The Beverly Hills City Council has agreed to turn over $2.4 million to the city’s financially troubled school district to help it avoid deep budget cuts.
In an agreement announced Tuesday, the city said it will give the district the funds the council had allocated but refused to hand over since 1984 because of legal questions over whether the yearly payments constituted an illegal gift of public funds.
‘We Worked Hard’
“We have come to an agreement,” Mayor Edward I. Brown said. “We have worked very hard and the staff has come up with a solution.” The city will give the district a check for $1.5 million on Sept 23. The remainder will come later.
The City Council allocates money to the school district through a joint-powers agreement allowing appropriations in the form of lease payments for the use of school properties.
Payments were halted after the city attorney issued a decision saying that the city was not receiving the proper value for the amount of money it was contributing each year. The city staff evaluated the arrangements and decided that the city was receiving the value of about $375,000 for its $1.2-million yearly contribution.
The school district disagreed with the city attorney’s interpretation and asked the state attorney general to issue a decision on the legality of the contribution. That decision is pending.
Brown said that the value of the old lease was based on the services provided by the school district, such as maintenance and upkeep of the school property. It did not take into account the market value of the land or the of the price the city would have to pay if it rented such facilities on the open market.
Under a new arrangement, Brown said the city will include the value of the land in its determination of a rental charge, which justifies the total contribution.
School board members had planned to approve a reduced budget Tuesday night. “Everybody did it together,” school board President Fred Stern said. “That is the spirit that we will do it (with) in the future.”
The district’s financial director, John Scoggin, said restoration of the city funds gives the district another year before it must begin making cuts. He said that the district is spending about $5 million more each year than it receives in revenues.
The district’s 1985-86 budget of $28 million will include about $3.4 million in reserves, he said. But in 1986-87, he said, reserves will drop to about about $800,000, leaving the district with a $5-million deficit.
Supt. Leon Lessinger said that the district has had a “credibility problem” in convincing the public that it is experiencing financial difficulties because it has always managed to avoid drastic cuts.
Lessinger said that the district has made more than $1 million in cuts in recent years but has also lost revenue because of declining student enrollment and because of a drop in the price of oil from wells operating on the high school campus.
Last month, Supt. Lessinger proposed cutting $1 million from the budget by laying off teachers, administrators and clerical staff members. Those cuts, if necessary, can be postponed until next year.