City deficit may wash out rainy-day fund
By: Joshua Sabatini
Examiner Staff Writer
December 31, 2008
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| City officials are considering accessing a rainy-day fund currently used primarily for schools for other purposes. (Examiner file photo) |
SAN FRANCISCO — Millions of dollars in a special city fund that can bail out San Francisco’s public schools could end up being used to offset The City’s own deficit, as part of a larger revenue package envisioned to help government weather the economic crisis.
Voters approved a ballot measure in 2003 that required The City sock away money in a so-called rainy-day reserve during healthy economic times. There are strict guidelines for how that money could be spent — either on city needs if revenue growth is down or on public schools if they face severe state-funding cuts.
Supervisor Chris Daly has introduced a charter amendment that, if approved by voters, would change the rules to permit The City to spend all the existing $100 million in the fund — and not just a portion of it, as allowed under current law. The money would help close San Francisco’s projected deficit next fiscal year of about $500 million. That would leave nothing for the school district, which is also facing severe budget cuts.
Daly said the state may call for a special election in June and he would like his measure to go on that ballot, along with other proposals designed to soften the blow of the deficit.
The City is looking at severe service cuts and possibly thousands more layoffs on top of the $71 million in cuts and 409 layoffs announced earlier this month.
Stakeholders are considering and gauging public opinion on several tax measures, among other revenue generators.
“Everything is on the table, so yes, taxes are on the table,” Daly said. “Things in addition to taxes are on the table, like looking at the rainy-day fund, like looking at, potentially, bond programs.”
He said the district has already benefited from millions of dollars from city coffers.
“Now it’s time for the school district to understand that one out of every $2 of discretionary spending in this city could be gone,” Daly said.
School board member Hydra Mendoza said Daly’s proposal “would be very devastating for our school district.”
The district received $19 million from the fund earlier this year, alleviating the impact of state funding cuts and allowing it to rescind teacher layoff notices. But more cuts are expected as the state debates how to close this fiscal year’s deficit and next year’s. District officials have been talking with city officials about using more money in the fund to offset additional state cuts.
The charter amendment would require at least six votes from the Board of Supervisors to make it onto the ballot, as would other ballot measures.
Planning for future
San Francisco voters in 2003 adopted Proposition G, creating a rainy-day fund. The City socks away money in the fund during healthy economic times. During rough economic times, city officials can tap into it under certain conditions for needs or to help out the San Francisco Unified School District.
$19 million: Rainy day funds The City gave SFUSD this fiscal year
$100 million: Estimated rainy day fund balance
How money collects in the fund: 50 percent of general-fund revenues in excess of a 5 percent growth
City use: Up to 50 percent of fund balance under certain conditions
School use: Up to 25 percent of fund balance under certain conditions
Source: San Francisco Municipal Code
