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SMMUSD board mulls proposal for split

Pictured is Malibu High School, which could soon separate from Santa Monica to become the Malibu Unified School District. Lauren Coughlin/22nd Century Media
Lauren Coughlin, Editor
9:03 am PDT March 14, 2017

The crowd slowly dwindled as the SMMUSD Board of Education spent four hours Tuesday, March 7, deliberating what several board members deemed the most important decision they will ever make.

The evening’s agenda had just one item to consider: the Malibu Unification Negotiation Committee’s report on the financial implications of reorganizing SMMUSD into two unified school districts. The special meeting allowed the board to ask the MUNC questions, which were plentiful.

“Tonight was about, ‘Do we understand what’s being presented to us?’ ‘Does this make sense?’ ‘What questions does it raise?’” Assistant Superintendent of Human Resources Mark Kelly said.

At the end of the evening, the difficulty of the decision was enhanced by the disconnect expressed by several board members. The item will come back to the board on April 20. 

The Malibu and Santa Monica communities will each have an opportunity to learn more about the project. MUNC has planned a 7 p.m. Tuesday, March 21 meeting at the district headquarters in Santa Monica, and the committee also plans to present as part of the Malibu City Council meeting Monday, March 27. While community input was mentioned by several board members as an important aspect, the board’s own comfort was top of mind last week, too.

“I guess we can’t really get to that discussion without some comfort level, closure [and] acceptance of this report,” Board President Laurie Lieberman said.

Lieberman reasoned that the ideal solution to closing the gap was to seek out a second opinion.

Board Member Craig Foster agreed, but noted the flaws in going to a third party that is unfamiliar with the district.

“If we went to someone else, they would have hours and hours and months and months of work to get their head around this,” he noted.

The board eventually landed on the ideal situation being an April 20 presentation from School Services of California, which aided MUNC in its process and signed off on the plan they ultimately presented.

“I would love for us to hear the same voices you heard saying the same things you heard them say,” Foster said to the MUNC members in attendance. 

Board Member Jon Kean, who also expressed a desire for a second opinion, was among those on the board who thanked the MUNC for its work.

“I don’t want to drag it out,” he said, “I really don’t, but I want to make sure that we don’t leave any stone unturned.”

Board Member Richard Tahvildaran-Jesswein remained quiet for most of the meeting, but finally spoke up in favor of not seeking a second opinion, saying he felt it was important to not drag out the issue any further. He added that he had great confidence in the MUNC’s Santa Monica representatives and felt that they had the district’s best interests at heart.

“I think that the members of the community are entitled to a decision from this board,” he said, adding that a second opinion is often sought when someone does not like the first opinion.

What it took to get here

The six-person Malibu Unification Negotiation Committee was formed in January 2016. Malibu was represented by Laura Rosenthal, Manel Sweetmore and Makan Delrahim, who replaced Kevin Shenkman in April 2016 and served until mid-January before moving out of state. Tom Larmore, Debbie Mulvaney and Paul Silvern represented Santa Monica.

Over the course of one year and 39 meetings, the committee members sorted out their differences. 

“It wasn’t always easy, and certainly we didn’t agree on everything in the beginning and along the way, but as you will see this evening, we do agree about everything in this report,” Rosenthal told the board. 

The report contains five portions: the impact of reorganization on SMUSD and MUSD revenues; the division of district assets (fund balances, buildings, land and school buses); bond-related items and other liabilities; environmental liability; and the implementation of the committee’s recommendations.

Silvern explained how each district had a “very different revenue profile” on a per-student basis (using average daily attendance, which typically represents 95-98 percent of enrollment). While Santa Monica has an average daily attendance of about 8,700 students, Malibu has an ADA of 1,700, he said.

“A Santa Monica-only district will start off as a State Aid district, move eventually to — according to SSC’s projections — a Minimum State Aid district and eventually a Basic Aid district,” Silvern explained. “A separate Malibu district would be a Basic Aid district on Day 1.”

The committee’s report explains that “a Minimum State Aid or Basic Aid district can provide a higher level of funding for its schools than a district that does not qualify for Minimum State Aid.”

To help resolve the projected imbalance, the committee developed a formula in which Malibu would make annual payments to Santa Monica through 2029-30, assuming the split occurs in 2018-19. A neutral third party would determine the exact annual amount and timing of the payments. The 12-year span was modeled by SSC, Larmore said. 

The formula does provide for an amendment to the length of payments if it is found that SMUSD can exist without significant adverse financial effects at an earlier time.

“We established a payment schedule that allows both the gap to be filled on the Santa Monica side in a way that Malibu can have a predictable and viable budget,” Sweetmore explained.

The Malibu district’s ability to pay will be judged based on an annual Cost of Living Adjustment.

“The COLA will be the published State Revenue COLA, but if necessary, will be adjusted so that it will be no less than 50 percent and no more than 80 percent of the annual percentage change in the total assessed value of real property within MUSD,” the report states.

Bond debt and funds would also be allocated at the time of the split based on assessed property values in each new district.

“The agreed-upon allocation method is to divide the undesignated Fund Balance between SMUSD and MUSD at the time reorganization becomes effective based on the ratio of total Measure ES funds allocated to bond-funded projects in Malibu schools and bond-funded projects in Santa Monica schools,” the report notes. “To be specific, the SMUSD/MUSD allocation ratio will be 78 percent/22 percent. This is based on an allocation to the Malibu community of (at least) $77 million out of $350.6 million, which is the amount remaining from the $385 million Measure ES total bond authorization after subtracting $34.4 million allocated for district-wide technology improvements.”

Santa Monica retains the obligation to pay for remediation of Malibu’s polychlorinated biphenyls contamination, though the handling of the cost would be determined by the project’s status at the time of the split. Per court order, the toxic materials are to be removed from Malibu buildings by Dec. 31, 2019.

If reorganization were to occur, Santa Monica would not be responsible for inspections or remediations extending beyond those that the court required, the committee determined.

MUNC recommended that the district split be handled by State legislation, which received mixed reviews from the board.

“It would become State law, and we felt that that was the strongest when it comes to legal and enforceable,” Rosenthal said.

To view MUNC’s report, visit www.smmusd.org.