Unlikely Allies May Lose School Funds

Laguna Beach, the wealthy seaside town known for its resorts perched over the Pacific, may seem an unlikely ally for the dusty outpost of McKittrick, 200 miles north in Kern County.

The median family income in Laguna exceeds $100,000, more than twice that of McKittrick, whose lone school and fire station are surrounded by scrub brush and oil fields as far as the eye can see. And about the only water visible in McKittrick is at the school’s swimming pool.

But Laguna and McKittrick are bound by one inescapable fact: High property values pump millions of dollars in extra property taxes into their schools -- Laguna because of its pricey beachside real estate, McKittrick because of underground oil reserves.

The surplus money has given these two districts -- and more than 60 others in the state -- a financial advantage.

Now, however, these districts are trying to fend off a plan by Gov. Gray Davis to use $126 million of their property tax money to help close the state’s gaping budget shortage. Revenue in these districts would drop dramatically -- in some cases by nearly half -- although most would remain above the state average of about $5,000 per pupil.

Calling Davis’ proposal unfair and crippling, leaders in the districts are lobbying the Legislature and are quietly threatening a lawsuit to protect their funds -- which pay for core educational programs, teacher salaries, extra computers, art specialists, field trips around the state for McKittrick students, and even yoga classes for instructors in Laguna.

“There’s not a lot of sympathy for districts like Palo Alto or Laguna Beach. But we have students and parents and teachers too,” said Supt. Theresa Daem of the Laguna Beach Unified School District, which would lose one-quarter of its funding under Davis’ plan and have to lay off several teachers and principals at its four schools. “This would remove the lifeblood of our district. Let us deal with the same level of cuts as everyone else.”

For years, these districts have received far less state money than most others. Because they generate so much in local property taxes, they get only the “basic aid” mandated by the California Constitution: $120 per student in state general funds compared to the state average of about $2,500.

McKittrick School, a K-8 campus with 63 students, would be among the hardest hit by Davis’ proposal. The school, in a town that is little more than a truck stop 40 miles west of Bakersfield, stands to lose nearly half its $1-million budget, said Principal John Barnes.

Until now, the surrounding oil fields and a nearby electric power plant have generated enormous property taxes to run the school, nearly $17,000 per pupil last year.

But if Davis’ proposal goes through, Barnes said he might have to lay off all three instructional aides, a custodian and one of the four teachers. The remaining three teachers would have to cover three grade levels each.

The campus swimming pool, which serves as a summertime community watering hole, probably would close this summer. And field trips to San Francisco, Santa Barbara and other places would come to an end.

“We’re a small town. This school is this community,” Barnes said. “It would just devastate us.”

Davis administration officials say they sympathize, but they believe the school systems can cope with such cuts.

The governor wants to redistribute the $126 million in property taxes to other districts within their counties. That would reduce the amount the state would have to spend on the schools.

“There’s no way to sugarcoat it. The proposal does involve some real pain for those districts. But the thinking was that they had more wherewithal to deal with cuts than other districts,” said Erik Skinner, an assistant secretary for fiscal policy in the Davis administration.

“It was not our intention to take any districts out at the knees,” Skinner added.

Most of the affected districts are in Northern California, the result of high property values and enrollments that have grown slowly or declined. Orange County has two such districts -- Newport-Mesa and Laguna Beach -- while Los Angeles and Ventura counties have none, according to the state’s list.

The basic-aid districts -- which serve affluent communities such as Laguna but also cities with many low-income children such as Costa Mesa and San Jose -- hope Davis will spare them when he releases his revised budget in May.

In the meantime, they are trying to rally parents and politicians around their cause -- with some success.

Nearly half of the members of the state Assembly and Senate signed letters recently urging Davis to reconsider. Many question whether the state can legally take local property taxes to help balance its budget.

“You can’t cut funding that you don’t provide,” said Assemblyman Joe Simitian (D-Palo Alto), whose district includes 10 basic-aid school districts. “Once you go down that path, where do you stop? Will the state then conclude that it can take the proceeds of local parcel taxes?”

State Supt. of Public Instruction Jack O’Connell also has objected, saying the cuts would be disproportionate compared to other reductions the governor has proposed for schools.

“To take these funds from basic-aid districts at this point would jeopardize their solvency,” O’Connell told a Senate budget panel recently.

Basic-aid districts -- which serve just 2 1/2% of the state’s 6 million public school students, or about 150,000 -- are an anomaly in California’s complicated school finance system.

That system sets a per-pupil funding level for each district, a figure usually based half on local property taxes and half on state general revenue funds. The combined average is about $5,000 per student in unrestricted funds, which are supplemented by state aid to specific programs and federal money.

The basic-aid districts, by contrast, rely mainly on the $126 million in property tax revenue that Davis now wants to take. Making matters worse for them, Davis also plans to hold back the $120-per-student basic-aid payments, which total $18 million for those districts, arguing that the state already meets its constitutional funding obligations through other programs.

Although several legislators and O’Connell said they do not object to that $18 million reduction, the districts contend that such a move would violate the state Constitution.

Basic-aid advocates argue that their status can be misleading. They say many of their districts don’t generate astounding amounts of property taxes, just enough to put them onto the target list. And, they stress, some basic-aid districts enroll large numbers of students from economically struggling families.

They point to places such as McKittrick, where students’ mothers and fathers work in the sprawling oil fields around the school or at the power plant outside of town. Housing prices average about $60,000, less than one-tenth the average price of houses in Laguna Beach.

“We’re a poor community in a rich area in terms of resources,” said Principal Barnes. “Everyone thinks that basic-aid districts have rich kids. It’s not so.”

Two hundred miles south, Laguna Beach Unified, which serves 2,700 children in a town of 24,000 residents, fits the better-known image of wealthy basic-aid districts.

At Thurston Middle School, nicknamed “Paradise on the Hill,” teachers can step outside and enjoy commanding views of the ocean. A new gym and performing arts center are under construction at the campus tucked amid million-dollar homes.

Thurston students can choose from a long list of elective classes, including home economics, drama and art.

“Art ... makes them happy. How can you make them give that up?” asked Principal Chris J. Duddy.

Duddy has been told he could be laid off because of the threatened cuts. Eight of his 28 teachers have received the same notice, as have his only counselor and the assistant principal. In the worst-case scenario, class sizes would increase to about 32 students -- from the current range of 25 to 28 -- and some courses would be eliminated.

Duddy’s boss, Supt. Daem, isn’t happy about the prospect.

“It’s going to cut so absurdly across the board,” Daem said. “There will be nothing beyond the core curriculum being taught in classrooms that are filled to the brim.”