Commentary: The School District Is Fiscally Vulnerable Like Never Before

Photo by alam kusuma on Unsplash

By David M. Greenwald
Executive Editor

Davis, CA – The school district is seeking to renew its parcel tax and perhaps this time it has an uphill fight.  It’s hard to judge this early.

Truth be told, I thought they were in trouble back in 2020 but they managed to squeak it out with the help of a surge in the late ballots.

This time might be harder even though it’s a straight renewal.

But the district has far bigger problems up ahead than the parcel tax—even if the parcel tax passes.

I get why the district would focus on the parcel tax—it’s the one governance piece they actually control, assuming that the voters are willing to support it.

There are three reasons why I think the parcel tax could have a much tougher road to hoe this time.

The first is demographics.  Previous polling has consistently shown that support for the parcel tax declines with age and as people’s children age out of the schools.  There has been a huge demographic shift in recent years away from families and toward seniors and retired people.

The second, we’ll call it tax fatigue.  A lot of people I’m talking to have come to the conclusion that they have shelled out too much in the way of taxes, and schools (again a lower priority with more and more not having kids in schools) seem to lead the way.

Finally there is politics.  I think this can be summed up neatly in a recent letter from former Councilmember Michael Harrington— “developers try to blow open our borders with junk sprawl neighborhoods” and “the schools are used by them as reasons to vote for the new projects.”

There is a lot of misinformation going around that’s not particularly helpful.

In the same letter from Harrington, as I noted a few weeks ago, he argued, “The policy I strong disagree with is the one where they invite in hundreds and hundreds of out-of-town families to fill up our school buildings so the DJUSD doesn’t have to make hard choices to close a school (or two), and lower our taxes.”

I’ve attempted to explain many times over the years why this formulation is completely wrong.  But it is time for the school district to take the lead and show in clear and unambiguous numbers why closing a school will not stop the problem.

And that is the big problem that we now face here.  It all stems from the same place.

On the one end, the voters are less likely to support parcel taxes because fewer and fewer have children in school.

On the other end, there are fewer and fewer children in school which is putting pressure on the school district financially in ways that go well beyond simple parcel taxes.

The two seem related, but in fact they are not.  The main reason we have the parcel tax has more to do with how California funds schools and the fact that under the Local Control Funding Formula (LCFF), Davis, with its relatively low number of Title 1 students, is somewhat disadvantaged.

The district has then made up the difference and funded critical programs through the parcel tax—programs that would be jeopardized if the voters were to strike down the parcel tax.

But in another sense, the parcel tax is the least of the district problem.  The bigger threat—long term—is declining enrollment.

And no, you can’t fix declining enrollment by closing schools and ending out-of-district transfers.

Why?

Because even if you could do so legally or over time, you’re going to have a shrinking number of students.  We’re not talking about a rapid decline, but enough to lose ADA dollars more quickly than the district can cut teachers and other costs.

This is in fact all about our housing policies.

Judy Ennis noted the impact on our schools: “We’re known as being a small town that’s great for families, great schools, and that is true. I’m a very proud DJUSD parent. But we do have declining enrollment.”

Some of that she acknowledged is statewide: “There is statewide declining enrollment for other reasons that are not related to housing costs and more about birth rate. But even so, for the children that are being born right now that we want to have in our school for the next five years, we have more students that we are bringing in from other districts because families can’t afford to live in Davis anymore. New families can’t afford to come in to Davis.”

She said, “This is a reality that we’re looking at, has an impact on our schools, has an impact in terms of our commutes has an impact on our students. This is our community.”

And this is the problem that is driving both the parcel tax problem and the declining enrollment problem.  The problem that we have is that we need to build housing that parents, that young teachers, that families can afford to move into or we are going to end up with a community that looks very different from the one that we have grown accustomed to and many of us moved here to enjoy.

It’s not going to happen overnight.  This is a long, slow, long-term decline.  But it’s a real problem and the school district is going to have to take the lead on this.  It’s easy to cheer on the parcel tax.  Much harder to create long-term structural change.

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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20 Comments

  1. Tim Keller

    I have a small amount of cognitive dissonance when people start talking about the schools like this.

    I think declining enrollment is a trailing indicator… like the dissapearance of frogs from an ecosystem that is being poisoned.

    If you try to re-introduce the frogs, they will just die again – the first think you need to do is identify the poison, remove it, and then the frogs will likely recover on their own.

    So the developers using schools to promote their developments arent wrong… but building their particular developments actually going to fix the problem either.   The problem is the cost and inavaliability of housing in general.   No single development is going to move the needle.  Something fundamental needs to change which unlocks a significant amount of construction of affordable homes.

    1. David Greenwald

      It’s an interesting point. The way I view it, it’s a long term issue. You can’t solve it with a quick fix. But it starts with building housing that people can afford.

      1. Matt Williams

        David, it is more than an interesting point.  It is the existential core of the issue.  You are absolutely correct when you say “it starts with building housing that people can afford.”   And that statement begs the question, “Why then are we considering new housing developments that contain the majority of residences that have prices that people can not afford?”

        Nancy Reagan was famous for the phrase “Just say no!”  Davis needs to follow that dictum and reject any development proposal that contains housing that people can not afford.  That kind of housing simply is magnifying the problem.

  2. Keith Olsen

    I’ll post it again.

    The DJUSD needs to face reality and downsize.  All of the spinning, twisting and excuses for keeping the system bloated doesn’t make sense when the actual student demographics of Davis doesn’t support the current size.

      1. Keith Olsen

        “When you lose kids, you lose money,” Ms. Roza said. “There’s no hidden piece to this puzzle. You have to close schools and lay off people. And every day you spend trying to avoid that, your kids are getting older and still not reading, and your district is spending money it’s not going to have.”
        Few states illustrate the challenge as clearly as California, which educates roughly one in eight of the nation’s public schoolchildren. For the first time in two decades,public school enrollment fell below six millionthis academic year.

        https://www.nytimes.com/2022/05/17/us/public-schools-falling-enrollment.html

  3. Don Shor

    Something fundamental needs to change which unlocks a significant amount of construction of affordable homes.

    But it starts with building housing that people can afford.

    Wealthy people have school-age children, too.

    “It starts” with building homes that people want to live in. Presently home buyers who have children are buying in Woodland. People with kids tend to want houses with yards.

    Creating more opportunities in the home rental market in Davis would be a reasonable goal. There is, of course, the likelihood that student renters will crowd out families who might want to rent here. Generally speaking, based on my interactions with non-student renters in this market, the further they get from campus the more likely they are to find what they want.

    Pretty much everything about consumer preference argues against high-density downtown housing here as being any kind of solution for increasing the numbers of school-age kids in the district. It will create some nice student rentals, especially the ones without parking. Very few families would rent in a place where they can’t have a car.

    1. Richard McCann

      The point of downtown housing is to attract students and young professionals out of the family-sized duplexes that they now occupy in central and north Davis. Then families can move into those houses. That’s one way of how we attract more students here.

      1. Tim Keller

        Amen.  I have made that point before too:  If you build more student housing and non-SFH housing for people who likely would prefer something else… you WILL get more SFH in the market as these people re-distribute themselves into more appropriate housing types..

        1. Don Shor

          Downtown projects:

          G St: The proposed housing development project would consist of 120 apartment units and 6 ground floor live/work units with garage parking in one building

          4th and G: 114 new apartments, including 20 percent of the units as affordable units for lower income households.

          The Lumberyard: The Lumberyard is a privately funded vertical mixed-use multi-family project with 224 residential units (comprised of 74 studios including 11 Live/Work units, 94 one bedrooms 21 two bedrooms and 35 three bedrooms).

          Total: 464 residential units

          Current number of households: 25,475

          These three projects would be a 1.8% increase in the number of housing units.

          I don’t know what that increase in housing units would do to the market, but I’m guessing you wouldn’t see a lot of current rentals that are filled with students suddenly being occupied by families. An economic analysis of the impact of small increases in supply would be useful. I think these projects are important, but I’d be very surprised if you’ll see significant changes in how people distribute themselves.

          Worth noting that students often prefer to live in houses with yards for the same reasons that other people do, and we can’t control where people choose to live.

        2. Richard McCann

          That these initial projects may not have a big initial impact on housing supply in Davis does not argue against using downtown housing to open up SF housing in the other neighborhoods. We always need to start with a small number–we aren’t going to get 5,000 units right away. In addition, small changes at an inflection point can have big impacts. Traffic congestion a good example where the flow can be rapid at 95% of capacity, but going to 96% can suddenly create a bottleneck without an accident.

          As for housing preferences, I expect most students would prefer accessibility over a yard. Looking at many rentals away from campus, a yard is viewed more as a burden than an amenity. As noted in David’s article on the housing element, apartment rents in Berkeley are 50% higher near campus vs. the city borders. A few students might prefer a house (and most likely grad students with a family), but many will be happier with a close by apartment.

        3. Matt Williams

          Tim, in concept you are correct, but in the current financial environment the cost of moving from one house to the other is forsaking a very low interest mortgage for a much higher interest rate mortgage.  For those people who have paid off their mortgage, the challenge is frequently the capital gains tax liability (or fear of that liability).

        4. Richard McCann

          Matt

          We have no idea of what the interest rate environment will be when these projects are actually finished and available for occupancy. Making assessments based on today’s conditions probably aren’t particularly useful.

    2. Matt Williams

      Don, I suspect that the substantial majority of wealthy people who are interested in buying a $900,000 to $1,000,000 house in Davis already have their children out of college, in college, or very soon to be in college … if they have any kids at all.

  4. Don Shor

    Interdistrict students bring in ADA funding on a per-student basis.

    The parcel taxes have no direct connection to the number of students. Indeed, many who pay those parcel taxes get no direct benefit from the schools, and many who get benefit from the schools don’t directly pay those taxes. That’s an artifact of Prop 13 that can’t be solved at the local level.

    If you eliminate interdistrict transfers, the school district will lose significant revenue and would have to cut many course offerings. That would affect the quality of the schools and reduce opportunities for the students.

    Also worth noting: if you eliminate interdistrict transfers you will probably increase demand for Davis housing.

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