Lawmakers seeking long-term funding solution for San Mateo County

But because the setup of San Mateo County’s existing educational revenue structures doesn’t qualify the county for the full in-lieu VLF amount, representatives are left to haggle for the funding each year. In previous years, legislators have been able to secure the full amount — but this year, facing a looming budget deficit, only two-thirds of funding, roughly $76.5 million, was secured. 

The county is arguing in a lawsuit filed against the state this week that the county and its respective cities are owed the remaining $38 million, which is typically used to fund basic local services.

State Sen. Scott Wiener, D-San Francisco, chairs the Budget Committee and has been able to help prioritize San Mateo County’s VLF reimbursement in past years. But with no assurance that the budget chair will be a Bay Area representative in future sessions, now is the time for the state and the county to find a long-term solution, he said. 

“Every year when the government budget proposal comes out, the proposal never includes this money for San Mateo County. Every year, I work closely with Sen. Becker, Assemblymembers Papan, Berman and [Stephani] …we work together to advocate for restoration,” he said. “I will not be budget chair forever. I think it’s really important just to resolve this, so it doesn’t depend on who happens to be in what role.” 

The county’s legal argument — that it’s unfairly burdened by the VLF funding distribution mechanism and is owed $38 million from the past year — is strong, Wiener said, and he’s hopeful that either the lawsuit or an out-of-court conversation between state and county will create greater assurances. 

“In an ideal world, we just achieve an agreement with the Department of Finance that this amount will go into the baseline, this amount will be included every year,” he said. “Really putting an end to the year-after-year, chaotic fight for this money. We can either do that or it can be litigated.” 

The lawsuit technically only pertains to the $38 million that wasn’t included in this year’s budget cycle, Interim Strategic Communications Director Effie Milionis Verducci said. However, it’s possible that if the county wins this legal battle, a positive precedent could be set for future VLF fights. 

“If the state can shortchange cities and counties in one year, it can do the same in the future as well. That’s why we decided to go ahead and sue for the whole amount,” she said. “It could set a positive precedent for future years’ challenges to underpayment or nonpayment of VLF funds.” 

As one fight plays out in the courts, lawmakers are continuing to push for a long-term legislative solution, Assemblymember Diane Papan, D-San Mateo, said. 

“I see their legal action and my legislative work as two different paths aimed at the same goal,” she said. “The lawsuit will play out in the courts, and I’ll continue my focus on the budget process and legislative advocacy.” 

As conversations heat up at the federal level around California’s position as a “donor state” — giving up more money to the federal government than it receives, state Sen. Josh Becker, D-Palo Alto, drew a similar comparison to San Mateo County’s status as a donor county. 

San Mateo County alone contributes roughly 15% of the state’s entire income tax, Becker said. In addition, a majority of public school districts in the county are funded via county property taxes, meaning the county takes much less in state education funding than a majority of other counties. 

Aside from the fact that the county is owed the money, it’s unfair for it not to be receiving funding for basic services when it is helping to fund those services in other areas of the state, Becker said.  

“We contribute much more than other counties to the state, and we actually receive much less from the state,” he said. “Not only are we owed this money, number one, number two, not only does it go for critical services for our public health system and for people who need assistance throughout the county … [this] hurts our ability to do any of that.”