蜜桃影视

The L.A. Unified school board has approved a with its teachers union that officials admit they can’t fully afford, calling the deal鈥檚 sustainability into question as the district receives repeated warnings from the county that it鈥檚 in severe financial straits.

To shoulder about in added costs through 2021, district officials say they’re largely relying on more state funding and a 2020 California tax referendum 鈥� neither of which are guaranteed. District board members could also a parcel tax, though it鈥檚 been unpopular in the past. Short-term fixes so far include cuts to the central office and the reassignment of some funds within the budget, a spokeswoman said via email.

The contract compounds L.A. Unified鈥檚 financial woes, which include in unfunded liabilities for post-employment benefits such as health care, about聽聽in annual deficit spending, and millions in funding losses due to student enrollment. The new deal, in fact, could drive up this year’s deficit by about $187 million, according to a recent district . The agreement tripled L.A. Unified鈥檚 previous offer 鈥� from $130 million to $403 million over three years 鈥� to lower class sizes and hire more support staff, such as nurses.

Reason Foundation education policy analyst Aaron Garth Smith said he believes the contract materialized from “a desire to end the strike” and alleviate tensions between L.A. Unified and United Teachers Los Angeles, with 鈥渘o clear path forward that indicates how the district is going to pay for these new and existing long-term liabilities.鈥�

While L.A. Unified ended聽last school year with nearly $2 billion in reserves, officials most of it has already been earmarked for 6 percent raises, mandated programs, and filling budget shortfalls as the district continues to spend more than it takes in.

“I don’t think any part of [this deal] was the district thinking that they can afford it,” said Smith, who co-authored the right-leaning think tank鈥檚 last year on L.A. Unified’s finances. The ideas for new funding “basically come down to wishful thinking. They’re hoping that the state is going to kick in more dollars. They’re hoping that taxpayers are going to approve tax hikes.”

And the clock is ticking for a solution. L.A. Unified has until March 18 to submit an updated fiscal stabilization plan to the county proving that it can keep its head above water through 2020-21 鈥� even with the new contract deal. A team of four fiscal experts appointed by the county began 鈥渕ore regular face-to-face meetings with the district鈥檚 staff” last week after having extensively reviewed the district鈥檚 fiscal situation, team leader and former L.A. Unified chief operating officer Jim Morris told LA School Report. They are only serving in an advisory role.

鈥淲e think we鈥檙e off to a good start,鈥� he said. 鈥淏ut between now and March 18 is really when the heavy lifting has to be done.鈥�

As of right now, L.A. Unified is projecting it won鈥檛 meet mandated reserve levels for 2020-21, which county superintendent Debra Duardo reminded the school board in late January is the recipe for the district losing control of its finances.

鈥淪hould the [school board] fail to submit a [plan]鈥� that fixes the financial picture, 鈥淚 am prepared to take further actions,鈥� she wrote in a letter to the board.

A search for more funding

District officials are banking on new funding at both the state and local levels to afford the contract. But the bulk of those funding ideas are either not yet guaranteed, far from fruition, or likely to face opposition.

As longtime district observer Jack Humphreville put it: “It’s a bunch of smoke and mirrors.”

One of the most touted new funding streams is Gov. Gavin Newsom’s proposed . It includes a boost in K-12 and special education spending and a one-time $3 billion pot toward pension relief, generating an estimated in new revenues for the district, according to the state. About $44 million would be added to the district鈥檚 general fund annually starting in 2019-20, a district spokeswoman said in an email. The state Department of Finance did not respond by the time of publication explaining how the estimate was calculated.

L.A. Unified mentions new state funding in a recent budget when explaining how it intends to pay for the contract. The funding, however, is not guaranteed. Legislative committee hearings on the proposed budget are “underway,” a spokesman for Newsom’s office told LA School Report via email. “The Governor will release a revised budget in May and negotiations with the legislature will continue until a final agreement is reached and voted on in June.”

“The biggest issue is that [the contract] is based on two things: one, assumptions from the governor’s budget, and two, assumptions about future revenue,鈥� said Alex Johnson, who sits on the county Board of Education. Those 鈥渁re the two most critical things about this proposal that are concerning.” California watchers, including former governor Jerry Brown, are a state recession after a period of tax revenue growth.

Charter schools have also become a political lightning rod in the search for funding. UTLA has repeatedly called for halting charter growth in L.A. Unified because the independently operated 鈥� and often non-unionized 鈥� schools siphon student funding away from traditional public schools. The L.A. Unified school board a resolution that helped end the strike asking the state for a moratorium on new charters in the district. And last week, Newsom 聽that state Superintendent Tony Thurmond had been charged with establishing a panel of experts to explore how charter growth affects districts鈥� finances.

State and local taxpayers are also being tapped as a new revenue source. Union and district officials are backing a initiative on the 2020 ballot that, if approved by voters, would property taxes statewide on commercial and industrial properties and generate an estimated $1.4 billion for L.A. County schools. About 55 percent of California voters voiced 鈥渁t least some support鈥� for a change to this tax in a USC poll released last week.

Some education observers note, though, that revenues from that tax reform would flow in too late,聽as the district is already expected to drain its reserves by 2021. A coalition of business groups has also denounced the measure and is 聽up to $100 million to defeat it.

Locally, the school board has Superintendent Austin Beutner with crafting a three-year 鈥渆nterprise plan鈥� by March 18 to bring in more money to L.A. Unified. One possible option is adding a parcel tax 鈥� a property tax based on a property’s , such as its acreage or square footage, rather than its assessed value. A tax of about $600 per parcel could bring in about $500 million a year to L.A. Unified and essentially聽 its deficit spending.

Parcel taxes tend to take a greater percentage of income from lower-income taxpayers, however, and can therefore be unpopular. A call for a new parcel tax to pass a school board vote last year, and related measures in and were also unsuccessful. About 68 percent of local taxpayers last June said they a cheaper $330 parcel tax. A school board majority has to approve a parcel tax to place it on the ballot; at least two-thirds of district voters then have to vote for it.

District 4 board member Nick Melvoin that he hopes those who supported the teacher strike and the new contract are now willing to see it through. “It鈥檚 undeniable that the union galvanized the attention not just of the Los Angeles community but the national community toward the conditions in our schools,鈥� he said. 鈥淚f the tens of thousands of people who honked and marched and tweeted are actually serious about standing with teachers, then they will vote for that [2020 reform] measure, and they will vote for a parcel tax.鈥�

But UTLA’s chief negotiator Arlene Inouye Jacobin magazine last month that 鈥渨orking people already pay enough in taxes 鈥� it鈥檚 the wealthy who need to pay their fair share.”

“We鈥檙e going to keep fighting on this taxation issue. There鈥檒l be a big battle in 2020,” she said. Inouye did not respond to LA School Report’s request for comment or to discuss ideas the union might have on how the contract can be funded.

The district is also scrutinizing its current spending obligations. L.A. Unified 鈥� which is into a separate health benefits contract for three years 鈥� proposed during the contract negotiations a two-year delay to when new teachers would start receiving the district鈥檚 generous lifetime health benefits. The district spends a year 鈥斅燼bout 15 percent of its budget 鈥� on health and welfare benefits.聽These benefits, along with pensions, are expected to consume 聽of L.A. Unified鈥檚 budget by 2031-32.

The union, however, the proposal, citing in part the district鈥檚 reserves.

Humphreville, a neighborhood council budget advocate and 聽contributor, said L.A. Unified can reduce spending by cutting administrators, too. The number of certified administrators in the district 22 percent between 2011 and 2016, from 2,146 to 2,628, despite teacher and student enrollment declines. The district is at least 12,000 students a year, costing it about in lost state funding.

“One of the things that hits me is the school count is down” while “the bureaucracy 鈥� the number of people hanging around in overhead 鈥� is up 20 percent,” Humphreville said. 鈥淭hat’s just not right. They need to really do a big job of trying to figure out how to downsize.鈥�

L.A. Unified last year announced a 15 percent of central office resources that will save $86 million over two years. Beutner last fall was also reportedly exploring a potential of the district into about 32 autonomous networks to further shrink the central office. That is an “ongoing” discussion and is not finalized, a district spokeswoman confirmed via email.

The financial uncertainty has Sylvia Torres-Guill茅n, ACLU of California’s director of education equity, worried that the district will misallocate current funds 鈥� notably from the Local Control Funding Formula, the state’s funding mechanism that targets aid to low-income, foster, and English language learner students 鈥� in a scramble to pay for the contract. ACLU successfully the district in 2015 on the grounds that it misused about $450 million in local control state funding, she said.

鈥淲here we have issues of inadequate funding, then that has to be the conversation: How do we get additional funding to support the expenses districts are dealing with?鈥� she said. 鈥淏ut let’s not take away from our most vulnerable children.鈥�

Ticking clock

Whatever solutions the district comes up with, it will have to convince county overseers by mid-March that those steps will rightsize its reserve levels in order to stave off a takeover.

If the county isn鈥檛 satisfied with updated financial projections, county superintendent Duardo can install a with 鈥渟tay and rescind power,鈥� meaning he or she could rewrite budgets and overturn school board decisions.

The district is on watch to begin with because its three-year reserve projections show a 0.96 percent cushion in 2020-21 鈥斅爅ust under the mandated 1 percent minimum reserve school districts have to maintain. At least 1 percent of a district’s total expenditures has to be designated for 鈥渞ainy day鈥� emergencies.

The latest budget shows total available reserves plunging from about $836 million this year to about $74 million in 2020-21.

County officials have sounded the alarm that the district is financially unstable. The latest warning came Jan. 29 鈥� hours before the school board unanimously the contract 鈥� when Duardo wrote in a statement that the new contract agreement “continues to move the District toward fiscal insolvency.”

She also again cautioned the district against relying 鈥渉eavily on one-time funding sources and projected revenues,鈥� such as Newsom’s proposed budget.

While Duardo didn’t go so far as to recommend that board members reject the contract, Johnson, from the county board of education, noted that that’s not her job.

The county Office of Education 鈥渋s a neutral party. It had no stake if the negotiations went one way or the other,鈥� Johnson said. 鈥淭heir role was to assess and to make certain that the district in particular was on notice of the impact of their budgetary decisions. … I think the letter absolutely struck the right tone.”

UTLA has previously the county of working on the district鈥檚 side 鈥� an accusation district and county officials have stridently .

The union is skeptical of L.A. Unified鈥檚 financial projections. And there鈥檚 a reason for that: L.A. Unified ended last school year with a record nearly $2 billion in reserves, though district officials have that most of that money was already earmarked. The district has also overstated its proverbial 鈥渇iscal cliff鈥� in the past. It in 2016, for example, that it would be $400 million in the red by 2018-19. It isn鈥檛.

鈥淭here is a history of the district crying wolf over negative balances two years out that then never seem to arrive,鈥� former Board District 5 member David Tokofsky in January the union-funded website Capital & Main.

Some education experts have noted, however, that the county鈥檚 recent involvement adds validity.

It is the county鈥檚 job to ensure that districts 鈥渁re fiscally sound and healthy,鈥� Duardo told LA School Report last month. 鈥淲e鈥檙e hoping that the fiscal experts can go in there and be able to work with the district 鈥� and be able to come up with a plan that we鈥檙e satisfied with.鈥�

Although the fiscal experts 鈥斅爓ho have 鈥渟trong budgeting and fiscal oversight鈥� backgrounds 鈥� haven鈥檛 yet reached the point of offering any specific budget cut recommendations, team leader Morris said he鈥檚 encouraged that the district 鈥渨elcomes our support.鈥�

鈥淟.A. Unified is a very important school district,鈥� he said. 鈥淚 think that’s why Dr. Duardo has been clear that we’re here to support them.鈥�

Did you use this article in your work?

We鈥檇 love to hear how 蜜桃影视鈥檚 reporting is helping educators, researchers, and policymakers.