Mark McDermott

Manhattan Beach school board forms parcel tax subcommittee

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by Mark McDermott

The Manhattan Beach Unified School District Board of Education last week formed a subcommittee to explore the possibility of putting a parcel tax on the ballot in either June or November of next year.

Under state filing deadlines for elections, the district has until January to decide on a June ballot measure. At its Oct. 4 meeting, the school board indicated that the community’s receptiveness to the idea, as determined by polling over the next few months, will be the biggest determinant.

“Because we did just put out two bonds,” said Karen Komatinsky, school board vice president, referring to Measures C and EE, which were approved by voters last November to meet the district’s facilities needs. “And if there’s not sufficient [support]…the polling will tell us that.”

Board member Bill Fournell stressed the urgency.

“The bigger issue is we passed a budget that has cuts the next two years out,” Fournell said.

In an interview this week, Superintendent Mike Matthews said the parcel tax discussion is still preliminary.

“Nothing has been decided,” Matthews said.

But the superintendent also said that MBUSD, already the fourth lowest funded district in the state, is facing increased costs across the board —  including skyrocketing employee pension and health insurance costs and regularly scheduled “step-in-column” employee salary increases. Meanwhile, the state has indicated that no new education funding is on the horizon.

“The state has basically told us, ‘Don’t wait.’ They are not coming to our rescue in the near future,” Matthews said. “So school districts are left to themselves, and communities are left to themselves, as to how they are going to fund schools.”

The district was forced to dip into its reserves —  taking nearly $3 million from its uncertainties fund —  to balance its $70 million budget last June. That same budget will impose 40 employee layoffs next year and nine more the following year in order to avoid a gaping deficit.

“If left unattended, next year and the year after our projections are an over a $5 million deficit,” Matthews said. “Hence the urgency. If you look at our current projections to deal with that, we have way too many layoffs built into our budget —  as many as 50 over the next two years, kicking in the next fiscal year. We are really looking to see how we can avoid some of that, but that is what the board adopted back in June.”

Manhattan Beach Education Foundation executive director Farnaz Flechner has outlined the district’s unique funding challenge in a presentation she has been giving to groups throughout the community. Prop. 13, the property tax reform enacted almost 40 years ago, froze the percentage of property tax generated locally that stays with schools at 20 percent, and likewise left the district in the state’s “Revenue Limit” funding model in which MBUSD is funded as if it did not include a high school (Mira Costa High was part of the South Bay High School District, not the Manhattan district, at the time of Prop. 13’s passage). By contrast, a “Basic Aid” district such as Laguna Beach retains 80 percent of local property tax revenue.

MBEF has managed to bridge the gap for several years now, with support from  MBX (which focuses on fundraising for athletics) and a strong PTA organization. But the array of increasing costs —  as well as $24 million in deferred maintenance needs identified by a district facilities assessment —  is outstripping the abilities of yearly fundraising drives.

Pension cost increases alone would require significant budget cuts. Both state retirement systems MBUSD, CalPERS, and CalSTRS, have underperformed and are thus requiring a higher percentage of district contributions. Those contribution rates will both double over the course of a decade. The district’s contribution of 11.7 percent toward CALPERS funding in 2014-15 will increase to 21.6 percent by 2020 and over 27 percent by 2025.

“The challenge is the rate at which pensions are increasing, and the cost of living is increasing,” Flechner said in an interview earlier this year. “The revenue is not growing at the rate the expenses are.”

MBUSD’s pension contributions have already risen from under $4 million in 2014-15 to approximately $6.5 million this year; if the district maintained current staffing, those costs would reach $11 million annually by 2025.

The City of Manhattan Beach has also seen its CalPERS contribution rates increase and has begun budgeting $750,000 annually to meet those costs. Even so, that funding will likely not be enough, and the City Council has likewise formed a subcommittee to examine a parcel tax or a sales tax increase.

The community rejected a parcel tax put forward by the school district in 2003. But much has changed since then —  both in the drastic nature of MBUSD’s current financial challenges and in the outreach to the community regarding the district’s plight.

“The more people learn about how we are funded by the state, the more eyes are opened to why we have some budget challenges over the next few years,” said Matthews, who credited MBEF for educating the community regarding the district’s finances. “I think they are the best in the nation.”

The newly appointed parcel tax subcommittee is comprised of board members Christine Cronin-Hurst and Ellen Rosenberg. They will focus on the next step in the process, which is finding a polling firm experienced in parcel tax balloting.

“We just want to make sure we have the right people working for us,” said Cronin-Hurst.

Cronin-Hurst said that a few factors make an earlier ballot more appealing, including lessening parent volunteer involvement after school is out for the summer and June’s gubernatorial primary.

“We lose [parent volunteers] June through August…so it may be easier for us to look at June,” she said. “Also, we’d get the revenue sooner. So we’ll see what the polls say, what the community says, but we are open to June or November. June is also a big primary —  since Jerry Brown can’t run again, the governor’s race will attract a lot of interest, and most people will be voting.”

Rosenberg was involved in the parcel tax effort in 2003.

“That was a hastily put together but earnest effort when the district was truly in a financial crisis,” Rosenberg said. “So I understand why that didn’t pass at the time, though we were all disappointed.”

Part of MBEF’s presentation shows how most “revenue limit” school districts and those of a similar socioeconomic profile rely on other funding sources, including parcel taxes, at a time when state revenue isn’t adequate. Rosenberg said the overwhelming community support for last fall’s bond measures also shows how truly invested the community has become in its schools.

“People definitely understand,” she said. “We’ve spent years communicating a coherent message about the need. I think it shows people are listening and understanding. And there has a been a lot of turnover in houses over the last 10 years —  a significant number of people really have moved here for the schools. Some people hear that and say, ‘Yes, that’s a theory.’ But it’s more than a theory; it’s the practice and reality here, and with that comes the level of support we have seen for our schools.”

“It’s unfortunate the state of education is what it is and that this is how it has to be done,” Rosenberg said.  “But we are doing something about it. We are trying to help ourselves, and I think that’s admirable.”

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