Mark McDermott

On the brink: How Manhattan Beach Unified became among the lowest funded school districts in the U.S. and what it could mean for the future of local education

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Manhattan Beach Unified School District Superintendent Mike Matthews flanked by Hilary Mahan, Manhattan Beach Education Foundation director of annual appeal, left, and MBEF executive director Farnaz Flechner. Photo by Brad Jacobson

by Mark McDermott

Early in the morning on February 1, a few dozen of the most active supporters of Manhattan Beach’s public schools gathered in a conference room at the Main Library on Highland Avenue. The Manhattan Beach Education Foundation hosted the meeting, which in its invitation was called, “Community Leaders Breakfast: Sustaining Our Schools.”

The speakers were Manhattan Beach Unified School District Superintendent Mike Matthews and Farnaz Flechner, the executive director of MBEF. The people in attendance, most who were from the local business community, had collectively raised and given millions of dollars in support of MBUSD schools.

Matthews, who led things off, joked that Flechner had referred to their speaking roles as “good cop, bad cop” but that he didn’t think that was necessarily accurate.

“We are all good cops here,” Matthews said.

What unfolded over the next two hours nevertheless had a good cop/bad cop dynamic. Matthews talked about the many great things happening in MBUSD schools; Flechner lowered the boom. But the animating factor for both speakers was a looming crisis within Manhattan Beach Unified, a unique and complex set of circumstances that has one of the highest achieving school districts in the nation on the brink of teacher layoffs and burgeoning class sizes.

Matthews addressed the overall state of education in Manhattan Beach, which aside from finances is an inherently sunny topic. Though he demurred from parading the district’s gaudiest numbers — MBUSD has been conferred the prestigious designation as a National Green Ribbon School District, its standardized test scores are in the top 1 percent nationally, and Mira Costa High School was ranked in the top 1 percent of American schools by both Newsweek and U.S. News and World Report —  Matthews highlighted an array of programs that have made the district a destination for families in search of excellent schools.

“People move here because of our schools,” Matthews said. “The weather is not bad, the beach isn’t bad, but the main reason people move here is because of our schools.”

Matthews noted that the school district, which has 6,700 students, has the unusual distinction of having had eight of its teachers in the last eight years named as LA County Teachers of the Year.

“We are a small place,” Matthews said. “To have county teachers of the year, year after year —  we are doing something right along the way.”

Matthews, who is originally from Arkansas and spent the first decades of his career as a teacher and administrator in much poorer areas, also emphasized the factors within the community that made its schools’ achievements possible.

“I used to work in Oakland and in Stockton,” he said. “Parents are trying very hard there, but they cannot support their children the way you support your children. And so we have the advantage of having amazing parents who support their kids and collaborate with us. It’s a powerful combination of having great schools, great parents behind them, and spectacular kids. When we watch our kids perform, it’s truly amazing.”

He was referring to parental involvement on many levels —  from the volunteers who help out at district schools the robust financial support received from the district’s booster clubs and especially its Education Foundation, which contributes more than $6 million a year to support classroom programs. One of those parents present at the meeting, for example, was Mike Duckworth, who has helped spearhead fundraising that will result in a $20 million dollar endowment by 2020 that will provide $1 million a year to MBUSD schools thereafter.

MBEF has, in fact, become a model for education foundations —  a success story that was instrumental in preventing teacher layoffs through the Great Recession and continues providing funding for dozens of programs that make the district itself a model for high-achieving school districts. The Education Foundation provides ten percent of the district’s overall budget.

But it’s not enough. Matthews ended his talk referring to the district’s most daunting challenge: MBUSD is one of the lowest funded school districts, on a per pupil basis, in California.

“We are the second lowest in the county, second lowest in the state —  in a state that is 44th lowest in the nation [in per pupil funding],” he said. “So that is our challenge.”

California’s spending on its public school students has among the nation’s lowest for decades. But several factors, rooted both in the history of property tax reform in the state and the rising costs of providing public education, have created a situation in which the district must consider drastic options. One is the implementation of a parcel tax. The other is laying off as many as one in six teachers within MBUSD. The school board in early February considered options to terminate between 35 and 60 of its 369 teachers in the next three years.

As Flechner’s presentation would illustrate, no amount of private fundraising will stave off what amounts to a potential disaster for education in Manhattan Beach.

“Why are we at the bottom?” Flechner asked, referring to MBUSD’s per pupil funding. “There is this myth out there that’s true in some states —  which is probably why some people believe it —  that our property taxes go to education. And that’s just not true anymore.”

The presentation

Flechner took the helm of MBEF four years ago. Her career in education up to that point had focused largely on socioeconomically challenged schools, beginning as a teacher at LA Unified’s Ulysses M. Grant High School. She later obtained her master’s in public policy at Harvard University’s Kennedy School of Government.

She inherited an Ed Foundation that was already among the strongest in the state and helped make it stronger, increasing parental involvement and helping expand MBEF’s range of classroom programs. But even as MBEF continued to set annual records for fundraising, she began to recognize it wasn’t a sustainable solution to the darkening clouds on the district’s financial horizon. She also realized that most people didn’t really understand what a unique bind the district found itself in, financially.

“I really wanted to help people understand deeply how school funding works,” she said. “I thought if they truly understood how school funding works, they would understand the Educati0n Foundation.”

So Flechner put together a PowerPoint presentation and in December 2016 began delivering it wherever and whenever anybody in the community would have her. She presented it at homes, school board meetings, PTA meetings, at the library, the Rotary Club, and to various other community groups. By the time she spoke at Feb. 1 breakfast, she had given the presentation an estimated 58 times. The response she received was almost startling.

“There has definitely been a lot of shock,” she said. “People have come up to me and said, ‘I’ve lived in this community 30 years and never understood until now…’ There’s been that lightbulb moment for a lot of the community.”

Flechner identified four main factors that impact state education funding, particularly in Manhattan Beach. The first is that schools in California simply are not adequately funded. As she noted at the library, the state’s ranking as the 44th lowest in per pupil funding shows states such as Arkansas, Indiana, and Kentucky below California. But in real dollars, arguably no state has less funding.

“The cost of living in California is so much higher than it is there,” Flechner said. “So what being 44th in per pupil funding means is that we are 50th in student to teacher ratios and 50th in student to counselor ratios. What you can buy being 45th in Indiana does not buy you [the same thing] in California. And out of the school districts in the state of California –there’s 1,200, I believe — we are at the very bottom of the state.”

Courtesy MBEF

The second factor concerns the passage of Proposition 13 in 1978 and it’s specific implications for MBUSD. School districts, up to that point, derived their funding from local property taxes. Prop. 13 gave the state control of property tax revenue, and in so doing took away most local control for funding schools. MBUSD, like most school districts, was classified as a “Revenue Limit” district at that time and had its percentage of property tax revenue frozen.

“When Prop. 13 was implemented in 1978, it not only limited your property taxes to 1 percent of the assessed cost of your home, but it also says what percent of your property taxes are now being allocated to education,” Flechner said. “So in 1978, we were a K-8 district. Our high school wasn’t absorbed into our district until 1992. And having a K-8 district is a lot less expensive. So about 20 percent of our property taxes went to education. And with Prop. 13 and Assembly Bill 8 that went with it, it fixed it at that 20 percent level. So no matter how much higher our property taxes go and how much more revenue we have, 20 percent goes to our school system.”

About 200 districts in the state were grandfathered in as “Basic Aid” districts. They included many of the most affluent districts, such as Beverly Hills, Palo Alto, and Laguna Beach. Those districts were able to retain 80 percent of their property taxes for education.

“We don’t get to do that,” Flechner said.

The third factor is a more recent reorganization of state educational funding implemented by Governor Jerry Brown, known as Local Control Formula Funding.

“It’s based on the concept that it takes a lot more funding to educate kids in low income communities that don’t have all the resources and support that we do. This is our Governor’s very significant change to education,which started in 2013, and the idea is that if you have 20 percent or more of the student body that qualifies for free and reduced lunch or English language learners, then you get an additional $1,700 in per pupil funding. And if you have 50 percent of your student population in those programs, then you get up to $4,200 more per pupil.”

MBUSD has the lowest number of students in the state qualifying for such funding, meaning LCFF will provide some revenue but only enough to bring the district back to pre-recession 2008 levels. The implementation LCFF also means that the governor and most legislators in California believe they’ve already addressed educational funding problems in California, so chances of further legislative reform that would address MBUSD’s unique situation are very slim.

The fourth factor, one very specific to MBUSD, is that most similar districts have turned to other tax measures; a parcel tax was on the ballot in Manhattan Beach in 2003 but was not approved by voters.

Flechner showed a slide in her presentation that showed how these other districts are funded. Palo Alto, for example, is already better off because it is a Basic Aid district, but it also has a strong education foundation, as well as a parcel tax —  resulting in funding almost twice as much as MBUSD’s $9,603 per pupil ($10,900 with the addition of MBEF funds). Piedmont, a Revenue Limit district who implemented a parcel tax, is at $14,561, with 25 percent of its funding coming from a parcel tax.

“So…when you compare us to a lot of the other districts that are most like us, [ in terms of] the demographics of our community, these are the districts that have similar outcomes, similar student populations, and want more from their schools,” Flechner said. “All of them have a parcel tax, and some of them also have a sales tax. We don’t have either.”

Meanwhile, in states as varied as New York, Alaska, Washington D.C., and New Jersey, per pupil funding is over $20,000.

Flechner said a common theme in the feedback she gets after her presentation is that MBEF is successful enough to bridge the gap.

“The reality is the cost of education is going up significantly, especially in the next couple years, and we are flattening out —  MBEF is not going to raise  significantly more money over the next few years… So what that means is our district is already projecting terminations,” Flechner said. “What that also means is our already large class sizes are going to continue to grow. We already have classes now with 37 to 40 students.”

Educators believe the ideal class size is no more than 17 students per teachers; the national average is 14.8. At MBUSD, the average class size K-3 is 24 and 31 for grades 4 through 12.

Flechner said there are few realistic political options. The most obvious would be Prop. 13 reform. It’s something many academics, such as state historian Kevin Starr, have called for, but remains a politically untouchable topic.

“Prop. 13 reform is a taboo subject, because Prop. 13 has really made it possible for a lot of our seniors to stay in their homes by fixing property tax levels,” Flechner said.

Sacramento Bee journalist Peter Schrag wrote a book called “Paradise Lost: California’s Experience, America’s Future,” in which he showed how dramatically Prop. 13 impacted education. Prior to 1978, California had the highest per pupil funding in the country and was regarded as the best public education system on the planet. Nobody argues that is the case today.

“Proposition 13 set up an unfair and dysfunctional two-tiered system of property taxes,” said Starr, who was also the state’s Librarian Emeritus prior to his death last year. “It choked off a source of revenue, and the lack of that revenue has brought California to the edge.”

Flechner said there is a solution but it has little political traction —  leaving Prop. 13 intact as regards residential property tax, but reforming it to exempt commercial properties from its restrictions. It’s a concept called a split roll.

“What it means is businesses shouldn’t benefit from Prop. 13 in the same way that homeowners do,” she said. “Why should Disneyland pay 50 cents per square foot on property taxes while you are paying $7 per square foot? Why should country clubs pay $1.50 per square foot while we are paying $7 and $8? There’s no reason that the Wells Fargo that is right next door to an H&M should pay a fraction just because they have been there for 100 years. Shouldn’t new businesses get incentives to come in? Those are the questions ‘split roll’ asks, and a lot of times when that comes up in conversation people freak out. ‘Don’t touch Prop. 13!’ But in reality that would be a huge source of income that our state needs.”

During the course of her many presentations, a question kept emerging from audiences when they saw other districts’ funding sources: why doesn’t Manhattan Beach have a parcel tax?  

By the time of the Feb. 1 presentation, this was no longer an idle question.

The parcel tax

On Feb. 7, the MBUSD Board of Education received two presentations. The first was a budget workshop led by Dawnalyn Murakawa-Leopard, the deputy superintendent in charge of business services. The second was the results of a survey conducted by consultants regarding the feasibility of a parcel tax.

Murakawa-Leopard’s PowerPoint in many ways mirrored Flechner’s, except it drilled down more on the specifics of MBUSD’s budget. It wasn’t a pretty picture.

On the cost side of the equation, everything is going up. She showed a slide illustrating how the district’s cost of special education has increased from $8.5 million a year in 2006 to $13.1 million last year. The federal and state governments technically are required to pay those costs, but their contribution has not changed significantly in a decade —  federal funding has gone from $1.08 million a decade ago to $1.2 million, while state funding has gone from $3.3 million to $3.8 million. The district’s share of the cost has doubled, from about $4 million in 2006 to $8.1 million last year —  and those costs are projected to increase at an even steeper rate going forward. Overall, each student requires $17,900 in funding, nowhere near what the district receives.

A potentially bigger jump could occur in employee benefit costs. Both CalPERS and CalSTRS —  the latter is the certified employees’ (which includes teachers)  retirement system, the former the classified employees’ —  have underperformed and thus will require a doubling of both employees’ and the district’s contribution to the fund. What that exact number will be is not yet projected, but like special ed, it’s a financial responsibility in the millions that will shift from other funding sources —  the state retirement system, in this case —   to MBUSD.

Budget projections show the district with $73 million in revenue this year and a four year projection with virtually no increase; meanwhile, costs will increase to $81 million. Without layoffs, that would require the district to burn through all its reserves and still end up with a $10 million deficit in 2021.

“So you can see, every year the new costs we know about outpace the new money we’ll be getting from the state,” Murakawa-Leopard said. “…This is just those things that are predictable and quantifiable at this point. This is the dilemma we find ourselves in. This will hit us earlier, but it will hit almost every district in the state.”

Murakawa-Leopard’s most harrowing slide showed how many teachers would need to be layed off to balance the budget —  35, if the positions were eliminated by next year, or 60, if the district spread layoffs out over three years.

“These are terrible options,” Matthews said. “I am not recommending it, and I don’t think you would, either.”

Another slide the deputy superintendent presented amplified a point Flechner has been making. It showed the 15 lowest per pupil funded districts in the state. Many were elementary districts; all but three had either a parcel tax and/or was a Basic Aid district, meaning they had funding sources beyond the state levels.

“Only three have neither of those,”  she said. “One is us, another is Hermosa Beach. They are only an elementary school district… but are very much in the same boat as us. The third is Canyon Elementary, which —  they have this very cute website which says, ‘10,000 redwood trees, 70 students, five teachers, and one school. So it’s a very different district from us.”

The presentation that followed was from Charles Heath of TBWB Strategies, a polling company that in December completed a survey of Manhattan Beach residents regarding support for a parcel tax. He began by showing a slide of comparable school districts, all of whom had parcel taxes —  Palos Verdes at $446 per year, South Pasadena at $376, and Santa Monica at $346. All, he noted, had started smaller, and polling numbers indicated MBUSD would need to do likewise —  only at about $200 per parcel per year did support levels locally reach 65 percent, one percent shy of the two-thirds required to pass the tax.

“We are within striking distance,” he said. “….[But] this is no slam dunk.”

The board was scheduled to continue the discussion at its Feb. 28 meeting, one at which a new recommendation —  paring layoffs back to 9 to 12 teachers —  was to be presented as well as a recommendation for the final approval of placing a parcel tax on the June ballot.  Anything more than those layoffs, Matthews said in an interview earlier this week, would impact schools too drastically to be contemplated.

“I won’t call it a disaster yet,” he said. “Let’s look at this option. But we do plan three years out, and if it’s 12 this year, and 50 overall —  that’s a disaster. We have to take any means necessary to avoid that.”

The answer, said MBUSD board President Karen Komatinsky, is the parcel tax. She stressed that such a tax would include an exemption for senior citizen voters, who make up a disproportionate percentage of voter turnout.

“What this does, it’s not just a tax issue —  it really is putting us in the driver’s seat in having some say over how we are funding our schools,” Komatinsky said. “Because that’s the issue: we have very little control, very little say, over how we fund our schools. Certain things we can’t change the course of. In this instance, a parcel tax would be a direct source of funds, where we wouldn’t need to make these terminations and we could keep any cuts as far away from the classroom as possible….This is really about local control.”

One parent spoke up after the budget presentation who was a living illustration of the point Matthews had made at the breakfast a week earlier. She and her family, which included a kindergarten student, came to Manhattan Beach for the schools.

“We are getting a little nervous, because we are thinking…we made a big mistake,” she said.

Komatinsky reassured her. The district would find a way to keep its schools intact, she promised.

“You didn’t make a mistake,” she said. “You made absolutely the right choice. This situation is our reality. This is California’s reality.”


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