Evaluating Property Resources Aids Reform to California’s School Funding System

The phrase “failing public schools” is one we’ve all heard for decades. It becomes a hot-button issue during election season, and then is generally neglected by the same politicians afterwards. The issues are long-standing and of enormous importance, and finding solutions seems intimidating to all but the most dedicated public servants. The major issues are funding and community commitment, and for the first time, it seems like there may be a breakthrough on both.

The debate over public vs. private school education is a daunting and sensitive one, and it starts at the level of parents with growing families. Parents must weigh the financial obligation of private schooling against the potential benefits of better facilities, curriculum, and margins of performance. Some parents in California have moved to private institutions to avoid confronting issues in the public system including poor facilities, large classroom sizes, and sparse resources for special needs children.

Students in class Public school districts should understand the recent reforms to California’s school funding system.
Image source: Flickr CC user Brad Flickinger

For most families, though, public schools still play an important role in sustaining daily life, while also providing a functional alternative to the financial strain associated with private education. However, many public school districts struggle with budget shortfalls, which negatively impact the level of education received by the students. For many school districts, understanding the recent reform to California’s school funding system can help them in their mission to mitigate budget problems while improving the quality of public education.

California’s public school funding system underwent substantial reform this year as a result of legislation signed by Gov. Jerry Brown in July 2013. The reform was the largest of its kind in nearly 40 years and represents a financial and ideological shift of state funding. At the core of this legislation is the Local Control Funding Formula (LCFF), which aims to equalize base grants throughout the state, adding supplemental funding for low-income students, English learners, foster children, and special needs children. By eliminating the bureaucracies of the former system, districts are now able to spend the base grant money more freely. This spending flexibility will be outlined in a district-specific action plan collaboratively developed by the community, rather than by state officials in Sacramento. This can help school districts find and maintain higher-quality facilities.

How Surplus Property Can Bridge the Funding Gap

The Local Control and Accountably Plan (LCAP) is an annual report that will outline engagement plans, goals, corresponding actions, and track results. This comprehensive document is completed at the district level throughout California. The state’s hope is that each LCAP will be drafted through a transparent dialogue among educators, parents, community leaders, and other stakeholders, effectively distributing responsibility to the communities each district serves.

Currently, school districts in California will likely not receive adequate funding to provide facilities for the estimated 6 million students of California. The new legislation helps overcome the challenge of providing resources and facilities by increasing local districts’ flexibility with funding and property rights.

For example, if a district has confirmed surplus property, the district may now choose to sell or lease that property to assist with operating expenses. Collaborating with commercial real estate companies that specialize in community-based organizations, nonprofits, and schools is an efficient way to evaluate property resources with an eye towards facilitating reform.

How Small Upgrades Make a Big Difference

Small upgrades to deteriorating facilities can add tremendous value to current public school properties. For example, improving sealing and insulation will provide better facilities for students as well as immediate and substantial cost savings for the district.

School districts can also consider renting out unused facilities. A joint-use agreement is a common mechanism that allows school districts to share space with public organizations or private entities. Joint-use agreements also allow third parties to fund improvements to current property resources, or construct new facilities at no cost to the district.

Exchanging property is an alternative to selling or leasing surplus property. Commercial real estate companies that understand the unique challenges of community-based organizations are well-situated to aid school districts in maximizing their base grants, drafting a responsible LCAP, and planning for the future.

Developing an LCAP means evaluating the present state of each district’s facilities, considering improvements, and creating systems to meet long-term goals. This financial reform is expected to take 8 years to fully integrate. But by assessing property resources at the outset of this process, districts can prioritize what matters most to parents: their children’s education.

At DCG Real Estate, we know how difficult it can be for educational institutions to make time for asset management and property assessments. That’s why we’re here to support school districts in their mission to put education first. Call us today to learn more about how we can help.