Council pushes back on proposal to add staff next fiscal year | June 12, 2019 | Almanac | Almanac Online |

Almanac

News - June 12, 2019

Council pushes back on proposal to add staff next fiscal year

by Kate Bradshaw

The Menlo Park City Council cast doubt on proposals in the city budget to add new staff members and use non-guaranteed money to pay for pension liabilities during a June 4 public hearing.

The budget is scheduled for review and potential approval at the council's next meeting on Tuesday, June 18.

For the 2019-20 fiscal year, the city's planning for $169 million in revenue and $171 million in spending, drawing on existing capital improvement funds to balance the budget, and plans for a surplus of $100,000.

One element of the proposed budget that Mayor Ray Mueller questioned was a change from past policy to dedicate future ERAF dollars to pay down pension liabilities, since it's not revenue that's guaranteed to go to the city in the years to come.

However, according to Finance and Budget Manager Dan Jacobson, the city could save over $18 million over the long run by using that money to amortize the $30.4 million it has in unfunded pension liability in 10 years instead of 15.

ERAF, short for educational revenue augmentation fund, represents a pool of property tax revenue from cities and special districts that doesn't go to the local "basic aid" school districts, where property taxes cover a base per-student dollar amount. Both the Menlo Park City and Las Lomitas school districts, with schools in Menlo Park, are basic aid districts.

These revenues can have a big impact on a school district's bottom line. In Southern California, when the Santa Monica-Malibu Unified School District in Los Angeles County became a "basic aid" school district earlier this year, the district lost $8.6 million in ERAF funding, according to the Santa Monica Daily Press.

When Vice Mayor Cecilia Taylor asked if school districts had ever asked for ERAF money, city staff said there's not a clear pathway in which a school district might be able to access those funds if the city doesn't spend them. Mueller had previously proposed using a joint powers authority structure to bring cities together and contribute their excess ERAF funds to support capital needs in the Ravenswood City School District, which Belle Haven School in Menlo Park is part of, but the new council has yet to talk about that idea.

Mueller said he doesn't want to count on the full ERAF refund and leave only the $100,000 surplus as a buffer.

Several members of the public advised caution on the city budget: Former mayor Mickie Winkler asked the council to hire an auditor for an organizational review of city staff, arguing that Menlo Park has a large staff for a city of its size.

Councilwoman Cat Carlton responded that the city has a comparatively larger staff because it provides comparatively more services. City Manager Starla Jerome-Robinson noted that the city runs two day care centers, two pools, an overnight parking enforcement program, and a senior center; some of those programs are not offered by other nearby jurisdictions.

The council asked for more information about how the city's services compare to similar cities. This data could be used for council goal-setting and in times when the city budget is leaner to make decisions about what might have to be cut, Mueller said.

The council also pushed back against a budget proposal to hire 4.75 net new full-time employees, especially the proposal to hire one full-time employee to work on an effort to improve financial transparency in the city and help roll out new finance and budget software, as well as 3.25 new library staff members to help keep the Belle Haven Library open for more hours.

The proposed budget also includes plans to hire a park ranger at Bedwell Bayfront Park, which Facebook would pay for as an agreement term with the city, and a new provisional senior civil engineer and an equipment mechanic.

"I'm not sure we need to add (full-time employees) to achieve what we're trying to accomplish," Mueller said.

The library has been hosting many more programs lately, Councilwoman Betsy Nash said, adding that she would prefer to see the library open more hours than to have more programs.

The Police Department has also requested a $450,00 mobile command center, which Police Chief Dave Bertini said could be customized with equipment to respond to Menlo Park-specific emergencies, like incidents at SRI International or Facebook. He noted that the center could be customized for Menlo Park only if it is owned by the city, rather than borrowed from another jurisdiction. He said the department plans to pay for it with Supplemental Law Enforcement Services funding.

And while the proposed budget has some information about tax revenue generated by district, there's no information about city spending by district. Vice Mayor Cecilia Taylor she wanted to see more investment in District 1, which includes the Belle Haven neighbood, east of US 101.

Comments

2 people like this
Posted by Jennifer Bestor
a resident of Menlo Park: Allied Arts/Stanford Park
on Jun 11, 2019 at 8:53 pm

Bravo to our City Council for not rushing to pre-commit their *excess* ERAF windfall to ongoing spending. Not only am I trying desperately to get some of that money into our flailing districts -- esp. Ravenswood and Redwood City -- but the Governor will be dedicating ever larger chunks of it to his Early Childhood Education initiative.

The only way to get ERAF into schools is via the Legislature. Kevin Mullin's office has shown the mildest of interest, Jerry Hill's none ... And, tragically, both Kevin Mullin and Jerry Hill are in the vanguard of support for SB 5, which funds affordable housing OUT OF the school property tax of the county's poorest schools. Yes, Ravenswood and Redwood City. With the promise that the State will pay them back. Ha ha ha. Half their funding arrived late in 2012 (after the schools had closed for the summer!) and they only got it for sure when voters passed Prop 30.

Please, Almanac writers -- and City Council, if you care about Ravenswood -- you need a review course on ERAF. Because you are spreading misunderstanding that will BITE the poorest children in this county.

ERAF is a pool of countywide property tax allocated to education. It was created in 1992-1993 when the Legislature *reclaimed* the 30% share of SCHOOL property tax that it had *handed off* to cities, special districts (like Menlo Fire), and counties a year *after* Prop 13. So, although cities and counties love to talk about how it was taken from them, it was taken from schools first.

Unlike direct property tax allocations to school districts, ERAF is only used to fund the poorer districts in a county -- in inverse proportion to the property tax they receive directly. AND (and this is IMPORTANT) it can only be used up to the State's target spending level for that district. Once every district in a county has been brought up to the State target, the remainder is handed off, again, to cities, special districts and the county.

Since our school funding program uses exactly the same formula for every school in the state -- with no allowance for high regional costs (or property tax receipts) in areas like San Mateo County -- the ERAF pool easily covers all our property-tax poor school districts ... and $200M-and-climbing-fast gets handed off to the county government, cities and special districts each year.

Basic aid districts are not magic pumpkins. They are simply districts whose direct allocation of property tax exceeds the (flat, one-size-fits-all) school funding formula. A good rule-of-thumb for that formula is $8000 a child, plus a $1600 supplement if s/he is an English Learner or meets the Federal guidelines for free/reduced-price lunch. In districts where more than 55% of the students meet this guideline, an additional $4800 is allocated for every kid over the 55% (the concentration grant).

So, Menlo Park City Elementary gets about 20% of the 1% levy on all property within the district. That's brings in about $30M. 3000 kids attend the district, 10% of whom qualify for the supplement. So, 3000x8000 + 300x1600 = $24.5M. MP Elementary is therefore a "basic aid district" and gets to keep the extra $5.5M. But it only gets $200 per student in "basic aid" from the state. And, thanks to the generosity of the community, also raises parcel taxes, gets donations, etc.

Ravenswood actually has a higher allocation, about 30% of the 1% levy on its property, but lower property values, for a total of $12M. However, it is also caught up in buckets of redevelopment and, although it got about $8M back last year, that funding drain will take decades to unwind. The district also has (about) 3000 children (including its charters, which it has to fund). However, 95% of those children qualify for the supplement. So it is entitled to 3000x8000 + 2850x1600 + 1200x4800 = $38.3M. This is much more than MP Elementary -- until you realize the scale of the challenge. 22% of the children are homeless, for a start.

Anyhow, the difference between the $20M Ravenswood has in property tax and the $38.3M state target spending level comes from ... ERAF. If the state target spending level accounted for local costs, there would be less "excess" ERAF, but more in Ravenswood (and Redwood City Elementary, which is closing a quarter of its schools this week, and Daly City, and Cabrillo ...). (There would still be $70M+ of excess ERAF to redistribute, however.)

So what happened in Santa Monica-Malibu and why won't that happen here? Well, when their property tax rolls grew, the school district (and county office of education) didn't pay attention. So they didn't realize that their share was now greater than their state funding target (their share is a measly 14.4% for a UNIFIED district, by the way -- when you add Sequoia Union HSD to MP, it's a total of about 35% ... and 38-40% total when combined with Ravenswood). So, they reported too-low property tax receipts to the state, which told the county countroller to give them $8.7M of ERAF. NOTE, however, that their property receipts would have HAD to be at least $8.7M MORE than they expected. So this is a case of eating your cake and your brothers and finding yourself short one piece of cake when he comes home. Uncool.

But they're not alone. The San Francisco County Controller realized that $415 million of "excess" ERAF had accidentally been given to San Francisco Unified. In this case, SFUSD is NOT a basic aid, so the State had to pony up the money instead. But I digress. As usual.


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