LACOE Chief Explains LAUSD’s Financial Crisis, Decries Unions’ 'Racist and Sexist’ Attacks As 'Unacceptable, Inappropriate And Frankly, Something We’re Not Going To Tolerate’

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Speak UP: Can you please tell us about the letter the Los Angeles County Office of Education sent to LAUSD Wednesday and tell parents what it means? We want to help them understand what's going on with LAUSD’s financial situation. Why did you send the letter?  

LACOE Superintendent Debra Duardo: At the County Office of Education, we oversee all 80 of the [Los Angeles County] school districts’ budgets. So, it's not just LAUSD, and we're looking at their budgets very closely to make sure that they can show that they have a positive budget, three years out, to ensure that they're fiscally healthy and that there's no chance of them becoming insolvent. So, what this letter is, it's a follow up to many, many other letters that have been sent to LAUSD regarding our concern for them not having a healthy budget. Our concern over them using one-time funds to pay for ongoing expenses. We want to make sure that they're going to continue to be able to keep their doors open and not have any type of interruption of instruction. This letter is basically telling them that we have not seen the results that we would like to have seen in terms of them coming up with a fiscal stabilization plan that shows us that they're going to be able to make the cuts that they need to make and adhere to the law in terms of them maintaining a 1 percent reserve. 

Speak UP: This letter is coming in the middle of tense labor negotiations, and United Teachers Los Angeles is demanding that LAUSD spend more -- much more. The union wants the district to spend its $1.8 billion reserve immediately. LAUSD says it is spending it just to keep the district lights on for the next few years. The average parent sees a $1.8 billion reserve, and they hear the union saying LAUSD is flush with cash and is hoarding money. Can you explain to parents why that's not the case?

Debra: All of this comes down to the law and Ed Code. And Ed Code requires them to have a 1 percent minimum reserve. So, for LAUSD, when they have such a large budget, a 1 percent reserve, that sounds like a lot of money. But really, they have to be able to show that they can keep their budget with that 1 percent reserve three years out. It may be difficult sometimes for parents to see, “Wow, there's all this money there. Why can't they just use that?” It is a requirement per Ed Code that they maintain a 1 percent reserve [for the next three years]. Now that it's gotten to the point where they can't show us that they can maintain that 1 percent reserve in their third year out, what we're doing is we're going to send in a team of fiscal experts that are going to go in there and really help look at their budget from a different lens. We will actually be able to take a much closer look and see how they're spending their money and assist them to make sure that they can maintain a healthy budget — and talk about the areas they need to cut. Our focus is to keep it as far away from impacting children as possible.  

Speak UP: Is the purpose of the 1 percent reserve requirement for three years to serve an early warning system to make changes before the district would go insolvent?

Debra: Absolutely. Especially at a district as large as LAUSD, if they were to go insolvent, then they would be in really big trouble. They would actually run out of the cash that they need to pay their teachers and all of their salaries. So, we want to make sure that we're avoiding any situation where they can't even pay [teachers] because their cash flow is not enough to cover their salaries.

Speak UP: You talk in your letter about using one-time money for ongoing expenses. Is this $1.8 billion reserve made up of one-time money? Is that what you're talking about when you warn LAUSD not to use the reserve to cover ongoing expenses?

Debra: Exactly. You have a reserve, and that's not money that you [will] have [again in the future]. So it's really paying for ongoing expenses with one-time dollars. It's almost like if you were going to pay for your mortgage out of some money that came [from] an inheritance, but it's not going to pay your mortgage forever. Eventually it's going to run out. So you can't pay for ongoing expenses with these one-time funds, and that's what they have going on. That's why their reserve, you see [in the budget] from one year to three years out, almost a 91 percent drop in their reserve. Because they're taking dollars that they have that are just one-time funds -- they're not coming in every year -- to pay for those ongoing expenses.

Speak UP: How did LAUSD get those one-time funds? Did the governor just give them unexpected money because the economy was good? Is that how they built up such a big reserve?

Debra: The governor decides. There's more money that comes in. The Local Control Funding Formula is increased, and all of a sudden, they have this one-time pot of money, but that's not going to carry the amount for every year in the future. It’s just one-time dollars.

Speak UP: Your letter also referenced collective bargaining agreements and staff unrest. Are you looking at LAUSD’s offer to UTLA? Do you have any concerns about LAUSD’s ability to afford that offer?

Debra: I'm aware of the offers and some of the negotiations from conversations with the superintendent and the media. But how do I make this clear? We're not in a position to say whether those requests are unreasonable. What they're asking for are things that we all want. We absolutely want to see teachers with higher salaries. We want to see more counselors, more nurses. What we're saying is, if you're going to make these increases and provide these things that UTLA is asking for, then you need to find a way of either bringing in more revenue or making cuts elsewhere. So, it may be selling some of their property. Parents will understand, we all have our own household budgets so we know that if we're going to add anything to our budget, we need to either make more money, or we need to find a way to cut something else out. And what we’re trying to do is make sure they’re spending within their means, and they're not using one-time dollars to pay for ongoing expenses.

Speak UP: If LAUSD were to just give the union what it’s asking for right now, which is spend all the reserves right now on a permanent nurse, a counselor, librarian in every school, 6.5% raises going back to 2016. If they were to just say, "Okay, we will meet these demands," what would you as the county overseer have to do? What would that do to their budget, and would you have the authority to come in and reverse that decision or to order them to lay people off? What would be your response if, in order to avert a strike, the district were to say, “Yes, we will agree to all of UTLA’s demands”?

Debra: Well, I think the superintendent understands that they can't give everything that they're asking for without making some cuts elsewhere. But our responsibility at the county is to make sure that they maintain a 1 percent reserve and have a fiscal stabilization plan that's going to get them out of deficit spending. The law is set up where if they were to show us in their budget that they don't have enough money to maintain that reserve, and even go further into the negative -- which would concern us that they may be at risk of becoming insolvent -- then the next step would be for us to assign a fiscal advisor. And a fiscal advisor has stay-and-rescind authority, which means that if there are decisions being made that put the district at risk of becoming insolvent, then we could override decisions that the board is making.

Speak UP: That would be the next step if LAUSD were to do something that you believe they cannot afford? As it is right now, the budget shows that they're beneath the required legal reserve in year three of the budget?

Debra: Correct. They're below that 1 percent in year three, the 2020-21 year.

Speak UP: So you are ordering LAUSD to make cuts to maintain the required reserve in year three?

Debra: That's what we've been telling them all along. This is not the first letter, but one of many letters saying, "You need to make sure that you're spending within your means. That you're not deficit spending and that you're maintaining that 1 percent reserve.”

Speak UP: Can you explain the deficit spending part because UTLA President Alex Caputo-Pearl came out the other day and said, “We have budget documents showing there has been no deficit spending for the last five years.” The union is claiming there is no deficit spending, while LAUSD says they're spending roughly $500 million more every year than they're bringing in. Can you explain from the county's perspective, is there a deficit, and what should parents believe?

Debra: Well, our definition of deficit spending is when more money is going out than what you're bringing in. And from all of what we’ve seen in terms of LAUSD documents provided to us, they are spending more, and evidence to that is the fact that they're going from a 10 percent reserve to an 0.96 percent reserve [in three years]. So, if they weren't deficit spending, we wouldn't see this reserve dwindling down to below 1 percent.

Speak UP: That make sense. UTLA is also questioning the timing of this letter. Can you explain the timing? It's coming right in the middle of these negotiations. Did the letter have anything to do with that, or did the timing have to do with something else?

Debra: Our timeline is driven by Ed Code, not union negotiations. These union negotiations have been taking place for a long time. We have 80 districts [for whom] we are providing oversight on their budget and certifying whether they have a positive, qualified or negative budget. The timeline per Ed Code for us to make sure that we certify all of these is Jan. 14. So, it's a few days early, but it's right at the deadline. It's unfortunate that the union or other people may see it that way, and I can see why they might because of the closeness in the timing, but if you look at that Ed Code, you know we're following what's prescribed there.

Speak UP: The other thing that the union is questioning is the independence of the county. UTLA is saying that there is some collusion between LAUSD and LACOE, which oversees LAUSD budget. They're basically implying that it's actually the other way around -- that the District is controlling the County Board of Education. Can you address these allegations and tell us whether you are in the district’s pocket and a puppet of the district, as UTLA claims?

Debra: That's absolutely not true. The decision to go in with the fiscal experts, actually the decision is mine. It's up to the County Superintendent. It doesn't even require my Board's approval. So, the question that the County Board of Education is controlled by LAUSD is absolutely wrong. I am a longtime educator, and I care about kids. And when I see a budget that's dwindling down with a district this large, and the impact that that has on children and families and interruption to their instruction, I'm going to go in there and I'm going to do my job and make sure that we're giving them the support that they need. But it has absolutely nothing to do with the union negotiations.

Speak UP: UTLA and a consultant for the administrator’s union did the same thing with Dr. Candi Clark, the Chief Financial Officer for LACOE. They really maligned her personally and attacked the credibility and credentials of this African American woman in a way that was pretty sexist and racist. They implied that she was a puppet of the district, said that she didn't write her own speech to the Board. UTLA claimed they had emails showing that the district wrote her speech. Can you address these conspiracy theories that we hear a lot from the unions?

Debra: That again is another absolute false statement. Dr. Clark is a very strong CFO, absolutely writes her own speeches. Everything that was written in her speech is in alignment with what she's been writing to the district over the past year. There was nothing new in there, nothing different. I was actually with her. We had a meeting, as we meet with all our superintendents in the county. I believe it was about their differentiated assistance, and they were going to have a board meeting that day. I asked him how we could assist. He said it would be helpful if we would share the information, our concerns that we shared with him, to his board. I had a board meeting that same day, and I said, "Absolutely, I can't be there but Dr. Clark can stay," and she wrote her speech at LAUSD. She used their laptop, then wanted to send it for us to review because it had to be approved by me. So, because they saw that there was an email that went from LAUSD to her, they made the assumption that someone else or LAUSD wrote her speech, which is absolutely preposterous. I also agree, and I think it's really unfortunate that she's been attacked in an unfair way. And I agree that there's been some sexist and racist remarks that I think are unacceptable.

Speak UP: At one board meeting, a consultant for the administrators union even publicly called her “Miss Candy Crush or Crunch or whatever.” Do you have any comments about people working for the unions maligning and insulting a public official in this way publicly?

Debra: I find it offensive, and I find it unacceptable, inappropriate and, frankly, something that we’re not going to tolerate. That is just uncalled for.

Speak UP: When you say you’re not going to tolerate or accept this, do you just mean that you're going to speak out against it?

Debra: Yes, and we did. We definitely sent something out indicating that that was not acceptable, and in my conversations with the various networks, I made it clear that that's just not acceptable.

Speak UP: Is this typical in labor negotiations? Have you encountered this before where your employees, your independence as an agency has been maligned by one of the major labor unions?

Debra: Well, I think these negotiations are very heated. They're emotionally charged, and yeah, sometimes you see the worst in people coming out. And it's unfortunate, but it's not anything new.

Speak UP: There's a lot of rhetoric and misinformation being spread right now that mirrors what's happening on a national level from the current administration. Truth is hard to come by when people in power feel free to spread untruths. Do you think there's more misinformation and outright falsehoods now?

Debra: Absolutely, and of course with social media, people are posting things, and whether it's accurate information or not, people start sharing information more readily.

Speak UP: Can you tell us a little bit about your background and how you got the job that you have now?

Debra: I've been in education for about 30 years, and I was appointed by the Board of Supervisors. So I'm not elected. My position is appointed, and the Supervisors also appoint each of the Board Members on the Board of Education for the County.

Speak UP: Is there anything else you want to say?

Debra: The only other thing that I really would like to make clear is that the most important thing is the children of LA Unified. What we want is for them to get quality education. We don't want there to be any interruption in their instruction. Really, the folks who are going to miss out the most are the children, poor children of color. And so, I hope that as the district and as the union continue their conversations, they find a way to come to an agreement to keep all of this outside of impacting the children of the district.

Speak UP: Do you think a strike would be harmful to these kids?  

Debra: Absolutely. There's no question. I think a strike would be harmful to the children. It would be harmful to the district. It would be harmful to the community. It would be harmful to the employees. Nobody wins when there's a strike.