Cupertino is served by two school districts, Cupertino Union (CUSD) for elementary and middle schools, and Fremont Union (FUHSD) for high schools. Both districts serve most of Cupertino (other than one small section), as well as parts of San Jose, Saratoga, Santa Clara, Sunnyvale, Los Altos, and some unincorporated areas.
While the City of Cupertino
is a separate and distinct entity from the public school districts
serving the city, our actions, and the actions of the other cities
served by the public school districts, have a direct result on
school funding, especially when it comes to the type and quantity of
new housing we approve. Our actions also have a direct result on the
number of students within the boundaries of each school in the two
school districts. Hence, the candidates that are elected to City
Councils, both in Cupertino and in other cities served by the two
school districts, end up affecting the two school districts in
multiple ways. It is important to elect City Council members that
have an intricate understanding of school funding, school
enrollment, and housing. In this election, Mayor Steven Scharf and
Planning Commission Chair Kitty Moore, are the only two candidates
with the knowledge and experience to address the issues affecting
our schools.
School funding is very complex because there are so many different factors that come into play, so this is a very long policy paper.
1. Fix the huge parcel tax inequities by having the school districts follow the Berkeley model and put per-square-foot school taxes on the ballot.
2. Ensure that future Housing Elements place new housing in areas where school enrollment is currently declining.
3. Address the huge property tax inequities by passing Proposition 15, "Split Roll" which will ensure that commercial property pays their fair share of taxes.
4. Remove portable classrooms from all campuses and temporarily change the school boundaries to assign more students to the under-enrolled schools.
5. Encourage the passage of a statewide "Intercounty Base Year Value Transfer" system that would increase the turnover of existing housing stock to both increase property tax revenue and increase enrollment.
6. Advocate for more for-sale
housing and less rental housing.
These are not quick-fixes and will not prevent all school closures. And these suggestions are up to the school districts to implement. But this is an opportunity to create a long term strategy to address under-funding, under-enrollment, and over-crowding. No school properties should be sold off. As we have learned from the past, enrollment is cyclical. New development, as well as the eventual turnover of existing housing stock, will cause a future need for any schools that are closed. In the short term, it may also be necessary to look into transportation solutions to transport students from areas where schools are over-crowded to areas where schools are under-enrolled; this is controversial, most parents prefer neighborhood schools, but there may be no alternative until we can address the housing imbalances.
School funding is a very big issue, especially for CUSD which is very poorly funded. California calculates a base funding level for each school district based on attendance numbers. There are two funding models, Basic Aid and Revenue Limit. Basic Aid: Local property taxes generate most of the district's revenue. This occurs in areas where the property tax revenue is high enough, and the number of students low enough, that the school revenue from property taxes exceeds the minimum per-pupil funding level set by the state. The District keeps all the property tax revenue that they receive, which exceeds, often greatly, the state minimum funding level. About 8% of California's school districts are Basic Aid. FUHSD is a Basic Aid district. FUHSD doesn't get more money from the state for each additional student that enrolls. This is why FUHSD is so strict about verifying residency. Parcel taxes and bond measures supplement the funding but bond measure money can only be spent on capital expenditures. Revenue Limit: Local property tax revenue is not high enough to generate enough revenue to meet the minimum per-pupil per pupil funding level set by the state. The state fills in the gap. Some additional funding comes from property taxes (25% of the property tax revenue). About 92% of California's school districts are Revenue Limit (State Aid). CUSD is a Revenue Limit (State-Aid) district. Since CUSD gets additional state funding for each additional student, they are less strict about verifying residency, though residency is still required, with certain exceptions.
An oft-asked question is this: How is it possible that FUHSD is Basic Aid, and well-funded, while CUSD is Revenue Limit, and struggling? Aren't the property values in this area high enough for CUSD to also be Basic Aid?
It's complicated. The root cause is because of the increase in high-density rental housing which not only generates lower property tax revenue per housing unit, but also has a disproportionately higher number of children of elementary and middle school age living in that housing. For CUSD, the limited amount of property tax revenue is spread across a much larger number of students and does not meet the minimum state funding level, and it's not even close. By contrast, Saratoga is a Basic Aid district because their property tax revenue is spread across a much lower number of students. Saratoga does not have a lot of rental housing, and rental housing is what generates a larger number of students because of much higher turnover of the housing stock. For a Basic Aid district, the fewer the number of students the more money per student is available. Sometimes the amount of money per student is absurdly high dues to a very low number of students but a very high amount of property tax revenue; one school district receives about $200,000 per student, but $10,000-20,000 per student is more common.
The next RHNA (Regional Housing Needs Allocation) Cycle (2023-2031) is going to greatly exacerbate school funding problems if the housing that is entitled is actually built, especially if it is mainly rental housing. It will be high-density housing and will generate a large number of students, but the property tax revenue and parcel tax revenue will be relatively low. However, due to the current housing glut, and the fact that Covid-19 and remote working are permanently changing the need for commercial office space, housing, and transit, it's likely that the same thing that happened in the current RHNA Cycle will happen again--Cities will rezone land to meet their absurdly high RHNA requirements but the property owners won't actually build because there's no market for the expensive market-rate housing.
in the current RHNA Cycle (2015-2023), Cupertino was required to allow 1064 additional housing units. A previous City Council created a Housing Element with 1,400 housing units, but in reality we far exceeded the number of entitled units for a total of 3,457 units. Since most of these are rental units, they negatively affect school funding (except for senior rental units). Originally, the housing at Main Street was supposed to be age-restricted but the property owner received approval from a previous City Council to switch them to non-age-restricted.
There are three problems with the 2015-2023 RHNA Cycle Housing Element related to school funding and school enrollment:
Fixing #1 and #2 are possible. First, for the next RHNA cycle, we need to choose Housing Element sites in areas of the school districts that are under-enrolled. School boundaries could also be modified, and students could be bused to schools outside their current boundary. Second, we need to adopt tax policies that encourage property owners to build for-sale housing instead of rental housing (this would be better for funding but would generate fewer students. Third, at the state level, we need to find a way to increase the turnover of the owner-occupied housing stock.
Fixing #3 will be very difficult. The glut of market-rate rental housing is being further exacerbated by the pandemic, and even when the pandemic is over, things will not go back to the way they were, with crazy-expensive rental rates. Greatly increased remote-working means that many workers can live in areas with lower-cost housing and they can purchase single-family homes. High-density areas were disproportionately affected by Covid-19 so that has been another factor in the desire to live in less dense areas and in lower-density housing. If the Covid-19 has taught us anything it's that "Density is NOT our Destiny." Property owners have a long list of reasons as to why they are not building their entitled or approved projects, but all of the reasons boil down to the fact that they don't see a path to profitability.

A very controversial issue in CUSD is the proposal to close some schools due to under-enrollment. Students from the closed schools would be assigned to other schools. No one wants to see their neighborhood school closed, but it's too expensive to keep multiple under-enrolled schools open due to the fixed costs of the facilities, office staff, administrators, and other expenses. Furthermore, closed schools can often be rented out to private schools, bringing in much-needed revenue. Further complicating the CUSD funding picture was the March 2020 failure of voters to pass Measure O, a $125 per parcel parcel tax which would have provided $4.3 million annually for 5 years.
This issue has been building up for more than a decade. Under-enrollment of some schools on the west and south portions of CUSD and FUHSD are a direct result of poor planning decisions made by prior City Councils, not only in Cupertino, but also in San Jose and Saratoga. A significant amount of new high-density housing was approved in areas where the schools are at capacity (and adding more portable classrooms), while almost no new housing was approved in areas where school enrollment was falling.
Grassroots resident groups like Better Cupertino warned about adding more housing in areas where schools were already over-crowded and came to an agreement with the Main Street property owner to make the housing at Main Street age-restricted senior housing which would have avoided adding more students to schools that were already over-crowded; unfortunately, the City Council then allowed the property owner to abandon the plans for senior housing. In fact, Main Street itself exists because residents overturned, at the ballot box, a plan by Toll Brothers to build 380 housing units on that land. Residents opposed the Toll Brothers plan because of the over-capacity issue at the schools that would have been served by that housing (see http://www.smartvoter.org/2006/11/07/ca/scl/meas/E/).
What is often unclear to some people is that adding more students to a Revenue-Limited district, like CUSD, in order to prevent the closure of schools, does not actually solve the school funding problem, in fact in can exacerbate it. This is because the per-student funding provided by the State of California, and by the County of Santa Clara, is less than what CUSD spends per student per year. The balance is made up by voter-approved parcel taxes. If we build large apartment buildings that generate hundreds of new students, we are not fixing the problem because the property tax revenue and the parcel tax revenue will not cover the difference in costs due to inherent inequities in how parcel tax is assessed. For example, under the current parcel tax system, the housing at the Vallco SB-35 project, if all the housing units are rental apartments, would pay $500 in parcel taxes; that's not $500 per unit, it's $500 total, or about 21¢ per apartment! The property tax revenue, collected by the county, and given to CUSD would be about $2.5 million. By contrast, if all the housing units were condominiums, they would pay 2402 * $250=$600,500 in parcel taxes (unfortunately, the studios would pay the same $250 per unit as the 3 bedroom apartments), but the property tax revenue of 2,402 individually-owned units would still be much higher than the property tax of 2,402 units all owned by one apartment complex owner.
In one of The Oaks (Westport) proposals (not the one moving forward), the property owner offered to pay the equivalent parcel tax for each of the rental units for a number of years in order to offset the revenue loss to the school districts caused by rental housing. The currently approved Westport project won't help enrollment issues much because all of the rental housing is senior housing, but the for-sale housing will at least provide adequate property tax and parcel tax revenue for the additional students that it will generate.
As to parcel taxes, the owner of an 100 unit apartment building on a single parcel pays only one set of parcel taxes, while the 100 owners of 100 condominiums, or 100 houses are paying one-hundred sets of parcel taxes even though they are generating fewer students per housing unit. State-Aid districts like CUSD depend on parcel taxes to fill the gap between the funding per pupil provided by the State, and the spending per pupil by the district.
Exacerbating the problem is that while ownership housing is eventually sold, and reassessed at market value, apartment complexes are not often sold and reassessed, so the revenue gap is continuously getting worse.
Currently, the CUSD (K-8) parcel tax is $250 per parcel per year and the FUHSD (9-12) parcel tax is $98 per parcel per year for a total of $348 per year. By contrast, In Palo Alto, the parcel tax (for K-12) is $836 per year (2.4 times higher in Palo Alto than for CUSD and FUHSD combined). Yet in March 2020, voters rejected an additional $125 parcel tax for CUSD. In fact, every school parcel tax in Santa Clara County failed in March 2020. Voters are just weary of passing new taxes, especially when the taxes are applied unfairly.
One more note, it is not permissible to charge different per-square-foot rates for commercial versus residential property, all parcels must be taxed at the same rate. However it is permissible to cap the maximum amount that parcels would pay, i.e. you could tax only the first 100,000 square feet.
Again, if a per-square-foot
school tax were passed, it would replace the current
per-parcel school tax. There would still be a senior
exemption.



There's another reason why a per-square-foot tax makes sense and it's based on recent laws on ADUs (Accessory Dwelling Units). When a homeowner adds an ADU, they can rent the ADU to families with school-age children. With a per parcel tax, the ADU owner will not be increasing their funding of schools but they will be receiving significant additional rental income. With a per-square-foot school tax, the square footage of the ADU will be counted when determining the school tax.
Under a per-square-foot school
tax, commercial property would pay the same square-foot rate as
residential property. While the Apple "Spaceship" is not within
the CUSD or FUHSD district, the parcel south of the "Spaceship"
(which is south of the old Pruneridge Avenue) is within CUSD and
FUHSD. This property has an assessed value of over $655 million
but pays $250 in CUSD parcel tax and $98 in FUHSD parcel tax.
No one likes paying taxes. But when a tax is fairly administered, and is progressive rather than regressive, people will vote for them.
The YIMBY mantra of "Build Baby Build," which advocates for adding vast amounts of housing, without any thought to necessary infrastructure is especially dangerous when it comes to schools (though it is also thoughtless in terms of water, energy, sewage, roads, transit, parks, public health, and sustainability). In most built-out cities in the Bay Area there is no more land for schools. While schools could always build up, the funding necessary for multi-story public schools is not available from the State, County, or from developer-impact fees. The only solution, and it's a solution that we've seen over and over again, is more portable classrooms placed on blacktops and playing fields; there's just no money for anything else.


Over the decades, the two school districts have reduced the number of schools even as the population has increased.
The original thinking for CUSD was that it was better to have a large number of smaller schools. There were once twelve more elementary schools (demolished, with part or all of the land sold for housing) and there are two elementary schools that are currently leased out (Serra and Luther). When enrollment declined, some schools were temporarily closed, but later reopened (Eaton and Murdock (now Murdoch-Portal)). There was another junior high school (Ortega) whose facilities were leased out but then taken back and merged into Stocklmeir Elementary as enrollment increased. See https://en.wikipedia.org/wiki/Cupertino_Union_School_District for a detailed list of all the original schools and what happened to them.
For FUHSD, there were two more high schools than we have now, both in Sunnyvale. There was Blaney High School, a continuation high school in Sunnyvale on Homestead Road (torn down and sold for housing), and Sunnyvale High School (currently leased out to The King's Academy and some other private schools). Sunnyvale High School will eventually need to be renovated or rebuilt, and re-opened, due to the population growth in that area.

Whatever happens in terms of
school closings for CUSD, it is vitally important that the
district not sell the schools and the land because eventually
enrollment will rebound and those schools will be needed.
Exacerbating the school funding problem even more is the average number of students per housing unit. An unintended side-effect of Proposition 13 is that owners of for-sale housing typically don't sell their homes as soon as their children are done with the public schools because Proposition 13 makes it advantageous to remain in their homes. As a result, the average number of public school students goes down the longer a single family home is not resold. For example, if you have two children in public school for 13 years, but stay in your house for 26 years, the average student load for that housing unit is 13 years x 2 students ÷ 26 years = 1 student.
Tenants of rental housing
turn over much more frequently because once the children of
the tenants in rental housing are done with the public schools
they tend to move to an area with lower-cost housing because
school quality is no longer a concern; they are replaced by
new tenants with school-age children. This is why schools in
areas without much rental housing are experiencing an
under-enrollment problem while schools in areas with a lot of
new rental housing are over-crowded. One workaround is simply
to assign students to schools outside the normal school
boundaries, and this is already occurring to some extent.
There is no guarantee that a student will get to attend their
neighborhood school. It was rather sad to read a post on
Nextdoor from a mother, living in Rancho Rinconada, looking
for friends for her elementary school aged daughter that
should have gone to Sedgwick but was forced to attend a school
far from her home; the daughter's classmates all lived far
away so she had no friends from school.
It is true, that due to Proposition 13, older homeowners are paying much lower property taxes than newer homeowners, but it's also true that the level of services they require are lower because they aren't using the public schools anymore. The 2% annual increase in property taxes is low, but not unfair. However if the owners rent out their homes, or let their adult children with their own school age children live in their home, that creates a big burden on the schools without generating the necessary funding. I have seen this in my own neighborhood. A couple, with an annual income of $400,000, moves into the childhood home of one of the couple's parents. The home is worth $2 million but is assessed at $200,000. The property taxes are extremely low. The couple sends their two children to public schools. But their $2500 in annual property taxes doesn't nearly pay for the the schools' per-student costs. No one is doing anything illegal or unethical, they are just taking full advantage of Proposition 13. It's why I believe Prop 13 should be modified to apply solely to owner-occupied for-sale housing, and not to income property.
I favor State Laws that allow older homeowners to take their Proposition 13 assessed value with them and move anywhere in California. Currently, Propositions 60 & 90 allow this for some counties, but each county can decide whether or not to participate, and only ten counties currently participate (Alameda, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne, and Ventura). Other counties have opted out because it is not financially advantageous for them. Here's an example of the problem: a senior in Cupertino, living in a house with a market value of $3 million, an assessed value of $300,000, and is paying about $3000 per year in property tax. They sell their home for $3 million; the new owner is paying $30,000 in property tax. The seniors move to a Prop 90 county and buy a $500,000 house but take their $300,000 Prop 13 assessed value with them. Santa Clara County makes out like a bandit, with $27,000 more in property tax revenue. The Prop 90 county loses out because the seniors are paying $3000 a year in property tax instead of the $5,000 that they'd pay if their new home were assessed at market value. But this inequity can be addressed with some sort of revenue sharing system, and both counties would benefit, i.e. Santa Clara County could pay the $2000 difference to the other county and still be $25,000 ahead.
Why do all this? Because it encourages turnover of the residential housing stock in dense urban areas. It's the lack of turnover of the housing stock, especially that of single family homes, that is causing both the under-enrollment problem and the funding problem.
Per Square Foot School Taxes
The parcel tax issue is especially vexing. Some districts, like Berkeley, have passed school taxes based on square feet rather than on a per parcel basis. Owners of rental housing complexes, and commercial office property, don't like this, but it is much fairer. The most recent vote on school taxes for Berkeley passed 89%-11% (see https://ballotpedia.org/Berkeley_Unified_School_District,_California,_Measure_E,_Parcel_Tax_(March_2020)). I have long advocated for this system to both CUSD and FUHSD. Both districts insist that replacing the current parcel taxes with a per-square-foot tax, would never pass. They may be right, but they've never tried. In Santa Clara County, in March 2020, every school parcel tax, including the CUSD parcel tax, failed (some bond measures passed), so a per-square-foot school tax might be worth a try.
Another feature of BSEP is that
senior exemptions are needs-based. This is fair, but the reality
is that most seniors living in CUSD and FUHSD areas don't take
the senior exemption anyway. Practically speaking, if a senior
exemption is what makes the difference between a tax measure
passing or not passing, then it should be included.
Here's the deal--if a per-square-foot parcel tax fails then CUSD has clear mandate to close schools because it will be clear that voters don't care about the quality of our schools. But I think that our voters do care, and that a fairly administered tax could pass given the proper campaign. It has to be made clear that the new tax replaces the existing tax.
Even more revealing was what
came out of a Public Records Request from Fremont Union High
School District. "The FUHSDS data yielded some surprising
results mixed in with that district deciding not to try the
square foot parcel tax: 71% of respondents did not know
they paid less than $100 per year in parcel tax to the
district. 73% of renters supported the square foot parcel
tax. Only 19% of respondents felt there was a “Great need”
for additional funding for FUHSD and 44% felt there was “some
need.” But it's important to understand that CUSD and FUHSD have
very different funding models. Polling on the likelihood of
voters passing a per-square-foot tax for FUHSD cannot be
extrapolated onto CUSD. It's also important to understand that
FUHSD, both the administration and the school board, have
consistently lobbied on behalf of development interests so any
polling they performed is highly suspect. Did they explain that
individual property owners would actually pay less but that the
total revenue generated would be greater because apartment
complexes would no longer get away with paying almost nothing
per unit? Unlikely!
One reason that I advocate for new housing to be for-sale, rather than rental, is because of the financial advantages to the schools. There are other advantages as well, that accrue to the owners who are building equity and wealth rather than contributing to the wealth of the rental property owner.
Another issue with school funding is the level of impact fees that are assessed on new housing. These fees are capped by the state, and are extremely low, far too low to construct new permanent buildings or new schools. This is the reason that school districts resort to portable classrooms to increase school capacity when new housing generates additional students; it's not that they believe portables are a good idea, it's because portables are much cheaper than constructing new permanent buildings. One parent whose children attended the same schools as my children, made up a riddle: "What did one new portable say to another new portable at the portable factory? See you on the playground."
School Districts are bound by
strict rules when they assess impact fees on new development.
For example, if a school district has unused, or leased out
schools, the State's belief is that impact fees should be lower
because the District does not need to construct new buildings to
accommodate the new students that will be generated by a new
development. But the unused school could be very far from where
the new development will occur. For example, CUSD has two
schools, Serra (Sunnyvale) and Luther (Santa Clara) that are
leased out to private schools. Luther is certain to be needed in
the future due to new high-density housing that is planned in
the area. Serra could also be needed in the future if new
high-density housing is constructed at or near Loehmann's Plaza
shopping center in Sunnyvale which has lost two of its anchor
stores (Loehmann's and Orchard Supply Hardware) as well as at
the shopping center with Homestead Bowl in Cupertino. A similar
situation exists with FUHSD, since the District is leasing out
Sunnyvale High School to Kings Academy and some other private
schools, this limits the District's ability to assess the
highest possible level of impact fees. Due to a great deal of
housing construction in the area around the Sunnyvale High
School campus, it will be necessary for the District to
eventually re-open Sunnyvale High School, though they claim that
it would require a complete tear-down/rebuild for the campus to
meet state standards.
Fixing the inequities in school funding are not something that individual cities can accomplish. It requires action by the State Legislature. Unfortunately, many State Legislators are heavily funded by entities that would be required to pay more in taxes if the school funding model were made fairer.
Cities are forbidden from considering school impact when approving or not approving new housing that is compliant with the General Plan and existing zoning. However the City does decide whether or not to grant General Plan Amendments and rezoning land for different uses, as well as for increased height and density. School impacts need to be considered when deciding on these General Plan Amendments and rezoning.
Both the City and the school
districts need to charge appropriate taxes and fees, as
necessary, to pay for their operation, not try to extract payola
from developers in exchange for granting them General Plan
Amendments that allow projects that would never normally be
allowed. We can't go running to Apple or to developers every
time we need some money for something.
Steve Jobs was spot on when he replied, on June 7, 2011, after a
City Council Member asked for free Wi-Fi and other freebies from
Apple, "I'm a simpleton, I've always had this view that we pay
taxes and the City should do those things." See: https://youtube.com/watch?v=gtuz5OmOh_M&feature=youtu.be&t=806.
So let's collect fair and appropriate taxes and fees and then
use that money to pay for the City's and the Schoold District's
needs.
There are efforts in the State Legislature, funded by Wall Street real-estate investors, to take zoning authority away from cities. Most cities are opposed to this legislation, but there are Astroturf groups, funded by developers, corporations, and real-estate investors that have been formed with the express intent of destroying suburban cities that have high-quality schools. These Astroturf groups go by various names, including various YIMBY groups (YIMBY stands for "Yes In My Back Yard," but is more accurately called WIMBY (Wall Street In My Back Yard), as well as groups with "Forward" or "For All" in their names). Often people join these groups with the best of intentions, not understanding the big picture.
Fortunately, there are also groups working to stop the State Legislature from passing bills designed to benefit real estate investors and corporations from destroying suburban cities and their schools. These include Livable California, California Alliance of Local Electeds (CALE), and Better Cupertino. These groups are well-intentioned, but lack the money necessary to have much influence on legislators.
Mayor Steven Scharf, and
Planning Commission Chair Kitty Moore would like to see the per
parcel tax of $250 replaced by a per square foot school tax. For
example, at 15¢ per square foot, a 2000 square foot home would
pay $300 per year instead of the current $250. An apartment
complex with two-hundred apartments averaging 800 square foot
per apartment would pay $24,000 per year instead of the current
$250. A corporate parcel with a one million square foot building
would pay $150,000 per year instead of the current $250. The
other two serious City Council candidates, Hung Wei and J.R.
Fruen, oppose a per-square-foot school tax replacing the current
parcel tax.
School funding is an issue
where it's not possible for everyone to gather in a circle and
sing Kumbaya and come to a solution. There are multiple
conflicting interests, the State, the County, the School
Districts, the Property Owners, the Developers, and the Parents
& Students. It will take the leadership of the City and the
School Districts to team up to fight for adequate funding from
the state, to encourage residents to pass a per-square-foot
parcel tax, to ensure that school impact fees are allowed to be
set at adequate levels, and to decide, if necessary, which
schools should be combined until such time as enrollment
increases.
This is probably more that most people want to know about school funding, but it's very important that voters understand this crucial issue. School quality and school funding affect all of us, even if our children are done with the public schools. Steven Scharf and Kitty Moore are the only two candidates that understand the complexities of school funding and how City policies have a big impact on our school districts.
Personally, I have a very strong interest in our schools. I volunteered throughout my children's K-12 school years, and beyond. I chaperoned my son's 8th grade Yosemite trip. I continued to volunteer for Cupertino High School's Tournament of Bands even after my son graduated. My son is now a teacher. I am convinced that we can get voters to pass fairly administered school taxes.

Steven Scharf for Cupertino City Council 2020 FPPC ID #1388099