City Reportedly Rejects District Offer, Funding Initiative Likely

By Jorge Casuso and Olin Ericksen

April 27 -- Negotiations to avert a controversial school funding initiative may have reached a deadlock after City officials rebuffed a last-ditch compromise offer from the school district, The Lookout has learned.

Unless an agreement is reached, Community for Excellent Public Schools (CEPS) will hand in next week more than the necessary 8,200 signatures to qualify a charter amendment that would carve out nearly $6 million a year from the City’s budget to fund the cash-strapped school district.

The district’s offer addresses the key sticking point in the negotiations – how much more than the $6 million the City would contribute if its general fund budget increases in any given year, according to sources familiar with the negotiations.

The CEPS initiative guarantees that if the general fund budget grows by more than 3.5 percent, 1 percent of that total budget would go to the district.

City officials -- who vehemently oppose the measure -- have agreed to provide the mandated $6 million a year, but have offered an annual cost of living increase that falls far short of the additional funding sought by CEPS.

The district’s offer raises the threshold to 5.5 percent and lowers the amount schools would receive from 1 percent to ¾ of a percent, sources close to the negotiations said.

“My understanding is that progress fell apart last week,” said a source familiar with the negotiations. “The City is retrenching and backing off. I’m not expecting that a deal would be struck.”

City Manager Susan McCarthy and School Superintendent John Deasy met shortly before Tuesday night’s City Council meeting, where McCarthy is expected to give a progress report on the negotiations.

On Wednesday evening, a joint ad hoc committee comprised of City Council and School Board members will convene for a final time before CEPS is scheduled to meet its self-imposed May 5 deadline to hand in the signatures.

The City reportedly rejected the latest proposal, which council members contend does not give the City control of its financial future.

Expecting the City's budget to grow by 5.5 percent is “both realistic and unrealistic,” said Councilman Herb Katz, when told about the offer.

“You can't project which way the City's economy will turn," he added, noting that the City’s budget is tied to Sacramento, which is in the midst of a budget crisis.

"I believe we should reach some solution, and give the schools some certainty in their budget,” Katz said. “We should have an acceleration with a cap on it. If the City's budget decreases, then the school's cut should decrease as well.

"The idea of a charter amendment is not the right way to do things,” Katz said. “It pits people against each other, and what we need is some solution."

But with negotiations faltering, a ballot initiative looks more and more likely.

CEPS is moving “full steam ahead” with its signature gathering drive this week hoping to add to the more than 9,000 signatures they gathered as of last weekend, said CEPS spokesperson Louise Jaffe.

On Friday, CEPS representatives will meet to decide whether the group will continue circulating petitions.

On Sunday, the group will meet to make a final decision on whether to submit the signed petitions. Once the petitions are handed in, it will be too late to turn back.