Changes sought for school funding formula in San Mateo County

At the core of the inequity is the difference in ways school districts are funded, as prosperous communities generally generate sufficient property tax revenue to fund schools and others must rely on state allocations and supplemental income.

The county’s basic aid systems, or those supported by community taxes, include Brisbane, Hillsborough City, Las Lomitas, Menlo Park City, Portola Valley, San Bruno Park, San Mateo-Foster City and Woodside elementary districts, as well as La Honda-Pescadero and South San Francisco unified districts and San Mateo, Sequoia and Jefferson union high school districts.

Meanwhile, Belmont-Redwood Shores, Burlingame, Millbrae, Pacifica, Ravenswood, Redwood City and San Carlos elementary school districts, along with Cabrillo Unified, are those reliant primarily on state allocations to fund their schools. Such districts, which receive state funding based on average daily attendance, were formerly known as revenue limit. They are currently recognized as Local Control Funding Formula, or LCFF, which aligns with the funding mechanism’s title.

Experts said when insufficient property tax revenue is generated in an affluent community to accommodate a larger student body, the local school district will likely be LCFF. Alternatively, less wealthy cities can have basic aid school systems if average daily attendance is relatively low.

While exceptions exist, it is more common for LCFF districts to experience financial difficulties, as shown in Redwood City where officials recently approved closing schools and San Carlos where $2 million was cut to balance the budget.

Basic aid districts also often score higher on standardized tests, offer better teacher salaries and enjoy more educational amenities than their counterparts — showcasing the foundation of the prevailing achievement gap.

In recognition of those districts which need more assistance to fill their budgets, state Sen. Jerry Hill, D-San Mateo, intervened with Assemblymen Kevin Mullin, D-South San Francisco and Marc Berman, D-Palo Alto. The three Peninsula lawmakers recently proposed a bill seeking to lower the supermajority voter support requirement to pass school parcel taxes down to 55 percent, easing the path for educators to generate more local income.

But during a time when property values are among the nation’s highest and local businesses help drive the state’s flourishing economy, some question how it is possible for schools in San Mateo County to struggle financially?

Enhanced equity

Rather than potentially raise taxes, some suggested tweaking the mechanism by which schools are funded to make financing more equitable across a region largely flush with resources.

School funding advocate Jennifer Bestor said a financing system considering the local cost of living would help build the basis for school self-sufficiency in the Bay Area.

“In leaving regional costs out, they have inflicted lasting pain in areas with high costs of living,” said Bestor, referring to lawmakers who crafted the state funding formula.

Bestor suggested folding property tax money diverted to the excess Educational Revenue Augmentation Fund, or ERAF, into the school funding model could provide the additional financing needed to smooth the prevailing inequity. Excess ERAF is revenue split between the county, cities and special tax districts once the funding minimum is met for local school districts.

Furthermore, Bestor said sharing the millions of tax dollars already collected would limit the need for the local legislators’ proposal, which, if successful, will likely lead to more frequent school financing ballot measures.

“You can’t ask for more if you won’t even spend what you’ve already got,” said Bestor.

Moving targets

Beyond Bestor’s concerns associated with tax revenue sharing, she noted the challenges presented by the funding system to districts which change from basic aid to LCFF on an annual basis.

The basic aid threshold is regulated by whether sufficient property taxes are collected by the district to exceed its funding target. A formula built around average daily attendance, base funding and government allocations according to students with specialized needs shapes the different funding goals for each district.

As the target moves according to shifts in a district’s demographics, some systems will switch funding sources as they flip between basic aid and LCFF, which can present budget planning issues for school officials.

“The tighter you are to that line, the harder it is to know which way you are going to go,” said Denise Porterfield, deputy superintendent of business services for the county Office of Education.

Typically, a shift in funding formula would be driven by a seismic change in a district’s enrollment or property tax revenue. For example, when many students are pushed away from a community by the local affordability crisis, the district’s funding mechanism could change.

In seeking simple solutions which could stabilize the budgeting process for districts, Porterfield stopped short of offering recommendations, noting the complex nature of school financing.

“Educational funding is extremely complicated and teasing out one aspect of it is challenging,” she said.

She also doubted an overhaul to the school financing system is on the horizon, noting Gov. Gavin Newsom has indicated the funding formula will remain. Hill shared a similar perspective recently too, in building a case for the tax threshold bill.

Regional solutions

Marc Friedman, a member of the San Mateo Union High School District Board of Trustees, said he felt the tax proposal could help close the equity gap plaguing districts across the county.

“It moves us in the right direction, but it’s not a solution,” said Friedman, who has long been a critic of the school funding formula.

But with no illusions about the limited potential for changing the state financing mechanism, Friedman suggested a regional consolidation of districts could also aid some of the less affluent school systems.

“By having different districts, all you are doing is segregating the poorer areas and the richer areas,” he said.

Pointing to the southern end of the county, Friedman said he believed merging the districts serving Woodside, Portola Valley, Menlo Park and East Palo Alto could be an example of ways to close the wide funding gap between the neighboring cities.

He noted though such a proposal is also unlikely, as the politics around school funding and local tax revenue favor Balkanization, with powerful factions seeking to preserve the status quo.

Bestor, meanwhile, was more optimistic and hopeful lawmakers can build momentum toward substantive change which she believes would offer local students equal chances for success.

“It’s obvious there is very real pain and a very real threat. So hopefully, between those things, logic will prevail,” she said.

austin@smdailyjournal.com

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