Two school districts in Santa Barbara County have launched multi-pronged battles against having to relinquish funding to Olive Grove Charter School, a financial blow that one superintendent has said could lead to insolvency for his district.
The California Department of Education recently informed the Santa Barbara Unified School District and the Santa Ynez Valley Union High School District that they owed thousands of dollars for in-lieu property tax payments for Olive Grove, which has five branch locations in the county.
“We are in a full-court press right now to remediate the impacts of Olive Grove and the in-lieu property tax payment for this year, as well as looking at a long-term solution starting next year and beyond,” Superintendent Scott Cory said during Tuesday’s meeting of the Santa Ynez Valley Union High School District board.
For Santa Barbara, this amounts to about $1.3 million. For Santa Ynez Valley’s high school district, it means approximately $700,000, with some estimates it could be up to $1.2 million, which would add up to a 10-percent loss from the operating budget, Cory said.
“This is literally something that we cannot afford, and we need a full-court press on right now to do right by our students,” Cory said.
The state has billed Santa Ynez for its payment, but the district has withheld sending the funding; Santa Barbara has started paying its in-lieu property tax fee.
Olive Grove Charter School, with an enrollment now of approximately 750 students, gained approval for its charter after rejections from multiple local school districts.
Unlike their counterparts, the Santa Barbara and Santa Ynez districts have been hit hard with the payments because both are basic-aid districts, meaning their revenue from local property taxes exceeds their entitlement under the Local Control Funding Formula (LCFF).
The California Education Code requires school districts to transfer to charter schools an in-lieu amount of property taxes, essentially lowering the district’s local revenue amount, according to the Department of Education.
For non-basic aid districts, or those where property taxes add up to less than the entitlement under the state formula, state aid covers the payment they otherwise would have to hand over.
Cory presented three options to his board on Tuesday, with a similar presentation occurring at the Santa Barbara school board meeting the same night to submit the first request to the state on Wednesday.
“We need to be pursuing all three of these. All options need to be on the table,” he said. “This is really something we cannot afford to lose.”
Both districts will ask the state to waive requirements, although it’s not something the California Board of Education has done before. Additionally, that waiver would only last two years.
The state board likely would consider that request at its July or September meeting.
Another option would be for the state board to authorize another district to be the sponsoring local education agency for Olive Grove.
If that other district is a non-basic-aid, the state would cover the costs for Olive Grove, meaning Santa Barbara and Santa Ynez would not lose some of their revenue.
“I am in conversations with a state-aid district, and if we can get that district to become the authorizing school district for a state-aid district, there would be dollar for dollar backfill,” Cory said.
That district, which was not identified, would not want to provide oversight of Olive Grove, and would need to ensure the reimbursement doesn’t cause cash-flow problems, Cory added.
Approval of an alternate local education agency could be considered by the state board in May.
Payment amounts are based on Olive Grove’s student enrollment, but school leaders have questioned if students who live in other areas were included. The roster reportedly shows students from as far away as Paso Robles.
Although the high school district has only ninth- through 12th-graders, the Olive Grove payment formula includes students from kindergarten through 12th grades, Cory said.
“There are some significant questions that we have about the number of students that are being reported,” Cory said, adding that the challenge may lead to a court case to get a better accounting of students.
When Olive Grove was seeking a petition to operate, it was rejected and refiled the paperwork with the number of students jumping more than 200 percent, Cory said.
“Some of the original numbers were significantly lower and it would have put us somewhere in the $100,000 range,” Cory said.
The permanent solution calls for a legislative action so districts like Santa Ynez and Santa Barbara won’t be affected in the future.
“A long-term fix does not happen without a legislative change,” Cory said.
“We are definitely trailblazers here. Ultimately, what we hope is that we make a difference, not just for us but for others that are in similar situations statewide as well, and that would be the legislative fix we’re talking about,” he said.