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Jennifer Bestor is a Menlo Park resident who writes occasionally on school tax issues.
By Jennifer Bestor
What do all the arguments about Gov. Jerry Brown's plan to take funds from redevelopment agencies, including Las Pulgas in Menlo Park, have to do with us?
Quite a lot, as it turns out. In fact, over half of Menlo Park's redevelopment has been paid for by our schools. We never said, "Let's shortchange the schools to address urban blight!" But that's what we've done for 30 years.
Created in 1981, the Menlo Park-Las Pulgas Redevelopment Agency covers Menlo Park east of U.S. 101 plus a thin wedge up Willow Road from 101 to Middlefield Road.
Circumventing post-Proposition 13 apportionment of local revenue, RDAs were able to take any increase in property taxes in their coverage areas -- whether that appreciation was due to improvements, inflation, real-estate bubbles, or blight reduction. By declaring this area blighted, the Menlo Park-Las Pulgas RDA was able to commandeer all property tax appreciation (over 10 percent now of the city's total property tax base), negotiate minimal funding pass-backs to other affected local services, fund itself, and float $75 million of bonds to finance RDA activities.
You might wonder why local services were willing to take less than their allotted share. Two crucial facts were that education consumed around half of each property tax dollar and, at that time, the state was backfilling any loss of property tax for all school districts.
Loophole met moral hazard. School districts, thinking that they would be made whole, signed away almost all of their tax share, while outside agencies with some negotiating power (the county, the fire district) gave up 30 to 50 percent.
The city, meanwhile, nominally gave the RDA almost all its share, knowing that the City Council (sitting as the Redevelopment Commission) could return RDA funds to support city programs, police activities, public works, and other initiatives that either addressed blight or improved economic conditions in the area.
I had thought that the state was hitting up everyone to pay for education. Never before had I understood that the cities have been siphoning school funding to pay for blight reduction.
Here in Menlo Park, children in the elementary and high schools now directly bear the cost of over $1.5 million of our redevelopment activity. For the past decade, the Menlo Park City School District and Sequoia Union High School District have been funded by local property taxes, with no state backfill. The RDA takes $1.8 million ... and hands back a paltry $0.010 million to Menlo Park City School District ($10,000) and a mere $0.15 million to Sequoia Union High School District ($150,000).
Unmentioned in these numbers is the fact that the redevelopment area is not an industrial wasteland. Resident along Willow Road are 95 Menlo Park City School District students (on whom we spend $665,000 of our fixed district property tax pool) -- while over 340 Menlo-Atherton students live along Willow and in Belle Haven ($3.4 million of high school district's pool). They and their classmates have been shorted the quality education for which we taxpayers assumed we were paying.
The two other affected local school districts, Ravenswood and Redwood City, are technically backfilled by the state, whose largess has been invisibly funding another $2.8 million of our redevelopment activity. But, as we have seen with the endless cuts out of Sacramento, California's pockets have been picked dry. Thus, the end result of all these funding shifts is that both districts have watched their basic funding per child drop over recent years.
So parents vote with their feet. Not surprisingly, state-funded districts in San Mateo County have seen a 5 percent drop in enrollment over the past decade (Ravenswood is down 19 percent; Redwood City is down 3 percent), while locally funded districts have climbed 11 percent (the Menlo Park City School District is up 28 percent).
By the early 1990s the state inevitably noticed that its pockets were being picked and began to assess the cities, counties, and special districts for what was called "Educational Revenue Augmentation" (ERAF) to fund education, and two years ago to raid RDAs for "Supplemental ERAF." So the funds that had been wrested from our local school and service districts into the RDAs and cities, in turn are wrested from the RDAs and cities to fund the schools.
By the time you read this, Sacramento may have decided for us how to extract communities from this self-defeating cycle. Whatever it does, the Menlo Park-Las Pulgas RDA won't actually end before 2031, a period when half of the RDA area tax revenue ($94 million) will go to repay the $63 million of debt that the RDA is carrying, plus interest, and also possibly $11 million of additional indebtedness due to an ill-timed attempt to hedge the interest rate on that debt.
We need to ensure three things moving forward:
First, it is time that the unencumbered half of the RDA property tax revenue reverts to our established local services. Fifty cents on the dollar isn't that great, but the schools have been getting just 14.
Second, Sacramento cannot be allowed to say, "Locally funded districts like the Menlo Park City School District and the Sequoia Union High School District are rich enough, so we will just channel funds we take from RDAs to the poor revenue-limited districts." Locally funded districts experience disproportionate enrollment growth because they are California's best hope of remaining competitive with the world, not just with other states at the bottom of the national school funding scale.
Third, redevelopment works are worthy, sufficiently worthy to be funded explicitly by Menlo Park voters. The problem is the means, not the end. Menlo Park residents need to discuss what redevelopment activities we want and how to pay for them, and not let the city hit up the schools when no one notices.
Please let your City Council members, State Assemblyman Rich Gordon, and State Sen. Joe Simitian know your thoughts. This is a local issue. And let's continue this discussion in the Almanac's Town Square.