Laguna Beach District Covets Neighbor City’s Tax Base

If Laguna Beach school officials have their way, the 20,000 older adults who make their home in Laguna Woods will soon become part of their district.

Why would a school system want to redraw its boundaries to include a city made up mostly of Leisure World, where anyone under 55 is an illegal resident unless married to an older person, where the average age is 77 and which includes no school-age children but does include about 20 centenarians?

You had to ask? For the money.

The tiny Laguna Beach Unified School District, with only four schools and about 2,500 students, is one of a handful of districts statewide funded entirely by property taxes, rather than by state money based on student population.

And there in Laguna Woods sit all those taxed homes, enough to bring in an estimated $5 million to the schools. At no added cost to Laguna Woods, since its residents already pay property taxes. And with nary a student to be educated.

Most of Laguna Woods lies within the neighboring Saddleback Valley Unified School District, but those schools are funded by state money, based on the average daily attendance formula, rather than property taxes. A small portion of the city already is in the Laguna Beach Unified School District.

Saddleback would never even miss its senior citizens, Laguna Beach school officials say, so why can’t the coastal school system have them?

“It would enhance our revenues with no harm to Saddleback or Laguna Woods,” said Eileen Walsh, Laguna Beach school board president.

Laguna Woods would like to find out exactly what this would mean.

“Since we don’t have any children, is there a financial advantage to our residents?” asked City Manager Leslie Keane.

If the proposal is approved, Saddleback Valley would continue to be funded by the state, and Laguna Beach schools would gain the additional millions. The only apparent loser would be Sacramento, which wouldn’t get to keep as much of Laguna Woods’ property taxes.

State officials agree this is basically true.

“Laguna Beach would gain revenue, Saddleback wouldn’t lose any money and the bottom line is it will be a net increase in costs to the state,” said state Department of Education consultant John Gilroy.

That doesn’t mean Saddleback Valley Superintendent Peter Hartman likes the idea.

Even though Saddleback does not currently use Laguna Woods property taxes for school funds, it would like to someday.

Ideally, Saddleback would like to fund its schools the same way Laguna Beach does--through property taxes. For that to happen, the district will need its senior citizens.

Hartman said he expects real estate values to increase in south Orange County and Saddleback Valley may be able to receive more money per student through local taxes than it does now through the state formula.

“It’s in the long-run best interest of this district to keep Laguna Woods,” Hartman said.

Only 60 school districts in the state are funded solely through property taxes, but for those that can manage it, the financial advantage can be significant.

Most school districts receive their allotted portion of state funding based on the average number of students who attend. That amounts to about $4,000 per student.

School districts funded entirely by property taxes, however, often have more money to spend. Sometimes these are districts in wealthy areas with high property values. But sometimes it’s a district that contains valuable industrial property, or encompasses a vast area but has few students.

Ultimately, Laguna Beach officials say, they hope to work out a revenue-sharing agreement that allots Saddleback a portion of the $5 million in property taxes.

Once the Laguna Beach board votes, its proposal must be approved by the County Superintendent of schools and then must be sent to the county committee on school district organization.

That committee will hold public hearings before deciding on the petition. And ultimately, the state Department of Education will speak about the financial impact on both school districts and state coffers.

Laguna Beach officials expect the process to be completed within 90 days.

But Hartman took a dim view of the prospects, saying he didn’t know how the Department of Education would even allow such a proposal, since Laguna Woods generates no students.

“The state law doesn’t allow you to change attendance boundaries if it’s just for the financial well-being of a district,” Hartman said. “I don’t know how the state’s going to permit it.”