Whither Malibu (schools)?

As a Santa Monican, the origins of the saga of parents and others in Malibu wanting to separate from the Santa Monica Malibu Unified School District (SMMUSD) and form their own school district seem to me to be lost in the mists of time, but that’s not the case for Malibuans. Their grievances only seem to multiply. Based on letters SMMUSD school board member Craig Foster has recently sent to local media, grievances now include the outlandish claim that the District caused many Malibuans to lose their possessions and homes in the Woolsey fire, and that the District did not open Malibu schools in the pandemic. Even though the District spends more per student in Malibu than in Santa Monica, Foster has accused the District of cutting teachers, staff and programs in Malibu, causing a decline in enrollment there. Emotions are high. (For the District’s response to Foster, go here.)

Back in 2015 the City of Malibu passed a motion to start the process to form a new district. The SMMUSD school board voted not oppose the separation, provided that separation could be accomplished without having a negative impact on the finances of the surviving Santa Monica district. The board appointed a task force consisting of three volunteers from each city. The task force came back with a proposal, whereby the new Malibu district would pay money to the Santa Monica district for 10 years.

The board rejected the task force’s proposal because when the money ended after 10 years Santa Monica students would “fall off a cliff.” Malibuans contend that this rejection of the recommendation was in bad faith, but the board’s fiduciary responsibility is to the students. The board members voting against the recommendation argued that they could not agree to anything that would result a reduction of money per student in Santa Monica.

Since then, off and on, Malibu and SMMUSD had been negotiating a deal (more on those negotiations later), but last fall Malibu broke off negotiations and reactivated a petition for separating that Malibu had filed with the Los Angeles County Office of Education (LACOE) in 2017. SMMUSD opposes the formula in that petition as well. The matter will now go before the Los Angeles County Committee on School District Organization (the “County Committee”) for a hearing April 17. The County Committee can deny the petition, which would kill it without leave to appeal, or “tentatively approve” it. Tentative approval would mean that the matter would proceed to more in-depth hearings, leading to the committee’s final approval or disapproval. That decision could be appealed to the state Board of Education. Ultimately any final decision would need voter approval.

Malibu and Santa Monica are separated by many linear miles of Pacific Coast Highway and many square miles of Pacific Palisades. The fact that they comprise the same school district reflects 19th century historical conditions (namely emptiness). Nonetheless, establishing a new school district for only about 1,200 students, the current number of students in Malibu’s schools including out-of-district permit students, seems ridiculous. Twelve hundred students are about the same number of students at one K-12 private school, Crossroads, here in Santa Monica; imagine Crossroads comprising a school district. What would have happened decades ago in a rational world (meaning not the world of education in California) is for Malibu to have become part of the adjacent Las Virgenes Unified School District.

The City of Santa Monica contributes tens of millions of dollars a year to the District, both under a facility sharing agreement and pursuant to sales taxes voters approved with the understanding that half the money would go to the District. Nonetheless, counter-balancing Santa Monica’s contributions, Malibu’s assessed property values on a per-student basis are significantly higher than Santa Monica’s, and thus more money per student is available to the District from Malibu than from Santa Monica. That funding is the root of the dispute over separation.

Because of Malibu’s high property values and relatively few children, if Malibu leaves the district the amount of money per student in Santa Monica would drop. Strangely, but for the fact that both Malibu and Santa Monica are flush with property taxes compared to the rest of California, this would not make much difference. If the two cities did not generate enough property taxes per student to reach the minimum state level for financing, the state would top off their taxes to bring them up to the minimum.

Malibu, however, has such high property values per child that it would automatically qualify for a status called “basic aid,” which allows a district to self-fund and retain use of local property taxes beyond the state minimum level. There are projections predicting that within five years on its own a Malibu district would have more than $37,000 per student to spend.

(Relevant digression: $37,000 per student would approach the level of private school tuition. If you hear Betsy DeVos-type politicians say that throwing money at education doesn’t make for good schools, ask them why presumably rational and intelligent rich people will pay tuition equal to three or four times as much as public schools get to spend on their students, and why our tax code allows contributions to those schools to be tax-deductible.)

Meanwhile, as per-student funding in Malibu would increase drastically, the remaining students in Santa Monica would take a hit by losing the Malibu property taxes, because, or even though, Santa Monica schools would likely move into the basic aid category in a few years. Proponents of the Malibu split such as Craig Foster argue that once Santa Monica reaches basic aid status, the surviving district would have more money per student than nearly all districts in the state. What happens in those other districts, however, is irrelevant to the decisions the SMMUSD School Board has to make.

After the board rejected the task force’s proposal, direct negotiations ensued. The District’s consultants proposed that at the time of the break-up, Malibu’s tax money would be divided proportionately based on the ratio of the number of students in the two cities. This would mean that upon break-up, the financing would be the same as it was, and Santa Monica students would not have their funding reduced. That base amount of tax would remain divided as such in perpetuity, but any increases in assessed values would go to the city where the increases occur. Property values will likely increase faster in Malibu, and Malibu would gradually accrue more money per student, but Santa Monica values would also increase and there would be no cliff to fall from.

Based on four letters spanning 2019 and the spring of 2020 between Malibu’s lawyers and the District’s consultants, this proposal looked to be forming the basis for an agreement. Malibu made five comments to the proposal, dealing with issues such as how the City of Santa Monica’s contributions would be treated, whether the new district would get help with initial administrative costs, and whether the deal would be reevaluated after 50 years. With some caveats and counter-proposals the District accepted Malibu’s comments, and Malibu seemed to accept the District’s counter although details and contract drafting still had to happen. Based on an April 2020 letter from Malibu, it looked like a deal could be made.

However, there was one issue that did not seem significant, but which turned sticky. The disagreement was over strategy, not substance. It concerned the revenue the District collects each year from a parcel tax approved by voters years ago. The District was fine if Malibu would collect the money from properties in the new district. Malibu, however, was nervous that there was not a valid legal structure for the tax to continue to be collected in Malibu, since the voters of the new district would not have approved the tax. (Under Prop. 13, voters need to approve parcel taxes on a 2/3 vote.) Malibu and the District agreed to ask our local legislators to seek to resolve the issue with legislation in Sacramento, but they disagreed over the timing. Malibu wanted the District to seek the legislation now, while the District wanted to wait until the rest of the deal was agreed on.

In the meantime, the pandemic hit. The District had bigger fish to fry, and the negotiations seem to have stopped. I don’t know; it seems like the question of when to go to the legislature would be more or less a detail if the rest of the deal was coming together. Maybe Malibu simply got frustrated when this issue did not get resolved over the summer. In any case, Malibu refiled its petition with the County’s Office of Education in the fall, and the hearing before the County Committee is next week.

What I do not understand is why Malibu refiled when filing with the County is risky. There are many reasons for the County Committee to reject the petition. For one, Malibu’s position that its property tax revenues are its alone for only Malibu children is not consistent with California law going back to the landmark Serrano v. Priest cases and the refinancing of schools that took place after Prop. 13. Malibu complains that over 50 years $4 billion of its tax revenues would be “redistributed” to Santa Monica students, but property tax revenues are already pooled and shared according to formulas going back to implementation of the Serrano decisions and Prop. 13. Under the District’s proposal, which Malibu had accepted in principle, Malibu would get to keep revenues from future increases in assessed values.

Moreover, the new Malibu district will be much less diverse ethnically than the current combined district and the future Santa Monica district. Currently, Malibu students are about 75% Anglo, and that percentage includes the impact of out-of-district students in Malibu schools, students who tend to be more from non-Anglo backgrounds. As a whole the current SMMUSD is a little over 50% Anglo, and after separation it would be a little under 50% Anglo. The ACLU Foundation has written a strong letter to the County Committee decrying the proposed split as “impermissibly increas[ing] segregation.” Combined with the increased funding, the County Committee could easily determine that separation would not serve public purposes as expressed in the California Education Code. The code requires that district splits be equitable and not further discrimination or segregation.

Meaning that the County Committee will have many reasons to reject the petition. (There are other provisions in the Ed. Code that might also prove problematic for Malibu.) Under the rules, a rejection at this stage would kill Malibu’s petition. The parties could then return to negotiations, but it Malibu’s position would be weakened. If the County Committee gives a tentative approval, it only starts a multi-step process that entails many uncertainties. There are impatient people in Malibu, but the prudent thing would be for Malibu to withdraw its petition and for the parties to get back to the negotiating table, once the District has dealt with reopening schools after the pandemic.

But that won’t happen.

Thanks for reading.

3 thoughts on “Whither Malibu (schools)?

  1. Pingback: Some other shoes drop in Santa Monica and Malibu | The Healthy City Local

  2. Frank, this is an illuminating article. Interesting to see the nitty gritty of the politics so thoroughly explained and analyzed. The depth of your research, I mean, this is a really fine piece of journalism.

  3. Frank, this is an illuminating article. Interesting to see the nitty gritty of the politics so thoroughly explained and analyzed. The depth of your research, I mean, this is a really fine piece of journalism.

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