Severing School District Would Cut Budget Shortfall

Based on initial estimates, Santa Monica would see its deficit slashed by a half of a million dollars, but a proposed Malibu Unified would face a $2.35 million budget gap.

Santa Monica would save more than $500,000 if Santa Monica-Malibu Unified , according to estimates released Thursday at a school district Board of Education meeting.

If separated from the current district, the projected deficit for the Santa Monica Unified School District would be about $4.1 million. The school district currently has a $4.6 million deficit, according to Chief Financial Officer Jan Maez.

She gave a detailed 90-minute presentation at the meeting at Malibu City Hall that was attended by more than 100 people, nearly all in support of unification, the term used by education officials for the process to separate school districts.

The $4.1 million projection is based on current staffing levels, Maez said, adding that the estimate could go up or down depending on a number of factors. She noted a number of times that the analysis was preliminary, and more study is needed.

The analysis presented by Maez did not include revenue from a variety of sources, and was only preliminary.

On its own, the proposed Malibu Unified School District would have to shoulder a $2.35 million budget shortfall. That number does not include potential revenue from an existing parcel tax. With the parcel tax, that deficit could go down significantly, according to Maez.

Moving forward, the current school district will have a variety of options, including preparing a feasibility study on state "unification" criteria, at a cost between $30,000 to $40,000, she said. Maez also recommended that the district explore legislation and poll voter opinion on such issues as determining who would be responsible for paying down outstanding bond debt, at a cost of up to $25,000 per study.

“The new district either through legislation or voter approval could agree to continue paying existing debt,” Maez said.

A group comprised of representatives from the cities of Malibu and Santa Monica, the school district, the unions, parent groups and Los Angeles county will meet soon to decide which option to move forward with first.

During a discussion, board member Ralph Mechur said a more detailed, independent analysis of the finances is needed. 

“I think that we have to move forward on these evaluations,” Mechur said.

said he was encouraged by the meeting and also wants to move forward.

“I think this meeting today is demonstrative of the fact the board and the district heard the concerns and studied the issues carefully… We are now in a place as a board to be much more thoughtful of the process,” Allen said.

He added that the feasibility study should be done by a finance officer with experience working at a school district.

“The last thing we want to do is enter into an agreement on premises that end up being false … That would be a disaster for the community here,” Allen said.

Board member Nimish Patel said he is also in favor of moving forward.

“I want this to happen. I want us to look at it,” Patel said, adding that he has changed his initial opinion that the costs wouldn’t work out.

“We’re going to hit some roadblocks and we’re going to have to just deal with it. It’s counterintuitive, that breaking something apart, it can be better. But sometimes it works,” Patel said, adding that he first wants to make sure special education and other programs won’t suffer.

Several Malibu residents spoke out during a public hearing, some expressing frustration that Malibu’s needs have not been heard by the district.

Mayor Laura Zahn Rosenthal noted that the city council to sit down with the district, the unions and the city of Santa Monica to talk about separation.

“We are not listened to both on a city level and as a resident … for the last 16 years. I can’t implore you enough to listen to that, whether you agree with it or not. Listen to it. It is real and it is there. Please sit down with us. We are ready to sit down with you right now,” Rosenthal said, adding that the community is willing to shoulder the cost of the studies.

Craig Foster, a Malibu parent, said he was encouraged by the numbers in the presentation.

“We really want to work with you moving forward and I think these numbers show there is something for all of us moving forward,” Foster said, adding that the groups Malibu Schools United and Advocates for Malibu Public Schools are also willing to fund the studies.

Mayor Pro Tem Lou La Monte said Malibu will do what is necessary to move forward with unification, even if that means going to court.

“What we’d rather do is work with you… We’re not going away this time. We want to work with you. We think we can do this together. We’re willing to even pay for it. I’m hoping that you do that tonight,” La Monte said.

Only one parent expressed doubts about separation, because of his child’s special needs.

“This stuff is expensive. I have to suspect that it would be proportionally more expensive in a smaller district than a larger. Malibu would have to committed to shoulder these costs,” said Craig Strachan, who lives near Topanga Canyon.

Skylar Peak May 04, 2012 at 01:42 PM
This is a step in the right direction for the current SMMUSD. Thank you to the School Board for working with us on this. Kids in Santa Monica and Malibu are greatly going to benefit if this works out financially. Thank you Craig and the rest of the parents, teachers, School Board Members and Council Members for working so hard to make this happen.
Ralph Mechur May 04, 2012 at 04:21 PM
The CFO's presentation was a broad outline of a financial future if there were to be two districts. The statement that the structural deficit reduction of $500,000 means that a Santa Monica district would be better off is jumping to a conclusion not necessarily merited. If one allocates the deficit by the number of students it actually is an increase of $35 per student; an increase from $416 per student in the current combined district to $451 per student in a SM district. A Malibu district, under the scenario outlined, would have its own structural deficit of $1,243 per student. This is one of a series of issues that need detailed analysis in reviewing how becoming two unified school districts may impact the education of our children.
Karen Farrer May 04, 2012 at 04:31 PM
Yes, we have finally been heard by the board of education. Thank you to everyone who attended the meeting last night. Thank you Jessica, for this extremely well-written article. Please keep in mind, however, that SMMUSD CFO Jan Maez's numbers did not include several critical sources of income, and, as she said several times, many of her figures were projections and/or estimates. Our offer to fund an independent, third-party study has (finally) been accepted by the school board. Advocates for Malibu Public Schools (AMPS) is now ready to accept contributions toward this first, necessary step. Anyone reading this is welcome to contact me or any other AMPS executive board member to do so. A community-wide meeting of AMPS will be scheduled for the near future, details to be announced soon. Thank you all in advance for your continued interest and participation!
Malibu Girl May 04, 2012 at 05:17 PM
Thank you, Karen. Thanks also to the school board for their unexpectedly reasonable stance and willingness to consider the issue and move forward. It is extremely complicated and ay takes years to resolve, but it is a step in the right direction and something we have been asking for for a very long time. Many thanks to our city council for their unanimous support and to the AMPS volunteers for pushing hard to make this happen. AMPS is going to begin fundraising and will need support from the Malibu community to make this a reality. Please get involved and contribute to the AMPS cause, It takes a village, but with a co-operative school board and an enthusiastic community, we can finally begin to establish local control over our Malibu schools.
Terry May 04, 2012 at 05:23 PM
fabulous job to laura and karen. a malibu school district moves forward. we should be raising the money for the study and for the road that lies ahead. the lights and higher electrical costs that go with them and potiential parcel tax increases should be put on the back burner as we sort this out and move forward. the task ahead will require a committment and financial backing.
Craig H. Foster May 04, 2012 at 05:26 PM
For those of you who find this confused, Jessica's story missed several key threads of last night's narrative. Jessica said: "On its own, the proposed Malibu Unified School District would have to shoulder a $2.35 million budget shortfall. That number does not include potential revenue from an existing parcel tax. With the parcel tax, that cost could go down, according to Maez." This would have more accurately reflected the meeting’s conclusions: On its own and without the potential revenue from the currently existing parcel tax, the proposed Malibu Unified School District would have to shoulder a $2.35 million budget shortfall. Maez also stated that options exist to keep Malibu's existing parcel tax in place. In that scenario, her numbers for an independent Malibu district would swing to a $600,000 budget surplus. <more follows>
Craig H. Foster May 04, 2012 at 05:26 PM
<continued> Likewise, Jessica didn't mentioned that Jan's number reflecting an approximately $600,000 gain for an independent Santa Monica district did not include any cuts to current staffing levels even though Santa Monica would lose 17% of its students. To the extent that Santa Monica reduced its central administration and related expenses, further reductions in Santa Monica’s structural deficit could be realized. Certainly, Santa Monica stands to gain from retaining all of the approximately $2mm of joint-use funds paid by Santa Monica to SMMUSD and shared pro rata throughout the district. It was based on these nuances that the board agreed unanimously to precede with further investigation. Without understanding those facts, the board's decision to investigate further makes little sense.
Steve Scheinkman May 05, 2012 at 06:02 PM
I applaud and support the efforts being made by those trying to create a separate Malibu school district. Having dealt with SMMUSD before, I offer caution when reviewing numbers that they supply as they will be in a manner that best serves the SM administration. A lot of questions need to be asked and answered. For example in the calculation of the budget for the new Malibu district, how was debt service on the Measure BB bonds calculated. Was it calculated at the combined real estate tax rolls which results in Malibu residents paying close to 30% to 35% of the bill or based on how much money was spent on Malibu schools from the bond proceeds which is 12% to 15%. A big difference in who pays for a $300 million bond indebtedness.
Hans Laetz May 05, 2012 at 06:11 PM
Rest assured, we can afford both. The higher electric costs -- perhaps a hundred dollars or two -- are the last thing we have to worry about. But nice try!
Craig Strachan May 05, 2012 at 07:15 PM
One aspect of the figures as presented particularly struck me - the respective contributions to the schools budget by the Cities of Santa Monica and Malibu. Santa Monica gives $13.5 million. Malibu gives $0.1m. Members of the Malibu Council have been vocal on schools issues lately. But money talks too.
R Y A N May 05, 2012 at 09:56 PM
Craig, your comparison of illegal "contribution" is ridiculous. The joint-use agreements are quite different. There are many fewer users (in Malibu) using SMMUSD facilities, and THE LAW requires a nexus to the agreement. There CANNOT BE A GIFT OF PUBLIC FUNDS from either City to SMMUSD. That said, the City of Malibu's $20-something million annual budget, and payments to joint-use payments to SMMUSD, are proportional to scale. Please don't try to distort the joint-use agreement amounts again; they are public record and passed at public meetings.
Craig Strachan May 05, 2012 at 10:14 PM
Ryan, Funny, I thought I heard Mayor Pro Tem La Monte say at the board meeting, in reaponse to a question from Ben Allen, that the City of Malibu would be looking at increasing its financial support of a Malibu district. Your comments seem to suggest that will be problematic. Clarification of what the City of Malibu can and cannot do is probably required, especially with City Council members giving such vocal support to moves towards unification.
Ralph Mechur May 05, 2012 at 10:27 PM
Steve, BB debt service is not part of the district's budget. Debt service is an obligation of property owners. legal opinion is that the SM district would bear the full burden of paying for all outstanding debt at the time of a unification.
Steve Scheinkman May 05, 2012 at 10:36 PM
RAlph- please clarify. Would the amount Malibubresidents pay for BB debt service change if the Districts are separate?
Ralph Mechur May 05, 2012 at 10:37 PM
Craig, You know it is not a $600,000 gain. It is a reduction in the structural deficit of a SM-only district if it were created today with a larger per-student deficit than today. Yes, it is without making cuts at the central office, which is not an easy thing to do since it is already is paper-thin due to all the cuts the last years. A Malibu district created today would have a $2.5 million structural deficit without a parcel tax. Also, Jan included the SM City funds in the budget calcs already. To try and paint this as financially simple is misleading. We can work together to establish the parameters going forward but we all need to be fair and open because it is about all our children.
Steve Scheinkman May 05, 2012 at 10:59 PM
Craig- the disproptionate amounts Malibu residents pay in parcel and bond taxes makes up the difference between how much is paid by the two city governments.
Craig Strachan May 05, 2012 at 11:16 PM
Steve, Yes, I get that. But only one of the city goverments is effectively cheerleading for a break up of the district, and it appears to be the one with the least skin in the game, in $$ terms.
Hans Laetz May 06, 2012 at 03:44 AM
"There are many fewer users (in Malibu) using SMMUSD facilities..." Not true, my childless friend. You seem to be unaware that hundreds of Malibu taxpayers (parents) have members of their families partaking of services at the schools -- services on school property that are hardly reimbursed by the city. These are social services that in most cities are provided by a combination of state, school and CITY funds. You must be blissfully unaware, for example, that the school district has district-subsidized before-school and after-school academic programs, and that hundreds of Malibu parents rely on these programs to help them raise their children and put bread on the table. We all benefit but there is no cost to the city. Malibu has no afterschool parks programs for its kids. Dumping little kids at the beach is not an option. This is not 1966. Hundreds of nonschool people enjoy the pool, the fields, the open space. The city pays a pittance for these programs. By supporting a first class arts program, the school district is meeting demand from Malibu parents for such efforts. Other cities support youth arts -- Mlaibu should also. Most importantly to childless people like you, R Y A N, is the fact that the Malibu school system is nationally-ranked, and that means extra property values for all. I know certain Ayn Rand acolytes may disagree with a strong local school. Malibu has five city council members who support local schools. Thank goodness!
R Y A N May 06, 2012 at 04:53 AM
Argumentative, Hans. As an attorney -- no, I'll rephrase that -- as a man schooled about law -- you should know that the PROHIBITION AGAINST GIFT OF PUBLIC FUNDS applies statewide. You seem very eager to loot the City's treasury for the schools, which is illegal. The restrooms were constructed with City funds, and remodeled with City funds, and the City pays $12,000 a month for whay many school districts allow for free: after-hours and non-conflict use of the facilities already constructed with our tax money. They don't try to rent them back to those that paid for them. Hans, you should watch the meeting (did you leave early again?) where City Attorney Christi Hogin unequivocably stated that THE CITY OF MALIBU CANNOT GIVE MONEY TO THE SCHOOL DISTRICT. That is a fact, and you should respect the laws of the State of California, without purpose of evasion . . .
Hans Laetz May 06, 2012 at 03:54 PM
No one I know -- particularly at AMPS -- is advocating a city gift to schools. I certainly am not. Your point -- that Malibu taxpayers do not use the school facilities to the same degree as Santa Monica taxpayers use theirs -- is just plain wrong. Look at those fields any day after school,and you will see hundreds of Malibu taxpayers on them. You seem to think that Malibu children are somehow not worthy of city services. Santa Monica residents passed a half cent sales tax -- proposed and supported by the city council -- that goes directly through the city and then out to the schools. NO ONE IN MALIBU IS PROPOSING THAT. But such funding arrangements are perfectly legal, That is a fact, and even though you are unschooled -- and apparently quite ignorant -- about the law, you should respect the laws of the State of California. R Y A N, you make a very good case for Malibu's city government to support an independent school district. More local control will mean more accountability for the city parks funds that pay for all of Malibu to use schools as parks. I agree -- the city is paying SMMUSD for services we are not getting. And finally, I note that when you make a point, it is correcting the record, but when others speak, it is "argumentative."
Craig Strachan May 06, 2012 at 04:31 PM
Hans: "Santa Monica residents passed a half cent sales tax -- proposed and supported by the city council -- that goes directly through the city and out to the schools. NOBODY IN MALIBU IS PROPOSING THAT" Why not?
Hans Laetz May 06, 2012 at 08:32 PM
Fair question. I think the answer is that it would be counterproductive. I do not speak for AMPS. But I support them. Thus, I can offer these reasons why a half cent sales tax in Malibu would be a bad idea. First, it would not raise very much money. Malibu generates very little sales tax revenue, compared to SM and other cities. I think the city told me it collects $1.5 million per year in one percent sales taxes -- a .5 percent tax would generate $750,000 or so. And that scant figure probably would not be necessary. As Craig Foster (who is way more familiar with this than me) has explained, state tax money already collected from Malibu would be returned back to a Malibu district in an amount greater than what SMMUSD currently collects. There a a billion questions about this and the new study will quantify those figures. A half cent sales tax -- or an increased bond tax or parcel tax -- would make some segments of Malibu residents freak out. And many think it is very important that Malibu gain its own voice without a tax increase, and without a service decrease. Seems right.
Craig Strachan May 06, 2012 at 09:18 PM
Hans, Thanks for the considered response. I'm not sure the $750,000 is so insignificant. It would cover about a third of the deficit for a Malibu district projected in the presentation the other night, and would be around 5% of the total budget of such a district, (again as projected by Ms Maez.). I'm sure it would be very useful. And if some segment of Malibu residents would freak out over such a modest measure, what about when the new district wants to do a round of bond financing of its own? To pay for district offices, say, or some other big ticket item that would inevitably come up? And how big is this segment of residents anyways? A half? A third? You see where I'm going with this, I'm sure.
Ralph Mechur May 07, 2012 at 04:44 AM
Per current legal understanding, the entire BB debt service would go to the existing district, meaning Malibu would not pay at all. AMPS is reviewing how a fair share would continue to be paid by Malibu property owners.
Steve Scheinkman May 07, 2012 at 01:15 PM
Ralph- thanks for your reply. It seems like resolving the disposition of BB debt service is an obstacle that needs to overcome in a fair and equitable manner to both communities.
Terry May 12, 2012 at 10:11 PM
sorry to ask a question but does the mayor or for that fact any person on the city counsel need to recuse themselves on city/school decisions if they have children in the school system????
Hans Laetz May 12, 2012 at 10:16 PM
No. That is not a conflict of interest, according to the city counsel. Christi addressed such issues several weeks ago, and made it clear that the only conflicts that require abstentions are issues where the elected official has a direct financial conflict. Mayor LZR was told she does not have a conflict on the Busch Drive pedestrian trail, even though she lives right off Busch.


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