TRACY — The priciest school in California sits far from swank ZIP codes in Malibu or Marin County. It lies a stone's throw from the orchards and fields of the Northern San Joaquin Valley. It's a tiny district that saw opportunity in a charter school funding law and seized the day. But that funding heyday may have passed.
New Jerusalem School District received more than $540,000 in attendance revenue for each of its 16 noncharter students last year roughly 100 times the state norm. Neighboring Manteca Unified, for example, received $5,251 per child in attendance funding the same year.
The state spent about $51 billion on education in 2012-13, of which the extra $8 million paid to New Jerusalem was only a fraction. But because schools all pull from the same pot, every other school received a little less because one district got a lot more.
The 16-student district oversaw charter schools serving 3,101 students last year. Through a quirk in a complex education funding formula, the state paid the charter schools for each student and then paid New Jerusalem District half again for the same youngsters, about $2,900 each, or $8.7 million.
This year, a sixth New Jerusalem-authorized school opened, Acacia Community Charter, enrolling for kindergarten through eighth grade. The district also sponsors Great Valley Academy-Manteca, an expansion of the Modesto campus of the same name; Humphreys College Academy of Business, Law and Education, a high school; and California Virtual Academy @ San Joaquin, an online school.
New Jerusalem runs two charters of its own: New Jerusalem Elementary with 222 first- through eighth-graders, and Delta Charter, serving some 650 kindergartners through seniors.
As charter schools opened, the state kicked in an extra $1 million for three years, then $3 million for one year, then $8 million last year as Superintendent David Thoming and school board members watched in disbelief.
"We kept saying, there's no possible way this could work like this. The state is smarter than this," Thoming said. "Every year, it was like, 'They're going to fix this.' "
This year, they did.
"There was a flaw in the formula. The law was designed to reimburse districts that authorize charter schools," said Peter Foggiato of the California Department of Education, which allocates funding for schools.
"They seem to be maximizing the effect of that law," he added dryly.
Foggiato, head of the department's School Fiscal Services Division, said a cap included in a year-end budget trailer bill will limit what is paid to New Jerusalem this year.
'A crazy number'
The department notified the district July 24 that its attendance funding would be slashed to about $750,000, Thoming said.
"We were under no illusion it would go on forever. The $8.7 million is a crazy number, and we get that," Thoming said. It's the timing he has a problem with.
Thoming said he was assured by the state Department of Finance in January, February, May and mid-July that the funding would remain for one more year.
"It's ludicrous for anyone to say we should have made a bunch of cuts," he said. "We're fighting with the state at this point. You can't do that to a district, to say, 'Go ahead and build your budget,' and then blindside you."
Department of Finance spokesman H.D. Palmer said his agency believes the state's Local Control Funding Formula pledge to "hold harmless" districts with higher funding applies in this case. "It boils down to a difference of interpretation between our office and the Department of Education," Palmer said.
But Foggiato said the pledge did not address this section of funding and, in any case, final authority rests with his department.
"We know New Jerusalem is not happy about this," he added.
The loophole applied only to districts fully funded by local taxes. Because New Jerusalem went all-charter except for one grade, attendance revenue for its 16 kindergartners was fully covered by the $429,832 in local property taxes it collected last year.
Thoming said it kept one grade to maintain its autonomy as a traditional district.
Its one full-day kindergarten class this year has 23 students. Teacher Shannon McComb leads circle time and reads stories in a light and airy room full of colorful art projects and new books.
There are no whiz-bang extras such as iPads, but there is an all-day aide, Roslyn Thomas, and local field trips, including to the zoo and pumpkin patch.
So where did those extra millions go?
Thoming said the district provides busing for all its in-house charter students, as well as cafeteria services. But much of it went to expensive special-education services.
12% special-needs kids
While public charter schools legally must serve all students who want to attend, most have very few special-education students. Some 12 percent of New Jerusalem students, however, have special needs, and almost all are included in regular classes, Thoming said.
Its budget shows that $1.6 million in salary and benefits goes more to support staff salaries, such as aides and bus drivers, than teachers and administrators. Thoming's income for 2012 was $153,381, and a second administrator made $119,102, the only district salaries to top $100,000.
The district also saved a chunk, leaving a $3.3 million balance in its general fund. The district planned to save $5.6 million this year, then live off its reserve for at least two more years, a three-year budget projection shows.
It also has hefty debt. The district financed new facilities in 2011, using low-interest bonds paid back out of its general fund, according to bond financial disclosure documents. The $5 million bond issue will cost the district more than $400,000 a year through 2025.
Thoming said paying cash was not considered, because district leaders believed higher funding would continue indefinitely.
The bulk of the bonds, $4 million, built the 11,600-square-foot Teranishi Event Center with a 400-seat gymnasium, performing arts facility, snack bar area and restrooms. Bond money also provided the district match to get state building funds to add 10,000 square feet of office space and classrooms, including a music room, state-of-the-art science classroom, uniquely designed special education facilities, a library, a computer lab and a new district office.
Thoming grew up in the small community, attending the small rural school as did his parents and his grandparents. Traditions run deep in New Jerusalem, but it also has embraced innovative ideas such as online learning and visual development through its charters.
With the application for 2012-13 of the large, virtual charter school, district leaders faced a difficult choice, Thoming said.
"We knew (the funding level) would raise red flags," Thoming said, "but regardless of the politics, number one, is it good for kids? And in my opinion, it is."