As County Orders Budget Cuts, McKenna Warns ‘The Worst Thing In The World’ Is Coming If UTLA Forces LAUSD Off Fiscal Cliff

Deputy State Superintendent Nick Schweizer and LACOE CFO Candi Clark Issue Warnings About LAUSD’s Budget

With the state superintendent’s office adding its voice Tuesday to the chorus of warnings about LAUSD’s finances, longtime allies of the teachers union are now among those saying that the union’s demands – under threat of a strike – could send LAUSD over the fiscal cliff.

“We can’t bargain ourselves into insolvency,” Board Member George McKenna (BD1), whose candidacy was backed by UTLA, said at the Board meeting Tuesday. “They can strike, and at some point we’ll settle the strike, but at what cost to the parents, to the children? I’m absolutely opposed to a strike. I’ve been through a strike. I know how hard it is for staff, parents, the children. It’s terrible.”

A strike could even deal a fatal blow to the district, which is already losing 16,000 students a year, said Board Member Richard Vladovic (BD7). “When they go on strike, another 4000 parents are going to leave this district and go someplace else, and we’re going to lose the money for that,” he said. “And when they do that, it’s a self-fulfilling cycle of despair. Bad things are going to happen if there’s a strike, and I’ll tell you, you will never, ever recover.”

The dire warnings from Vladovic and McKenna came in response to remarks from Candi Clark, Chief Financial Officer of the Los Angeles County Office of Education (LACOE), and Nick Schweizer, Deputy Superintendent of the California Department of Education.

Clark said that LACOE is giving only “conditional” approval to the LAUSD budget, and she directed the LAUSD Board to pass a resolution specifying $72 million in budget cuts by Oct. 8. Without those cuts, LAUSD will be insolvent within three years, she said. If that happens, state takeover will follow.

“I am concerned that the window of opportunity is closing to address the district’s fiscal challenges,” Clark said. “It’s imperative that the governing board step up its efforts to stabilize the district’s fiscal operation. The district cannot continue to go down the path of simply just drawing down the reserves.”

Schweizer spoke on behalf of State Superintendent Tom Torlakson -- a strong ally of the statewide teachers union -- and backed up Clark’s dire assessment. “We certainly share [LACOE’s] concerns about the deficit spending,” he said. “We support their conditional approval of the budget and their recommendation that the district begin addressing the deficit in a time sensitive manner.”

Board President Monica Garcia (BD2) asked Schweizer point blank whether his presence at the meeting was a “warning flag that you’re watching, and these issues are serious?”

Schweizer’s response: “Yes. My presence is indicative this is serious,” he said. “We are hoping that the district works with all of its partners to address solutions to this problem. This district needs to be strong and robust.” While “LAUSD is not alone” in facing financial pressures, it’s in “worse condition than many others,” he said.

Clark warned LAUSD not to use its reserve funds to cover ongoing salary increases, calling it “a key indicator for risk of potential insolvency.” Instead, she said that LAUSD must address its structural deficit. “It’s very clear that you’re living off the reserves. That’s not wise.”

LAUSD is currently spending more each year than it receives in revenues, and even after identifying an additional $72 million in cuts, LAUSD’s reserve fund will be a paltry $1.5 million above the legal minimum within three years. If LAUSD does not bring its deficit spending under control, Clark said for a second time that LACOE may take financial control away from the LAUSD Board.

“We do believe in local control,” Clark said. “However, when the state’s early warning system necessitates our intervention in a school district, we are prepared to respond. Should the district continue to incur expenditures and erode the fund balance, our office is left with no other choice but to respond.”

LACOE recently rescinded Board authority at another school district, and McKenna, for one, took Clark’s warning to heart. “I was a superintendent in Inglewood, and they sent us a fiscal advisor because the Board continued to spend because of demands from unions saying ‘we want our money, we want it retroactive,’” he said.

Ultimately, it led to salary cuts and loss of local control. “A fiscal advisor will come and sit at the horseshoe and make all decisions that have to do with budget,” McKenna said. “The board will have nothing to say about it. We won’t be able to vote, nor will the superintendent.”

McKenna has also lived through the next step: state takeover. “It’s the worst thing in world,” McKenna said. “I was in Compton when it was in receivership. Our salaries don’t exist anymore. We don’t get paid. We’re now volunteers. The superintendent position disappears.”

Such comments from the union’s traditional allies marked a strong rebuke to union representatives that continue to deny the reality of LAUSD’s financial woes. The three-year budget process is designed as an early warning system so LAUSD can make budget cuts in time to prevent bankruptcy. Because LAUSD has been responsible enough to avoid falling off the fiscal cliff in the past, UTLA leaders accuse the district of crying wolf.

Former LAUSD Board Member David Tokofsky, a strategist for the administrators union, even appeared to openly mock Clark, an African American woman, stumbling over her name, calling her “Miss Candy Crush or Crunch or whatever,” and questioning her credentials and authority at LACOE. His words and behavior drew strong criticism from Board Vice President Nick Melvoin, who pointed out that her correct title was “Dr. Clark.”

“I was incredibly disappointed by the conduct of a former school board member, especially in front of an audience of students and parents for whom we should all be examples,” Melvoin told Speak UP after the meeting. “The harassment—talking over other speakers, constantly walking around and looming behind her, his phone beeping loudly, and the undertones of the name-calling and casting doubt on a woman of color’s doctorate—has no place in our Board room. I ask my colleagues to join me in demanding more respect from those present at our meetings.”

Clark, who earned a doctorate in Educational Leadership, Administration and Policy from Pepperdine University and joined LACOE in 2017 (never working under LAUSD CFO Scott Price, as Tokofsky claimed), also issued a statement: “I heard the comments by Mr. Tokofsky; however, I am committed to remaining focused on what is most important, which is ensuring that LAUSD remains fiscally solvent.”

One of the main threats to district solvency is the cost of free lifetime healthcare benefits, Melvoin reiterated. After LAUSD struck a deal with employee unions in the spring to keep healthcare spending at its current level for three years, the unions agreed to join a committee with parents to explore cost savings. That committee has yet to meet.

With teachers threatening to strike, Melvoin cautioned LAUSD not to make the same mistakes that Sacramento Unified just made -- offering unaffordable raises to avert a strike, which led to its budget being rejected by county overseers. “Nothing is more disrespectful to our employees than to promise something and then take it away months later or to have massive layoffs or furlough days.”

Vladovic recalled that LAUSD took back promises it made to employees to avert a strike in 1992 and predicted that painful times are coming again. LAUSD “can’t create money or print it,” he said, so if LACOE is ordering budget cuts, then LAUSD will have to raise class sizes and lay off employees.

“At some point, we’re going to have to cut $400 million in people. We don’t have any choice because our budget is 86 percent people,” he said. “We’re going to have to start laying people off in massive numbers…Nobody in the state is going to give us that money. They gotta pay for prisons first…If I were the superintendent, I’d be freaking out by this report.”

McKenna echoed those concerns. “I have a great fear that we might go into a terrible situation that we can’t talk ourselves out of with photo opportunities and sound bites,” he said. “We can’t afford to let this place get into a position that’s worse than where we are now. We have a conditional [budget approval]. Some of us may say, ‘well, we survived it in the past. We’ll survive it again.’ Don’t count on that.”

McKenna and Vladovic argued that LAUSD should put a parcel tax on the ballot immediately to try to bring in more revenue. Clark, however, said that merely placing a parcel tax on the ballot would not change LACOE’s assessment of LAUSD’s budget because there’s no guarantee it would pass. In fact, the district’s own internal polling shows that a tax big enough to close the deficit would be unlikely to pass this year. Melvoin also said LAUSD needs to demonstrate fiscal responsibility before taxpayers will hand over more money.

“The childish response of the Board of Education would be to say, ‘we spent all our money, give us more. Bail us out with a regressive parcel tax before we’ve made hard decisions,’” Melvoin said. “We’ve kicked the can down the road on the tough spending decisions for years…The more mature and grown-up thing to do is to say, ‘let’s finally live up to our responsibilities.’ Make those tough decisions, and then we’ll convince taxpayers to come along with us because they see we’re eating our vegetables.”

If that involves living through a strike, though, McKenna warned it would not be pretty. “Only a couple of us have been through a strike when we were at the school site trying to run the school, and nobody shows up but administration and clerical people and some custodians,” McKenna said. “You’re trying to run a school, and kids are filling up an auditorium. It’s a terrible thing. You don’t want that to happen.”