Santa Ynez school sign
The state ordered the Santa Ynez Valley High School District and Santa Barbara Unified School District, which are both basic-aid-funded, to pay Olive Grove Charter School. Santa Ynez Superintendent Scott Cory worries paying $700,000 will make his district insolvent.  (Janene Scully / Noozhawk file photo)

Two Santa Barbara County school districts ordered to pony up hundreds of thousands of dollars for Olive Grove Charter School will challenge the payments that one educator says could lead to insolvency for a Santa Ynez Valley district. 

The California Department of Education recently informed Santa Barbara Unified School District and Santa Ynez Valley Union High School District they owed in-lieu property tax payments for Olive Grove, which has five branch locations in the county.

For Santa Barbara, this amounts to about $1.3 million. For Santa Ynez Valley’s high school district, it means $696,586, a “crushing” amount, Superintendent Scott Cory said.

“The result of this payment would be catastrophic for our district and would lead to insolvency in the next couple of years as a payment, if this amount or something similar is ongoing as long as (Olive Grove) exists in its current form,” Cory said. 

“We could not cut enough people or programs to balance our budget given that we are also addressing a structural deficit that compounds the issue significantly,” he added. “The structural deficit we can remedy, but not when coupled with this additional fiscal impact.”

Olive Grove Charter School, with an enrollment now of approximately 750, gained California Board of Education approval for its charter after rejections from multiple local school districts.

Operating since the 2001-02 school year, Olive Grove Charter School leaders say the program is geared toward students in sports and entertainment, or those seeking alternatives to the traditional schools. It enrolls home school and independent study students in grades from transitional kindergarten through 12th grade, according to the school. 

A court ruling required Olive Grove to seek the new charter, with the school unsuccessfully petitioning Santa Barbara Unified, Buellton Union, Lompoc Unified, Orcutt Union, and Santa Maria Joint Union High School districts, along with the County Board of Education, in 2017.

All the districts rejected the petition and cited concerns about the school’s finances and programs, but then Olive Grove successfully won approval from the state.

Unlike their counterparts, the Santa Barbara and Santa Ynez districts have been hit hard with the payments because both are basic-aid districts, meaning their revenue from local property taxes exceeds their entitlement under the Local Control Funding Formula (LCFF).

The California Education Code requires school districts to transfer to charter schools an in-lieu amount of property taxes, essentially lowering the district’s local revenue amount, said Jonathan Mendick, spokesman for the state Department of Education. 

For non-basic aid districts, or those where property taxes add up to less than the entitlement under the state formula, state aid covers the payment they otherwise would have to hand over.

“We understand this is creating a hardship for the districts so we are actively exploring options to try to minimize that impact, and we are working with school district representatives to do that,” Mendick said.

The charter school payment means Santa Barbara Unified falls into basic aid district by $900,000, instead of the $2.8 million in excess property taxes they had planned.

“So we lost quite a bit of money. That’s just things we can’t do now,” said Meg Jette, Santa Barbara’s assistant superintendent of business services, adding it will affect the balance at the end of the year. 

She has questioned state officials about multiple of issues including how they arrived at the number, adding she wanted to ensure the Santa Barbara district wasn’t being charged for students from outside its boundaries.

“I will pay all day long if this is an approved charter by the state and they’re our kids,” Jette said. “I have no problem with that. But I don’t want to pay for somebody else’s kids.”

Cory said the Santa Ynez Valley district will challenge the payment from three angles: locally, with the California Department of Education, and through state legislation.

“The consequences of this decision are unacceptable for the students and community we serve,” Cory told Noozhawk.

His board discussed the matter at its meeting last week, less than a month after learning about the required payment. 

Future board meetings will address specific actions needed by his district in the wake of the payments, he said.

Laura Mudge, CEO and executive director of Olive Grove, said the payments don’t mean new funding for the programs.

“Olive Grove Charter Schools are not receiving any additional or greater amount of per pupil funding than it did previously,” Mudge said. “The only difference is the payment split between the state and various districts.”

She said Olive Grove funding goes to “the usual expenses” handled by schools, with most of the money going to deliver the program along with paying for teachers and staff salaries and benefits.  

“We hope and trust that there is a solution that allows Olive Grove to maintain the level of funding we have received since our inception as an independent charter school in 2015, without cutting too deeply into the basic-aid funding enjoyed by Sant Ynez and Santa Barbara school districts,” Mudge said. “We are willing to work with anyone to achieve this mutually beneficial goal.”

Olive Grove was originally founded under a charter from the Los Olivos School District, then got an independent charter from the state.

It operates locations at 1933 Cliff Drive, Suite 11 in Santa Barbara; 240 E. Highway 246, Suite 100 in Buellton; 820 North H Street, Suites BCD in Lompoc; 5075 Bradley Road, Suite 234 in Orcutt; 4500 Highway 166 in New Cuyama; and 733 Marsh St, Suite 210 in San Luis Obispo, according to its website. 

The enrollment of approximately 750 students at its learning centers includes 250 students in Santa Barbara, 95 in Buellton, 150 in Lompoc, 231 in Santa Maria, and 24 in New Cuyama, according to Mudge.

She said Olive Grove anticipates having more than 900 enrolled students before the school year ends.  

Noozhawk North County editor Janene Scully can be reached at Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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Janene Scully | Noozhawk North County Editor

Noozhawk North County editor Janene Scully can be reached at