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  • Writer's pictureDeodate

How Local School District is Preserving Assets and Generating Revenue Amidst Falling Student Counts

Updated: Mar 25, 2023


OVERVIEW

While school districts across the country have reported declining student headcounts, these dropoffs have dramatically accelerated over the last two years, and nowhere more sharply than in Southern California. More than 250,000 students across the state no longer attend public schools, including approximately 43,000 students lost from the Los Angeles Unified School District alone.


This growing trend has become a growing problem for districts that are primarily funded on a “per student” basis, especially when these districts often hold fixed-income agreements with teachers’ unions and other groups. Bonds may provide relief funding for these districts, but they’re traditionally accessible only for growth initiatives, something fewer schools are currently experiencing a need for.


Districts are often left with few options but to close schools where attendance has fallen to a point of it being cost-prohibitive to keep them open and fully staffed. When this action is taken, a much more difficult decision must often then be made—what to do with these properties that once consistently met the District's educational mission while generating critical revenue?


With a large client base of developers, investors, and operating companies in need of additional property in Southern California, DEODATE has identified a unique solution that meets the needs of our clients and provides long-term revenue to local school districts.


CHALLENGES

  • A projected continued decline of public school student headcounts

  • Per-student revenues can’t support current or future financial needs

  • Lack of clarity on how to generate returns for under-utilized/vacant properties

  • The California Ed code may require years to sell district/county-owned properties, revenue is needed now

TIME-SENSITIVE RESOLUTIONS

One DEODATE client, a prominent energy company, recently needed to expand the size of their corporate offices to support their growing operation. The only available space on their existing parcel where a new office could be built was their employee parking lot. This expansion would effectively cancel out most of the facility’s employee parking during a five-year construction window. Our client wanted to avoid having to force employees to park remotely, and then be shuttled to the workplace. DEODATE was brought in to identify which, if any, nearby properties would cause the least headache, and cost, for the company should they end up with no other options but to move their parking offsite.


While conducting extensive research of the surrounding area, DEODATE approached a local school district, inquiring specifically about a school that was adjacent to their client’s property. DEODATE would learn that this school, like other schools in the area, was experiencing low enrollment, and that the large portion of the school property wasn’t being used at all.


This conversation, and DEODATE’s 10+ years of negotiating mutually unique, sensitive, and complex lease agreements, led to a three-year lease of a portion of the school’s property. Furthermore, with the client only needing additional space for parking, this would result in no impact to the school’s existing student population, or the school’s ability to provide them with a sound education.


What would not have worked was anything that would delay the property from being able to generate revenue—especially after attendance later fell so low that the district was forced to close the school. By not being forced to enter into a lengthy sales process, DEODATE’s client was not only able to begin their own expansion project but to also provide sustained revenue paid directly into the district’s General Fund.


SUSTAINABLE REVENUE FOR SCHOOL DISTRICTS

Leases between businesses and our local school districts generate much-needed revenue paid directly into each district’s General Fund. This revenue can hence be immediately applied to providing additional support for the more than 600,000 students who continue to attend our region’s local schools. The ability for schools that remain open to add new resources or improve existing resources is a critical need in our area. Whether it’s providing students with greater access to technology, replacing athletic equipment, funding after-school activities or school lunch programs, or building entirely new facilities—there is no limit to the needs our public schools face.


When local school districts determine that closing a school entirely and then selling the property best suits their needs, DEODATE can and has assisted with this process, as well. Short-term lease arrangements like the one described above give school district access to added funds now, rather than letting a property be unable to generate revenue while it sits empty and unused.


OUR STRATEGIC DIFFERENCE

DEODATE leverages a combination of data-backed, creative strategies and empathetic approaches to meeting the unique needs of private and public entities alike. Every member of the DEODATE team has a sincere interest in building sustainable solutions for our community, particularly those who are most in need of our help.


Contact us today to inquire as to how these results were achieved, and how similar, tailored strategies may assist your organization's initiatives.



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