Sycamore Fund not a source for loans, former superintendent says

Schools special fund has dropped nearly $2.4 million since 2001

The Pleasanton school district's Sycamore Fund was never intended to be the source for revolving loans that it has become, according to the superintendent in charge of the district at the time.

Bill James, who headed the district from 1985-98, said the fund came from sale of the property on Sycamore Road near the intersection of Amber Road. It had been purchased with the idea that Pleasanton would continue to grow and a new high school would be needed.

"The property was taken by eminent domain," said Julie Testa, who has lobbied for a new high school. She said she's been in touch with the landowner, who's upset that the district profited by selling the 42.5-acre site, claiming that the money was to be his retirement fund.

James said demographic studies that began in the mid-'80s showed the expected growth never happened.

"It became evident that a high school wasn't going to be needed," James said, adding the property was sold in either 1986 or 1987. School records on the fund only go back to 2001.

"We set up the fund to make sure that all our technology needs would be met forever, so that students would always be kept up to date," James said.

That idea was the brainchild of Juanita Haugen, he added. Haugen was first elected to the old Amador Valley Joint Union High School District board in 1979. Following the school district unification in 1988, she continued her service with the new board, and was the longest serving board member at the time of her death.

To ensure the money wouldn't be treated as a slush fund, James said a super majority was established from the beginning, requiring votes from four of the five school board members. This was done to protect the money -- at that time called the "special fund" -- from being raided by future boards.

"We wanted to be sure they took it seriously," James said.

He said if it had been available for other uses, the fund would have been drained a long time before now and not saved for its purpose.

"If the school board at that time had intended it for other uses, it would have been put into the general fund," he said.

Pleasanton school documents show the fund at more than $7.2 million in 2001, which brought the district nearly $421,000 in interest that year. The fund peaked at almost $7.5 million in 2002, and has been steadily declining since.

The Sycamore Fund was used exclusively for technology until 2005, and for several years it spent more on technology than it received in interest. In 2005, however, a precedent was set when the district borrowed nearly $980,000 to go toward the state teacher's retirement system (STRS); that same year, a partial repayment of about $144,000 toward the STRS loan was made from the school's general fund.

Longtime Trustee Pat Kernan, who was on the board then, recalled that Haugen was ultimately convinced to dip into the fund.

"Based on what we were finding at that time, we weren't happy to do it, but we had to," Kernan said.

With interest earnings and repayments of the STRS loan, the fund grew from about $6.15 million in 2005 to nearly $6.4 million in 2007. In 2008, though, the board borrowed $230,000 for the Hearst Elementary School roof, and loaned itself $472,123 to cover shortfalls in its capital facilities fund, its food services fund and instructional materials. That left the fund at a little more than $5.9 million.

Similarly, in 2009, despite transfers in to repay loans from the previous year, the board borrowed again: more than $1.1 million for its capital facilities fund; about $103,000 for food services; and more than $435,000 for instructional materials.

Kernan said that last item, for textbooks, prompted "long and hard discussions about tapping into that reserve."

In 2010, the board borrowed $100,000 for solar panels -- a project already under way at Foothill High School; nearly $308,000 for the capital facilities fund; and about $422,000 toward a mold remediation project at Hearst.

Despite interest and repayments of loans the district made to itself, the balance dropped to just over $4.8 million, although outstanding loans from the district should, in theory, ultimately bring the Sycamore Fund back to well over $7.1 million.

James, however, is unsure the district will ever be able to repay it.

He said schools across California went though a similar budget crisis in 1990 and Pleasanton didn't tap the fund.

"We never even dreamed of touching that money. It was very specific when we set it up," he said, adding that the goal was for every child in Pleasanton schools to have a computer.

"It's tragic that it's not being maintained for the purpose it was set out for," James said.

Chuck Eddinger was on the board at that time, and although the fund wasn't touched, he said the district faced similar hard choices.

"You really have to look at every single item in the budget and decide what's important. When you start with that premise, that you have to make cuts, you have to decide what has the least negative impact on the student," Eddinger said.

The Sycamore Fund was a contentious item at the last school board meeting, when the trustees split 3 to 2 over spending money for textbooks for some advanced classes, and about loaning the CORE (Community OutReach for Education) campaign enough to bump tech support workers for elementary and middle schools to half time. Because the vote wasn't a super majority, as required, those motions failed when board members Jamie Hintzke and Valerie Arkin opposed them.

Kernan called that a first.

"In the past, I can't ever recall it not being a unanimous vote," he said. "When the budget started going further and further south, we just felt we had to. It's a question of priorities."

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