The City Council agreed Tuesday to loan up to $1.2 million to the Pleasanton Unified School District.
The revolving line of credit agreement was approved in a 4-0 vote, with Councilman Matt Sullivan recusing himself from the discussion and council vote because his wife is a school teacher in the district.
Emily Wagner, the city's fiscal officer, said the loan amount will come from excess funds currently invested in the city's investment portfolio. The agreement with the Pleasanton school district calls for these funds to continue to earn interest throughout the four-year duration of the revolving line of credit agreement.
She said that in 2002 and 2003, the school district issued approximately $20 million in certificates of participation for the acquisition and construction of land and school improvements "for the betterment of the PUSD school facilities."
The annual debt payments for these COPs are approximately $1.2 million, and funds collected from development impact fees are used to fund the annual debt service on them.
"Over the past year, a downturn in the economy has impacted the amount of funds collected by the PUSD," Wagner said in a report to the council.
Former City Councilwoman Kay Ayala objected to the loan, arguing that the district's shortfall is the result of poor financial planning. She said that when money was coming into the district, it chose to build new facilities instead of paying off the certificates of participation.
Ayala was the only speaker at the council's public hearing on its loan proposal.
The school district recently put an initiative on the June 2 ballot, now called Measure G, that would bring in just over $4.5 million to the school district. The funds collected from the parcel tax, however, would not be able to pay off the debt service.
Instead, the ballot language states that only the following would be funded by a $233 per parcel tax: class size reduction, reading and math support programs, libraries, music, counselors, technology instruction, music, and maintaining safe and clean schools.
Mayor Jennifer Hosterman said the loan would not negatively affect city services and offerings.
"It's one-time monies that the council identified and can be made available without dipping into city coffers," she said. "It's the city's opportunity to show people that we want to be supportive of our school district."