School Funding Agreement Scales Final Hurdle

By Olin Ericksen and Jorge Casuso

May 12 – Placing safeguards before releasing the money and with the deciding vote cast grudgingly, the City Council Tuesday night approved an agreement to give the cash-strapped School District between $6 million and $8 million a year over the next five years.

The vote averts a potentially divisive ballot initiative sponsored by the Community for Excellent Public Schools (CEPS) that pressured the City Council to come up with a last-ditch compromise agreement after the group gathered the necessary signatures to qualify the charter amendment on the November ballot.

With Councilman Bob Holbrook out of town, Councilman Michael Feinstein abstaining and Mayor Pro Tem Kevin McKeown conflicted out because he works for the school system, the deciding vote was cast by Council member Pam O’Connor.

O’Connor, who arrived at the meeting late after flying in from Toronto, lashed out at CEPS, calling the group “schoolyard bullies” who used “extortion” to get the City to boost the $3 million to $5.25 million it has given the district in recent years.

“Maybe there will be a meeting of the minds, I’m not sure. But I’ve had three time zones and two countries to think about this,” O’Connor said, warming up.

“So we have an institution (the school district) that is not accountable for its actions, won’t step up to the plate and use their own taxing authority to raise the money they need, who won’t shine the light on their own budget, so what do they do? They take a passive-aggressive approach. They let the school yard bullies take over.

The CEPS schoolyard bullies, O’Connor said, use “extortion is a way to make policy. Their ethics are grounded in the ends justifying the means. They threaten an illegal charter amendment, they start ugly name calling…. That’s how schoolyard bullies do it, and that’s what the CEPS folks have been doing.”

“I don’t like bullies,” O’Connor said, “and I don’t have respect for those who sit back and let it happen.”

During O’Connor’s angry speech, Santa Monicans for Renters’ Rights Chair Dennis Zane, who worked on the CEPs initiative, clasped his hands tight, pumped his legs and muttered an obscenity under his breath.

O’Connor agreed to support the funding proposal negotiated by the City and School District only if a series of safeguards were attached to the final agreement.

They include reporting annual outcomes and the value derived by both agencies, posting the district’s budget online and at local libraries and schools and establishing a financial oversight committee made up of fiscal experts.

“We’re talking about a contract with a value of six million dollars,” said Mayor Richard Bloom. “I don’t think there is any outside agency that we’d give that amount of money to that we don’t expect significant accountability from, so it is completely appropriate that we have accountability.”

Bloom and Council members Ken Genser and Herb Katz – whose likely bids for reelection would have been hampered by a ballot initiative they adamantly opposed – joined O’Connor in voting for the agreement.

“This has been tough, a long haul,” Katz said. “It will be best for our City, and certainly for our students.

“Is it ideal? No. Is everyone going to be happy? No,” Katz said. “But it’s a lot better than going through a long process which would divide this City.”

Bloom and Genser took exception to categorizing CEPS as schoolyard bullies.

“I’ve seen bullying, or what you could call bullying, that relates to the CEPS campaign, but it doesn’t stop there,” Bloom said. “I would not generalize that to most of the people who brought the CEPS measure forward.”

Genser commended CEPS for using the public process very effectively, adding that the grassroots group – which gathered some 15,000 signatures to qualify the measure – should “be very proud of what they accomplished.”

Feinstein – whose chances for reelection would also be potentially riding on his vote if he chooses to run – said he felt “ripped off” by an agreement that was the result of “slash and burn” politics, before abstaining.

The Council, Feinstein said, has always been in support of education and has proved it over the years, but the agreement, which does not identify an ongoing revenue stream, is bad fiscal policy.

“I don’t think what’s brought before us tonight is anywhere near a compromise,” Feinstein said. “I think it’s a fiscally irresponsible approach, and I think it’s a political low point for our community.

“If this was really a partnership, not a raid on funding by one agency on another, there would be a mutual synergistic dynamic,” he said.

After the vote, jubilant CEPS representatives hugged and congratulated each other in the lobby and took a quick vote to drop the initiative.

“We’re not handing in the signatures,” said CEPS Co-chair Shari Davis. “We’ll continue to watch how the contract gets drafted, but we feel it’s a very significant accomplishment.”

The council vote came after 11 speakers – including high ranking district officials – urged the council to approve the agreement.

School Board President Jose Escarce called last Thursday’s School Board meeting, where the board voted unanimously to support the agreement, “one of the most gratifying board meetings” he’s attended

Escarce praised the efforts of everyone involved and said Santa Monica’s children will reap the rewards of an agreement that will strengthen the relationship between the City and District.

John Deasy, who used the words “thank you” nearly half a dozen times, said, “I wholeheartedly support the agreement before you.”

City Manager Susan McCarthy, who spent several months in “intense” negotiations with Deasy, called the agreement a “significant compromise” for the City.

“Negotiations are by their nature a delicate business and these discussions were intense,” McCarthy said from the dais. “I can tell you that absent goodwill on both sides and the prospect of economic recovery for Santa Monica, an agreement might not have come to fruition.

“Compromise was essential on both sides,” McCarthy said. “On our part, our offer of a significant increase to ongoing payments was not made contingent on realization of a new revenue stream. This was a significant compromise for us.”

The five-year agreement -- which allows public use of district facilities – calls for incremental increases of the $6 million a year the City will gave the district starting in July.

A cost of living adjustment of between 2 and 4 percent a year would likely boost the total by between $120,000 and $240,000 a year. District officials estimate the cost of living increase would likely reach about $500,000 in the fifth year.

Additional increases of as much as $1 million in 2007/2008 would depend on the fiscal health at the City’s “Big Eight” revenue streams, comprised of taxes and fines that currently total about $125 million.

If the revenue streams falter, City payments could be held constant or reduced by no more than $1 million.

After five years, the agreement could be renegotiated for two 2½-year terms that could further boost the amount the district receives to between $10 to $12 million a year after ten years, according to district officials.

McCarthy said that the City revenues for next fiscal year are coming in “above projections” and that austerity measures implemented in the last few years have kept the City on a solid fiscal footing.

In order to accommodate this compromise, however, staff believes there should be an increase in fees and a new revenue source voted in for November, McCarthy said.

Said Mayor Bloom: “I think we should look forward where we are going with this… It may have been painful to get here, but I think we are in a pretty good place because of it.”