MBEF Endowment Surpasses $20 MillionDec 20, 2020 11:41AM ● By Jeanne Fratello
The Manhattan Beach Education Foundation (MBEF) has announced that the MBEF Endowment has reached its ambitious goal to raise $20 million by 2020. By reaching this critical threshold, the endowment will be able to distribute approximately $1 million per year in perpetuity to the Manhattan Beach Unified School District.
The endowment provides critical financial support for MBEF’s mission to enrich teaching and promote innovation and academic excellence in the public schools of Manhattan Beach.
It is designed to provide a stable and consistent source of funding that avoids fluctuations in the economy and the unpredictability of state funding for education. This helps to ensure that Manhattan Beach's public schools have enrichment opportunities today and for years to come.
"Generous gifts from our supporters, and strong long-term investment returns, have fueled the MBEF Endowment balance to over $21 million," said Mike Duckworth, MBEF endowment president, in a statement. "We are grateful to those individuals who had the foresight to establish the MBEF Endowment with just $10,000 in 1986, and to all of the dedicated endowment donors who have helped us reach this exciting milestone since then."
Hilary Mahan, the executive director of MBEF, concurred. "The endowment hitting $21 million is phenomenal," she told DigMB.
Mahan noted that when MBEF had set this goal, it had no way of knowing about the extremely difficult budget and COVID challenges that were ahead. Additionally, the endowment didn't have its traditional moment in the spotlight during this year's Manhattan Wine Auction. (Given the dire school budget situation, MBEF dedicated this year's annual "paddle raise" at the wine auction to support grants going directly to the schools, rather than to the endowment, as had been done in the past.)
"We are absolutely thrilled that our endowment was able to continue on its course, thanks to a boost from the markets, as well as continued support from donations from those who believe in the cause." said Mahan.
Endowment Policies Hold Disbursements Steady
Manhattan Beach was one of the first communities in the country to establish an endowment to create a stable, secure and self-sustaining source of funding for its public schools. The fund, modeled after successful university endowments, serves as a permanent source of monies to enhance and stabilize the long-term growth of MBEF’s annual contribution to MBUSD,
The MBEF Endowment Disbursement Policy follows the standards outlined in the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA). Using these standards, the endowment's current balance of over $20 million will allow for the distribution of approximately $1 million annually in perpetuity.
"Since reaching $10 million and making our first disbursement in 2014, the endowment has disbursed nearly $3.7 million in annual grants to MBEF," noted Duckworth. "In 2020 alone, the endowment provided $923,000 to MBEF as part of our record $7.5 million grant to MBUSD."
One question that MBEF repeatedly gets is, "Why not put more of the endowment money toward schools today?" The answer lies in the purpose and structure of what an endowment is and what it is meant to do.
As per the policies set by the board, and in line with UPMIFA restrictions, the endowment can disburse up to 5% of the average of the end balances of the fund for the past three years (and it has consistently given that maximum amount).
UPMIFA rules allow for endowments to distribute as much as 7%, but the 5% standard that MBEF's endowment operates under is consistent with that of its peer organizations, according to Duckworth.
"The goal for the endowment is to create a sustainable source of funding - for it to last in perpetuity," Duckworth told DigMB. "The rules that cover endowments are put in place to protect both the endowments and their donors."
Duckworth noted that the kind of donors who give to the endowment are focused on not just their students right now, but on the larger future of MBUSD schools even after their own children have graduated. He noted that the endowment's original donors had "tremendous foresight" when they started the endowment in 1986 with just $10,000. The endowment did not even begin making disbursements until 2014.
Challenges in the Current Year and Beyond
MBEF and its endowment continue to play critical roles in supplementing the inadequate state funding for Manhattan Beach schools. Due to California's revenue limit funding formula - and due to the fact that Manhattan Beach students do not qualify for supplemental funding through the state's Local Control Funding Formula - Manhattan Beach schools receive roughly $10,500 per pupil, putting the district's funding level at among the lowest in the state and in the country.
MBEF and its endowment have continued to play a central role in supplementing MBUSD funding. For 2020/21, MBEF increased its support by over 15%, providing $7.5 million for programs and educators districtwide.
Nevertheless, MBEF's Annual Appeal and the endowment face fundraising challenges this year. Those challenges may range from individuals' financial situations worsening during the pandemic, to parents who are angry about school closings and want to send a "message" by not donating or donating less to MBEF.
"People are frustrated. But at the same time, the school board's hands are tied," said Duckworth. "And yet people don’t fully appreciate that - and MBEF has certainly felt the impact of that."
Those who withhold MBEF donations as a source of protest may not realize how it hurts students, given how important MBEF funding is to the school district, he added.
"People sometimes use the attitude of "I'm not happy; I'm not going to give. That’s kind of shooting yourself in the foot," said Duckworth. For those individuals who express specific frustrations, he added, MBEF tries to work with them to help address those concerns.
At the same time, there may be a point at which the community may be "tapped out" on donations. (This year's suggested donation is $2,000 per child - an amount that has risen slowly and steadily over time.) And with school expenses rising every year, the amount that MBEF is able to give to the district amounts to a smaller and smaller percentage of the school's budget.
That is in part why MBEF will continue to try to build its endowment to maintain a solid base for annual funding supplements, said Duckworth. Although he conceded that this is more of a long term vision, he added, "Wouldn’t it be beautiful to get the endowment to $100 million and then have it displace our need for an annual appeal?"
Additionally, there is also almost universal agreement - from the school district, to MBEF, to parents and community members - that policymakers need to work out long-term structural solutions for more funding.
Locally, there has been discussion of another parcel tax. (Manhattan Beach successfully passed Measure MB in 2018. That parcel tax of $225 is scheduled to raise $2.6 million per year over six years for Manhattan Beach schools.)
But bigger changes would need to come from Sacramento, where Manhattan Beach community leaders have routinely gone up to lobby for structural changes that would fix inequities in state per-pupil funding.
"There will always be challenges as long as we have a structural deficit problem in funding for education," said Mahan.