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HomeMy WebLinkAbout1980-05-20; City Council; 6079-1; Administrative Charges for Handling School FeesCITY OF CARLSBAD i Initial: AGENDA BILL NO. d? 0 7 ?""^L^^^o^v^^fc ^/ Dept. Head DATE: May 20, 1980 City Atty' ^S2 City Mgr. DEPARTMENT: CITY MANAGER Subject: ADMINISTRATIVE CHARGES FOR HANDLING SCHOOL FEES Statement of the Matter The City Council at its November 28, 1979 meeting directed staff to prepare recommendation of an appropriate administrative charge for handling school fees. The Council also requested advice regarding release of funds while litigation was pending regarding the collection of fees in other jurisdictions. The City is limited to charging no more than interest earnings on the fees collected as a charge for handling school fees. The Finance Department has analysed the cost of handling school fees. The monthly cost of handling fees collected for all school districts is approximately $280. An average of $23,700 in school fees has been collected each month. The interest earnings on the average monthly collections will not likely generate enough revenue to cover handling costs. The Finance Department is recommending that the City keep any interest earnings and release school fees on a monthly basis. Financial Impact The City will be exposed to an estimated annual cost for handling school fees of $3,360. There is no guarantee that interest earnings will offset this cost since it will depend on when during the month fees are collected. Exhibits Memo to Assistant City Manager, dated April 18, 1980. Memo from City Attorney, dated February 25, 1980. Memo from City Attorney, dated April 15, 1980. Recommendation Approve the retention of interest earned to cover City admin- istrative costs and direct staff to release school fee funds on a monthly basis upon receipt of the schedule required by Section 21.55.190 of the Municipal Code and a signed statement as described by the City Attorney. Council Action: May 20, 1980 - Council approved staff recommendation. DATE: APRIL 18, 1980 TO: ASSISTANT CITY MANAGER FROM: Finance Director SUBJECT: ADMINISTRATION OF SCHOOL FEES During early 1979, the City of Carlsbad began collecting fees for the school districts, as directed by the Carlsbad Municipal Code :Chap:ter 21.55. These fees are established by the school districts under the authority of SB 201 to help alleviate the impact of overcrowding caused by development within a district's boundaries. According to the Municipal Code, the City may distribute these fees to the districts on a schedule determined by the Council, and may charge an administrative fee up to but not exceeding any interest earned on the fees collected. The following sections discuss both points. Frequency of Payment As the City Code indicates, the City Council has control over the schedule for payment of fees collected for the school districts. The schedule of payment is important to the City because the longer fees are on deposit, the greater the potential for interest earnings that may be used to cover administrative costs. On the other hand, the longer fees remain on deposit with the City, the greater the administrative effort required to account for payments collected, interest earned, refunds and questions regarding fees still held by the City. The following table is the result of a survey of some of the San Diego County cities showing the method of handling fees collected: Fee Admin. Int. paid Frequency of City Collected Charge to District payment to District Chula Vista no — El Cajon no (City Council refused to impose fee) Escondido yes no no monthly Imperial Beach no — -— — Oceanside yes no no monthly San Marcos yes no no monthly Vista no April 18, 1980 Page 2 Administration of School Fees As you can see the payment schedule choosen by most agencies is monthly. This seems to give a good return to the school districts while maintaining an acceptable workload on the city staff. A quarterly payment schedule has been discussed at the staff level and has the advantage of reducing the number of payments required during the year. Both schedules should be very acceptable to the city. To date no fees have been paid to the districts. Administrative Fee The City Code allows the city to charge an administrative fee for handling school fee collections of an amount equal to or less than the interest earned on the investment of school fee revenue. This allowance presupposes that the interest earned will be greater than the amount of administrative costs. If the administrative costs exceed the interest earned, the city is not allowed to recoup its excess costs. The following is an analysis of the costs associated with the administration of school fees for an average month where about 20 fees are collected: Employee Hrs. per month Rate* Finance: Cashier (Acct Clk II) 5 Acct. Clerk II 5 Accountant 2 Finance Director 3 Planning: Asst. Planner 2 Building: Director 2.5 Plan Checker 2.5 Secretary 2.5 $7.90 7.90 9.25 14.25 9.60 17.50 9.50 6.50 Total Cost $39.50 39.50 18.50 42.75 19.20 43.75 23.75 16.25 Total Salaries 243.20 15% overhead 36.48 * Includes fringe benefits $279.68 With a monthly cost of $280, the city would have to keep an average balance of about $24,000 invested at 14% ($21,000 @ 16%) to be properly compensated. The average monthly collections to date have been $23,700. April 18, 1980 Page 3 Administration of School Fees Recommendations The following recommendations go hand in hand. First, it is recommended that the city establish a payment schedule whereby school fees are paid to the district on a monthly basis. Those fees collected before the end of a calendar month would be paid to the school by the 15th of the following month. Second, it is recommended that the city retain all interest earned as compensation for administering the school fee col- lection process. It is my opinion that these recommendations treat the school fairly by offering the districts control of these revenues shortly after collection. These recommendations also reduce the administrative work required of the city staff by removing the requirement that the city constantly treat interest earned for each school district separately. It also places the burden of refund or correction of fees collected upon the school districts. It should be noted that school districts have accepted similar arrangements with three other North CounfeV cities. JAMES ELLIOTT Finance Director JErgb MEMORANDUM DATE: April 15, 1980 TO: City Manager FROM: City Attorney SUBJECT: SB-201 School Fees Before the fees may be released, the Code requires that the district first submit a schedule to the Council showing how they will be used. Assuming that requirement is satisfied, I have no concern about releasing the money if the district will agree to the attached statement. VFB/mla Attachment VINCENT F. BIONDO, JR. City Attorney The School District recognizes that there is ongoing litigation which could establish that the "SB-201" school fees are a special tax under Section XIIIA of the California Constitution (Prop. 13). If a court so rules, the District and the City could be subjected to claims for refund and litigation. City has been retaining all fees collected pending resolution of the litigation. The District also recognizes questions have been raised regarding the amount of the fee and that the City, in establishing the amount, has relied on the correctness of the fee schedule recommended by the District. The District has asked that the fees be released. The City is willing to release the fees if the District assumes responsibility. In any litigation concerning the fees, the District agrees to defend the legality of the fees and their collection by the City as the real party in interest and to be responsible for any refunds. Frank Manner -2- February 25, 1980 facilities will be made available. Thereafter, the school district must submit any changes to the Council with the reasons for such changes. The funds should not be released until the district has submitted their schedule and it has been approved by the Council. The letter from the Superintendent of the San Marcos District, dated February 11, 1980, citing an Attorney General's opinion, completely misses the point. The opinion addresses the question of whether or not a city can rely on a district's determination of overcrowding and that the amount of fees bears a reasonable relationship to meeting the need for interim facilities for schools caused by a development. There was some question as to whether or not the Council was required to make its own deter- mination. The City Council has already adopted the posture of taking their actions in reliance upon the recommendations of the district. Our hesitation to release the funds, based on the ongoing special tax litigation, has nothing whatsoever to do with the Attorney General's opinion cited in the Superintendent's letter. Please let me know if you need any further advice. VFB/mla VINCENT F. BIONDO, JR. City Attorney MEMORANDUM DATE: February 25, 1980 TO: Frank Mannen, Assistant to the City Manager FROM: City Attorney SUBJECT: RELEASE OF SB 201 SCHOOL FEES You have asked for our advice on the legal problems involved with your proposed release of SB 201 school fees to our school districts. As you know, our primary concern involves the pending litigation on the question of whether or not the fees are special taxes within the reach of Article XIII(A) of the Constitution (Prop 13). I have delayed responding to your request for advice so I could discuss the matter with the other city attorneys in the county at our spring seminar. As a result of that discussion, it appears the other agencies collecting the SB 201 fees are releasing them to their districts. In the event the fees are held to be special taxes, the city would become liable to make refunds. We, at that point, would ask the school districts to return the money. If there was any problem in that regard, we would be responsible. My advice that we hold the fees until the special tax question is resolved was an effort to avoid having the city caught in the middle. In dealing with a similar problem several years ago, the City Council, by resolution, made it clear that their willingness to provide fees to the district was conditioned upon the district's assurances that they would be responsible if any litigation ensued. Consistent with that action I suggest, in releasing the fees, the districts be asked to sign a receipt which includes a statement which recognizes the existence of a special tax question and agrees on behalf of the district to be responsible for defending any litigation which ensues and in making any refunds which might become necessary. That statement won't solve all of our problems, but it should help. Section 21.55.220 of the Code provides that the fees shall be paid to the school district from time to time as the City Council may determine. The Council has indicated, before releasing the funds, they wish to be informed as to how they will be used. Section 21.55.190 of the Code requires the district to furnish us with a schedule, including the sites to be used, the class- room facilities to be made available and the times when those -/ San Marcos Lnificd School District 270 San Marcos Boulevard San Marcos, California 92069 Phone: (714) 744-4776 June 10, 1980 x^"' The Honorable Ronald Packard, Mayor 1200 Elm Avenue Carlsbad, California 92008 Dear Mr. Packard: Enclosed is an agreement of purpose between the La Costa Land Company and the Board of Education of the San Marcos Unified School District. The agreement concerns the removal of the Alga-Melrose elementary school site from the General Plan of the city and the dedication with- out charge to our district, of the Fuerte Street elementary school site, (Case no. CT 79-25/PUD - 12) Your attention and assistance in expediting this matter would be of great benefit to our district. Acquisition of the Fuerte Street site is vital to our educational program in the La Costa area. Thank you for your consideration in this matter. Sincerely, David L. Larson Director of Business and Operations c . c . Jim Hageman Planning Department Paul Graham La Costa Land Company DLL:1 San Marcos U "lied School District 270 San Marcos Boulevard San Marcos, California 92069 Phone: (714) 744-4776 May 30, 1980 To: From: Subject: City Council City of Carlsbad 1200 Elm Street Carlsbad, CA 92008 Board of Education San Marcos Unified School District FUERTE STREET SCHOOL SITE 1. At the Monday, May 12, 1980 regular meeting, the San Marcos Unified School District Board-of Trustees accepted the offer of the La Costa Land Company to dedicate without charge the Fuerte Street Elementary School site contingent upon the removal of the Alga Road-Mel rose Avenue second elementary school site from the General Plan of the City. 2. The offer is completely satisfactory to the San Marcos Unified School District as the student generation factors projected to the year 2000 clearly indicate that a second elementary school site is not required for the La Costa area contained within the School District's boundaries. 3. The dedication of the subject site satisfies the conditions imposed by the Carlsbad City Council relating to schools for the Rancheros Subdivision. 4. At present, negotiations between the Carlsbad Unified School District and the San Marcos Unified School District are being conducted on proposed boundary changes. If those negotiations result in this District assuming responsibility for that portion of La Costa included in the Carlsbad May 30, 1980 To: City Council City of Carlsbad From: Board of Education -2- San Marcos Unified School District School District area, the Board of Trustees has requested La Costa Land Company to reserve one elementary school site within the aforementioned area—which they have agreed to. 5. It is therefore requested that the Carlsbad City .Council approve the arrangements made between the Board of Trustees and the La Costa Land Company and the resulting changes in the City General Plan to enable the San Marcos Unified School District to accept conveyance of the Fuerte Street School Site as quickly as possible. SANJflflSCOS UNIFIED SCHOOL DISTRICT Ralph ESKellogg Superintendent of Schools