Redevelopment Funds and the School District

With the , the school district hired a consultant to predict various funding scenarios.

The Redevelopment Agency Impact Analysis Report was presented at the Milpitas Unified School District Board of Education Meeting on August 23. 

Dave Mealy of Urban Analytics provided the analysis.

Scenario if the city RDA dissolves:

• Should the Milpitas Redevelopment Agency dissolve, any additional revenue paid to the school district would be based on the amount remaining after all the RDA’s obligations were paid.  

• As the exact amount of these obligations is not yet known, the projected impact is calculated based on different scenarios. 

• Should the Milpitas Redevelopment Agency dissolve (and leave some revenue for distribution to taxing entities), the estimated additional revenue to the district could range from $4 million to $6 million in annual property tax revenue.

• The district could receive some revenue that is subject to limitations, meaning that revenue would reduce the state assistance–and would not result in a gain to the district. 

Mealy said the school district is not expected to receive sufficient additional property tax revenues to push it over the limit.

Scenario if the city RDA continues under new state legislation:

• Should the Milpitas Redevelopment Agency continue to operate under new state regulations, it would pay the state the required annual ERAF contribution. The first year is estimated to be nearly $14 million, and $3.3 million each year after that. That money would be redistributed by the state to public schools. 

• Under this scenario, 69 percent of the estimated $14 million, or $9.5 million, would go to the district. But the entire amount would reduce the amount of state funding the district receives that year, so it would not necessary be a gain.

• However, about $2.2 of the $3.3 million in subsequent years would not offset the money the school district receives from the state.

Milpitas Unified is a revenue limit district, meaning that it receives money from the state in addition to local property taxes.

School districts such as Palo Alto and Saratoga are basic aid districts which budget revenues comes mostly from local property taxes.

The Milpitas City Council/Redevelopment Agency has moved in the direction of continuing the Milpitas RDA and has joined in litigation opposing the state's efforts to dissolve RDAs and take local funds. The California State Supreme Court has granted a stay on further actions by the state. A ruling is expected in early 2012.