Unless Los Angeles voters support a parcel tax in June, LAUSD will fall $749 million below the required 1 percent reserve levels during the 2021-22 school year, according to projections from LAUSD Chief Financial Officer Scott Price.
Price presented the latest incarnation of LAUSD’s required “fiscal stabilization plan” to the LAUSD Board Tuesday, which voted 4-1 to approve it. Board Member Scott Schmerelson (BD3) voted no, and George McKenna (BD1) abstained.
That plan was required by the Los Angeles County Office Of Education to show that LAUSD can balance its budget for the next three years. It includes a 15 percent reduction in central office staff at LAUSD’s Beaudry headquarters and in local district offices.
One of the positions listed on the chopping block is the deputy superintendent of schools currently occupied by Vivian Ekchian. That cut alone would save $300,000. It’s unclear whether Ekchian, who served as interim superintendent before Superintendent Austin Beutner was hired, will leave the district or take another position at LAUSD.
She did not return an email seeking comment, and Senior Executive Director of Finance and Policy Pedro Salcido said LAUSD is focused on reducing budgets on specific offices by a targeted amount rather than eliminating specific individual jobs. “There are still decisions being made on central office staff and what that will look like,” Salcido said. “But as you are making reductions in offices, one of the better ways to couch it is in positions, but it doesn’t exactly mean that it will translate into elimination of a deputy superintendent.”
While cutting bureaucratic staff at LAUSD’s Beaudry headquarters, the district is planning to drive more money to school sites, where students may see benefits in reduced class sizes, more nurses, counselors and librarians – all changes that United Teachers Los Angeles pushed for in its new contract.
“We are investing in schools,” Price said. “Those are the benefits those parents will see in each of their local schools.”
The current fiscal stabilization plan and the required three-year budget forecast will take the district through the year 2020-21, and even with the plan in place, LAUSD is projected to fall $3 million below the required reserve amount in 2020-2021. But in June, LAUSD will be required to show its plan for the following school year, too, and at that point LAUSD will move deep into the red unless new revenue is found or more cuts are made.
If the Measure EE parcel tax passes, it will add an estimated $350 million a year to the bottom line of LAUSD (and some smaller amount to independent charter schools) starting next January. That would reduce some of LAUSD’s persistent financial problems. “It would change the dialogue of this district,” Price said.
The threat of impending insolvency led LACOE, which oversees LAUSD’s budget, to take the unprecedented step in January of appointing a team of fiscal experts to “compel” the district to end its deficit spending.
“We’ve had the County team here,” Price said. “They’ve been meeting with my team quite frequently, and they have gone through specific portions of our budget to see if there’s anything they can adjust. It’s an ongoing process, but they haven’t suggested doing anything different than what’s in the fiscal stabilization plan up to this point.”
If the parcel tax fails at the ballot box in June, LAUSD will have to go back to the drawing board to make more drastic cuts, and that’s what the County’s fiscal experts are focused on now, Price said.
“They understand the importance of it for the district moving forward,” Price said. “If some of those elements to get additional revenue in the district are not successful, they’re starting to help us with a plan in case the parcel tax does not pass.”
LAUSD is hoping to find additional savings through streamlining its outside contracts and by leasing or selling some real estate.
Many student advocates are worried that LAUSD will divert funds set aside in the Local Control Funding Formula for high-needs kids such as low-income students, foster kids and English Language Learners in order to pay for promises in the new UTLA contract. Price, however, said that’s not happening.
“Those funds are still being focused on the schools and getting them the resources they need. This coming year, there will be a little more flexibility for schools to decide what resources they’ll use with those funds, but the amount of funds going to schools has not been cut.”
Meetings to engage the public in the budget process and update the Local Control Accountability Plan (LCAP) will be held in June, Salcido added.
The latest budget plan also factors in some, but not all, of the governor’s proposed funding increases for education, including a $44 million cost of living adjustment next year, and $24 million a year more to help pay for retiree pensions for two straight years. Increased funds the governor proposed for special education and early education were not included in this budget.
One note of interest in the latest adjusted budget projections: LAUSD is spending far less money this year – $346 million less – on books and supplies than it originally budgeted at the start of the year, a massive 51 percent difference. UTLA has accused the district of padding its budget to hide money so a discrepancy this large between projections and reality is worth examining.
“Books and supplies” tends to be a “catch-all” category that includes much of the general budgets at school sites, Price said. “Anything that isn’t employee expenses or contracts falls into that books and supplies category. It’s the most volatile category.”
Because “it has the most variance,” Salcido added, “you tend to budget it slightly higher,” and any unspent money typically goes to principals’ carryover funds. That means principals have the discretion to spend leftover funds as needed the following year.
While principal carryover funds are protected in this budget, all bets are off if LAUSD doesn’t see some new revenue soon. “If the parcel tax doesn’t pass,” Price told Speak UP, “we’re going to have to look at some of those carryover funds.”
*This story was updated to reflect the presentation and vote at Tuesday’s board meeting.