BY SARA TABIN
Daily Post Staff Writer
Palo Alto’s school district stands to lose over $5 million because the city is considering terminating its Cubberley Community Center lease to save money next fiscal year.
Both the school district and the city are preparing for deep budget cuts because tax collections are expected to drop due to the COVID-19 economic slowdown.
The city is predicting a $20 million loss by June and deeper losses when the new fiscal year starts July 1. City Manager Ed Shikada said all options need to be on the table.
One possible cut he listed in a memo to council is not renewing the city’s lease of 27 acres of the Cubberley Community Center from the school district. The city also owns eight acres at Cubberley. The city sublets the property to various nonprofits.
The city didn’t talk to the district before announcing the idea.
The city’s lease for the property expired last year and the lease has gone to a month-to-month arrangement that can be canceled at any time by either party. While both the city council and school board indicated last fall that they wanted the city to have a new long-term lease, the agreement was never finalized.
School Superintendent Don Austin told the Post he called Shikada on Tuesday after reading about the suggestion of cutting out Cubberley in the press.
Austin said the district and city will have many conversations before any decisions are made. He said he respects Shikada and believes the two parties will find a solution together.
He said the district would lose $5.4 million if the city stops leasing the land.
“There aren’t great answers to most questions facing us right now,” he said. “This is just the latest example.”
Shikada said in a statement that the lease is just one of many options being explored. He said the city will factor the financial impact to PAUSD into its decisions.
Austin said at tonight’s school board meeting that the Cubberley situation was a “curveball” but he doesn’t want anyone to panic.
District Chief Business Officer Carolyn Chow said the district will face its own financial hardships because of COVID-19. She said the state is no longer in a budget surplus so state funding could be cut.
She said the district is also losing money because it is paying cafeteria workers but not selling meals and because of loss of facility use fees. The district is also paying for new expenses like laptops for kids stuck doing schoolwork at home without a computer.
She said the termination of the Cubberley lease would have a significant impact. Chow said the district is saving some money because it is paying less in utility bills.
The district might lose tax revenue in the coming years.
County Assessor Larry Stone said 2021 property taxes could be reduced if housing prices crash because of COVID-19. Since the assessors legally have to assess value on Jan. 1, the tax bills people get this October won’t be impacted.
Board member Todd Collins said the district is flying blind because they don’t know how big of a hit the budget will take.