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Financial Blunder Proves Costly For Palo Alto School District

PALO ALTO (CBS SF) -- A Peninsula school district's serious budget failure is leaving taxpayers on the hook for $6 million, all because someone forgot to send a letter.

The Palo Alto Unified School District did not want to give teachers raises this year, but it is going to have to anyway.

"It was both a misunderstanding and a mistake," said Palo Alto Unified School District Superintendent Max McGee.

The simple mistake but costly budget blunder has a $6 million price tag for the district.

Palo Alto Unified School District Superintendent Max McGee
Palo Alto Unified School District Superintendent Max McGee (CBS)

"When we got this news last July about the budget shortfall -- over three percent, a significant budget shortfall -- we immediately went into cutting mode, budget adjustment mode."

The school district slashed more than $3.7 million from last year's budget. But the one thing they failed to do was notify the teacher's union in writing that they were re-negotiating a raise the union was expecting in 2017 in accordance with the current contract when faced with a shortfall.

Once that notification deadline came and went in March, the district was on the hook for the money.

Without documentation -- without something in writing, we consulted with two different legal teams, two different firms. And we were really obligated to pay the three-percent raise," said McGee.

The Palo Alto Educators Association, the union representing teachers, released a statement that read in part, "Any new investment in Palo Alto's educators is an investment in the future of this outstanding community, and in the district's ability to recruit and retain teachers."

When asked what he would say to people who've lost confidence in his ability to manage the district's finances, an apologetic McGee replied, "I say again that this was a mistake and a misunderstanding. And that we have a plan going forward. And the money is not lost; it's going to teacher compensation."


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