The 60-day countdown to get the city’s five-year financial plan to Moody’s Investors Service before the agency decides to drop the city’s credit rating provoked passion and, at times, tempers during a Revenue-Sharing Agreement Committee meeting held this week.
The committee, which is comprised of three Manassas Park school board members and three city council members, was formed this year to discuss the decade old revenue-sharing agreement. That agreement requires the city to share 57 percent of its non-designated funds with the school division to help fund education.
The divison also receives federal and state monies.
During the committee meeting Monday, school board and committee member Ron Gill said he and other representatives of the school division came into Monday’s meeting defensive because of the city's five-year financial plan for Fiscal Years 2012-2016.
School administrators and board members also took issue with the fact they received copies of the second-draft of the city’s financial plan at 6 p.m. Friday without any discussion and just six weeks before the plan is to be adopted by city council.
Dr. Bruce McDade, superintendent of schools, said he is concerned that isn't enough time for the school board to react to the document and provide input.
“Our concern is one of grave concern—you just need to know that,” McDade told committee member Councilman Suhas Naddoni. “We were told back in June that this committee would convene in the summertime. July, August, September, October—four months have gone by with nary a word of a get together. And in the meantime, we see draft one, draft two of a plan that’s going to be discussed in the November meeting (and) voted upon in the December meeting—a draft that says it will be discussed with the school board with their blessing, yay or nay. That’s what we are concerned about.”
Naddoni said the governing body only meets once a month during the summer, and that he didn’t know the school board had selected representatives for the committee at its July 6 meeting.
Gill said the plan looks like the city has already decided what money will be left for the schools.
Prior to Monday’s meeting, no one made it clear to the school board that the financial plan it received Friday was just a draft, school officials said.
Jones told the rest of the Revenue Sharing Committee that the plan has yet to be acted upon and adopted by the governing body.
The financial plan is a dynamic document that is going to change, finance director Gary Fields said on Monday.
Getting all of that approved in such a short time frame seems to short circuit what the Revenue Sharing Committee is trying to do, school board Chairman and committee member Michael Wine said.
Jones said that the Revenue Sharing Committee is on a separate track than that of the financial plan.
The city needs to get some sort of plan to Moody’s in less than 60 days, he said, but 90 days after that, the plan may be refreshed, based on what the committee decides.
Fields said Moody’s has the city on Watchlist for a possible credit downgrade but has agreed to postpone its final decision until after it has received the city’s financial plan. Moody’s is expected to make its final decision in early December, he said. Standard & Poor’s dropped the city’s credit rating five notches in June partically because they didn’t have a plan, Fields added. Moody's has Manassas Park's credit rating at A1, which means it is a low credit risk, but still susceptible to problems in the longterm.
Generally speaking, the lower the credit ranking, the higher the city pays in loan interest. The city could even have trouble getting loans because it would be viewed as a financial risk if its credit rating drops too low.
What Moody’s is looking for is a plan for the city to get out of the deficient fund balance, continue to operate and remain solvent, Fields said. This plan shows the proactive nature of the city to Moody’s. But it's a living document and it's not written in stone, Fields said.
As the revenue sharing agreement and budget evolves, the school board and citizens will be involved in the decision-making process, Jones said. Early on in the meeting, Jones listed on a dry erase board all of the non-negotiable city and school division expenses—things that must be paid.
The list included paying debt service, vehicle leases, utilities, employee insurance, retirement contributions, among other items.
Gill told the mayor that he didn’t see the point of making such a list.
“I respect the approach, I mean you want us to be aware that there are going to be limited funds; you want us to see what we have to pay for,” he said. “Everybody in the room knows we aren’t the only bill in town, but spending the time to go through all the other things you have to pay for—with all due respect—I don’t know why we are doing it.”
Gill said the committee should spend time talking about the percentage the city can actually allocate to the schools, but Jones didn’t agree.
“See—that’s where I think you’re dead wrong,” Jones told Gill. “You don’t make a predetermined assessment of a dollar value without understanding what the full requirement is. What I’m trying to get you to understand, before you try to draw an arbitrary line and create a percentage or number, (you need to) understand what the requirement is so that we can all agree, when we’re done, on what that requirement really is that has to be funded.”
“So, what you are telling me is we are going to fund the schools to the minimum requirements? Is that what I’m to understand? Gill asked Jones.
“I never said that,” Jones said.
“Oh but you are. You keep repeating, ‘We’re going to find out what we need to pay.’ What we need and what we want—based on our division goals, what we want for our citizens, what we want for our kids and what we want as Manassas Park residents—isn’t what we need to pay, it’s what we want to put our money for.”
Jones said he wants to start with “ a clean sheet of paper” instead of just coming up with a percentage—a move he views as extremely short sighted. If the rest of the committee wants to do that, then that’s fine, he added.
“I think we have to provide the best services we can within the scope of what we can afford,” Jones said.
“We’ve got more bills and things to do than what we got money for,” committee member Councilman William “Bill” Treuting said.
Manassas Park residents do not expect to have a lesser or different education or availability of services as that of neighbors such as Fairfax or Prince William, just because of where they live, Gill added.
There is data that shows how much the City of Manassas pays its teachers and how much residents pay for water, so there’s no need to start from scratch, Gill said.
“… I’ve said it for years and years—apples to oranges—the economies are totally different, you can’t take those models … and make a cookie cutter and say, “the city of Manassas Park is going to be the same way,’ It’s totally different,” Fields said.
Manassas Park schools was compared to its neighbors when it didn’t make Adequate Yearly Progress, Gill said.
The next revenue-sharing committee meeting is planned for Nov. 2 at 7 p.m. at city hall.
Dr. Ritchie Carroll, deputy superintendent of schools, asked that there be some structure to future meetings so that everybody understands what is going to be discussed when they convene.
“Any type of discussion like this, we are going to be passionate,” Carroll said. “We also need to have some ground rules as to how we are going interact with each other—whether written or expressed— because that’s going to help us move to the ultimate goal. It’s very appropriate to be upset and be passionate but it’s not appropriate for us to be ostracizing each other or saying things that would not be productive. ”