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Board hears that state is reclaiming growing share of county property taxes; Second Interim approved
Summary
The Board approved the 2025–26 Second Interim Financial Report with a positive certification and heard that rising local property taxes have led the state to reclaim more than half of county office collections—nearly $40 million—prompting calls for advocacy and possible LAO study.
The San Mateo County Board of Education unanimously approved the 2025–2026 Second Interim Financial Report, which Superintendent staff presented with a positive certification. Deputy Superintendent Kevin Bultema explained the County Office’s finances and the mechanics of state reclaiming of excess property-tax revenue.
Board Member Susan Alvaro pressed staff on why the County Office returns more than half of its property-tax revenue despite total property taxes rising to about $74.5 million. Deputy Superintendent Bultema said county offices keep only the portion defined by their Local Control Funding Formula (LCFF) calculation and "any property tax revenue above that is returned to the state." He added that the amount reclaimed has grown “from roughly $20 million, or about 30%, five years ago, to over 50% today.”
Alvaro described the effect as the County Office being penalized for higher local tax contributions because reclaimed funds go toward state costs she said are unrelated to county education services. Bultema said the issue affects county offices specifically—school districts that are community-funded keep their excess—because the LCFF calculation for county offices differs and there is no single set percentage the state requires be returned.
Board Member Mike O’Neill raised the related impact of a Genentech-related repayment: "the County Office must return $530,000 in previously paid property tax revenue," and Bultema said that repayment will reduce next year’s excess-payment projection rather than produce an immediate local revenue shortfall. Board members discussed avenues for advocacy, including requests for an LAO study and potential Vehicle License Fee (VLF) changes, but staff cautioned that while there is slightly more openness at the state level, no changes are assured.
The Board approved the Second Interim Financial Report following a motion by Board Member Gerard and a second by Board Member Love; the vote was unanimous (Alvaro, Arias, Bonini, Gerard, Love, O’Neill, and Torres).
