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LAUSD is about halfway through fixing what an independent panel said could lead to bankruptcy

Sarah Favot | June 21, 2017

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LA Unified has implemented about half of the strategies stemming from an independent panel’s report on the district’s finances, Superintendent Michelle King said at Tuesday’s presentation of the budget.

The Independent Financial Review Panel of nine experts commissioned by former Superintendent Ramon Cortines stated that if significant actions weren’t taken, the district was headed toward bankruptcy and state takeover. The report was presented to the school board in November 2015 and offered more than 40 recommendations to make improvements and avoid the ruinous outcome.

“If the district desires to continue as a going concern beyond FY 2019-20, capable of improving the lives of students and their families, then a combination of difficult, substantial and immediate decisions will be required,” the report states. “Failure to do so could lead to the insolvency of the LAUSD, and the loss of local governance authority that comes from state takeover.”

King and the board came up with a plan to address the recommendations during three board retreats last year. On Tuesday, King said the new budget that was passed Tuesday was based on the recommendations of the Independent Financial Review Panel.

A letter from King to the school board obtained by LA School Report outlines the progress made on each of the 34 strategies. The document shows 15 items are in progress, 16 are completed and three haven’t been started.

Some of the completed items are:
— continuing a hiring freeze for new positions
— reducing central office costs by 30 percent
— reducing food waste.

Some of the works in progress are:
— the district’s unified enrollment system, which is scheduled to be launched in the fall
— allowing charter schools to purchase items from the district
— a community outreach campaign for schools to showcase their strengths.

An example of how the panel’s recommendations are reflected in the new budget is the reduction of central office administrators, which has resulted in a $79 million savings to the district, according to budget officials speaking at a media briefing last week. Many of those personnel have been moved to other positions at school sites.

District officials have said that 115 administrators have been reassigned from central office positions to school sites.

The panel had recommended that 10,000 staff members, including administrators, would need to be cut to adjust for declining enrollment.

The panel found that even as enrollment has declined, the number of district staffers has grown. A superintendent report last year to the board showed that administrative staff has grown by 22 percent in the last five years.

The district was able to stave off a budget deficit for the 2017-18 and 2018-19 budget years (the panel had predicted deficits in those years), but is projecting a $422 million deficit in the 2019-20 school year (the panel had predicted a $600 million deficit).

One factor that has resulted in new revenue for the district that wasn’t known when the panel was completing their review was the extension of Prop. 30, which was set to expire. Voters approved the statewide ballot measure to continue the tax on high-income earners to fund education.

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