It is open to question whether Stanford's contribution of an "endowment" to the Menlo Elementary School District will offset the costs of educating children who may come to reside in the soon-to-be-opened 215-unit Middle Plaza housing project on El Camino Camino. If not, district taxpayers will wind up subsidizing one of the nation's wealthiest universities.

Stanford's contribution is $1.5 million. When coupled with the city of Menlo Park's contribution of an additional $1 million, prudent investment of the total $2.5 million endowment can reasonably be expected to yield 5-6%, or from $125,000 to $150,000 per year.

If Stanford's practice with respect to its own endowment is followed, something like two-thirds of the annual earnings would be available for current use and the remainder would be added to the endowment to maintain its effective size after compensating for inflation. Thus, maybe as much as $100,000 a year may be available from the endowment to pay for educating students.

If we assume a per student cost of $20,000 a year, which is in the middle between the statewide average and the actual Menlo Park Elementary numbers, the endowment will cover five students.

The Almanac news story about the endowment did not state how many elementary school students Stanford projects to be living in the Middle Plaza complex. If it is more than five, the endowment will not cover the cost. In the absence of property tax revenue, taxpayers will be subsidizing Stanford.

Whether the development generates property tax revenue will depend on how it is managed. If Stanford manages the property directly, it will remain tax exempt. On the other hand, if, as has been the case with the Stanford's shopping center and other property, Stanford enters into a long-term lease arrangement with a for-profit property management enterprise, the resulting leasehold interest may be subject to property taxes.

What the tax revenue may be will depend on the assessed valuation of the leasehold interest. Whether any tax revenue will be sufficient, when added to the endowment to compensate the Elementary District for the students residing in the Middle Plaza complex, will depend on how many students come to be involved.

Thus, whether district taxpayers should be appreciative of the Stanford endowment or will be subsidizing Stanford will depend on future developments.

James Madison

Holly Avenue, Menlo Park