The passage of Prop. 57, the $15 billion bond measure designed
to bring California
’s budget into the black, was greeted by Morgan Hill School
District officials with a resounding cheer, while the City of
Morgan Hill still has some concerns.
The passage of Prop. 57, the $15 billion bond measure designed to bring California’s budget into the black, was greeted by Morgan Hill School District officials with a resounding cheer, while the City of Morgan Hill still has some concerns.
“Gov. Schwarzenegger has promised that all unified school districts will receive another $86 per pupil,” Deputy Superintendent Bonnie Tognazzini said on Wednesday. “This softens the blow of the reductions, although it still may change. That’s another $650,000 for our district.”
Tognazzini said districts in the state will be receiving $2 billion, half of $4 billion originally budgeted to schools, but the $86 per student will be over and above that amount.
“The fact that Props 57 and 58 passed gives the governor an opportunity to honor his commitment to education,” Tognazzini said.
Superintendent Carolyn McKennan, who serves as in a leadership capacity in the Association of California School Administrators, said the organization worked with the governor to come up with a plan for education funding.
“He sat down and rolled up his sleeves and worked with us,” she said.
The hope now, she said, is that promises are kept. There is the possibility that funding could be changed.
“We are all putting a lot of faith in the hope that this governor is a man of his word,” she said.
Former Gov. Gray Davis told the education community three years ago that he was keeping hard-won federal funding for special education instead of paying it out to the districts because of a budget deficit. He told the education community the federal funds would come to the districts the following year, but instead kept the funds to pay for other state programs once again, citing the deficit.
Prop. 57 passed 63.3 to 36.1 percent; Prop. 58 passed 71.0 to 27.9 percent.
Another school-related proposition was approved by voters, although by a narrow margin. Proposition 55, the $12.3 billion school bond measure that will provide money for modernization, repairs and new school construction.
The measure, which passed with 51 percent of the vote, will allow schools to apply for funds to pay for 60 percent of approved modernization projects and 50 percent of approved new construction projects.
The Morgan Hill School District will not benefit from this bond, Tognazzini said. The district is receiving money from a previous state bond, which offered districts an 80/20 match.
PROP. 57
Over at City Hall, the council and staff are still waiting for the other shoe to drop. By passing Prop. 57, voters gave the governor permission to borrow $15 billion to keep the state running while legislators figure out how to make do with less. The $15 billion includes the $4 billion lost when Schwarzenegger repealed the Vehicle License Fee revision to previous levels.
But the money to pay the $15 billion piper will have to come from someplace, most notably from a grab at cities’ sales tax revenues.
City Manager Ed Tewes told the City Council Wednesday night that the state will have to pay debt service on the bond at the tune of $1 billion a year for nine to 14 years (depending on the economy and state income).
“And Prop. 57 gave the governor permission to transfer $1.7 billion from cities and counties to the state,” Tewes said.
“The legislative analyst (Elizabeth Hill) released her evaluation of the governor’s proposal,” Tewes said. “She doesn’t believe it is proper to shift $1.7 billion to the state. However, she has other ideas including some that would take even more from Redevelopment Agencies.”
The state will use property tax revenue to reimburse cities. However, those payments will come six months after the sales tax money is borrowed, interrupting the normal cash flow and causing cities to lose revenue from interest.
In addition to the property and sales tax flips, cities could lose out on a portion of the Vehicle License Fees the state had promised. Cities could also see their portion of property tax revenue reduced by nearly one-third.
The 2004-05 city budget, ready for council review in May, will include significant cuts, Tewes said.
“It will impact city services and city employees,” he said. “We have a target level of $800,000 in reductions.”
Tewes thanked his staff for their diligence in finding places to cut even though reduced services could mean a smaller staff.
“These service cuts might also affect their jobs,” he said. Council has been working with staff to pare services that will benefit the budget the most and affect the public the least.
Mayor Dennis Kennedy was resigned to having to make needed cuts but hoping to keep the pain limited.
“It could have been worse if Prop. 57 had not passed,” Kennedy said about the election.
Council, except for Councilman Larry Carr, had previously voted to endorse the proposition.
“We held our noses and voted yes,” said Councilman Greg Sellers.
“It’s the best thing for the city that it passed,” said Councilman Steve Tate. “I don’t like mortgaging the city. Let’s hope it is just this one time and that we are represented by people (in the legislature) who can figure a way out.”
Councilwoman Hedy Chang agreed with Tate.
“I’m glad it passed,” said Chang. “I hope the legislature and the governor can work together to fix things so we don’t need to do this again and, with Prop. 58 (the balanced budget proposition) passing, maybe they will.”
