THE NEW DEAL The agreement, which was hashed out behind closed doors, calls upon City Hall to give local schools at least $6 million annually for the next five years, and significantly more if the economy blossoms. The charter amendment would have lasted indefinitely, and likely forced larger donations.
In presenting the compromise to the City Council, City Manager Susan McCarthy — who negotiated the details with John Deasy, superintendent of schools — said both sides made significant concessions. School interests gave up indefinite funding that likely would have continually increased, while City Hall interests agreed to hand over the money without designating a new revenue source, something they’d pushed for.
“Negotiations are, by their nature, a delicate business and these discussions were intense,” McCarthy said. “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.”
Five members of the public spoke on the compromise, including Deasy, current and former school board members, and a representative for City Hall workers, who adamantly opposed the school charter amendment. Union representatives feared that by forcing City Hall to give $6 million annually to the district, it would have translated into layoffs and cutbacks in services. All groups urged the council to accept the alternative compromise.
CLOSE VOTE AFTER ALL With City Councilman Bob Holbrook out of town and City Councilman Kevin McKeown unable to vote because he works for the school district, there were only five eligible voters. In order to pass, the compromise needed at least four votes.
City Councilman Ken Genser and Mayor Richard Bloom responded to O’Connor’s arguments, agreeing the charter amendment was poorly thought out, but praised CEPS leaders for having good intentions and using the democratic process to realize their goals.
City Councilman Herb Katz said the alternative wasn’t ideal, but it was the best the two agencies could do after a “long haul” — discussions started six months ago.
Those comments apparently weren’t enough to win the support of City Councilman Mike Feinstein, who declined to vote. Feinstein said he could-n’t bring himself to vote against the compromise because it would mean voting against students. But Feinstein also didn’t vote for the compromise, which he called the result of “slash and burn politics.”
“I feel ripped off by this agreement,” Feinstein told his colleagues. “This is a complete contradiction of how we’ve done business in this community.”
FOLLOW THE MONEY Under the agreement, City Hall will double for the next five years the $3 million it gives annually to the school district in ongoing funds, with a 2 percent to 4 percent annual adjustment based on inflation. The agreement also include loopholes for extraordinary circumstances, and options for both sides to reassess and renew the deal through 2014.
A group of school and city leaders will meet in January 2007 to reassess the agreement. That group will decide whether to adjust the base funding by $1 million, at most.
In making that determination, officials will look at the “big eight” revenue generators, including property tax, sales tax, utility users tax, transient occupancy tax, business licenses tax, real property transfer tax, parking facilities tax, and fines and forfeitures.
If the cumulative growth of the big eight exceeds inflation growth by 4 percent in 2004-2005 and 2005-2006 combined — and exceeds 1.25 percent in both years — the group will discuss adjusting the base payment by an additional three-fourths of 1 percent of big eight revenues, up to $1 million.
If growth doesn’t meet those levels or declines, the group will discuss whether base payments should be increased anyway, held constant, or reduced by a maximum of $1 million, according to the agreement. They also will consider whether to withhold inflation adjustments.
In what’s dubbed extraordinary circumstances — where big eight revenue shrinks or grows by at least 7.5 percent in any two consecutive years — the group will c o n s i d e r increasing payments or suspending the contract altogether.
At the request of O’Connor, school district officials also will be required by the terms of the agreement to present an annual financial report, and make copies of the complete budget available online and in local libraries. District officials said at the meeting the added conditions seemed acceptable and appropriate.
Originally published in the Santa Monica Daily Press print edition on May 13, 2004. Read the original PDF.