Sweet home Alameda

The Merry‑Go‑Round always has been unabashedly – and unashamedly – Alameda‑centric.

Whenever we read a story comparing California cities by various metrics, our first instinct is to see whether the City of Alameda is mentioned.  And if it isn’t, we wonder where our hometown would fit in.

Having encountered more than a few such articles recently, we decided to investigate further.  So today’s column will look at two recent reports, one involving municipal fiscal health, the other school test scores.

In each case, there is both good news and bad news for Alameda.

Municipal fiscal health

Every year, the California state auditor collects and analyzes financial data from more than 470 cities for purposes of determining whether a city is at “high, “moderate” or “low” risk of “fiscal distress.”  The results are available on an online dashboard.

According to the auditor’s website, the analysis is based on ten financial “indicators” that bear upon a city’s ability to pay its bills in both the short and the long term, each of which is assigned a specific weight depending on its relative importance.  Each city then is ranked and categorized on each indicator as well as overall.

The story that caught our eye was an October 23 piece in the East Bay Times reporting on the auditors’ release of its rankings for fiscal year 2021.  Naturally, the article emphasized the “bad news” – i.e., which Bay Area cities were “facing the greatest financial risk.”

Fortunately, Alameda was not one of them.

Indeed, the dashboard revealed that the City fell squarely into the middle of the pack in terms of overall fiscal health:  it ranked 198th out of 430 cities with 74.92 out of 100 possible points, which put it in the “low risk” category.  This is an improvement over the last four fiscal years, in each of which the City’s overall fiscal risk was characterized as “moderate.”

The dashboard enabled us to drill down a little further and compare Alameda’s overall fiscal health with that of other cities in Alameda County.  Again the City came in the middle of the pack, albeit closer to the top than to the bottom.  Here’s a chart:

But the news for Alameda wasn’t unequivocally positive.  Of the ten indicators, the City was categorized as “low risk” in four (General Fund reserves, debt burden, liquidity, and OPEB obligations), and “moderate risk” in another three (revenue trends, pension funding, and pension costs).  But for pension obligations, future pension costs, and OPEB funding, the level of risk was characterized as “high.”  Indeed, as to pension obligations and future pension costs, Alameda was among the 100 worst cities in the state.

The state auditor’s report does not discuss how Alameda came to be classified as “high risk” for these three indicators, and it is beyond the scope of today’s column to comment on the causes of the City’s ratings.  Suffice it to say that, whenever City Council boosts staffing and/or salaries for one employee group – oh, say, firefighters, for example – it not only increases current General Fund expenditures but it also saddles Alameda taxpayers with bigger bills to pay for retiree benefits in the future.  (By far the largest slice of the benefit pie will be consumed by public safety retirees.)

When we contacted then-Interim City Manager Nancy Bronstein (who retired at the end of October) for comment, she appeared to be well aware of the risk ratings the City had received from the state auditor.  The four “low risk” rankings, she said, were “very good news.”  The three “moderate risk” rankings reflected the auditor being “more cautious.”  And the three “high risk” areas?

This is a concern that the City Council and city staff take very seriously [Ms. Bronstein said].  In 2017, the City adopted a Pension Rate Stabilization Program and Other Post-Employment Benefits (OPEB) Funding Policy.  Since this policy was adopted, the City has elected to put an additional $27.5 million towards the CalPERS net pension liability (in addition to the City’s required contributions) as well as $16+ million in additional payments towards Public Agency Retirement Services (PARS) trust funds to pay future pension and OPEB obligations.  Additionally, the City elects to pay the required CalPERS contributions at the beginning of each fiscal year instead of monthly payments to take advantage of a 3.5% discount.

We hesitate to quibble with Mr. Bronstein, for whom we have high regard.  But . . .

As her comment points out, the City adopted the pension/OPEB policy in 2017.  Since then, it has paid $27.6 million above and beyond the required amounts to CalPERS, and contributed $11.5 million and $4.5 million, respectively, to a pension and an OPEB trust.  (The figures come from a staff memo submitted with the November 2 staff report.)  Presumably, the state auditor was aware of these amelioratory actions when it analyzed Alameda’s level of risk related to retiree benefits.  But it still put the City in the “high risk” category for pension obligations, future pension costs, and OPEB funding anyway.

We don’t think the state auditor ignored the payments made under the pension/OPEB policy.  Rather, the “high risk” designations for pensions indicate the auditor’s determination, based on the financial data it reviewed, that the City of Alameda was not generating sufficient revenue either to fund its net pension liability or to make its future required annual contributions without “straining” its financial resources.  Likewise, the “high risk” designation for OPEB reflects the auditor’s conclusion that the City had not set aside sufficient assets to pay its OPEB obligations.

Unfortunately, we doubt that many of our politicians will care about, or even understand, the issues these “high risk” ratings raise.

At last Tuesday’s Council meeting, staff presented a revision to the pension/OPEB policy that it described as a “clarification” of the existing program (and, indeed, the staff memo showed that, had the revised policy been in effect from 2017 to date, the total payments would have been virtually the same as those calculated using the existing policy).  The Council discussion revealed that, to put it most politely, there are no financial analysts among our current elected officials.  (Councilman John Knox White, for example, declared, with his usual certitude but without any evidentiary support, that “most of” the City’s unfunded pension liability resulted from “contracts signed in the beginning aughts.”  That’s nonsense.)

Even though Mr. Knox White is leaving Council, the body’s perspicacity is not likely to improve significantly after his departure.  None of the candidates running for office this year has spent much, if any, time on pension or OPEB issues, and, indeed, only Paul Beusterien even mentions the topic on his campaign website.  But his prescription is noticeably vague:  “Verify that there is a sustainable plan to deal with Alameda’s large unfunded pension liabilities.”  From a political standpoint, this is understandable:  these are not the kind of issues that excite voters.  From a public policy standpoint, however, ignorance is not bliss.

School test scores

On October 24, the State Department of Education released the results of the so-called “Smarter Balanced” test, which was given during the 2021‑22 school year to all students in the state in grades 3 through 8 and grade 11 to measure their proficiency in English language/arts (“ELA”) and mathematics.  Each school district got a report for its own students, and the data is available online.

This year’s report was eagerly awaited because it was expected to show the effect of the pandemic (and the accompanying transition to remote learning) on student performance.  (Testing was cancelled in 2019‑20, and a shortened version of the test was prepared for use in 2020-21.)  Most commentators were predicting a negative impact – and they got what they were looking for.

The story that drew our attention was a piece in the October 25 East Bay Times reporting that California students had “performed dramatically worse this year on the state’s standardized test.”  Statewide, the percentage of students who met or exceeded the applicable standard declined by 4 percent for ELA and 6.5 percent for math compared to 2018‑19, the last school year in which the full test was administered.  (Student performance is measured against the Common Core State Standards, which have been adopted by California and more than 40 other states.)  Moreover, less than half of the students in the state (47.06 percent) met or exceeded the standard for ELA for their grade level, and only about a third (33.38 percent) did the same for math.

For the Alameda Unified School District, the good news was that, even though the percentage of AUSD students who met or exceeded the applicable standards fell between 2018-19 and 2021-22, the declines (2 percent for ELA and 3.1 percent for math) were lower than the overall statewide decreases.  Moreover, higher percentages of AUSD students met or exceeded both the standard for ELA (68 percent) and for math (57 percent) than all students statewide did.

We also used the interactive feature on the website to compare AUSD to two other Alameda County school districts.  (Comparisons of three districts at a time are allowed.)  The overall scores for AUSD students were worse than those in one district (Berkeley Unified) and better than those in the other (San Leandro Unified).  Here are charts for the ELA and math test results:

The bad news appeared when one dug deeper.

The data was broken down by grade level and by “group” (including ethnic groups).  For AUSD, it showed that, for the 2021‑22 school year:

• Only 34 percent of Black/African-American students met or exceeded the ELA standard.  (This represented a one percent improvement from 2018‑19.)

• Barely half of Hispanic students (55 percent) met or exceeded the ELA standard.  (This represented a one percent decrease from 2018‑19.)

• Only 15.7 percent of Black/African-American students met or exceeded the math standard.  (This represented a decline of 5.6 percentage points from 2018‑19.  And it was even lower than the overall statewide number – 15.93 percent – for Black/African-American students.)

• Only 38.7 percent of Hispanic students met or exceeded the math standard.  (This represented a decline of three percentage points from 2018‑19.)

(The numbers were also low for special education students and students whose native language is not English.)

This data, especially the statistics about Black/African-American students, tempered the satisfaction that AUSD board members and staffers might otherwise have taken in beating the statewide numbers.

When the test results were presented to the Board at its October 25 meeting, all three members who spoke lamented the low scores for Black/African-American students.  Board member Megan Sweet, for example, commented that the results for that group on the ELA tests were nothing “we should feel proud of or hopeful about at all,” and those for math were “even more troubling.”  (Nor was she pleased with the downward trend in the scores for Hispanic students.)

AUSD spokesperson Susan Davis sounded a similar theme in response to our request for comment:

While we are pleased that our scores, viewed from the very highest level, stayed relatively stable, we are deeply concerned at the persistent opportunity gaps we are seeing and especially concerned about the low percentage of Black and African-American students meeting or exceeding math standards. This is a pattern long seen across the state and country, but as our Senior Director of Equity, Shamar Edwards says, “it may be a trend across the state, but this is our district and we need to do something about it.”

The key issue then became, to quote Board president Jennifer Williams, “What are we going to do?  What are we going to do?  We need to do something.”

The staff presentation contained a slide listing specific actions the District was taking to “address trends.”  More generally, Ms. Davis told us that

AUSD is currently fine-tuning and preparing to implement a Strategic Plan that in large part focuses on our students who need extra support to meet state grade‑level standards. This most recent news is compelling us to sharpen that focus even more. We will have more details after our staff digest and collaborate on the next best steps to see what we honestly believe is a crisis.

The specific actions identified in the presentation were “definitely a start,” Ms. Williams said at the October 25 Board meeting.  But she urged her colleagues and staff to treat the budgetary process as an “opportunity” to “make funding decisions that support these groups of kids.”  She continued:

[T]here are a lot of groups of kids in our district that need extra help. But we’ve got to get to the bottom of the academic lags that we see with our African-American children. And that’s a priority of mine and I know it’s a priority of this district and this board.

Sources:

Pension/OPEB: 2022-11-01 staff report re revised surplus policy; 2022-11-01 – Supplemental Memo

Test scores: SBAC Presentation 10.25.22 – SBAC_Presentation_10.25.22_Final_Revised