School Funding Agreement Unraveling?

By Juliet McShannon
Staff Writer

April 1 -- Negotiations between City and School District officials over more municipal funding for local schools may have reached a stalemate, with City officials on an ad hoc committee demanding guidance Wednesday on what programs they should cut.

The committee -- which includes three City Council and three school board members -- is working to hammer out a compromise that could avert a proposed charter amendment that would require the City to give at least $6 million a year to the district, and potentially millions more if its revenues increase.

For much of the short meeting, the two sides played ping pong with potential cuts, while Superintendent John Deasy and City Manager Susan McCarthy reported no new developments in their informal negotiations.

In fact, City officials -- who recently proposed a plan of five to ten years that would give the cash-strapped district $6 million a year with an annual escalator -- questioned the district’s trust in their ability to offer more financial help.

"From my perspective, it sounds like the district is rejecting the City's offer and there is a lack of acceptance of the credibility of the City’s information that is being presented," said Mayor Richard Bloom.

"Either you believe the money is there, that the City has the ability to negotiate more money, or you don’t,” said Bloom. “If you believe the City has the ability to negotiate more money, then nobody around this table has specified where that’s going to come from.”

Councilman Herb Katz said it was the responsibility of district officials to tell the City what programs they thought should be cut. “What do you cut that doesn’t indirectly affect education?” he asked. “Would that be libraries?”

McCarthy warned that the City is in “budget reduction mode” and would have to cut programs accordingly. She then outlined the potential impacts of trimming the budget to boost the $5.25 million the City is giving the district this year.

“A $250,000 diminishment represents two-thirds of the City’s fire-inspection capacity,” McCarthy said. “Five hundred thousand dollars is what the school resource officer program would cost, that’s the cost for the Third Street (Promenade) bicycle patrol.

“Seven hundred and fifty thousand dollars is the cost of one paramedic squad. At $1 million we would have to take off revenue growth. That’s the cost of special policing in the district. This is the magnitude of what we are dealing with.”

Deasy outlined the sacrifices the district would have to make in order to work within its current budgetary constraints.

"We have been through three cuts in the past eighteen months,” Deasy said. “Projected growth for next year is 1.8 percent, which doesn’t cover the minimum maintenance of a salary schedule. It doesn’t provide for any of our employees.

“We may have to continue reduction in administrative areas,” he said. “We won’t be increasing materials or supplies, and the last thing we want to do is to cut teachers.”

Future cuts would include school programs, especially at the elementary level. “We will be reducing music programs, librarians, nurses, custodians. The Board will make these decisions as had to be made last year.

"We are barely able to keep the basic reserves,” he said. “It’s not like the district has had money there to use for a rainy day.”

The district’s financial forecast, Deasy told the committee, is much less accurate than the City’s because, unlike the City, the district does not control revenues. “Our forecast is given to us by the state," the superintendent said.

Ken Bailey, who heads the district’s Financial and Business Services, assured City officials that in spite of financial constraints, the district was able to cut $4 million from its operating budget and that it "was not deficit spending driving ourselves into this situation."

But the district, Bailey said, needed financial help to stay afloat. “It is going to cost $3.5 million more dollars next year just to keep the same staff and programs that we currently offer,” he said.

Council member Ken Genser wanted to know what steps could be taken to move forward.

“It’s not that the City is insensitive to the needs of the school district,” he said. “All of us recognize the district’s needs are large, but we are already scratching to provide what we can provide.”

City officials have been exploring asking voters to increase the Transient Occupancy Tax to help the City meet its proposed $6 million annual funding to the schools. At the meeting, McCarthy told the committee that raising the bed tax could generate “approximately $3 million dollars.”

But the city manager warned that although she expected growth in the bed tax in the next five years, the heady days of the 1990s were over.

“As an international destination, we have been hit by 9/11,” McCarthy said. “We don’t know if things will get better. We are not forecasting the building of any more hotels.”

School Board Member Julia Brownley suggested that a step forward would be for Deasy and McCarthy to continue to discuss the district’s budget on a year-by-year basis.

"A short term solution is needed in terms of what is feasible for the next fiscal year,” she said.

The discussion became heated when Brownley suggested that perhaps the City and district should study each other’s budgets and make recommendations.

Genser replied, “I don’t think that we, the City, are interested in looking at your budget. If you think our priorities are to shift, tell us where they are to shift from,” he said.

McCarthy then expressed concerns about the legalities of a future contract, explaining that the City’s ability to provide funds for the district would be contingent on its receiving value in return.

“Closing the achievement gap would be an immediate exchange,” she said. “Normally it is a situation where the community is benefiting, but this is kind of a reverse process where the community is giving to the schools.”

Bloom also warned against “going down the litigation route.”

“The stakes are high in this situation,” the mayor said. “It could pull out the rug from our financial structure.”

Brownley concluded the meeting by reiterating the district's desire to come to an agreement with the City.

“This is, in my opinion, with the politicians sitting around the table, a matter of political will,” she said. “If we exercise that will, I think we can come up with some kind of agreement.”

If the City is to stave off the Charter Amendment sponsored by the Community for Excellent Public Schools (CEPS), an agreement would likely need to be reached by early May.

“If they really want to make it on the (November) ballot for sure,” said City Clerk Maria Stewart, “they should get the petitions in by early May.”

While the City has offered the $6 million a year guaranteed under the CEPS measure, the charter amendment would make the increase permanent and require that the City increase its funding each year if municipal revenues grow by at least 3.5 percent, which could amount to millions of dollars more.

The City’s proposed agreement, on the other hand, would provide for an annual increase to keep up with inflation.

After the meeting, Bloom expressed disappointment with the state of the negotiations. The City’s offer to increase the current $5.25 million it gives the district went unacknowledged, he said

“Can you imagine any agency we fund getting an extra $1 million and have them say that’s chump change?” Bloom said. “At this point it appears the school district is prepared to turn down a $1 million increase.

“To put something like this out there and have it thrown in our faces was not what I expected,” Bloom said. “This is the City reaching out to end a controversy and reaching out real far.”

Bloom, however, said he is still optimistic an agreement can be reached.

“I’m certainly not closing the door,” the mayor said. “I’m for continuing the negotiations and finding the daylight.”

The ad hoc committee will meet again on April 28.

Jorge Casuso contributed to this report.