Courtesy image.

Malibu’s potential divorce from Santa Monica schools is coming down to an issue that will be all too familiar to attorneys throughout the nation: educational alimony.

Both sides agree that Santa Monica will require financial support from Malibu if the two cities were to split their school systems but how much and for how long is up for debate.

Earlier this month Malibu City Council voted to exit two years of negotiations with SMMUSD over a school district separation plan and take its petition for an independent Malibu district to the L.A. County Office of Education.

In an Oct. 28 town hall, Malibu councilmembers explained that they took this step because the District and Malibu were unable to agree on a financial separation plan.

The separation debate boils down to an issue of local control and district funding. Malibu has 15 percent of the District’s student population but a large portion of the property tax revenues, and wants independent control of its schools’ facilities and educational offerings. Santa Monica wants Malibu to remain in the District, or leave under a District approved financial plan, so that it will not suffer a strong financial impact.

Per California Department of Education regulations, a district may not separate if it would cause a substantial increase in cost to the state or a substantial negative effect on the fiscal status of the proposed districts.

Malibu therefore cannot separate and withdraw all of its property tax revenues immediately, because the new Santa Monica District would suffer a significant financial loss and the state would need to provide additional funding to fulfill the Santa Monica budget. In April 2018, Malibu entered negotiations with SMMUSD to create a separation plan that both sides agreed on. They had previously petitioned for separation directly to LACOE in Aug. 2017, but suspended the petition in favor of working with the District.

During the negotiations Santa Monica’s financial consultants proposed that a portion of Malibu’s property tax base be permanently redistributed to the proposed Santa Monica School District. The Malibu separatists did not approve.

“In an analysis of this proposal that was submitted by the Santa Monica financial consultant, over ten years, over $250 million in Malibu property taxes would be given to Santa Monica and over 50 years it would be $4 billion in property tax split,” said Christine Wood, deputy city attorney of Malibu. “We submitted that to the City Council and we just couldn’t find common ground in something that wasn’t so permanent for the community of Malibu.”

Malibu’s consultants developed their own plan where Malibu property taxes would be redistributed to Santa Monica to the point where the state would not need to provide a Santa Monica District with any additional funding. This would continue until Santa Monica’s growth rate could cover the difference in funds, at which point the Malibu District would conserve all of its property tax revenues.

SMMUSD does not support this proposed plan as it would lead to a large gap in per student funding between Malibu and Santa Monica over time.

“Their consultants’ projections show Malibu starting at $16,494 per student, while students in Santa Monica would be funded at $13,592. Based on the Malibu formula for revenue growth, in year five, Malibu students will receive $25,998 per student, while Santa Monica per student funding will be $14,264: a five-year growth rate of 58% in Malibu vs 5% in Santa Monica,” said SMMUSD Superintendent, Ben Drati in an Oct. 28 letter to the City of Malibu.

Malibu consultants believe that it is still a viable option as both the Santa Monica and Malibu Districts are projected to receive more funding under Malibu’s separation plan than the joint district would, although the gains to the Santa Monica District are incremental.

“There wouldn’t be a negative financial impact to either of the proposed districts. On a per student basis, each district would be in a better position then they are today,” said Cathy Dominco, financial consultant for Malibu. “We think that it is reasonable to expect when a feasibility study is completed, that a reorganization could be deemed feasible and provide the City with some assurance that its own petition could be evaluated by LACOE.”

The petition to LACOE is one step in a multi-year process that could eventually lead to district separation. Both SMMUSD and Malibu representatives are preparing presentations for the public hearing LACOE will schedule in response to the petition.