High School District at Budget Crossroads

San Mateo Union High School District trustees discussed two distinct 2011-2012 budgets on Jan. 20, a best-case “status quo” budget and a second plan to anticipate a possible $2 billion state-wide cut to education.

includes $12.5 billion in spending cuts, but spares K-12 education funding. However, budgeting depends on a continuation of current temporary sales tax rates and the current vehicle license fees for at least five years. A special election in June 2011, requiring two-thirds of votes, will determine the outcome.

“I’m old enough to remember the movie Groundhog Day and that’s what I think it’s going to be like again,” said Superintendent Scott Laurence. “We’re planning for one number, but it won’t be until June, July or August when we find out what the real number we’re going to be dealing with is.”

In the event that the proposed budget passes, which will require the support of at least two Republicans in each house, and assuming that the budget is passed by March and that the sales taxes and vehicle license fees are approved for another five years, then the district will be looking at a “status quo” budget option.

But, if voters don’t extend the sales taxes and vehicle license fees, then the state will be forced to cut nearly $10 billion more in spending, which is expected to mean about $2 billion in cuts for K-12 education, or about a $350 per student.

“He’s pretty much protecting us, presuming that the taxes are extended,” said Deputy Superintendent Elizabeth McManus.

Brown’s budget also included proposals for phasing out local redevelopment agencies. 

“This being a basic aid district, this could be beneficial for us,” said McManus.

Redevelopment agencies are created, by means of provisions of state law, in order to fight local blight. In order for RDAs to fund the redevelopment projects, they borrow money which they repay by drawing on tax increment funding. 

Essentially, once an RDA is formed to redevelop an area, future increases in property taxes are turned over to the RDA to pay back the debts. In most cases RDAs will agree to repay some of the property tax dollars to the affected school districts, though the details can vary from case to case.

A portion of property tax dollars are diverted to an Education Revenue Augmentation Fund, used to pay for some of the per-pupil funding in schools and free the state of a portion of that funding responsibility, said Kamchan Charan, deputy controller of the San Mateo County Controller Office.

In most counties, with less property tax dollars being diverted to RDAs, more will go into these ERAFs, which will then save the state money.

But, in San Mateo County, ERAF already covers the school funding gaps, said Charan, so left over money will go back to the “taxing entity.”

The San Mateo County Controller's Office figures for 2010-2011 assessed property values show $5.2 billion in total property values captured by RDAs in Foster City, Millbrae, San Mateo and San Bruno, which amounts to about $52 million in property taxes.

Assessed property values increase an average of about six percent a year, according to McManus. And about 42 percent of property tax dollars go to schools.

“We have agreements where, in the blighted areas, in the RDA areas, we receive 2 percent of the increase, if that’s what it goes up,” said McManus of the district’s agreements with local RDAs. “If it goes up by 6 or 7 percent then they capture anything over that to pay their debt service.”

As to what all these numbers really mean if RDAs are phased out— “I don’t know what that will look like,” said McManus, who referred back to all those debts owed by the RDAs for the projects undertaken, which still need to be paid back.