Has the California business community had enough?

There is a particularly nasty YouTube video that made the rounds several years ago where a school punk was bullying another student who was overweight. The punk kept punching the other kid who was forced to retreat until his back was against a wall. After several punches, the overweight kid picked up the bully and slammed him to the ground so violently that the punk literally bounces off the pavement.

For decades, taxpayers in California have been the punching bag for tax-and-spend politicians and the special interests that consume tax dollars. Periodically, however, those receiving the blows stand up and punch back.  The recall of former Governor Gray Davis in reaction to his car tax increase is a good example.

For the most part, individual taxpayers and grassroots organizations are more vocal – at least publicly – against tax hikes than the business community. Certain business interests, especially large corporations, are more likely to have a “go along to get along” attitude which means that as long as a tax increase doesn’t hit their business directly (or can be passed along to consumers), they won’t put up much of a fight.  The rationale for this is that many of these business interests are vulnerable to arbitrary government action that threatens their interests and it would be unwise to anger the politicians who could, with a stroke of a pen, put them out of business.

But the frequency and intensity of recent tax proposals out of Sacramento and from various city halls is causing pushback from even the business community. In the City of Los Angeles, the Los Angeles Unified School District jammed through a tax increase proposal that is an affront to taxpayers of all stripes. Measure EE, appearing on the ballot in a June 4th special election, would add hundreds of dollars to property tax bills and rents by imposing a tax of 16 cents per square foot of building improvements on properties within the district. That’s $160 for every 1,000 square feet. This would hit homeowners, renters and businesses with a huge new property tax increase.

To read the entire column, please click here.

LAUSD’s Punishing Parcel Tax Proposal


LAUSD school busAmerica’s most dysfunctional school district has stepped in it again. The Los Angeles Unified School District (LAUSD), apparently coming to the shocking realization that there was no way they could pay for the horrible deal they just cut with the unions, has hurriedly placed on the ballot for June a new property tax that leaves no Los Angeles taxpayer unscathed.

That grassroots taxpayer interests would be opposed to the new levy is no surprise. But several business organizations, usually more tolerant of higher government spending — particularly for education — have had enough. Groups as diverse as the Howard Jarvis Taxpayers Association, the Los Angeles Chamber of Commerce, the Valley Industry and Commerce Association (VICA) and the L.A. County Business Federation (BizFed) have all announced their opposition. None of these organizations is anti-education. In fact, all are pro-education as long as there is demonstrable improvement in the education product we are all paying for. On this score, LAUSD falls way short.

At the core of the broad-based opposition is the abject lack of long overdue reforms at LAUSD.

The list of reasons to oppose the tax is long.

First, taxpayers would be wasting millions of dollars on a special election.

The LAUSD Board voted unanimously to put the tax increase before the voters in a special election to be held on June 4, 2019. The cost of the special election is $12.5 million.

The tax would add hundreds of dollars to tax bills and rents and would do so in a convoluted manner. Rather than a flat tax on every parcel — which would be bad enough — the proposed tax increase would be 16 cents per square foot of building improvements on properties within the district.

That’s $160 for every 1,000 square feet. Property owners (and tenants) should be sitting down when they do the math on this one.

Seniors are ostensibly exempt from the tax, but not from rent increases.

To read the entire column, please click here.

Modest Strike Settlement Nonetheless Puts LAUSD in Even Worse Financial Shape


Charter schoolOne of the grievances expressed by the union during their recent strike against Los Angeles Unified School District was that, according to them, charter schools are draining funds from public schools. This assertion, repeated uncritically by major news reports on the strike, does not stand up to reason.

Public schools in California receive government funding based on student attendance. Since one of the other primary grievances of the union was overcrowded classrooms, it would be reasonable to conclude that LAUSD schools are not underfunded, but overfunded. There should be plenty of money, but there’s not. LAUSD is teetering on insolvency, and the strike settlement agreement is going to make their financial challenges even worse.

Charter Schools Outperform LAUSD’s Unionized Schools

The reason LAUSD is running out of money has little or nothing to do with charter schools. It has to do with inefficient use of funds. A study conducted by the California Policy Center in 2015 calculated the per student cost in LAUSD’s traditional public high schools to be $15,372 per year. The same study evaluated 26 charter high schools and middle schools located within LAUSD’s geographic boundaries, and found their cost per student to be $10,649 per year.

At the same time as LAUSD spends far more than charters per student, they do a poorer job educating their students. The same 2015 study, “Analyzing the Cost and Performance of LAUSD Traditional High Schools and LAUSD Alliance Charter High Schools,” compared the educational outcomes at nine charter high schools to nine traditional public high schools in LAUSD. These 18 schools were selected based on their having nearly identical student demographics to LAUSD’s traditional public high schools – i.e., the same percentage of English learners, learning disabled students, and low income students. The charter schools clearly outperformed LAUSD in every important metric – SAT scores, graduation rates and college admissions.

There are two critical issues here, neither of which appear to have been discussed in the strike negotiations. One, why do charter schools manage to educate students for so much less than traditional public schools, and two, why do they manage to do it for so much less money?

The answer to the first may be hard for the union leadership and their supporters to accept: These charter schools are able to better educate students because they are not subject to union work rules. Incompetent teachers can be dismissed. If layoffs are necessary, the best teachers can be retained, instead of the most senior. What is more teachers do not acquire “tenure,” a job-for-life right negotiated by the teachers union despite its origins in the university with the purpose of protecting scientific inquiry, not protecting bad teachers in K-12 schools.

There are a host of reasons charter schools don’t cost as much as traditional public schools. Much of it has to do with teacher compensation. The average base pay in charter schools is less than in public schools, as is the average cost of benefits. But the “other pay,” typically taking the form of performance incentives, is higher in the charter schools. An interesting compilation, using data taken from Transparent California, estimated the bonus pay in the charter networks within LAUSD (Green Dot and Alliance) to average two to three times the average in LAUSD’s traditional public schools. This disparity, wherein compensation in charter schools is linked to the effectiveness of individual teachers, undoubtedly also helps explain why they achieve better educational outcomes.

The Cost of Benefits is Breaking LAUSD

LAUSD’s cost of employee benefits increased from $1.54 billion in 2015-16 to $1.92 billion in 2016-17, an increase of 25 percent, when the total employee headcount only increased by six-tenths of one percent. The reason for the increase is simple, and immutable: LAUSD, like many public agencies throughout California, has fallen woefully behind in its funding of retirement benefits, and they have reached a point where they must dramatically increase payments in order to catch up.

Staggering Pension Debt: LAUSD now carries an unfunded pension liability of $6.8 billion. Just paying down that debt over twenty years should be costing LAUSD over $600 million per year, not including the normal contribution they have to pay each year as their active employees earn additional pension benefits. As it is, including the normal contribution, in 2018 LAUSD “only” paid $584 million to CalSTRS and CalPERS.

The financial sickness relating to pensions is a statewide problem. CalSTRS, the pension system that collects and funds pension benefits for LAUSD teachers, as of June 30, 2017, was only 62 percent fundedSixty-two percent. CalPERS, the pension system that collects and funds pension benefits for LAUSD support personnel, is only slightly better off financially than CalSTRS. It has already announced it will roughly double the required employer contributions between now and 2025. CalSTRS, if it wants to survive, will likely follow suit.

Retiree Healthcare Costs: If anything, the financial challenges surrounding LAUSD’s other primary retirement obligation, retiree health benefits, are even more daunting. LAUSD’s OPEB unfunded liability (OPEB stands for “other post employment benefits,” primarily retirement health insurance) has now reached a staggering $14.9 billion. Like many public agencies, LAUSD does not pre-fund their retiree health benefits. In 2018, retiree healthcare cost the district nearly $400 million. A 2016 study prepared for LAUSD estimated that cost to double in the next ten years, and to nearly quadruple within the next twenty years.

LAUSD does face declining enrollment, something they claim is exacerbated by diversion of students into charter schools. Total enrollment in 2013-14 was 621,796, and by 2017-18 it had declined somewhat to 591,411. As a percentage of total enrollment during that period, unaffiliated charter enrollment rose from 15 percent to 19 percent of all students. But LAUSD nonetheless contends with bursting classrooms. LAUSD’s traditional, unionized public schools are still collecting revenue based on attendance that stretches the capacity of their facilities. If they are still attempting to teach more students than their facilities can handle, they can’t blame charters for their financial problems.

There is, however, an indirect financial threat that charters represent to traditional unionized public schools that is very serious indeed. The problem is not that charter enrollment steals money from LAUSD’s classrooms, because the classrooms are full. More students might bring in more money, but they would also require more classrooms. The problem is the growth of charters shrinks the revenue base LAUSD needs to pay the costs for retirees.

Charter Schools Dilute LAUSD’s Revenue Base Necessary to Pay Retiree Benefits

As LAUSD’s traditional unionized public schools contend with burgeoning per-retiree costs, every student that they lose to charters represents less available revenue to feed the pension funds. Every student lost to charter schools decreases LAUSD’s ratio of active workers to retirees.

These compounding effects are similar to what faced the auto industry back in the 1980s – retirees collecting expensive benefits, supported by companies with fewer workers and lower revenues. The difference, of course, is that public schools, and public sector unions, do not contend with the irresistible reality of global markets. Instead their ultimate solution will be to call for higher taxes.

This prediction is borne out by the strike settlement, which called for more hiring of teachers and support personnel, retroactive raises, and nothing in the form of benefit reductions or higher employee contributions to their benefits through payroll withholding.

The other key victory for the union, an aggressive stance by the LAUSD Board against any new charter schools, is a rear guard action to preserve the revenue base necessary to pay retiree benefits. Stop the charters, or reform pensions and retiree healthcare formulas. It was one or the other. But all this war on charters does is buy time.

LAUSD Will Eventually Have to Adapt to Financial Reality

Sooner or later, financial reality will strike. LAUSD’s total expenses in 2016-17 were $7.6 billion. Benefits constituted $1.9 billion. Twenty-five percent of all spending. Ten years from now, those benefit costs are likely to double, as the pension fund payments rise to around $1.2 billion, annual OPEB contributions near the $1.0 billion level, and current benefits – which constituted around $900 million in spending in 2016-17 – rise with inflation. Can LAUSD afford to pay current and retiree benefits equal to 40 percent of all spending? Will higher taxes, to enable much higher per student reimbursements – make up the difference?

Financial reform to put LAUSD on a stable financial footing requires benefit reform. Teachers will have to pay, through payroll withholding, a higher percentage of the costs for their current health benefits, their retirement health benefits and their pensions. The alternative is for them to get more state funding for these benefits, or accept lower benefits. Increased state funding is on the way, but it is unlikely it will be sustainable.

There is another solution that bears discussion, which concerns the ratio of teachers to other employees. Based on their own data, LAUSD in 2016-17 had 26,556 classroom teachers, and 33,635 administrators and support personnel. Why is it necessary to have so many non-teachers? Why is it that between 2016-17, and the year before, the number of classroom teachers declined by 271, while the number of non-teaching employees grew by 639? In this regard, charter schools also offer a lesson. Just as they don’t spend precious funds on employee benefits that dwarf what private sector professionals typically expect, charters also don’t spend as much money on support personnel.

Not all charter schools succeed academically, but the ones that do offer examples that LAUSD and other traditional public school districts could emulate, and would emulate, if it weren’t for the intransigence of the teachers union. In all critical areas, from benefits reform to tenure, dismissal policies, and layoff criteria, the teachers union fights change. They have declared war on charters, and just won a major battle in LAUSD. But like the auto industry in Detroit back in the 1980s, unionized public schools need to adapt to changing times.

This article originally appeared on the website of the California Policy Center.

Charter schools may face new era of opposition to funding


school busAfter a quarter-century of explosive increases in California, charter schools experienced all-time lows in growth the last two school years. And charters may also be facing an era of much harsher treatment from school boards allied with teachers unions who more than ever see charters as taking away resources that should go to conventional schools.

That was many education observers’ takeaway this week from the Los Angeles Unified School Board’s decision to approve a local moratorium on approvals of new charters until their impact on the state’s largest district is freshly assessed. District leaders had agreed to pass the resolution as part of their deal with United Teachers Los Angeles to end a strike that shut LAUSD schools for six days earlier last month.

Charters are privately operated public schools that hope to attract students from regular schools with their freedom to follow different teaching regimens. Some also offer specialized language or academic programs. Most are non-union.

From 1992 to 2016, charter schools went from zero students to more than 600,000 – about 10 percent of total K-12 students in California. The last two years, however, there was less than 2 percent growth in the number of total charters for the first time.

Charters initially faced brisk opposition from the California Teachers Association and the California Federation of Teachers, which had heavy influence in many districts thanks to the board members that union local chapters helped elect.

But in 2000, California voters approved Proposition 39 related to school financing. One provision requires that “school districts make available to all charter schools operating in their school district … facilities that will sufficiently accommodate all of the charter’s in-district students, and that facilities be ‘reasonably equivalent’ to other classrooms, buildings, or facilities in the district,” according to the state Department of Education page outlining how school districts should comply with the state law.

CalSTRS bailout spurs scrum for limited resources

Proposition 39 gave charters a potent tool to fight attempts to block them, leading to something of a cease-fire from unions. But the passage in 2014 of the California State Teachers’ Retirement System bailout not only isn’t having the effect of stabilizing school finances that some hoped, it’s created a more intense battle for district resources than ever.

Under the bailout, total contributions to CalSTRS will nearly double from 2013-14 to 2020-21 as hikes are phased in. But districts are required to contribute 70 percent of the new money – or close to $4 billion when the phase-in ends. Even with two more contribution hikes awaiting in 2019-20 and 2020-21, many districts across the state are already struggling to make their budgets balance.

That list starts with L.A. Unified, whose board was warned by the Los Angeles County Office of Education that the district couldn’t afford the two retroactive 3 percent raises it gave teachers to end the strike. The county office raised the possibility that the district’s finances could be so broken by 2020-21 that it could be subject to an outside takeover based on a state law requiring districts maintain minimum reserves.

L.A. Unified leaders hope to get the state Legislature to provide more funding for next school year. But the L.A. teachers union also wants the district to stop providing so much funding to the district’s 225 charters, which teach 112,000 of the district’s 486,000 students.

The wild card in a new cold war between teachers unions and charters is Gov. Gavin Newsom. While he has often praised charter schools as an important part of public education, he said while campaigning last year that he would sign legislation “requiring charter schools to be more transparent with their finances and operations and to adhere to stricter conflict of interest rules on their governing boards,” according to the EdSource website.

Charter school critics see this as an obvious response to the messy finances and scandals seen in some charters. Charter advocates see it as an ominous first step toward rolling back the charter movement. They backed former Los Angeles Mayor Antonio Villaraigosa in the 2018 governor’s race.

This article was originally published by CalWatchdog.com

Will Anything Good Come Out of the LAUSD Strike? Probably Not


LAUSD school busAs the teachers strike in Los Angeles entered its second week, it appeared the strike would soon be over. On January 22, online reports declared an agreement has been “hammered out,” with union members ratifying the deal late last night.

Union representatives have consistently stated that more pay is not the only reason they’re striking. That’s believable. The unions also want to unionize charter schools, they want smaller class sizes, and they want more hiring – for example, a full-time nurse at every elementary school. All of this, however, costs money.

Noriko Nakada, a LAUSD public school teacher, wrote a column in the December 18th edition of the UTLA “United Teacher” newspaper, entitled “People don’t strike for 6%; we strike for justice.” Considering each of those two phrases, one at a time, yields insights into what’s really going on in LAUSD, and by extension, throughout the unionized public schools of California. Briefly stated, according to the teachers union, “justice,” inside and outside the classroom, is to implement a Leftist political agenda with no regard to the sentiments of teachers or parents.

To start with, however, Nakada’s assertion that “people don’t strike for 6 percent” is false, because getting a 6 percent raise was one of the goals of the strike, and it looks like they’re going to get that raise. So how much will that cost? If there are 30,000 teachers on strike, and their average salary is $75,000 per year, then a 6 percent raise is going to cost at least $135 million per year. At least, because whenever salaries are increased, the cost for other benefits such as pensions increase proportionately.

So this concession of $135 million (or more) per year would have paid for the district to hire roughly 1,500 more teachers and support personnel, which when the details of the settlement are known, is likely to be roughly equivalent to how many new hires will be made. Where the money will come from? Who knows.

The more revealing phrase in Nakada’s article title is “we strike for justice.” What are examples of this “justice”? Would it include “restorative justice,” that well intentioned, benevolent sounding practice which in reality forbids schools from expelling students of any given ethnicity at a greater rate than expulsions occur within the entire student population?

Maybe “justice” is referring to “social justice,” which would include “protecting Dreamers,” “affordable healthcare,” “fair tax structures,” increasing the minimum wage, opposing the “privatization of public education,” immigrant rights, “green” space, bilingual education, reducing “inequality,” creating “racial justice” (such as through preferential scholarships for Asian, Latino, African, and LGBTQ students), and much, much more.

It’s unlikely that UTLA leadership would disavow these elements of their “justice” agenda. But is it nonpartisan? Is it focused on the skills that will truly enable a graduate to be successful – English literacy, math competency, and an awareness of history and civics that instills the American values of individual responsibility and hard work? Or is it a hard Left political agenda?

To answer that question, maybe the national political spending of the two largest teachers unions in America, the National Education Association (NEA) and the American Federation of Teachers (AFT) might be instructive. The table below, lifted from the book “Standing Up to Goliath,” written by the courageous Rebecca Friedrichs, reveals the political bias of these unions.

As can be seen, using 2016 data gathered by the Center for Responsive Politics, over 99 percent of direct political contributions by the NEA and AFT in that year were directed either to Left-leaning political action committees or to Democratic candidates and the Democratic party. Ninety-nine percent.

Can this degree of partisanship possibly be in synch with the sentiments of teachers who belong to these unions? Not according to the NEA’s own survey data on their members. As also reported by Friedrichs in “Standing Up to Goliath,” the most recent study available on this was a 2006 survey of American public school teachers, where they were classified as either “liberal,” “lean liberal,” “conservative,” or “lean conservative.” As shown, at the time, 55 percent of public school teachers in the U.S. were either “conservative” or “lean conservative.” Has this changed over the intervening decade? Would the findings be different in California compared to the rest of the nation? Of course the answer to both questions is yes, but how much different?

Two things can be reasonably inferred from these charts. (1) The political ideology of public school teachers in America is split roughly evenly between liberals and conservatives, and (2) the national political spending of the major teachers unions is almost 100 percent allocated to liberal causes and Democratic candidates. From their literature and their rhetoric, it is almost certainly accurate to state that the political agenda and political spending of the United Teachers of Los Angeles is in lockstep with that of these national teachers unions. And it is extremely unlikely that literally 100 percent of the UTLA teachers – and, more importantly, the parents of LAUSD students – adhere to an ideology that is 100 percent supportive of liberal causes and Democratic candidates.

The question of whether or not unions should even exist in the public sector is one worth asking. Already, the recent U.S. Supreme Court decision in the Janus vs. AFSCME case has recognized that all public sector union activity is inherently political. If so, shall the California affiliate of the NEA, the California Teachers Association, continue to collect and spend an estimated $325 million per year? Shall the California affiliate of the AFT, the California Federation of Teachers, continue to collect and spend an estimated $100 million per year?

Shall the UTLA continue to use their formidable power to deny school choice in spite of forcing students to attend mediocre and failing schools, to unionize charter schools despite many of them achieving spectacular results, to reject the common sense, bipartisan reforms proposed in the Vergaracase, and to inculcate students with Leftist political ideology, at the same time as their financial demands leave the district teetering on the brink of insolvency?

By all recent indications, yes.

L.A. Teachers Strike To Preserve Their Ruinous Monopoly


Teachers unionLast week, 31,000 Los Angeles Unified School District teachers represented by the United Teachers of Los Angeles (UTLA) union went on strike for the first time in 30 years.

Substitute teachers and administrators make up a skeleton crew that is keeping schools open, and about one-third of the 640,000 district students are attending class.

The strike is exacting a tremendous toll on parents, many of whom are poor and who must decide whether to take time off of work to care for their children or send their children to grossly understaffed schools.

The issues underlying the strike highlight the challenges facing public school administration, teacher unions and school funding, and shows what must change if U.S. public schools are to increase student achievement.

The strike is about teacher pay, classroom size and increasing the number of school support staff, including counselors, librarians and nurses. But at a deeper level, the strike is really about suppressing the state’s charter schools, which are the major competition facing traditional schools.

Charter schools, which grew out of interest in having public alternatives to traditional schools, began in 1992 and now enroll over 600,000 students within California. Charters have become increasingly popular, and their number has doubled over the last decade. …

Click here to read the full article from The Hill

Are LAUSD Teachers Underpaid, or Does it Cost Too Much to Live in California?


Teachers in the nation's second-largest school district will go on strike as soon as Jan. 10 if there's no settlement of its long-running contract dispute, union leaders said Wednesday, Dec. 19. The announcement by United Teachers Los Angeles threatens the first strike against the Los Angeles Unified School District in nearly 30 years and follows about 20 months of negotiations. (AP Photo/Damian Dovarganes) ORG XMIT: CADD303

In California, public sector unions pretty much run the state government. Government unions collect and spend over $800 million per year in California. There is no special interest in California both willing and able to mount a sustained challenge to public sector union power. They simply have too much money, too many people on their payroll, too many politicians they can make or break, and too much support from a biased and naive media.

The teachers strike in Los Angeles Unified School District cannot be fully appreciated outside of this overall context: Public sector unions are the most powerful political actor in California, at the state level, in the counties and cities, and on most school boards, certainly including the Los Angeles Unified School District. With all this control and influence, have these unions created the conditions that feed their current grievances?

The grievances leading the United Teachers of Los Angeles to strike center around salary, class sizes, and charter schools. But when the cost of benefits are taken into account, it is hard to argue that LAUSD teachers are underpaid.

According to the Los Angeles County Office of Education, the median salary of a LAUSD teacher is $75,000, but that’s just base pay. A statement by LAUSDin response to a 2014 report on LAUSD salaries challenged the $75,000 figure, claiming it was only around $70,000. They then acknowledged, however, that the district paid $16,432 for each employee’s healthcare in 2013-14, and paid 13.92 percent of each teachers salary to cover pension contributions, workers comp, and Medicare. That came up to $96,176 per year.

The Cost of Benefits is Breaking Education Budgets

This average total pay of nearly $100K per year back in 2013-14 is certainly higher today – even if salaries were not raised, payments for retirement benefits have grown. For their 35,000 employees, LAUSD now carries an unfunded pension liability of $6.8 billion, and their OBEB unfunded liability (OPEB stands for “other post employment benefits,” primarily retirement health insurance) has now reached a staggering $14.9 billion. CalSTRS, the pension system that collects and funds pension benefits for most LAUSD employees, receives funds directly from the state that, in a complete accounting, need to also count towards their total compensation. And CalSTRS, as of June 30, 2017 (the next update, through 6/30/2018, will be available May 2019), was only 62 percent fundedSixty-two percent!

The reason to belabor these unfunded retirement benefits is to make it very clear: LAUSD paying an amount equivalent to 13.92 percent of each employees salary into the pension funds isn’t enough. What LAUSD teachers have been promised in terms of retirement pensions and health insurance benefits requires pre-funding far in excess of 13.92 percent. To accurately estimate how much they really make, you have to add the true amount necessary to pay for these pensions and OPEB. This real total compensation average is well over $100K per year.

To put LAUSD teacher compensation in even more accurate context, consider how many days per year they actually work. This isn’t to dispute or disparage the long hours many (but not all) teachers put in. A conscientious teacher’s work day doesn’t begin when the students arrive in the classroom, or end when they leave. They prepare lesson plans and grade homework, and many stay after regular school hours to assist individual students or coordinate extracurricular activities. But teachers working for LAUSD only work 182 days per year. The average private sector professional, who also tends to put in long hours, assuming four weeks of either vacation or holidays, works 240 days per year – 32 percent more. The value of all this time off is incalculable, but simply normalizing pay for a 182 day year to a 240 day year yields an average annual pay of not $100K, but $132K. Taking into account the true cost of pensions and retirement healthcare benefits, much more than $132K.

This is what the LAUSD teachers union considers inadequate. If that figure appears concocted, just become an independent contractor. Suddenly the value of employer paid benefits becomes real, because you have to pay for them yourself.

California’s Ridiculously High Cost-of-Living

If a base salary of over $70,000 per year, plus benefits (far more time off each year, pensions far better than Social Security, and excellent health insurance) worth nearly as much, isn’t enough for someone to financially survive in Los Angeles, maybe the union should examine the role it played, along with other public sector unions, in raising the cost-of-living in California.

Where was the California Teachers Association when restrictive laws such as CEQAAB 32SB 375 were passed, making housing unaffordable by restricting supply? What was the California Teachers Association stance on health coverage for undocumented immigrants, or sanctuary state laws? What did they expect, if laws were passed to make California a magnet for the world’s poor? Don’t they see the connection between 2.6 million undocumented immigrants living in California, and a housing shortage, or crowded classrooms? Don’t they see the connection between this migration of largely destitute immigrants who don’t speak English, and the burgeoning costs to LAUSD to provide special instruction and care to these students?

From a moral standpoint, how, exactly, does it make the world a better place, when for every high-needs immigrant student entering LAUSD schools, there are ten thousand high-needs children left behind in the countries they came from, as well as less resources for high-needs children whose parents have lived in California for generations?

When you make it nearly impossible to build anything in California, from housing to energy and water infrastructure, and at the same time invite the world to move in, you create an unaffordable state. When California’s state legislature passed laws creating this situation, what was the position of California Teachers Association? Need we ask?

The Union War Against Education Reform

Charter schools, another primary grievance of the UTLA, is one of the few areas where politicians in California’s state legislature – nearly all of them Democrats by now – occasionally stand up to the teachers unions. But why are charter schools so popular? Could it be that the union controlled traditional public schools are failing students, making charter schools a popular option for parents who want their children to have a better chance at a good education?

Maybe if traditional public schools weren’t held back by union work rules, they would deliver better educational results. The disappointing result in the 2014 Vergara vs. California case provides an example. The plaintiffs sued to modify three work rules, (1) a longer period before granting tenure, (2) changing layoff criteria from seniority to merit, and (3) streamlined dismissal policies for incompetent teachers. These plaintiffs argued the existing work rules had a disproportionate negative impact on minority communities, and proved it – view the closing arguments by the plaintiff’s attorney in this case to see for yourself. But California’s State Supreme Court did not agree, and California’s public schools continue to suffer as a result.

But instead of embracing reforms such as proposed in the Vergara case, which might reduce the demand by parents for charter schools, the teachers union is trying to unionize charter schools. And instead of agreeing to benefits reform – such as contributing more to the costs for their health insurance and retirement pensions – the teachers union has gone on strike.

Financial reality will eventually compel financial reform at LAUSD. But no amount of money will improve the quality of LAUSD’s K-12 education, if union work rules aren’t changed. The saddest thing in this whole imbroglio is the fate of the excellent teacher, who works hard and successfully instructs and inspires their students. Those teachers are not overpaid at all. But the system does not nurture such excellence. How on earth did it come to this, that unions would take over public education, along with virtually every other state and local government agency in California?

L.A. Teachers Proceeding With Monday Strike Plan


Teachers in the nation's second-largest school district will go on strike as soon as Jan. 10 if there's no settlement of its long-running contract dispute, union leaders said Wednesday, Dec. 19. The announcement by United Teachers Los Angeles threatens the first strike against the Los Angeles Unified School District in nearly 30 years and follows about 20 months of negotiations. (AP Photo/Damian Dovarganes) ORG XMIT: CADD303

Without any new proposals from Los Angeles Unified School District officials coming over the weekend, the union representing 34,000 district educators is moving forward with a strike set for Monday morning, Jan. 14.

Calling the offer on Friday by district officials unacceptable, Alex Caputo-Pearl, United Teachers Los Angeles president, said the union was engaged in a “battle for the soul of education” at a news conference Sunday afternoon at union headquarters near downtown Los Angeles.

“We are more convinced than ever that the district won’t move without a strike,” Caputo-Pearl said as he was flanked by roughly two dozen teachers, parents and students.

“Let’s be clear, teachers do not want a strike. Teachers strike when they have no other recourse,” he said.

Union leaders illustrated four demands that remained unresolved Sunday. They included a cap on class sizes, providing a full-time nurse in every school, reforming co-location policies and improving special education. …

Click here to read the full article from the L.A. Daily News

L.A. Teachers to Strike After Rejecting Offered Pay Raise


unionAfter a temporary delay, teachers in the Los Angeles Unified School District seem likely to go on strike Monday morning. They are demanding, among other things, a 6.5 percent pay increase after rejecting a 3 percent hike offered by the district.

About 30,000 teachers in the nation’s largest school district had originally planned to strike on January 10, but union leaders postponed the strike until Monday after a judge ruled that the union had failed to give the district adequate notice for the work stoppage. Even with a few extra days to reach an agreement, the two sides remain apart, according to the Los Angeles Times, despite the district offering to pay an additional $75 million to meet union demands regarding staffing levels and class sizes.

The main disagreement, of course, is about wages. The union wants a 6.5 percent raise immediately, while the district has offered a 3 percent raise followed by another 3 percent raise next year, the Times reports. (Update: The average LAUSD employee earns $73,000 annually.)

Even without handing out pay raises, the Los Angeles Unified School District finds itself in dire financial straits.

On its current trajectory, the school district will face a $422 million shortfall by 2020, driven in large part by its $15 billionin unfunded health care benefit liabilities for current workers and retirees. A task force that studied the district’s fiscal condition in 2018 concluded that the structural deficit “threatens its long-term viability and its ability to deliver basic education programs.”

A major driver of the budget problems at the LAUSD is employee pension and health care costs. According to the budget task force, those costs will consume more than half of the district’s annual budget by the end of the next decade. Since there is no way to give employees raises without also increasing the future liabilities owed by the pension system, boosting pay now will only add to the long-term problems facing the district.

“LAUSD has already offered much more than it can afford (increase teacher pay across the board, dollars for lower class sizes, and new positions) so either way the resolution will likely expedite the drawdown of the district’s reserves,” says Aaron Smith, an education policy analyst for the Reason Foundation, which publishes this blog.

The other major issue is class sizes. The union is demanding that the district hire more teachers and staff to reduce the average class size in Los Angeles schools—which currently range from an average of about 26 students per class in elementary schools to nearly 40 per class in the city’s high schools. In its most recent offer, the school district said it would set caps of 37 students for high school classes and 34 students for lower grades.

But while smaller class sizes would be nice, that’s far from the only consideration facing the LAUSD. As even former Obama-era Education Secretary Arne Duncan has argued, teacher quality matters far more than class size as a determinant of student outcomes.

Hiring more employees is unlikely to solve the district’s problems. Since 2004, the LAUSD has seen a 16 percent jump in administrative staffers while student enrollment has fallen by 10 percent. Increasingly, students (and their parents) are opting for charter schools, which have proven to be successful and efficient alternatives. More than 160,000 students already attend charter schools in Los Angeles, and another 41,000 are on waiting lists trying to get in.

The school district likes to blame its structural problems on the loss of students to charter schools—but the real problem is that LAUSD has failed to adapt to changing circumstances. In 2015, the district’s Independent Financial Review Panel made a series of recommendations to help the district adjust to competition from charters—for example, if employees and retirees had to cover just 10 percent of their health insurance premiums, the district could save $54 million annually. Those ideas have mostly been ignored.

A long strike will likely only exacerbate those problems, warns Smith. A protracted strike may encourage more families to seek out alternatives to the public schools.

“If anything,” he says, “the strike will further illustrate exactly why more (not fewer) charters are needed.”

This article was originally published by Reason.com

Five Recommendations to Solve LAUSD’s Looming Fiscal Crisis


These recommendations are excerpted from the policy study “A 2018 Evaluation of LAUSD’s Fiscal Outlook.” 

LAUSD school busFrom the Independent Financial Review Panel’s report of Los Angeles Unified School District emerges a dire picture that should alarm parents, educators and community stakeholders alike. It found that maintaining the status quo would grow the budget deficit to about $600 million by 2019–2020, concluding that failure to act would have real ramifications for the district’s 550,000 students including financial insolvency and even state takeover. For years district officials have avoided substantive reforms, but the warnings of distant fiscal calamity have now become a reality that leaders must address head-on. While the path ahead involves many difficult decisions and political headwinds, the process of right-sizing LAUSD presents an opportunity to lay the foundation for a 21st-century education system that’s productive, agile, and responsive to the needs of students and communities. In other words, right-sizing isn’t about budget cuts and layoffs, but rather optimizing all facets of operations with the goal of providing high-quality options to all students at a cost that aligns with revenues. To do this, LAUSD leaders should focus on five key reforms.

#1 OVERHAUL LONG-TERM DEBT OBLIGATIONS

LAUSD has little control over rising pension contributions because reducing these obligations requires state-level reforms. However, general staffing surges that are not supported by enrollment can increase pension costs, since the district must make pension contributions for each new hire.

Further, LAUSD does have discretion over OPEB costs as well as health and welfare benefits for active employees. The district has several significant cost-saving options available to it, ranging from ending retiree health care benefits altogether to engaging in a variety of cost-sharing and cost-reducing strategies.

At its August 2017 board retreat on reducing health care costs, LAUSD staff presented five cost-saving options, as shown in Table 20.

Ultimately the board upheld the status quo for health care benefits for another three years at an annual cost approaching $1 billion.

#2 GO AFTER LOW-HANGING FRUIT

It should come as no surprise that LAUSD can become more efficient, but what’s less obvious is how relatively minor changes in operations can result in substantial savings that can put a dent in the district’s budget deficit. In fact, the Independent Financial Review Panel’s report found over $143 million in potential savings outside of staffing and long-term obligations, including:

Improve student attendance ($45 million): Because the state of California provides revenue based on Average Daily Attendance, LAUSD loses money with every student absence from school. Increasing the district’s attendance to just the statewide average—a relatively low bar to achieve—would generate an additional $45 million per year. Of course, this would not only help boost LAUSD’s bottom-line but also improve academic outcomes such as graduation rates and college and career readiness. In 2009–2010, Long Beach Unified shifted 10 of its social workers and counselors to working with campuses on truancy issues to increase student attendance. The chronic absence rate in Long Beach Unified dropped from 19.8 percent in 2011 to 10 percent by 2014. By 2015, the school district’s overall attendance rate was 96.17 percent up from 96.01 percent in 2014 and above the state average.

Improve staff attendance ($15 million): Currently, only 75 percent of LAUSD staff members have strong attendance as defined by the district. Bolstering this number to 90 percent would save about $15 million on substitute teachers while also providing students with more stable classroom environments. To save even more money, LAUSD could require select administrators to substitute teach five days per year, a policy that saved Scottsdale, Arizona about 7 percent of their substitute budget and also allowed district staff to stay connected to the classroom.

#3 INITIATE STAFF REDUCTIONS AND STRATEGIC SCHOOL CLOSURES

The reality is that LAUSD’s financial quagmire requires district leaders to make substantive cutbacks in both staffing and schools. Even though its declining enrollment has necessitated a reduction of about 10,000 staff, LAUSD has actually increased staffing levels in recent years while seeing costs associated with salaries and benefits also rise. This problem will only magnify if projected enrollment declines continue to hold true.

To start, LAUSD must recognize that the lion’s share of new hires have been administrative staff, even during declining enrollment. Therefore, district officials should first evaluate every central office staff position as part of its school finance overhaul.

Next, teacher layoffs are unavoidable but LAUSD can approach them in a manner that will help increase student outcomes even as overall staffing levels decrease. Importantly, district and union officials should work together to review and renegotiate factors that hamstring flexibility and do nothing to further student achievement, such as automatic pay increases, rigid staffing requirements, and termination provisions that favor costly teachers with seniority. For example, Boston Public Schools replaced a seniority-driven system by renegotiating its collective bargaining contract to give more autonomy over staffing to school leaders, and Hartford Public Schools’ contract now provides principals with more flexibility over things such as scheduling. Increasing district and school-level flexibility will not only minimize staff reductions and protect against future layoffs, but also help ensure that the district retains its highest-performing talent in the process. LAUSD should also follow the Independent Financial Review Panel’s guidance by offering early retirement incentives to senior staff and help reduce the percentage of teachers who have reached the maximum salary level, which is currently 10 percent higher than the state-wide average.

Lastly, underutilized schools are costly for districts to maintain as fixed costs such as facilities, school administration, and custodial services increase per-pupil expenses as enrollment declines. This means that schools that are at or near capacity—which are often higher-performing—essentially subsidize schools with declining enrollment and have less funding to expand programs, services and enrollment as a result. Undoubtedly, closing schools is a difficult yet necessary process for LAUSD to undertake, but district officials should prioritize closing underperforming schools and proactively engage communities throughout the process in order to maximize transparency and build understanding. Kansas City Public Schools closed 26 schools and laid off about 1,000 staff members in 2010, which ultimately helped the district close its budget deficit, improve academically, and reverse enrollment declines, as students transferred to higher performing schools. According to Superintendent R. Stephen Green, “When you close a number of facilities, it creates a bit of disruption, but it was a much-needed process to go through, given the financial stability that was needed for the district.”

Los Angeles also has declining enrollment without ensuring that all school sites are self-sustaining. While many other large urban districts with significant enrollment declines have worked to close and realign some schools to save money, LAUSD continues to keep under-enrolled schools open, even as it has opened many new schools over the last decade. In some areas of the district where school sites are very close to one another, the older schools have lost enrollment to newer schools. The district has not released a transparent recent report about the current capacity from one school to another or identified which schools may be under-enrolled and subsidized by the district.

The key question is to examine whether a school has enough enrollment to sustain the cost of running the school. In 2008, the district estimated that its schools would have a 16 percent vacancy rate by 2012. It predicted it would have the capacity to seat 670,000 students, but only 560,000 were expected to enroll. A Los Angeles Times analysis in 2008 noted that “the district plans to build campuses that will take hundreds of students from those schools, further reducing their enrollment. By the time the building program is completed in 2012, there will be tens of thousands of empty seats at dozens of once-crowded schools.”

If we assume that LAUSD still has the capacity for 670,000 seats, then the current enrollment level of 500,000 students means that it is past time for the district to do a transparent audit of school capacity and how it might save money by closing the most under-enrolled schools. Independent charter schools have used some of this excess capacity for their students, but a transparent examination would ensure that the district can accurately assess all its financial options. In addition, evidence shows that closing the lowest performing and most under-enrolled schools can improve the quality of education for the most disadvantaged students.

A growing body of research indicates that school closure increases educational opportunity so long as students have access to better schools. Closure students who attended better schools tended to make greater academic gains than did their peers from low-performing schools in the same sector that remained open.

A new report on LAUSD’s real estate assets by the LAUSD Advisory Task Force calls for the district to “analyze the current occupancy of core District assets to determine whether consolidation of and/or relocation of certain tenants to more optimal locations could create savings, maximize revenue, and/or reduce functional obsolescence.” With a more thoughtful approach to managing individual school sites and vacant property, the district could actually raise money with long-term leases to charter operators or with other commercial or community uses of their underutilized real estate assets. In addition, school consolidation could help ensure every school has more qualified staff, rather than distributing LAUSD’s scarce resources over too many school sites.

When LAUSD keeps open schools that are under-capacity, district-wide personnel may continue to grow while individual school communities feel staff shortages at the school level. This is because each school, independent of enrollment, requires a certain fixed number of staff positions, some of which may be vacant as enrollment shrinks. As the Los Angeles School Report noted in a May 2016 feature, former Superintendent Michelle King cited feedback from a principals’ survey she received that “showed principals expressing frustration with a lack of clerical staff, a lack of time to complete tasks and limited opportunities for instructional training. ‘Principals say there are not enough hours in the day to get everything they need done and improve teaching and learning due to a lack of sufficient personnel,’ King said.” In this way, the district can have too many employees that are unsustainable given the current level of enrollment and district revenue, while individual schools can also be under-staffed and stretched thin.

But when schools consolidate, fewer fixed staff positions are needed and are more likely to be filled. The district is staffing too many schools at an inadequate level and could increase staff and school support at individual schools by consolidating and closing some schools. LAUSD needs to make a transparent accounting of site-based enrollment, spending, and revenue based on the students who are enrolled at each site, examine how each school uses resources, and determine how that impacts the district as a whole. Until that is accomplished, the district will continue to have too many staff members that are not effectively deployed to best serve the needs of students.

#4 MITIGATE ENROLLMENT DECLINES BY FOCUSING ON QUALITY OPTIONS

Over a six-year period, LAUSD’s enrollment fell by nearly 100,000 students, about half of which is due to families choosing charter schools, with many others opting to enroll in traditional public schools outside of the district. With forecasted student attrition of 2.8 percent per year and lackluster outcomes in many of LAUSD’s schools, fundamental changes within classrooms are clearly in order. The Independent Financial Review Panel found that “there may be lessons to be learned from the migration of students to charter schools” and “it is very important that the District carefully analyze charter programs and focus on which students are leaving and why” so that LAUSD can ultimately improve its programmatic offerings for families. More bluntly, the days of district monopoly and residential assignment are coming to an end, and if LAUSD is going to attract and retain students then officials must be more responsive to parent needs. Fortunately, numerous districts across the U.S. have already undertaken substantive reforms to adapt to this new operating environment, and LAUSD has much to learn from them. One prominent example is Denver Public Schools (DPS).

DPS has adopted “portfolio management,” a model in which a district’s primary role is to approve operators, provide support, and evaluate school outcomes. Portfolio management is based on the belief that school-level autonomy drives performance by allowing school leaders and teachers to more effectively meet student needs. While traditional districts tend to prescribe a one-size-fits-all model by mandating inputs (e.g. staffing ratios, curriculum, etc.) portfolio management recognizes that each school has unique challenges and is thus more concerned with holding educators accountable for outcomes rather than how they operate. Ultimately, this helps to promote a diverse supply of schools that, when combined with a strong intra-district choice policy, can give parents more meaningful options that in turn help improve overall satisfaction and retention. As part of its strategic roadmap, The Denver Plan 2020, DPS is striving to have 80 percent of its students attending a high-performing school by 2020.

New data by the advocacy group Parent Revolution show that 234 LA Unified schools scored in the bottom two levels — orange or red — for both English and math on the California accountability dashboard. In the 2016–2017 school year, 155,779 students were enrolled in those 234 schools. LAUSD has 34 schools that are red in both English and math. Last year those schools enrolled 26,400 students. At a minimum, 30 percent of LAUSD students could use a higher-performing school.

#5 MODERNIZE THE DISTRICT’S SCHOOL FINANCE SYSTEM

Currently, LAUSD employs an antiquated school finance system. Instead of providing principals with actual dollars based on students, it allocates staffing positions that are determined using rigid ratios and district-wide average salaries. As Marguerite Roza of Georgetown University’s Edunomics Lab explains, “The district sends out teachers, principals, administrative assistants, lunchroom staff, librarians, and the like, and pays the bills out of the district coffers. Schools do not have their own bank accounts, nor do they receive reports that show the true costs of the resources that land in their buildings.” As well, according to Harvard researcher and former LAUSD budget director Jon Fullerton, the district’s budgeting systems “do not connect automatically with accounting systems, and both may be isolated from the human-resources systems that track who is hired, when, and for how much.” As a result, funding is delivered to schools in a manner that is non-transparent, inequitable, and less responsive to enrollment changes. This makes it difficult to provide leaders with valuable data that could help the district become more productive with its education dollars.

STUDENT-BASED BUDGETING

To modernize its school finance system, LAUSD should allocate dollars on a per-pupil basis by adopting student-based budgeting, a funding portability framework that sends dollars to schools rather than staffing positions. This not only promotes equity and portability across schools within the district, but it also empowers principals to have more decision-making authority over how dollars are ultimately spent. Allocating funding to schools in per-pupil terms would promote greater efficiency by allowing dollars to grow and contract in direct proportion to student needs. In this way, student-based budgeting would allow principals to make their schools more responsive to parents’ needs, increasing the likelihood of higher enrollment and potentially generating new revenue at the school level.

Moreover, when money goes directly to schools on a per-pupil basis, it becomes clear which schools are unable to financially sustain themselves and which schools may be candidates for consolidation to avoid insolvency. As part of this shift, LAUSD can also empower principals to purchase certain services from either the district or external vendors to optimize pricing and quality, which are often constrained by district contracts. This allows school leaders to make better use of their budgeted dollars while also helping to address central office bloat. Given LAUSD’s financial position and need to reduce personnel, student-based budgeting would allow school-level staffing based on the funding resources generated by the students in the school.

Student-based budgeting is based on five key principles:

  1. Funding systems should be as simple and transparent as possible.
  2. Per-pupil funding should be based on the needs of each student.
  3. Per-pupil funding should follow the student to the public school of their choice.
  4. Principals should receive actual dollars—not staffing positions or other allotments—to spend flexibly based on school needs.
  5. Funding allocation principles should apply to all sources of education revenue.

It requires a shift in mindset from top-down compliance to supporting autonomous school leaders, and some roles will fundamentally change or become obsolete in this new environment as a result. As one educator who participated in an Education Resource Strategies summit on school-level budgeting explained:

There has been a philosophical change: the principal is the CEO of the school. The central office is there to support them. We inverted the pyramid so that the principal is on top, telling the central office what they need, rather than on the bottom. That’s required a cultural change and huge structural changes in the district.

LAUSD has already laid the foundation for this reform by piloting autonomous schools through its Belmont Pilot Schools Network, which started in the 2007–2008 school year. In the 2017–2018 academic year LAUSD allocates $46 million to 83 schools that receive their resources based on a per-pupil formula that is allocated directly to schools. In these schools, principals have more autonomy to purchase school-based staffing and differentiated district support. LAUSD should take the next step by adopting a district-wide program as numerous districts such as Boston Public Schools, Houston Independent School District, and New York City Department of Education have already done.

THE CHANGING ROLE OF THE DISTRICT

Under a student-based budgeting system, the district itself still monitors school performance and makes big-picture decisions about which schools may need to be closed or consolidated based on enrollment and academic performance. The district’s new role would be to hold individual schools accountable for district-wide student goals, such as improving graduation rates or increasing proficiency in 3rd-grade reading. The district would not mandate how a principal and school community use their resources to meet district-wide instructional
goals, but would instead set the benchmarks and goals for the district.

In order to measure progress and monitor performance, LAUSD should revamp its knowledge infrastructure to better integrate key information systems. This means going beyond merging budgeting, accounting and human resource data by ensuring that student enrollment and achievement data are also readily available for cross-referencing analysis. This would ensure that individual school leaders and district leaders have the tools necessary to make sound financial decisions that are driven by academic strategy and outcomes.

For example, district leaders should know not only exactly how much is spent on each school but also how dollars are allocated across classrooms and courses. Disaggregating data to per-pupil terms at the classroom-level would help school leaders and district administrators assess the alignment of funding with strategic instructional intent and student outcomes, and more effectively consider trade-offs in how money is spent. This is especially important since research has shown that districts allocate funding in a manner that doesn’t align with stated priorities such as focusing on low-achieving students, a fact that leaders are often unaware of given antiquated accounting and budgeting practices. For example, a district may say its goal is to improve 3rd-grade reading and then spend all of its resources on high school AP classes. Without attaching school- and classroom-level expenditures to instructional priorities, school leaders, and districts have little information about how they are targeting resources to instructional priorities.

Such transparency would help LAUSD’s current measurement of progress, as the district doesn’t track or publicly report its allocations at the school level based on student characteristics. As a result, education stakeholders and policymakers cannot easily determine if the new LCFF revenue, which the California Legislature intended to help high-needs students, is boosting spending in the schools these students attend. As Marguerite Roza noted in a recent report evaluating California’s LCFF revenue, “this lack of financial transparency makes it difficult to assess the degree to which LCFF is delivering—or not delivering—on the state’s pledge to drive resources to the highest-need students.” A more transparent student-based system would allow district leaders to track these dollars and make more informed decisions about how best to use the district’s scarce resources to improve student outcomes.

Student-based budgeting has helped other districts determine which schools should be closed or consolidated and which schools should be expanded or replicated. For example, after adopting student-based budgeting, the Denver school board approved the closing of eight schools that were under-enrolled and low-performing. The board projected that the realignment of students from these schools to higher performing schools would achieve projected yearly operating savings of $3.5 million. Those resources were used to improve the education of students who were affected by the school closures, delivering additional resources to under-performing schools, and creating funding opportunities for new schools and new programs. In addition to the standard per-pupil revenue that followed students to their new schools, the district reinvested $2 million, or 60 percent of the savings from school closures, into the schools of reassignment. In this way, a student-based budgeting funding system is an important modern financial tool that can help right-size LAUSD’s financial ship.

Full Study: A 2018 Evaluation of LAUSD’s Fiscal Outlook: Revisiting the Findings of the 2015 Independent Financial Review Panel

This article was originally published by the Reason Foundation