Wednesday, Feb. 28, 2007 | It’s featured in the Beach Boys hit song “Surfin’ USA” and is known for having the highest income in incorporated San Diego County and some of the county’s most fiery land-use wars. But Wednesday night, the small city of Del Mar will play host to a watershed debate about the role of private foundations in funding public schools.

How the city’s elementary school district decides to balance parent concerns about equity with the reality that tax dollars cannot keep up with the needs of public education could provide an early glimpse at the issues schools in San Diego are beginning to face as nonprofit educational foundations quickly emerge as permanent fixtures in public education. The debate will also prove timely for the San Diego Unified School District, whose superintendent Carl Cohn has made the establishment of school foundations one of the priorities of his administration.

At the heart of the controversy is the Del Mar Schools Education Foundation, a 501(c)(3) nonprofit established by parents and the Del Mar Union School District seven years ago to help raise private money for the district. Currently, the foundation helps fund enrichment education in areas like the arts, physical education and science at the district’s seven elementary schools. In recent months, it has also become the target of detractors who criticize the foundation for its opaqueness and the compensation paid to its executive director.

In November, disaffection with the organization contributed to an upset in the school board election by a group led by a reformist board member, beating a slate made up of the school board’s previous president and one of the foundation’s board members. The new majority’s efforts to put space between the district and the foundation will come to a head Wednesday, when the school board is expected to vote on new rules governing how the district uses private money.

The leaders of the foundation, for their part, say the entire controversy has been cooked up by a renegade school board controlled by parents from one of the district’s schools.

“You want to know what’s going on here, you want to cut to the chase? Del Mar is a very unique community. … It is a very privileged community, and it’s a very political community,” said Debra McGinty-Poteet, one of the foundation’s two co-presidents. “There is not an atmosphere of compromise.”

The Legal Battle

Though they vary between districts and schools, education foundations are set up by parents or school staff for the purpose of raising philanthropic funds to augment the tax dollars doled out through strict formulas in Sacramento and Washington.

In Del Mar the foundation works with each school to raise at least $190 per student, the goal set by district Superintendent Thomas Bishop.

In fiscal year 2005, the education foundation raised more than $1 million for Del Mar’s schools, with about three-fourths coming from parent donations, said Maria Olson, the group’s executive. More than $600,000 of that was spent on enrichment programs at the elementary schools and $115,000 went to Olson’s salary, according to the foundation’s filings with the Internal Revenue Service.

A portion of the money raised by the foundation goes to the district as a whole, which uses it to pay for enrichment staff at the individual schools. Another part of it, though, is given directly to the campuses, which can use the money for additional enrichment teachers, on top of those provided by the district.

If a school does not reach the fundraising goal set by Bishop, the district has threatened to cut the enrichment program there.

Last fall, however, some parents raised concerns that the arrangement tended to favor wealthier and bigger schools by allowing them to raise the most money and thus purchase the most enrichment hours, despite a district policy that calls for equal access to education at all of its schools. These concerns, as well as criticism of Olson’s compensation, helped propel school board member Annette Easton to reelection in November, along with two other allies running on her slate.

In a legal opinion released last week, consultants for the school district concluded that the district’s arrangement with the foundation violated a state constitution provision that prohibits schools from charging parents for education. The $190 goal, they said, amounted to a mandatory fee. The consultants also said the district may have broken federal privacy laws by turning over student names and addresses to the foundation.

“The relationship of the District and the DMSEF is closely intertwined and one could argue the operations are so integrated that the DMSEF may be considered a ‘alter ego’ of the District,” the consultants wrote.

Wednesday, the board will vote on a proposal prepared by Easton, the school board’s new president, and one of her allies on the board, which would dramatically change the way the district deals with the foundation.

“I think, as you see in the legal opinion, it does appear that the two organizations were too closely aligned,” Easton said.

Easton’s proposal would eliminate the district’s fundraising goals, require the school district to pay the full cost of the enrichment program without using donated funds, and limit the number of additional enrichment teachers individual schools can fund with their share of the donations.

It would also require the foundation to restrict its administrative fees, scrap a policy that forbids foundation board members from talking about its operations, and require the school board to approve all donations. Unless the conditions are met, the school board would not endorse the foundation as “the primary fundraising vehicle” of the district, under the plan.

Leaders of the foundation call the plan a nonstarter and one that would further entangle the district in the foundation’s day-to-day operations. They also dispute the conclusions of the school board’s lawyers, and say there is nothing illegal about the relationship between the foundation and the district.

“Our mission is very broad, it’s to further advance the education of students at the Del Mar Union School District,” said Karen Dilbert, the foundation’s other co-president. “In a perfect world, we want to just raise the money, give it to them, and let them deal with it.”

The foundation heads argue that Easton and her allies created controversy where none previously existed as a way to mobilize voters for the election.

“We’re the envy of every single frigging school in this county, and even the state,” McGinty-Poteet said. “So, in the absence of an issue, you invent one.”

Rise of Foundations

The conflict over equity and structure is not unique to Del Mar, though it is one of the first times it has generated so much public attention and political salience.

In the last two decades, more than 500 schools and districts across California have created their own education foundations, and many are struggling to define the relationship between these private bodies and the public schools they help support.

The explosion in foundations has been fueled by two distinct events in the 1970s: a state Supreme Court ruling finding that the state’s method of using local property taxes to fund schools was unconstitutional because it left poor areas behind; and Proposition 13, a ballot initiative that capped property taxes. Both motivated parents in wealthier areas to find more civic ways to improve the quality of their schools.

The California Consortium of Education Foundations estimates that these groups now contribute about $100 million a year to local schools, and have helped them secure grants from other organizations. (Bishop, the Del Mar superintendent, sits on the CCEF’s board of directors.)

“We think they are affecting 4 million children. I think the value of these foundations is that it’s a local solution to some local issues,” said Susan Sweeney, the consortium’s executive director.

In San Diego, nearly one-third of the 180 schools making up the city’s school district have a nonprofit fundraising arm. Many have been created only recently, at the urging of the district’s current superintendent.

“This is something that this superintendent is very, very committed to, to provide resources to schools so that they can, on their own, build capacity on the school site,” said Janet Delaney, the San Diego Unified School District’s director of community relations.

In fiscal year 2006, for example, the foundation at Torrey Pines High School in the San Dieguito High School District raised more than $2 million in private funds. However, not all schools have been as successful. By contrast, the La Jolla High School foundation raised less than $900,000, and the nonprofit arm of the San Diego High School brought in less than $90,000.

“In a school like ours, where the parents are in the primarily disadvantaged category, it’s not possible (to ask them to donate). So we turn our alumni to help,” said Daryl Ferguson, who helped found the San Diego High School Foundation in 1992. “The playing field is never going to be level, but without the foundation, our school would be poorer than it is.”

In a 2003 paper, two San Diego State University economists studied the relationship between wealth and donations. Richer, smaller schools do tend to raise more private funds per student, the economists found, though the differences had little impact on the services offered at the schools.

The question of equity has also hit home in San Diego, where the district is currently working on a “conceptual plan” for helping schools that don’t have a base of wealthy contributors to tap. “It’s always going to be an issue,” Delaney said. “You have the haves and the have-nots, and how you bridge that, that’s something we’re looking at right now.”

From Enrichment to Contracts

While most San Diego schools continue to rely on private money to set up student scholarships, fund sports teams and pay for programs above and beyond those required by the state, Del Mar’s elementary schools have allowed their foundation to take on extraordinary responsibilities.

Most schools use philanthropic money to pay for optional programs, but the Del Mar district also uses the foundation’s money to pay instructors of P.E., a subject mandated by the state curriculum.

In addition, critics say the promise of enrichment staff is written into district’s contract with its regular teachers, meaning that district is on the hook to pay for these programs whether or not the foundation raises the necessary money.

The foundation says the blame for the arrangement lies with the school district, and how it decides what to fund with the donations. Bishop, the district’s superintendent, did not return calls for comment.

“It’s really a district issue,” said Olson, the group’s executive director.

Olson also defends her compensation; she contends she could earn twice her current salary in private industry, but took the job at the foundation to support her children’s school district. She also argues it’s naive for critics to assume that the foundation could raise as much money as it does without a professional staff.

“I think part of the reason that we’ve grown so quickly, and so fast, is that the people who started the foundation realized that they had to pay somebody to do the job,” she said.

Some colleagues at other foundations say they credit Olson for professionalizing Del Mar’s outreach efforts.

Easton, whose proposal would cap the executive director’s pay in exchange for a district endorsement, said the school board has no intention of telling the foundation how to do its job.

“I think, ultimately, we want to find a solution where the community supports the foundation, and the district supports the foundation, because they have been valuable allies in helping us move forward,” she said.

Please contact Vladimir Kogan directly with your thoughts, ideas, personal stories or tips. Or send a letter to the editor.

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