We enjoy many benefits from living here in Los Altos. My family and I have made this community our home, with three kids attending the local public schools. The median home price in our area is holding steady at $4.2 million, which can make it challenging for many to break into the market. But once you’re here, you’ve made an investment that will pay dividends for years to come. One of the biggest draws for buyers is our incredible school system, which has a significant impact on home values. Given that connection, it’s worth taking a closer look at how our schools are funded.
I recently joined the board of the Los Altos Education Foundation, and this experience has opened my eyes to how crucial local support is for maintaining our schools’ excellence. I’d like to share some insights about how our funding works and what it means for our community.
Local funding and basic aid
Due to the high property values in Los Altos, our schools are primarily funded through property taxes, following a “basic aid” or community-funded model. In contrast, other districts with lower property values rely more heavily on state funding, which is tied to student enrollment. For these districts, more students mean more state funding under what’s called the Local Control Funding Formula. But here in Los Altos, the majority of our school funding comes directly from the community – property taxes, parcel taxes, bonds, and support from organizations like the Los Altos Education Foundation.
To give you a sense of how this breaks down: Approximately 73% of our school funding comes from property taxes, with another 13% from parcel taxes. State and federal aid, plus the lottery, make up just 7%, and the education foundation fills in another 3%. This all adds up to 96%, but the remaining shortfall often needs to be filled by other means – like a bond measure.
Proposition 13’s legacy
Let’s take a step back and look at how Proposition 13, passed in the 1970s, still affects us today. This law caps property tax increases, which has been great for long-time homeowners but creates challenges when it comes to school funding. While Los Altos homes sold more recently at today’s high prices contribute a lot to our schools, many long-time residents or families that have passed down homes are paying much lower taxes. This gives our community stability and character but reduces the overall property tax revenue flowing into our schools.
When Prop. 13 first passed, property tax revenue across California dropped by 60%, causing a significant drop in school funding. Since then, property values have risen, helping somewhat to close the gap, but local bonds and parcel taxes have been critical in ensuring our schools receive the funding they need.
A tale of two houses
A study by the Los Altos School District illustrates the uneven impact of Prop. 13. While both homes are valued the same today, their vastly different tax contributions show how Prop. 13 affects school funding. One sold for $375,000 in 1985, and the other sold for $3.8 million in 2021. While these homes have the same market value, the difference in their assessed values means they contribute vastly different amounts to our schools. This is why voters have repeatedly passed parcel taxes to help make up for the revenue shortfall and ensure our per-student funding remains competitive with other districts.
This November, we’ll be asked to consider a bond measure to modernize our school infrastructure, update facilities, and construct new buildings. It’s essential to understand that while rising home prices benefit our schools, the real impact comes down to assessed values, and not every home contributes equally.
The costs of running our schools
Beyond property taxes, other costs are rising too. For example, utilities have gone up by 13%, and new state mandates around food services aren’t fully funded by the state. Additionally, programs like transitional kindergarten and special education, which are vital to our district, require local support to cover the costs.
Despite these challenges, our schools continue to thrive thanks to the dedication of our teachers, staff and administrators, who go above and beyond every day.
Los Altos schools are interconnected with the health of our community and local economy. The quality of our schools is one of the reasons Los Altos is such a sought-after place to call home, and that’s why it’s so important to keep supporting our local schools.
If you’d like more information or a copy of the slide presentation I’ve referenced, feel free to reach out. Our schools are at the heart of our community, and it’s up to all of us to ensure they continue to flourish.
Alex Wang is a Los Altos resident, realtor and founder of Rainmaker Real Estate. For more information, text or call Alex at (650) 800-8840 or visit AlexWang.com.
