No funding crisis at these schools

Times Staff Writer

It's become a familiar story line: Thousands of California teachers face layoffs and school districts statewide are scrambling for survival under the governor's threat of a $4.8-billion cut in education spending.

But not in Laguna Beach.

That's because the four schools in the 2,900-student district are funded primarily by property taxes collected from the affluent community, essentially insulating it from the state's economic emergency.

As nearby Capistrano Unified School District faces crowded classrooms, canceled school bus routes and pink slips for teachers, their neighbors up the coast are hanging on to music and art programs, and considering expanding Spanish instruction for elementary school children.

Laguna Beach High School Principal Don Austin calls the mood "cautiously optimistic."

"Our staff is appreciative of our current situation, but . . . this is definitely not a time when we're celebrating," Austin said. Many Laguna Beach employees have friends and neighbors working in hard-hit schools nearby, or children attending those schools, he said. "Everyone understands the severity of the state's financial situation."

While Capistrano Unified has about $7,900 for each student, Laguna Beach Unified has nearly twice as much available per pupil: $13,367, the highest in Orange County. The other so-called basic aid district in the county, Newport-Mesa Unified, has about $10,600 for each student.

"It's irritating to people," said Jon Sonstelie, an economics professor at UC Santa Barbara who researched school finance for the Public Policy Institute of California. "People think it's unfair."

Laguna Beach Unified and Newport-Mesa are two of 87 basic aid districts in the state, out of more than 1,000 districts in California. Districts become basic aid districts automatically under a formula based on their revenue; the status can fluctuate from year to year depending on property values. "Revenue limit" schools, conversely, receive state aid in addition to local property tax money.

The complicated formula, calculated in part from average daily attendance figures, determines how much money each school receives in combined state and local taxes. In most districts, property taxes fall short of the mark, so the state provides the remainder. But in districts where property taxes exceed this amount, no additional money comes from the state for general purpose use.

Some basic aid schools are in wealthy enclaves, such as a cluster of districts in Marin County, while others are near lucrative oil production facilities or in sparsely populated rural regions where property tax dollars stretch further among fewer students.

Just 3% or so of California's public school pupils attend these financially robust schools, Sonstelie said.

"Basic aid districts, they really operate in kind of a parallel universe," said Ron Bennett, president and chief executive of School Services of California, a Sacramento-based education consulting firm.

Orange County's two basic aid districts, next door to schools laboring to balance their books, don't anticipate job cuts.

"I think it's fair to say we are financially stable," said Norma Shelton, assistant superintendent of business for Laguna Beach Unified.

Although the basic aid districts are dodging cutbacks for now, officials are bracing for harder times ahead amid a sinking real estate market. Basic aid districts have more money than most districts, but their finances are much more volatile.

"We'll have hardship; it'll be from a different direction," said Paul Reed, deputy superintendent and chief business official for Newport-Mesa, which serves 21,500 students in Newport Beach and Costa Mesa. "Everyone is anticipating that property tax dilemma is going to be with us for a few years.

"We're at the mercy of the tax assessor, believe me."

Because of that, basic aid districts require larger financial reserves to help shield them from hiccups in the real estate market, Bennett said.

"They need to be braced for any downturn," he said. This year, "there's nobody really getting away scot free."

Newport-Mesa and Laguna Beach "know they have to bank money and those rainy days are ahead of them; the clouds are coming," said Bill Habermehl, Orange County superintendent of schools. "Times will change -- they always will."

But until economic reality intrudes, Laguna Beach elementary students still have a counselor to help them, plus special small-group learning and other perks.

At Laguna's El Morro Elementary, there are plans to build two additional classrooms to accommodate the growing student population, said Principal Chris Duddy.

A parent fundraising organization has paid for several years of Spanish lessons from a Berlitz language instructor for kindergarten through second-grade students at both the district's elementary schools -- a pilot program Laguna may adopt permanently.

Real estate agent Bridget Stuart has shouldered financial hardship to live in Laguna Beach so her four kids can attend schools there. She knows other parents considering enrolling their children in private school to avoid looming cutbacks at Capistrano Unified.

Her 16-year-old son, Wiley Pappas, a junior at Laguna Beach High, is a lineman for the Breakers football team and does chemical research in a lab after school.

"The teachers are just really happy every day," he said. "There are a lot of things there that I think we take for granted. We have really nice computers, just a really nice facility." Because of their often enviable financial status, basic aid districts tend to stay small, Sonstelie said, avoiding mergers with districts that have smaller tax bases.

But some administrators can't help but wish such schools, at times swimming in property tax revenue, could somehow share the wealth: "I would love it if every one of our districts had that funding formula," Habermehl said.

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susannah.rosenblatt@latimes.com

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