Jasper Veer Tuteja

Charen Yu (left), the Palo Alto Unified School District chief business officer, presents the updated 2026-2027 budget during Tuesday’s board meeting. According to Yu, expenditure changes are the primary reason for the deficit. “[Compared to the adopted budget], certificated salaries are up $18.8 million (which translates to 13.4%), classified salaries are up $11 million (or 17%), benefits are up $5.6 million and all other objects are down $2.9 million,” Yu said. “These are settled agreements with our bargaining partners. They are contractual obligations and they are the primary driver of the change.”

Editor’s Note: This article’s title was changed because the previous title implied a $33 million budget deficit, when instead PAUSD looks to cut $33 million worth of spending.

Palo Alto Unified School District has to cut $33 million in expenditures by the 2027-2028 school year, according to a presentation by Chief Business Officer Charen Yu at the Tuesday night board meeting.

Assuming no parcel tax renewal, but a 5% increase in property tax and a one-time transfer of $15 million from a rainy day fund, PAUSD’s plan requires cutting $33 million in expenditures next year and $10 million the year after that, stabilizing by the 2029-30 school year.

The board has yet to decide how these reductions will be offset, and plans to create budget reduction proposals in November and vote on them in January.

“Specific reductions — including affected positions, programs and other expenses — have not yet been identified,” Yu said.

According to Superintendent Jason Glass, PAUSD will have to make difficult decisions including potentially cutting positions due to the size of the budget deficit.

“A cut of that magnitude means people … we’re going to have to talk about not replacing roles that we are used to having,” Glass said.

This year, PAUSD has $357.4 million in revenue and is spending $404.6 million, taking $47.1 million from its savings. The presentation noted that the vast majority of our revenue comes from local property and parcel taxes, so the district has little ability to increase revenue.

According to the presentation, the district is legally required to keep money from the Cubberley sale separate from the general fund, meaning that the $65.5 million sale to the City of Palo Alto cannot alleviate these budget difficulties.

If the deficit is not fixed, the Santa Clara County Office of Education will perform fiscal intervention, which would result in SCCOE, not PAUSD, having control of the district’s budget.

Yu said that given the magnitude of this $33 million gap, the district cannot simply cut small expenses.

“Salaries and benefits are 86 cents of every dollar,” Yu said. “A gap this size cannot be closed by cutting supplies, travel or consultants — those lines together are smaller than the shortfall.”