In Partnership with 74

LA Unified deficit recedes, but enrollment drop portends trouble

Vanessa Romo | January 14, 2015

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Megan Reilly

LAUSD CFO Megan Reilly

It turns out LA Unified’s money woes aren’t so bad — for now, anyway.

Shortly before the end of the calendar year, Superintendent Ramon Cortines and other district officials were forecasting a deficit of $320 million, sometimes closer to $350 million. But that was before Governor Jerry Brown proposed his new budget.

Now, the district’s revised estimated shortfall is a quarter of the original — about $88 million.

Megan Reilly, Chief Financial Officer for the district, told school board members yesterday much of the difference is being made up by an increase of $240 million in Local Control Funding Formula (LCFF) revenue, which aims to return district funding to 2007-08 levels.

“LCFF makes up 76 percent of our total general fund,” she said.

That means per pupil funding next year will go up to $9,322 from $8,403 this year. Still, that falls far below the goal of just over $11,000 per student. And it leaves the district 18 percent shy of the overall budget target.

“And remember, having a target or meeting the target is not the same thing as having adequacy,” Reilly said.

Another windfall for the district next year is a one-time mandated cost reimbursement of $93.4 million. Reilly described it as a debt from the state for ”things that the governor or the legislature mandates the district to do but did not provide funding.”

The bad news for the district, however, is declining enrollment and attendance.

On average the LA Unified enrollment goes down by 3 percent each year due to a lower birth rate and attrition to charter schools. And every 3 percent loss of students, Reilly said, costs the district $100 million in funding.

But making matters worse this year is MISIS. The glitchy student data tracking system did not have the capacity to track attendance for several months early in the school year, forcing teachers to take attendance by hand, then go back and re-enter the information into the system. Unfortunately, the data often vanished from the program.

The implications of the district’s software problems could be disastrous when it comes time to report attendance data to the state because the state relies on self-reported data to calculate average daily attendance funding. The loss of information could cost the district several hundred million dollars.

“We’re trying to recapture as much of that data as possible,” Cortines said, attempting to soothe the board.

But board members took little comfort after hearing from Reilly on the subject.

“I will have to say right now we’re looking at variances of 3 percent up to 16 percent in these numbers,” she said. “We are talking about a drop in revenue in the hundreds of millions of dollars.”

That lead to an audible gasp in the board room auditorium.

Alex Caputo Pearl, president of the teachers union, UTLA, chose to seize on the positive state budget news to encourage the board to support a long-awaited salary increase for teachers. The union and the district have been negotiating a new contract for months, with little progress reported.

“We see a lot of opportunity to get down to business to talk about salary that will actually recruit and retain educators in LAUSD and some of our hardest hit schools in the nations,” he told the board.

The boon is also an opportunity to implement lower class size throughout the district, he added.

By UTLA’s calculations Reilly is low-balling how much LA Unified is likely to receive in state funding. “We’ve seen an 8.7 percent increase in K-12 funding. That could be up to 12 percent increase, from what we understand, for LAUSD,” Caputo-Pearl said.

Furthermore, he added, “those percentages are likely to be floors rather than ceilings given that we’ve got a democratically controlled legislature.”


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