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LA Unified board gets a look at financial future — it’s ugly

Vanessa Romo | December 10, 2014



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Ramon Cortines Dec. 9, 2014

Ramon Cortines at Tuesday’s LA Unified school board meeting

The LA Unified school board got a first look at the district’s financial future, and what members saw wasn’t pretty. Yet, it wasn’t ugly enough to stop the board from approving millions of dollars in new expenditures.

Like a town crier, Superintendent Ramon Cortines has been warning anyone willing to listen that the district is on the verge of a $300 million deficit by the 2015-16 school year. But during the eight-hour meeting yesterday, district Chief Financial Officer Megan Reilly reported it’s getting even more bleak:  “We’re facing a $784.5 million deficit by 2016-17,” she told the board.

A large portion of the first shortfall — $81 million —  is due to the expiration of the state’s Quality Education Investment Act (QEIA) grants at the end of the year. The program has helped some of the district’s lowest performing schools shrink class size and hire additional teaching staff as a way to raise test scores. Although some schools are eligible to carry over a portion of this year’s cash into next, providing a temporary bandaid, Cortines said it’s hopeless to attempt to persuade the state to keep the tap open.

“That’s the reason I caution you about additional spending,” Cortines told the board. “Because we will just have to deal with that, and it means that I’m going to have to cut, consolidate or eliminate programs.”

Other factors according to Reilly: Exponential mounting contributions to employee pension funds are hurtling the district deeper into negative territory; higher than expected state revenues this year are leading to a 10 percent decrease in additional Local Control Funding Formula resources for next year.

But the biggest wallop to future budgets comes from the district’s declining enrollment problem. Reilly says the district has been steadily losing about 15,000 students a year, about 3 percent of the current total enrollment.

“When that happens the estimated drop in revenue is about $100 million,” she said, adding that the downward slide is expected to last another two years.

The loss of students and the federal dollars that go along with them is due to a combination of lower birthrates and the exodus of students from traditional public schools to the district’s 250 charter schools.

Ironically, the sobering discussion on the financial threat charter schools present to the district was preceded by approvals for 14 of 15 charter schools, a typical rate for a board meeting. The seven members routinely green-light most of the charter applications and renewals that come before them.

The contradiction was not lost on board member Bennett Kayser, whose animus toward charter schools came into full view when he asked, “Why are we losing money? Because of birthrates and charter schools. How many charters did we authorize today? They’re taking away significant revenues to fund small charter systems or to fund corporate systems who are out for money and real estate instead of helping kids.”

Steve Zimmer waited to air his frustrations before a vote that ultimately approved another charter for the highly successful KIPP chain of charters.

“Given KIPP’s external funding contributions it is very, very, very hard for us to compete. We can’t compete,” he said.

George McKenna suggested one way to compete would be for the district to bring in professional fundraisers to tap wealthy Los Angeles residents to pitch in and help.

“We’re being eaten alive,” he said.

The hand-wringing over declining revenue did not stop the board from approving two big ticket items, more money for the student data tracking system known as MiSiS and for wireless devices.

Without much discussion, the board unanimously consented to spend another $13 million in bond construction funds to buy testing devices for the Smarter Balanced Assessment in the spring. The plan is to combine this sum with another $9.2 million left over from last year’s round of purchases, to buy approximately 29,000 iPads and Chromebooks. The devices are scheduled for delivery in February.

Similarly, not a single board member raised a question about Cortines’s request for $12.1 million to carry the plagued MiSiS software through the end of January, accepting that the “approval of the proposed action will provide additional funding needed for efforts to stabilize MiSiS.”

It was a stark contrast from previous demonstrations by school board members of disbelief, disgust, and almost apoplectic shock at the student data system’s colossal failure expressed in recent months.

Even Cortines’s statement, “I still believe it will take a year to resolve the issues with MiSiS,” failed to get a rise out of any of the board members. Though, perhaps they were assuaged when he added, “We are beginning to see evidence the system is stabilizing.”

The additional spending on MiSiS puts the total tab at $45.5 million to date. Matt Hill, who has overseen the implementation of MiSiS from the start, said that could go up to $86 million by the end of the year.

There were some areas where the board showed some restraint: A resolution that would have committed $3.5 million to “Promote Healthy Relationships and Prevent Teen Dating Violence” passed but was stripped of funding.

The same tactic was taken with Ratliff’s resolution aimed at increasing school safety by boosting staffing levels. While it started out calling for the district to staff every classroom with at least two adults, that part was gutted from the final version that was approved.

 

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