Mayor Michael Sweeney presented a sobering state of the city address Saturday morning, highlighting ongoing issues with the state’s shifting of funds from local government agencies, and the poor performance of Hayward schools, calling their performance “unacceptable.”

The Hayward Unified School District is dead last in performance out of all districts in the county of a comparable size, the county’s Academic Performance Index report for the year 2011-12 shows.

The API score is an aggregate of the school’s performance on the STAR Program and the California High School Exit Examination and compiles it into one score, the California Department of Education reports.

Sweeney stated that he wants Hayward schools to perform at least on the level of schools in Castro Valley. The Castro Valley Unified School District ranks fifth out of the 21 districts in the county, and performs on a level closer to schools in Fremont and Dublin.

“I don’t think it’s fair to Hayward kids that they are put in a position where it’s going to be harder for them to compete, and I think we ought to all expect more from the school district,” Sweeney said.

An increase in performance on Hayward schools would inflate property values for homeowners, leading to an increase in property tax revenue for the city and would provide an incentive for businesses to start up in Hayward.

Sweeney also lamented the city’s continuing troubles over its loss of state funding, most recently the dissolution of redevelopment funding from the state in 2012, and the effect it has had on the city.

In 1993, the state implemented the Educational Revenue Augmentation Fund, which diverted property tax away from the city to the state. Sweeney stated the tax shift gave $4 million to schools a year from the state’s general fund, and took $4 million from local governments to cover the state’s losses.

Sweeney said through the tax shift the state “basically laundered money through the schools,” and has cost Hayward $5 to $6 million dollars every year since 1993.  Since its implementation the city has sustained a total loss of $110 million in revenue to the city.

Sweeney stated the lost revenue would have fixed the city’s ongoing structural deficit, which has forced the city to bargain lesser benefit and salary packages with its labor groups to cover an increase in the cost of benefits. Sweeney says the city has been entangled in this problem since 2008.

“With the work that we’ve been able to do with our bargaining unit, primarily we’ve been able to do a lot of work to narrow that gap,” said Sweeney.

Longer lifespans and employees entering retirement at an earlier age are the driving force around the city’s deficit in benefits funding, Sweeney said.

Tax revenue to the city has been rebounding after it hit a low in the past couple years, Sweeney said, highlighting some of the city’s successes.  However the city’s property transfer tax is not estimated to recover to pre-recession levels, Sweeney said. The housing market crash led to a decrease in revenue to the city by $5 million from the property transfer tax, from a height of $10 million in 2006.

The city saw a big win in its attempts to curb illegal dumping throughout the city. Cleaning up the effects of illegal dumping has cost the city half a million a year, Sweeney said. In 2012, dumping doubled throughout the city. After city council passed an illegal dumping ordinance earlier this year, the city saw a decrease in illegal dumping by 60 percent.

Another win for the city was the passage of Measure A in 2009, which implemented a 5.5 percent Utility Users Tax on gas, telecommunications and electricity services and will last for 10 years.  Sweeney applauded the audience for their part in passing the tax.

“That’s about 15 million dollars a year; without Measure A we would be in a world of hurt, so thank you, thank you,” said Sweeney.

Longer lifespans and employees entering retirement at an earlier age are the driving force around the city’s deficit in benefits funding, Sweeney said.