Governor
’s fiscal plan worries city leaders, school officials
relieved
Gov. Arnold Schwarzenegger’s budget proposal has largely pleased local school district administrators and mostly frustrated city officials.
Any budget plan must be adopted by the state legislature before being signed into law by the governor. The governor’s proposal relies on voter passage of a $15 billion bond issue that will appear on the March primary ballot.
Schwarzenegger’s proposal to add roughly $2 billion to K-12 and community college coffers this year, for a total of $33.2 billion, Morgan Hill School District officials are cautiously optimistic.
SCHOOLS GIVE AND RECIEVE
“For the education community, this is politically and financially a good move for us,” Superintendent Carolyn McKennan said Monday. “We are owed, under Proposition 98, $4 billion. By accepting the $2 billion, by agreeing to a lesser amount, this is a good move. It provides us with a COLA (cost of living increase). We (education) are 42 percent of the budget.”
The funding increase, which would work out to approximately $216 per student, would be accompanied by an increase in control of funding at the individual school site.
Schwarzenegger also proposes easing restrictions on categorical funding, which comes from the state earmarked for certain programs. Twenty-two programs would be affected.
State Education Secretary Richard Riordan, along with Schwarzenegger, has shown interest in letting parents and site administrators have more power in decision making.
“People at the local level – the parents, the teachers and the principal – know much more about how to teach and train kids than the bureaucrats and politicians in Sacramento,” Riordan said.
On the downside, the governor’s plan includes a 10 percent increase in tuition fees for undergraduates at University of California (UC) and California State University (CSU) campuses, and a 40 percent increase in fees for graduate students.
The average annual cost would then be $6,028 at UC and $2,776 at CSU, with UC grads paying an average of $7,307 and CSU grads, $3,628.
The education portion of the plan, McKennan said, is a result of “weeks of meetings with the Education Coalition.”
“This is the first time the governor has been so actively involved in negotiations,” she said. “I was pleasantly surprised in his personal interest. He did not leave it to Mr. Riordan.”
To those who say cities and counties are losing state dollars to schools, McKennan said everyone is losing to some degree.
“We all are going to walk away from this table without a complete meal,” she said. “Proposition 98 was voted on, and we were to receive $4 billion dollars, so we gave at the altar as well. They gave something, we are not insensitive to that. Hopefully, this (plan) gives the governor an opportunity to find those resources other places.”
CITY BUDGET HURTING
City officials are less optimistic since they will take part – with other California cities – in returning $1.3 billion to the state, part of which will fund the schools.
City Manager Ed Tewes explained the hit to Morgan Hill Friday, just after Schwarzenegger’s speech relating the bad news.
“They will be taking $135 million from the Redevelopment Agency,” Tewes said.
More importantly, Tewes said, unlike 2003-04 where only the RDA was affected, this year the cities’ general funds will likely be reduced, in Morgan Hill’s case, to the tune of several hundred thousand dollars.
“We start with the understanding that we will be operating at a deficit of about $900,000,” Tewes said. “If revenues continue to grow slowly if at all, and costs are growing at a substantial rate, to balance the budget we will need to take significant steps to cut costs and increase revenue.”
Tewes said that, if the city does nothing, the undesignated fund balance (the city’s rainy day account, saved for just such a time) will be gone in four years.
“But we will take steps,” he said.
He did not say whether staff cuts or service cuts would be in the mix.
“That is up to the council to decide,” Tewes said.
“I’m embarassed that I was quoted several weeks ago complimenting the govenor on meeting his commitments (backfilling the Vehicle License Fee that cities rely on), and now the governor has reversed commitments, Tewes said.
“It’s a little frustrating,” said City Councilman Greg Sellers about the governor’s proposed budget. “They’re giving to one pocket, then taking from another. If the governor’s goal is to create jobs, this is shortsighted.”
“Clearly, there will be challenges,” said Councilman Larry Carr. “It was disappointing that the new governor, elected with the idea of change, is giving us more of the same,” he said, picking up on the accusation that the Schwarzenegger budget is not much different from the Gray Davis budget, a matter over which the former governor was driven from office.
“But we will work through it,” Carr said. “We cities struggle to balance our budgets and the state, in order to balance its own budget, makes it harder for us.”
Carr recently served for two years on a state commission looking at the tax policy.
“We submitted our report in early December,” Carr said. “It was full of suggestions that have been largely ignored. There are options out there but it takes a bold initiative.”
Fiscally conservative Councilwoman Hedy Chang said, unfortunately, the governor has no choice.
“I see two good things from the budget,” Chang said. “First, the balanced budget amendment and, second, they are setting up a rainy day account, like we have had in Morgan Hill.”
