying a Rolls Royce is more expensive than buying a Cadillac.

So the issue is who gets to decide if a public agency should buy a Rolls Royce rather than a Cadillac?

Peter Carpenter, you try hard to present yourself as reasonable and thoughtful in your comments and critiques, but then you reveal your lack of support for quality education when pressed.

Your stated position from a previous thread: “Sory [sic] folks but the non-parent taxpayers will not support the BEST of its kind education for the 20% of the taxpayers who have children in the schools and who contribute far less than do parents in the "comparable" communities.”

Mine is, once again, that exemplary education benefits our entire community and beyond and is well worth a few hundred dollars a year from us all. I have confidence in our community that your point of view is in a significant monitory.

Once again, if you don’t value high quality education, then all of your criticisms must be considered through this lens and are effectively moot. No response to your critiques/concerns will ever change your mind. No responses from the district will ever meet your ambiguous criteria.

So sad that some posters do not understand the difference between asking a question and stating an opinion.

And also those posters fail to understand the importance of informing the voters rather than just repeating endlessly the mantra that "it is for the children and you should therefore pay whatever is we claim is needed without asking any questions".

Again, I am only one voter and I have not yet declared my position on an as yet undecided parcel tax proposal BUT I can assure you that there are lots of other voters who will also want better answers before they cast a vote on this issue.

For those of you who would like to read more about the school district's pension obligations, here is a document prepared by district staff in response to questions by incoming board member Caroline Lucas. Web Link

The document also contains answers to the following questions:
The district has communicated to the public that it has made $923,000 in spending cuts. Are these actual hard dollar spending cuts or are these reductions in your planned growth rate of spending? Is it correct that $26,000 is an actual hard dollar reduction in spending and $897,000 is a reduction in the planned growth rate of spending. If not, could you
please clarify?

How much does it cost MPCSD to educate a student?

How many employees' students were in the district in 2010/2011 and 2011/2012?

I will be posting the text of the document as a new Town Square topic.