July 27, 2004

Public education funding and its effects on the Evergreen School District

By Brenda Franca-Serpa
Special to the Times

Editor’s Note: This article is the first in a series of five intended to raise awareness of the primary issues facing our local Evergreen School District and to suggest credible solutions for which the entire Evergreen community can take responsibility.

Many of you are aware, at least peripherally, of the budget issues confronting the Evergreen School District (ESD). The downturn in California’s economy led the California Legislature and the governor to institute major budget cuts throughout all programs, including education, to balance the state’s budget.

Other factors impacting the ESD, however, have exacerbated the budget shortfall, and the fiscal solvency of the ESD remains questionable in 2005-06.

Wants answers
As an Evergreen resident and parent of a child in the ESD, I wanted answers to the following questions: How are public schools financed and why is the current funding process so different than when I was a child in the ESD in the 1960s and 1970s? How does the current funding process impact our school district? What direct impact does this have on my child and other students in the public school system here in Evergreen?

In researching this topic, I discovered that public school funding is incredibly arcane. Information is not consolidated in a single document, and unless you can spend days and weeks deciphering the data, as I did, you may not realize how highly political and grossly unfair public school funding truly is. Unfortunately, public school funding affects almost every aspect of our children’s education.

To help unravel the mystery of public education funding, you need to understand basic funding legislation and terminology.

Who decides how much money goes to public education in California?
The California Legislature and the governor decide how much money will go to K-12 public education. They decide the division of the money between all of the school districts in the 58 counties in California.

California has a unique factor—the guarantee of a minimum allocation for education, which is tied to the state’s economy, for better and for worse.

What are the sources of public education funding in California?
The federal government contributes about 12 percent.

State-generated funds (business and personal income taxes, sales taxes, special taxes) contribute about 55 percent.
Local property taxes comprise about 25 percent, and the California Legislature and governor determine what portion of these funds goes to each school district.

The California Lottery contributes less than 2 percent of the total public education funding. Miscellaneous revenues (parcel taxes, foundation contributions, business and individual contributions, food service sales, percentage on investments) provide the rest.

How are the funds allocated to the school districts in California?
The combination of federal, state, and local revenues are different for each school district in California’s 58 counties. The variances stem from average daily attendance (ADA), revenue limits, categorical aid, low wealth designation and basic aid designation.

Revenue limits
A school district’s “revenue limit” is the amount of revenues it collects yearly for its general-purpose fund from local property taxes and state aid. Each school district in the state—nearly 1,000 of them—has its own specific revenue limit.

Senate Bill 90 set the base revenue limit for all of California’s school districts in 1972. SB90 was a legislative response to the first State Supreme Court Ruling in the Serrano vs. Priest case of 1971, which will be discussed in greater depth in the second article of this series.

The first base revenue limit amount was calculated by dividing the district’s 1972-73 state and local income by that year’s average daily attendance of students. This amount, set about 32 years ago, is adjusted for inflation each year.

School districts at that time varied greatly in terms of assessed property values as well as differences in property tax rates, so the initial base revenue limits per average daily attendance varied greatly.

The legislation of SB90 tried to equalize the disparity in base revenue limits from district to district by allowing low-revenue districts up to 15 percent cost-of-living adjustments.

In short, SB90 legislation tried to raise the revenue limit of poorer districts toward the statewide average.
High-revenue districts or high-wealth districts, usually called basic aid districts today, were given smaller cost-of-living adjustments in an attempt to bring their revenue limits closer to the statewide average revenue limit. Eventually, through a statutory provision, communities in the wealthier districts increased their revenue limit income through a voted override.

Each district’s revenue limit is based on whether it is an elementary district, a high school district or a unified district (K-12). The revenue limit is also based on the district’s size, its historical spending data and a myriad of other variables. All of these factors create a complex formula used to distribute funding for each district.

Low wealth districts
To better understand the concept of a low wealth district, imagine that each district in California has a different-sized shopping cart, representing its district’s total base revenue limit. Revenues raised through local property taxes are dropped into the district’s shopping cart, and if the shopping cart isn’t full, the state comes in and fills it with state tax revenues.

Districts that do not raise enough money from property taxes are considered low wealth districts. The Evergreen School District fits this analogy. ESD does not take in enough revenue from local property taxes, so the state fills up its “shopping cart” until it’s full.

78.7 percent of the ESD’s Unrestricted 2004/05 Budget—about $47.5 million—comes from property taxes. This is the general purpose fund that pays salaries, benefits, paper, chalk, school maintenance, etc.

21.3 percent of the ESD’s Unrestricted 2004/05 Budget—about $12.9 million—comes from state aid.

The ESD’s total base revenue limit for 2003-04 was $4,443 per student.

Basic aid districts
Another simple analogy can be used to describe a basic aid district. Imagine the same empty shopping cart, but this time, the property tax money collected from the community completely fills the shopping cart. The state has no need to “top off” the cart.

And, if the cart overflows with local property taxes, the school district gets to keep the overage and apply it to education. Of the nearly 1,000 school districts in California, about 100 extremely wealthy school districts spend from $9,500 to $13,000 per pupil including parcel taxes and foundation endowments. Most of these wealthy districts are concentrated in northern California, but a few are located in southern California.

Examples of basic aid districts are Saratoga Union Elementary, Palo Alto Unified, Los Altos Elementary, Los Gatos Union Elementary and Santa Clara Unified. School districts fall in and out of basic aid designation, depending upon the amount of property tax revenues collected.

These districts are considered basic aid districts because they have a revenue limit per average daily attendance that is greater that the state average for the same type of district (large or small elementary, large or small high school and large or small unified).

These districts are essentially islands rising high above sea level in terms of the complex formula used by the state to generate its revenue limit. In essence, the wealthy district’s total revenue limit per average daily attendance is in extreme excess of the statewide average of all elementary districts spending per pupil spending limit. For example, Saratoga Union Elementary had a total revenue limit per average daily attendance of $5,282 dollars and the statewide average was $4,636 in 2002-03.

On Feb. 26, 2003, it the San Jose Mercury News reported that Governor Davis planned to grab $126 million dollars in property tax money from some of the state’s wealthiest school districts. His plan never went far because his opposition mobilized and challenged him until he backed down. So, lucky for them, the state does not force them to return the excess, or at least has been unsuccessful in doing so in the past.

For ESD to be classified as a basic aid district, ESD would need about $60 million more in secured taxes. The majority of the total revenue limit comes from a tax term called the secured roll. It is that portion of the assessed value that is stationary, such as land and buildings. The secured roll averages about 90 percent of the taxable property in a district.

The unsecured roll (another tax term) is counted in the total revenue limit too. It’s the portion of assessed property that is movable, such as planes, boats, etc. ESD’s secured roll in 2002-03 was 43.9 percent of the total revenue limit, while Palo Alto Unified’s secured roll in 2003 was 82 percent of the total revenue limit.

Parcel taxes supplement budgets
Since California took over the funding of public education, many school districts have had to cut enrichment programs, such as music and art. It is our district’s local community support that will enable it to continue to run a high quality educational program, which will ultimately differentiate Evergreen Elementary from other districts.

Many districts have voted in a parcel tax to bolster the budgets of their school districts and to continue or reinstate enrichment programs. Palo Alto Unified’s parcel tax brought in an additional $5.5 million in 2002-03. Oak Grove Elementary School Districts’ parcel tax raised about $1.7 million in 2002-03. Los Gatos Union Elementary School District’s parcel tax raised almost $2.6 million in 2002-03.

The Evergreen School District is placing a parcel tax on the November 2004 ballot. Passage of this parcel tax will raise $1.9 million annually and keep the district from bankruptcy in the 2005-06 school year.

This parcel tax will enable the district to continue class size reduction, keep school libraries open with media clerks and credentialed librarians. It will enable the district to maintain its commitment to provide a textbook for every child and to maintain the commitment to support technology in every school. Please vote “YES” for this parcel tax.

The second article in this series will appear in the next edition of the Evergreen Times. It will explain how public education was historically funded and how one Supreme Court case changed the funding of California public schools forever. The article will then delve into the passage of Proposition 13 and its immediate detrimental impact on revenue limits. It will also illustrate how the ESD spends its budget.

Brenda Franca-Serpa is an involved member of the Evergreen community. One of her children is a student of Laurelwood Elementary School and her other child is attending Silver Creek High School. If you have specific questions about any of these articles, e-mail her at byfs@ix.netcom.com.