San Luis Coastal school district will be hit hard by loss of Diablo Canyon tax revenue

Students leave Los Osos Middle School at the end of their day with their homework.
Students leave Los Osos Middle School at the end of their day with their homework. The Tribune

For an example of how Diablo Canyon tax dollars have helped the community, look no further than the San Luis Coastal Unified School District.

The district receives $9.5 million per year in taxes from PG&E, which is about 11 percent of its total revenue.

Compared to other local districts, San Luis Coastal has been able to pay teachers more, maintain smaller classes and offer more elective courses and special programs. But without Diablo dollars, the district may go from being one of the wealthiest in the area to one of the poorest.

Superintendent Eric Prater is not sure of all the implications yet — he’s waiting for projected property tax estimates from PG&E — but he warns there will be cuts and said closing schools may be “in the cards.” That will depend in part on whether enrollment drops as families leave when Diablo Canyon ramps down.

The district, which serves about 7,500 students, has been setting money aside in anticipation of a possible closure — it has an unencumbered reserve of about $14 million — but that won’t make up for the loss of Diablo dollars.

“The reserve is just going to allow us to have cash to pay our employees while we make the necessary reductions. It will be fairly draconian,” Prater said.

San Luis Coastal has faced serious financial problems before; Diablo Canyon tax revenue hasn’t provided total immunity. During the recession years, the district trimmed millions of dollars from its annual budgets; in 2013 alone, the district cut $4.3 million and eliminated 40 positions.

Still, San Luis Coastal typically has been able to spend substantially more per student — nearly $3,000 more in 2014-15 — than San Luis Obispo County’s other large districts.

Again, that’s thanks to Diablo Canyon. The nuclear power plant has generated so much income that it has made sense for San Luis Coastal to rely on property taxes for the bulk of its support — a funding mechanism known as “basic aid” — rather than depend on the state for school funding.

In a post-Diablo economy, the district will most likely have to drop out of basic aid, Prater said, and rely on the state’s Local Control Funding Formula, which doles out money based on enrollment and demographics.

If that happens, San Luis Coastal will lose its financial advantage. The formula the state follows provides more funding to schools that have high concentrations of students who are classified as “high needs,” a category that includes English learners, low-income students, homeless students and children in foster care. Based on its current population, San Luis Coastal won’t qualify for that concentration funding.

Unless demographics change markedly between now and 2025, the district stands to lose as much as $11 million per year under the Local Control Funding Formula, according to Prater.

He’ll be briefing the school board on the implications of Diablo’s closure at a daylong workshop Tuesday. No decisions will be made, but the board may give direction to district administrators. Items up for discussion Tuesday include:

▪  Switching from basic aid to the state funding formula.

▪  Personnel implications, including staff reductions and layoff lists.

▪  Assessing program needs, including instructional coaching, counseling, adult school, Family Resource Centers, mental health contracts and field trips.

▪  Facilities, including repurposing, closing, or selling sites.

▪  Revenue enhancement options, including a parcel tax and programs aimed at boosting enrollment.

Until now, there’s been little financial incentive for the district to increase enrollment because its funding is based on property taxes rather than on average daily attendance. The district typically hasn’t objected when students have petitioned to transfer to other districts, nor has it made efforts to attract students from outside the district.

That will likely change.

“We approve transfers to other districts but typically deny transfers into our district, and that will actually be reversed in a world without basic aid,” Prater said.

If you go

Tuesday’s workshop for the San Luis Coastal school board is scheduled from 9 a.m. to 3:30 p.m. at the district multipurpose room, 1500 Lizzie St., San Luis Obispo. The agenda includes a discussion of long-range planning as it relates to the loss of Diablo Canyon tax revenue. No official action will be taken — the session is advertised as an opportunity for board members to “roll up their sleeves” — though the board may provide direction to the administration; those items will appear on a future agenda.

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