Slowing Down, Council Will Vote on Forming an Ad Hoc Committee with School Board to Plan Measure J Implementation

Recommendation is to form ad hoc committee to hammer out formal agreement within two months; also, to exclude use of the funds for public charter schools

Published : Friday, December 7, 2018 | 6:05 AM

[Updated] The Pasadena City Council is set to vote Monday on forming an ad hoc committee with the members of the Pasadena Board of Education to develop a plan within 60 days for implementing the tax revenue-sharing provisions of Measure J, approved overwhelmingly by voters in November.

A report from City Manager Steve Mermell to the Council suggests the Council should proceed as if Pasadena Unified ’s immediate budget crisis, a crisis which if not resolved by December 17 could have lead to a District takeover by Los Angeles County, has been solved.

Mermell said that Pasadena Unified management now believes it can satisfy the County’s requirements through planned budget reductions.

“If that were the case, then there would be no need for immediate Council intervention to stave off intervention by LACOE (Los Angeles County Office of Education) and a loss of local control,” Mermell wrote. “So, while the District has yet to submit its final plan and LACOE act on it, based on current information, staff suggests proceeding as if the immediate issue has
been addressed.”

The ad hoc committee would report back to the Council in 60 days. The slower pace of the meeting schedule is in stark contrast to the nearly three months of special budget meetings by the Board of Education, since being informed in March that it was in danger of being taken over by a fiscal agent of the Los Angeles County Office of Education (LACOE).

LACOE requires all County school districts to maintain a 3% Reserve for Economic Uncertainty (REU) fund. Based on the PUSD Appropriations Budget, the total of reductions required was $10.1 million over the next three fiscal years.

The School Board will meet December 13 to approve its final Fiscal Stabilization Plan before submitting it to LACOE on December 17, with no assurance that the plan will be approved.

The City Council previously discussed the revenue-sharing issue on November 19, discussing whether or not to actually share the new tax revenue, and if so, how.

In a staff report on the revenue sharing, City staff recommended that the City Council “prioritize” the $7 million yearly sharing with the PUSD, and prepared a series of questions and answers for the council.

According to the staff report, The REU fund is a set-aside of 3% of District General Fund appropriations. Because PUSD filed a negative budget plan in the recent past, LACOE is now requiring that the District provide evidence that it will maintain the 3% reserve for a three-year period, the report stated.

When the District amended its three-year budget projection in August 2018 to reflect the final 2018-19 State Budget and other revisions, according to the staff report, the District had sufficient reserves to cover the 3% requirement for school years 2018-19 and 2019-20, but not for 2020-2021 .

But the staff report, written by City Manager Steve Mermell, also noted that “the School District fully expects to achieve the reductions it has adopted.”

As part of its budget reduction process, the PUSD had previously voted to renegotiate a $1million Chromebook lease. Since then, the District has identified alternative staff reductions, which will be presented to the Board of Education on December 16th.

“Should the (PUSD) Board approve these alternative reductions as expected, they will be included in the District’s submission to LACOE on December 17th,” said the staff report.

Should LACOE not approve the submitted final PUSD Fiscal Stabilization Plan, a LACOE Fiscal Advisor would be put in place. The advisor would have the ability to override Board decisions to achieve fiscal stability.

LACOE previously installed a Fiscal Advisor in the Montebello Unified School District and recently warned the Los Angeles Unified School District, the second largest school district in the nation, that it was in similar danger of a fiscal takeover.

The staff report, also observed that, “In Pasadena, a takeover by LACOE and the loss of local control would create a very negative perception of the PUSD which would impact the City’s image as well and potentially impact property values.”

Pasadena schools, like all California schools, are supported by the State, based on Average Daily Attendance (ADA) rates.

In addition, the Pasadena Educational Foundation (PEF) provide PUSD “anywhere from $13-$15 million annually in the form of donations and grants,” said the report.

PEF recently obtained a $15 million Magnet Schools Assistance Program grant for the District. PEF does not contribute any unrestricted dollars to the District’s General Fund.

According to the staff report, “there was concern that (PUSD) may not be able to satisfy LACOE requirements for fiscal year 2020-2021 when it submits its budgetary plan by the December 17th deadline.

“To assist the District,” the report continued, “the City could enter into an agreement pledging to provide future revenues consistent with the intent of Measure J. Such an arrangement would not require the City to advance any dollars to the District at this time, however, LACOE would allow the District to count the pledged revenue which could offset the need to identify future budget reductions on a dollar-for-dollar basis.”

According to Mermell, while this remains an option open to the Council, the PUSD Board “believes it can satisfy LACOE’s requirements through planned budget reductions. If that were the case, then there would be no need for immediate Council intervention to stave off intervention by LACOE and a loss of local control.”

While the District has yet to submit its final plan to LACOE, the staff report suggests proceeding as if the immediate issue has been addressed.”

The staff report also noted that “The focus of Measure J should be the Pasadena Unified School District and does not recommend providing public charter schools Measure J funds. The City has a compelling interest in the success of PUSD as a strong local school district promotes property values and economic development.

“As PUSD continues to improve student performance,” the report continued, “the city and the business community should work to align services and internship opportunities to reinforce PUSD’s efforts,” said the report.

The report added that “Measure J furthers the partnership between the City and PUSD. As such consideration should be given to establishing a more formal structure for engagement.

Finally, said the report, “The City and PUSD have a long tradition of cooperation and coordination. The passage of Measures I and J will assist both the City and the PUSD in achieving the City Council’s strategic plan goals of maintaining fiscal responsibility and stability as well as supporting and promoting the quality of life and local economy.”

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