City Council Discusses Measure J Funding for Pasadena Unified

Can the Council help prevent a fiscal takeover of Pasadena Unified by Los Angeles County?

Published : Monday, November 19, 2018 | 6:52 AM

[Updated]  In a report to the Pasadena City Council ahead of tonight’s discussion about implementing Measure J, City Manager Steve Mermell’s office laid out a roadmap for the Council which could satisfy County demands that the Pasadena Unified School District meet a required 3% reserve target and which could help prevent a County takeover of the District.

That possibility could take the form of a formal multi-year commitment by the City to prepay a portion of expected Measure J tax revenues, for example $5 million, to the District on or about each July 1 during the term of the agreement.

Since the County has said it will only accept specific revenues that can be relied upon, anticipated Measure J tax revenue can’t be included in the District’s Fiscal Stabilization Plan. But a firm guarantee by the City to pay millions to the District on a specific date each year might be acceptable.

But even if the Council elects to follow that roadmap and passes every aspect quickly, before the County’s December 17 deadline, the County still may not accept it, the report said.

“LACOE (the Los Angeles County Office of Education) is in the ‘driver’s seat’ and ultimately will decide what is acceptable to it and what is not,” the report said.

Without City Council action, the report concluded, the District “is unlikely” to produce a satisfactory budget plan for the County by the required date, “thus triggering intervention by LACOE.”

Tonight’s scheduled discussion is exactly that and no more. The Council is not scheduled to vote on taking any action.

City staff plans to “bring forward a recommendation to the City Council on December 3 based on the discussions this evening,” the report said.

Signed by Assistant City Manager Julie Gutierrez for City Manager Steve Mermell, the background report also reveals that City officials sat in on a November 8 conference call School District Superintendent Brian McDonald and Board President Lawrence Torres conducted with County officials to explore how the passage of Measure J could be used by the District to satisfy the reserve requirement.

“To that end,” the report said, “LACOE made it clear that it would only accept either budget reductions or specific revenues that can be relied upon, such as those secured by a formal agreement with the City and that it would not accept a resolution of intent [by the Council — Editor].”

The discussion backgrounder provided to the Council lays out possible actions for discussion tonight.

Specific actions which might be considered, the report said, could include:

• City agrees to provide the District funds equal to 1/3 of the revenues received as a result of Measure I.

• District agrees to prioritize the use of the funds to meet mandatory reserve requirements.

• On or about the first day of each fiscal year during the term of the agreement, the City advances the District an initial amount of funding well within the anticipated amount of revenue, for example $5 million.

• Following the conclusion of the fiscal year once the City receives a final accounting from CDTFA, the City provides a “true-up” payment to the District for the balance of funds.

• The agreement could have a fixed initial term of perhaps three years or could automatically renew annually unless otherwise terminated. Ultimately, once the District is in a stronger financial position and able to meet its 3% reserve requirements each year, there may not be a need for any agreement and the transfer of funds could occur annually as part of the City’s normal budgetary process, similar to the manner in which annual transfers from the City’s Power and Light Fund are made to the City’s General Fund.

Mermell told Pasadena Now he believes that if the Council were of a mind to do so, a formal agreement between the City and the District could be consummated in time for Pasadena Unified to submit to the County in its First Interim Budget on December 17.