Council pushes back on proposal to add staff next fiscal year | June 12, 2019 | Almanac | Almanac Online |

Almanac

News - June 12, 2019

Council pushes back on proposal to add staff next fiscal year

by Kate Bradshaw

The Menlo Park City Council cast doubt on proposals in the city budget to add new staff members and use non-guaranteed money to pay for pension liabilities during a June 4 public hearing.

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2 people like this
Posted by Jennifer Bestor
a resident of Menlo Park: Allied Arts/Stanford Park
on Jun 11, 2019 at 8:53 pm

Bravo to our City Council for not rushing to pre-commit their *excess* ERAF windfall to ongoing spending. Not only am I trying desperately to get some of that money into our flailing districts -- esp. Ravenswood and Redwood City -- but the Governor will be dedicating ever larger chunks of it to his Early Childhood Education initiative.

The only way to get ERAF into schools is via the Legislature. Kevin Mullin's office has shown the mildest of interest, Jerry Hill's none ... And, tragically, both Kevin Mullin and Jerry Hill are in the vanguard of support for SB 5, which funds affordable housing OUT OF the school property tax of the county's poorest schools. Yes, Ravenswood and Redwood City. With the promise that the State will pay them back. Ha ha ha. Half their funding arrived late in 2012 (after the schools had closed for the summer!) and they only got it for sure when voters passed Prop 30.

Please, Almanac writers -- and City Council, if you care about Ravenswood -- you need a review course on ERAF. Because you are spreading misunderstanding that will BITE the poorest children in this county.

ERAF is a pool of countywide property tax allocated to education. It was created in 1992-1993 when the Legislature *reclaimed* the 30% share of SCHOOL property tax that it had *handed off* to cities, special districts (like Menlo Fire), and counties a year *after* Prop 13. So, although cities and counties love to talk about how it was taken from them, it was taken from schools first.

Unlike direct property tax allocations to school districts, ERAF is only used to fund the poorer districts in a county -- in inverse proportion to the property tax they receive directly. AND (and this is IMPORTANT) it can only be used up to the State's target spending level for that district. Once every district in a county has been brought up to the State target, the remainder is handed off, again, to cities, special districts and the county.

Since our school funding program uses exactly the same formula for every school in the state -- with no allowance for high regional costs (or property tax receipts) in areas like San Mateo County -- the ERAF pool easily covers all our property-tax poor school districts ... and $200M-and-climbing-fast gets handed off to the county government, cities and special districts each year.

Basic aid districts are not magic pumpkins. They are simply districts whose direct allocation of property tax exceeds the (flat, one-size-fits-all) school funding formula. A good rule-of-thumb for that formula is $8000 a child, plus a $1600 supplement if s/he is an English Learner or meets the Federal guidelines for free/reduced-price lunch. In districts where more than 55% of the students meet this guideline, an additional $4800 is allocated for every kid over the 55% (the concentration grant).

So, Menlo Park City Elementary gets about 20% of the 1% levy on all property within the district. That's brings in about $30M. 3000 kids attend the district, 10% of whom qualify for the supplement. So, 3000x8000 + 300x1600 = $24.5M. MP Elementary is therefore a "basic aid district" and gets to keep the extra $5.5M. But it only gets $200 per student in "basic aid" from the state. And, thanks to the generosity of the community, also raises parcel taxes, gets donations, etc.

Ravenswood actually has a higher allocation, about 30% of the 1% levy on its property, but lower property values, for a total of $12M. However, it is also caught up in buckets of redevelopment and, although it got about $8M back last year, that funding drain will take decades to unwind. The district also has (about) 3000 children (including its charters, which it has to fund). However, 95% of those children qualify for the supplement. So it is entitled to 3000x8000 + 2850x1600 + 1200x4800 = $38.3M. This is much more than MP Elementary -- until you realize the scale of the challenge. 22% of the children are homeless, for a start.

Anyhow, the difference between the $20M Ravenswood has in property tax and the $38.3M state target spending level comes from ... ERAF. If the state target spending level accounted for local costs, there would be less "excess" ERAF, but more in Ravenswood (and Redwood City Elementary, which is closing a quarter of its schools this week, and Daly City, and Cabrillo ...). (There would still be $70M+ of excess ERAF to redistribute, however.)

So what happened in Santa Monica-Malibu and why won't that happen here? Well, when their property tax rolls grew, the school district (and county office of education) didn't pay attention. So they didn't realize that their share was now greater than their state funding target (their share is a measly 14.4% for a UNIFIED district, by the way -- when you add Sequoia Union HSD to MP, it's a total of about 35% ... and 38-40% total when combined with Ravenswood). So, they reported too-low property tax receipts to the state, which told the county countroller to give them $8.7M of ERAF. NOTE, however, that their property receipts would have HAD to be at least $8.7M MORE than they expected. So this is a case of eating your cake and your brothers and finding yourself short one piece of cake when he comes home. Uncool.

But they're not alone. The San Francisco County Controller realized that $415 million of "excess" ERAF had accidentally been given to San Francisco Unified. In this case, SFUSD is NOT a basic aid, so the State had to pony up the money instead. But I digress. As usual.


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