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Wednesday, May 09, 2012

School District Numbers Only Tell Part of the Unification Finances Story

• Groups Supporting Separation of Malibu from Santa Monica See Stronger Overall Numbers


Last Thursday, Malibu residents packed City Hall to hear SMMUSD Chief Financial Officer Jan Maez disclose her report regarding the financial feasibility of a separate Malibu School District. Last month, the school board authorized the report to explore whether the two districts were independently viable.  
Emotions ran high for many locals in anticipation of the report, many of whom expected the worst because preliminary information had been leaked that suggested that the Santa Monica CFO’s numbers would not be an objective representation of the forecast that Malibu analysts had developed when researching the viability of separate districts.
Many attendees expressed pleasant surprise however, and public–comment speakers, including Mayor Laura Rosenthal and representatives from Advocates for Malibu Public Schools (AMPS), recognized and thanked the CFO for her efforts in compiling a report that they saw as an open-minded and fair starting point for the complex negotiations certain to follow.  
In order to calculate the financials, the CFO’s report took a snapshot of the current SMMUSD 2011-2012 budget and using the available data, developed broad-spectrum estimates for district separation, based on present revenue projections, expenditures for per student spending, including staffing, district programs, overhead costs, etc. The report separated the districts with Malibu taking 17% of the students and Santa Monica retaining the remainder.
In a broad outline, the preliminary elements of the report found that a Malibu school district, based solely on SMMUSD’s 2011-2012 budget, could potentially face an operating deficit of $2.35 million. While at first blush this initial report might portray the separation as a costly undertaking for Malibu, proponents for the separation assert the report cannot be considered financially accurate in its current stage because it lacks references to several crucial income streams, including Malibu’s potential revenue from its existing parcel tax. 
If Malibu were to follow precedent set by other cities who have recently separated their school districts—by keeping its parcel tax at the current rate—a Malibu school district would see a net gain of $3 million above SMMUSD report projections, thus changing Malibu’s projected deficit of $2.3 million into a budget surplus of $500,000. 
Private donations to Malibu schools PTAs were also left out of the CFO calculations. Malibu private donations have traditionally accounted for large sums of added income for Malibu schools, and many Malibu parents assert that if their donations remain in the Malibu community, they would be more inclined to donate.
The report further found that an independent Santa Monica district would gain assets of approximately $600,000 in a separation, lessening their current deficit from 4.6 million to 4.1 million. These assets however could increase notably because if Santa Monica shrinks its student population by 17%, further reductions in Santa Monica’s structural deficit could be realized with cuts in unnecessary overhead/central administration and even staffing, if so desired. 
Additionally, the report showed that Santa Monica stands to gain another estimated $2 million by terminating the joint-use agreement. Currently, the City of Santa Monica pays approximately $14 million for use of property owned by SMMUSD, funds, which are then allocated pro-rata to Malibu. A separation would allow Santa Monica to retain any joint-use funds for property located in Santa Monica entirely. Accordingly, Malibu would retain its joint-use funds for property used in Malibu by any city entity, which last year totaled about $150,000.
The report additionally included charts forecasting several possible scenarios regarding the issue of bond Measure BB. As part of a separation agreement, however, Malibu could subsequently negotiate compensation with Santa Monica and continue to take responsibility for their share of the bond, avoiding a negative financial impact in payment of the bond or delay in fund releases to Santa Monica. Advocates for separation claim that the negotiated payment of the bond will most likely necessitate mirroring the current debt service.
During public-comment, AMPS representatives asserted to the school board that, although the report was a good start, without both parties coming to the table, sharing data and conferring jointly, any projections could not accurately include the crucial nuances of a negotiated agreement critical to understanding the exact numbers in question—which are at the heart of any successful dialogue for a separate school district.
SMMUSD school board members unanimously agreed to join with Malibu in further exploration and commission of a more comprehensive analysis of feasibility, which could include additional revenue streams for both cities.  Board member Jose Escarce indicated he wanted to “assure an independent, objective evaluation.” President Ben Allen stressed the need to be “thoughtful, careful and methodical about this process.” He also indicated that Malibu polling would be a important step to understand the level of community support. Member Ralph Mechur quantified, “Right now, what we’re seeing is that this is not completely one sided...we know we’re within a range but there are some significant issues that need to be worked out.”
Further statements from board members appeared to indicate an enthusiasm and willingness to explore the issue further. Nimish Patel cited the tone and civility of the meeting as constructive and said, “I think we should move forward, we owe it to you, we owe to this community and I want this to happen...let’s do this right and we’re going to do it together. I’m going to be optimistic and look for ways to make this work out.” 
Maria Vazquez, formally in opposition of separation added, “I feel more comfortable in terms of pursuing the next potential steps...if the majority of Malibu is willing to move forward, so be it, I think it’s time that we do move forward.” Oscar de la Torre supported polling as well, and said his primary concern was that of the students, but indicated that for the City of Malibu, “This is the next step to move forward in terms of self-determination, I think in principle, I don’t want to get in the way of a people defining their own destiny.”

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