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$623 Million of Property Tax That California Schools “Don’t Need?”

$623 Million of Property Tax That California Schools “Don’t Need?”

How Can There Be $623 Million of “Excess” School Property Tax -- especially as we schools making drastic cuts?

That is because over half a billion dollars of property tax is collected in California’s priciest counties for a fund called “Educational Revenue Augmentation,”, or "ERAF", then disbursed to other agencies as being “excess” to schools’ needs.  

Where does this money come from?  

Every property in California pays taxes that are apportioned among multiple entities: its local school and community college districts, its county government, and any city or special districts within its tax rate area.  In addition, a portion of its tax goes into the county’s Educational Revenue Augmentation Fund. This Fund is only available to pay the state’s obligation to schools -- so it only funds those schools whose direct property tax receipts are less than the state’s funding target for the school.  However, the fund is county-wide, so wealthier areas support schools in poorer areas, all within their county. 

Why is any of this money declared “excess” and unneeded by local education, given that California trails the nation in school funding?

The Fund is only available to pay the state’s obligation to schools -- so if the state says schools get $8000 per student, even if one of these districts had the revenue to give them $1000 more per student, they could not use ERAF due to the limitations governing the fund.  Once the state’s targets for both schools and community colleges have been met (first from the districts’ direct property tax allocations, then up to the target from the ERAF Fund) and the state’s obligation for Special Education, anything remaining goes the county government, cities, and special districts. So, if the state’s target for school funding omits a key element (like a regional cost supplement), anything remaining in the Fund is automatically redistributed elsewhere. The schools that truly need the money raised in their counties are not getting that funding.

Even when schools in our area are being closed, programs shut, and teachers laid off?

That is exactly what is happening in, for example, South San Mateo County school districts.  Meanwhile, since the direct allocations of property tax to all the other government entities -- county, cities, and special districts -- continue to swell with high housing prices, the county is able to use their ERAF “rebate” or “windfall” as they wish.  For example, the Menlo Park’s Fire Protection District is able to use the money to pre-pay its pension obligations and to buy houses next to its fire stations, in case those stations need to expand. While school districts in East Palo Alto (Ravenswood), San Mateo-Foster City and elsewhere are starving. 

Help us make schools all over the state don't bear an unreasonable burden due to the high cost of living in their county.

Join the fight for equitable -- not nominally equal -- funding of all children in California.