Days After EE Fails, LAUSD Submits ‘Tenuous’ Budget Plan That Freezes Wages and Healthcare Costs 

LAUSD Superintendent Austin Beutner discusses the failure of Measure EE

LAUSD Superintendent Austin Beutner discusses the failure of Measure EE

Two days after voters rejected a measure to provide new funding to Los Angeles schools, LAUSD unveiled a new three-year budget that freezes future employee wages and healthcare costs, which LAUSD Superintendent Austin Beutner acknowledged was essentially a fiction generated to satisfy the requirements of county regulators.

 “It’s just not the real world,” Beutner said.

That’s because healthcare costs are actually rising, and the deal to keep healthcare payments flat expires next December, at which point district healthcare contributions are subject to labor negotiations with all its employee unions. Employee wage contracts will also be coming up for negotiations again.

Beutner admitted that this budget was intended to meet the letter of the law while buying more time to find new revenue now that voters have rejected Measure EE.

“As we look at the third year of this forecast, it’s tenuous,” Beutner said. “It’s tenuous because it assumes there are no wage increases. We’d expect to provide a wage increase to those who work in schools. We don’t expect our healthcare costs to remain flat. The third year is probably optimistic in terms of what reality might look like, in which case we don’t have the funding to provide for that third year.”

The Los Angeles County Office of Education requires LAUSD to submit plans for a balanced budget while maintaining a 1 percent reserve through 2021-22. LACOE Superintendent Debra Duardo initially said the third year of the plan LAUSD released Thursday did not meet those legal requirements before revising her statement early in the evening to say that it was “just over the legal minimum requirement.”

reserve met with additional funds.png

Nevertheless, she chastised LAUSD for continuing to spend $500 million more every year than it receives in revenue. “Despite actions to immediately maintain fiscal solvency, the district’s own analysis shows that the structural deficit has not been fully addressed,” she said.

“We’ve got time to work on it,” Beutner said, but a “reckoning is still coming.”  

That reckoning could mean some stark choices within a couple years. If employees want to keep their free Cadillac health plans and get wage increases, then class sizes may have to go up, and layoffs could be coming. “Either we find a path to more revenue to keep doing the work we’re doing in schools, which includes reducing class size and more support staff in schools, or we’ll have to face a series of choices,” Beutner said. 

In the meantime, LAUSD is nickel and dime-ing its way to savings that will stave off a county takeover and “keep the grim reaper away,” he said. Those savings include layoffs of up to 289 central office administrative staffers in August, saving $43 million. LAUSD also saved $62 million this year by leaving positions unfilled.

“We recognize we’ve got to reduce costs as much as possible and make sure the dollars are being spent in schools,” Beutner said. “Not a nickel of this comes out of a school budget.”

Other savings in next year’s budget, which total $239 million, include:

·      Special education reallocation: $35 million. (LAUSD did not respond to questions about what this reallocation would entail.)

·      Health care cost savings for out-of-state retirees: $50 million 

·      Expected efficiencies in cafeteria sourcing, worker’s compensation: $14 million

Savings healthcare $175 million.png

·      LAUSD will no longer be penalized for its ratio of administrators to students, because “admin” includes counselors, restorative justice advisors and others that serve “whole child” needs: $35 million

LAUSD hopes to receive additional state funding for special education, as Governor Gavin Newsom has proposed, but it won’t be reflected in the budget until the legislature approves it by the end of June. LAUSD also will be releasing an inventory soon of its real estate assets to see whether additional revenue can be generated through leasing properties.

The budget, which includes more investment in high-needs schools, will receive a public hearing at the LAUSD Board meeting Tuesday, and the 2019-20 budget will be voted on June 18.

Nevertheless, the County may require additional changes to the three-year plan once it is submitted at the end of the month. “The county team of fiscal experts will remain assigned to the district, and we will continue to work toward long-term budget solutions that meet legal requirements and the needs of the LAUSD community,” Duardo said.