LA Unified losing $100s of millions in mandates unpaid by state, U.S.
Michael Janofsky | November 24, 2015
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A major contributor to LA Unified’s pending fiscal crisis is unfunded federal and state mandates that have deprived the district of hundreds of millions of dollars in recent years.
The exact number is difficult to calculate because the total not only reflects the amount the district seeks in reimbursement but what percentage the governments return to the district. In some cases, it’s little more than 20 cents on the dollar.
“It’s all very, very complicated,” said school board member Richard Vladovic, who brought the issue to light last week during a budget committee meeting. “The state controls everything; they impose the mandate and we have the responsibility to fulfill them. And the federal government does the same thing.”
The reluctance of the state and federal governments to send dollars into the district and the ever-falling reimbursements rates is nothing new for LA Unified.
But the need for those missing dollars has become more urgent with budget deficits projected within a few years as the number of enrolled students declines and district expenses rise.
A recent report from an independent panel brought in by Superintendent Ramon Cortines warned the school board that under current trends, the district faces a deficit of $333 million in 2017-2018, $450 million in 2018-2019 and $600 million by 2019-2020. And those numbers would erode the district’s credit worthiness, driving the deficits up even higher.
Vladovic suggested that just by meeting its legal obligation on supporting special education, the federal government would ease the district’s financial struggles by $800 million.
“It’s so unfair,” he said. “They only reimburse us at something like 11 percent and law says it should be closer to 40 percent.”
At the budget committee meeting, the district’s Chief Financial Officer, Megan Reilly, told the board the state owed the district more than $200 million.
Vladovic turned to the camera live-streaming the meeting: “They haven’t paid us, for those of you watching, the state owes us that much more money, and I’ll get off this soap box, they owe us more and [we have] more requirements and they do not follow the law and yet we have to follow the law every bit. We can certainly use that $200 million, trust me.”
Reilly’s deputy, John Walsh, told LA School Report that his office is investigating an estimated $227 million owed by the state as well as money owed by the federal government. He pointed out that the independent financial report urges the district to press Washington for full funding for the students with special needs.
The district’s lobbyists have warned that a plan now in the House of Representatives could cost LA Unified $78.7 million of its Title I money for low income schools, which translates to 22.9 percent of its funding.
The district’s looming deficits could also be affected by the future of Prop 30, a ballot initiative approved by state voters in 2012 that raised income taxes on wealthy individuals for seven years and increased state sales taxes for four years. Much of the money has been going to support public education.
The prospect of extending those revenue streams is now in the hands of two groups that want to get a new initiative on the ballot next year. By one estimate, passage would generation as much as $9 billion a year for another 15 years.
Mike Szymanski contributed reporting to this story.