City of Lake Oswego ponies up money for cash-strapped schools
In its stressful budget planning, Lake Oswego School District officials can now pencil in just under $1.9 million in support from the city, and school board members will be better informed for their impending decision on school closures.
The city plans to continue its support to schools from last year, which totals $661,000 not including a one-time cash gift. Council voted on Tuesday night to support setting aside an additional $1.2 million for schools during the budget process.
In order to do so, the city will take its own budget cuts during a trying year as the West End Building financing and employee costs are going up.
Only Councilor Bill Tierney voted against making any budget cuts for schools, saying that the city has only half of the information in front of it at this point, since the proposed budget for the 2011-2012 year has not yet been released.
Back in January, the council had asked staff to provide options for cutting the budget by $2 million annually for two or three years in order to help fill a gap for the school district, which is facing a $13 million shortfall over the next biennium.
After city staff provided council with a list of options, a total of $1.2 million worth of cuts the council was willing to take was sent back to staff for further vetting.
City staff members returned on Tuesday, saying that they took into account the council's list, but they have now analyzed and tweaked next year's budget and come up with only $811,000 in cuts available for schools.
The reductions included the federal lobbyist contract, a vacated emergency and risk analyst position, annual flower plantings at entries to the city and at the Boones Ferry/Country Club intersection, a portion of street maintenance, a police position vacated by a TriMet special assignment and not purchasing a detective vehicle.
Council had also wanted the staff to look at using money for one-time expenses in last year's budget, such as the city's centennial planning, but staff did not include that as a viable source for financial assistance for schools.
The staff did however include $500,000 of unspent money from this year's budget that will roll over into next year's reserves.
Tierney argued that the unspent money could just as easily go to the WEB refinancing in light of new information that the new debt could go up to $1.5 million annually.
'We'd like to give the money to the school district where we can, but our first obligation is to run a city,' he said.
City Manager Alex McIntyre estimates that the city will have to take an additional $500,000 from reserves in order to refinance the West End Building.
The city has been paying an interest-only, short-term loan that expires in July. Though city officials were hoping for a better arrangement, banks are less willing to provide similar loans, and a new loan will likely require the city to make principal payments in addition to interest.
'The West End Building financing has really thrown a monkey wrench into the plan,' said McIntyre.
Councilor Mary Olson suggested that there are other places to find the $500,000 for WEB payments. A few years ago, the city council set aside $914,000 in a library reserve fund when the county library district formed. At the time, the council could have used it to offset the general fund, but instead decided that it could be used for the future construction of a new library. But this year, the council could consider releasing that money to help balance its budget.
Finding more money for schools
For starters, Olson moved to use $414,000 from library reserves to help fund the schools. The other $500,000 would stay where it is for now, though it could be moved during this year's budget process.
Councilor Donna Jordan opposed using the money for schools, saying that it doesn't make sense to use one-time money for a long-term problem.
'It needs to be solved at the state level, and no matter how many Band-Aids we put on it here it's not going to change what's going on,' she said.
Mayor Jack Hoffman also disagreed with the spending, saying that the money is committed to the library.
'… unfortunately we're in the mode of Band-Aids these days and I'm willing to deal with it on a year-by-year basis,' said Councilor Mike Kehoe.
Since the city is considering building the new library in the urban renewal district, the Lake Oswego Redevelopment Agency (LORA) can pay for it, said Kehoe. The city can also go out for a general obligation bond for the building.
Tierney agreed to support moving $414,000 to schools if the majority of fellow councilors were in favor. However, he pointed out that the council, which also acts as the LORA board, just adopted a goal to use the library reserves to go forward with a new library.
Both Kehoe and Councilor Jeff Gudman pushed the council to move the entire $914,000 to the school district, but they couldn't get the rest of the council to agree on the vote.
Raising franchise fees
Councilor Sally Moncrieff felt strongly about honoring the school district's request for $2 million in funding in addition to the city's current support and proposed a franchise fee increase in order to make up the difference.
'I went through my own bills and what that would cost is $5 a month. I think $5 a month is a reasonable amount to pay to support our schools,' she said.
Franchise fees are charged through any electricity, telephone, garbage, cable and broadband, natural gas and telecommunications company that operates in the city of Lake Oswego. Currently the city has eight franchises.
The council agreed to have staff come back with a package of fee increases that would fill in the last $775,000 and make the gift to the school district a total of $2 million.
Kehoe, Gudman and Olson disagreed with that plan.
On top of water, sewer and other increases, 'it adds up. It makes or breaks the budget for someone on a fixed income,' said Olson.
Hoffman strongly supported Moncreiff, saying he wasn't willing to make any more cuts in order to get to $2 million and felt that the community should pay for it if it wants the city to support schools.
Jordan was less enthusiastic about the option but agreed to support a fee if it were only raised for three years and then returned to its original amount.
Olson also made a motion to hold the school district to a financial standard due to its dependence on city assistance. Only Jordan and Hoffman disagreed.
The school district would be required to give full accounting of all its expenditures from the revenue it receives from the city. Additionally, it should be willing to open its books to an independent financial/operational analyst, who could be sure that the funds are spent appropriately and make additional recommendations for achieving operational efficiencies.
Also, it would be required to 'provide a five-year plan on how it could become financially viable under present circumstances and without continued city support,' according to language in the document.
In other news . . .
City staff will continue to analyze the costs of taking over the operation of the school district's pool, which has historically been a source of financial loss.