City holds second workshop on school separation

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More financial details explained in creating a Malibu Unified School District

As progress inches slowly toward the creation of a stand-alone Malibu Unified School District (MUSD), the City of Malibu held a second workshop to inform residents on the complicated process in divorcing from the Santa Monica-Malibu District. 

While a major milestone has been reached in the negotiation process with a Revenue Sharing Agreement (RSA) completed, albeit still pending ratification, two other agreements with Santa Monica still need to be worked out. They include an Operational Agreement and Joint Powers Agreement (JPA).

Cathy Dominico, a consultant for the City of Malibu and managing partner of Capitol PFG, presented a summary of the state of the schools’ separation process.

Dominico, a property tax expert, explained that the RSA memorializes the future allocation of what are currently all SMMUSD revenues between the successor educational entities. The Operational Agreement will define what will happen to the district’s assets including staffing, liabilities, and operational processes. 

The JPA will create a body governed by both parties to administer the separation.

A guiding principle in the separation of Malibu and Santa Monica schools is that each district have the funding to maintain a similar level of service at each school site as prior to separation. And that’s where things get complicated. As Malibu currently pays a disproportionate share of the school district’s overall budget relative to student population, Santa Monica has required assurances that it will receive transfer payments for some period of time to make up for its loss in revenue from Malibu property taxes and to keep its growth at no less than the historical rate of 4 percent.

Dominico and her associates working for Malibu stress-tested dozens of different scenarios to ensure that Santa Monica will be made whole while also ensuring sufficient funding for a MUSD. 

“Malibu has to make up the difference if there’s a shortfall in Santa Monica,” said Mike Matthews, former Malibu High School principal and retired superintendent of the Manhattan Beach Unified School District. Mathews is also a Malibu resident, now an educational advisor for the Malibu unification team. Under some scenarios, Malibu’s transfer payments would cease by the 2041-42 school year, while contractually the latest date would be 2051. 

“The agreement is not in perpetuity,” Dominico stated, noting that the 2051 termination date is fixed irrespective of how long it takes for the separate MUSD to commence operations.

Attendees asked whether Malibu’s tax base would sink should another natural disaster strike. Dominico answered that even with the Woolsey Fire, Malibu may have lost students who were forced to move, but aggregate city property taxes did not fall.

Dominico warned that for the initial MUSD budget, “It will be tight in the first couple of years.” 

Matthews concurred explaining, “We’ve looked at what we would need in terms of staffing, in terms of keeping everything going, and yeah, we believe we can do it. One of the things we hear a lot is, ‘I can’t wait till we can add a lot of stuff,’ and [initially] we’re not going to add stuff. In fact, one of our pieces of advice to the new district will be being a small district can be a dangerous thing because your resources are limited and giant unexpected expenses can be very harmful. 

“So, our advice will be when we do get increases in revenue to squirrel it away and put it in a really big reserve so that we as a small place can do that. It will even out eventually, but … we’re going to keep things the same, but hold off for a while until we feel secure that we can protect ourselves from anything that might come our way.”

Another Malibu consultant, La Tanya Kirk-Carter, a former chief administrative officer for the Beverly Hills Unified School District, added, “We could be more efficient spending our own money. You’ll get more bang for your buck.”

Dominico concluded, “What this gives us on day one is local control.”

City leaders are encouraging residents to voice their opinions and concerns. Comments or questions can be sent to the Malibu Deputy City Manager Alexis Brown at ABrown@malibucity.org or (310) 456-2489 ext. 300.