The LAUSD Budget: Let’s Dig In
In the LAUSD Universe, is there anything more confusing than the LAUSD budget?
Between the language and the slides and the presentation, it can be daunting for even the sincerest parent, teacher, or member of the LAUSD community who wants to understand the money in the system.
Because I have watched a lot of Board meetings, both general and committees. I have learned that some, not all, can have elements that are a mixture of hide-in-plain sight, hidden agendas and “Look over there, but not over here” misdirection. One could be forgiven if at times, instead of watching authentic good guidance and leadership, a parent felt they were in the middle of Kabuki Theater. I am sure I am not the only one who has felt that way watching meetings.
Given the budget is key to so many decisions that drive our children’s education, I decided to look at the last budget presentation to the Committee of the Whole (Feb. 14, 2023) from my lens as a parent who has watched a lot of meetings. Obviously, it can get wonky, and I reached out to people who understand the budget and nuances better than me. I continue to ask for clarification. With all that in mind, the agenda and materials are available at the above link. You will have to scroll down on your browser, but it is all there. Also, the video to the meeting is available on this page. It is also available in Spanish.
The videos provided in the District page do not have transcriptions available. However, The District has made the videos available on their YouTube channel. Some videos offer AI-generated transcriptions (available under the link with 3 dots on video page). I have inserted the transcription from the February 14 meeting. Every speaker has been transcribed and identified. There may be some spelling errors since the transcriptions are not perfect (remember, they are AI-generated). I have tried my best to clean up typos, but some are still in the text offered here.
This is the link of the meeting hosted by YouTube. I inserted the slides from the presentation at the time they are mentioned. Underneath the transcriptions you will see my questions and commentary in italics.
My goal is that I hope this will be helpful to others in the community who want to understand the money in the system and where there might be Kabuki. 😊
Tracy Cook
Parent
Let’s get this show started!
Slide # 2
David Hart (55:46): Good morning Mr. chair. Members of the board, Mr. superintendent. Will begin today as we had a forecast of last meeting today, is an update on the governor’s proposed budget. Last time we were here, I was joined by Martha Alvarez and we spoke with a broad brush to how the state was proposing to allocate monies notably to our neck of the woods K-12. Today we’re taking that down a level and talking about the specifics to the district. Before beginning in earnest on that, I just would caution there is still much to be decided in the months ahead as the legislative process plays out. We have no reason whether it’s welcome or not to expect that the budget we adopt in June, won’t be needing an amendment in August to better align to the actions of the state. But we will be very clear hopefully. And what it is we can say to you today and qualify whether we feel high degree of certainty or whether it remains in a gray TBD with that said we’ll jump to the timeline as the Green Arrow indicates today is where we are in
This is LAUSD’s CBO David Hart. He was the CFO for the last couple of years, until his recent change in title to CBO.
As you can see, he is motivating the audience to follow the fiscal timeline for annual budget generation process.
Slide #3
David Hart (57:22): Terms of speaking to the expectations we have for the Governor’s proposed budget as it Cycles through our processes. This is a commentary that is meant to be a point in time. As this calendar indicates this will get further updated when we come back with the second interim in March. And there are some Key activities that will occur in the next 30 days in addition to the activities that will occur April, May and June.
Some of you parents may be saying…
Are you wondering what is happening? I will try to help you. CBO David Hart has lately been coming, every month, to the board to share what his team thinks is important to talk about when looking at the governor’s projected financial budget. Why?
Is it because LAUSD is negotiation with all its “labor partners?”
In case you do not know, the operating budget for schools is NOT defined by the State of California. However, LAUSD’s general fund is defined by the Local Control Funding Formula (LCFF) and other programs. The LCFF was established by Governor Brown and has been amended several times. Nevertheless, the maximum amount of funding for schools in the state is defined by Prop 98 and any action by the legislature.
LAUSD, like all other school districts, knows what are the allowed expenditures and adjusts their general fund budget accordingly.
Question: When is the last time LAUSD leaders have looked at other districts budgets and processes for their best practices? Or does LAUSD believe they have the best practices?
These links can be helpful to understand the flow of money from state to the districts.
https://ed100.org/lessons/whopays
https://www.cde.ca.gov/fg/fr/eb/cefedbudget.asp
https://ed100.org/lessons/schoolfunding
David Hart (57:17): With that said the next slide speaks to the overview of the governor’s budget.
Slide #4
This is all a financial projection provided by the Governor’s office. You will note from the slide that Mr. Hart and his team seem to claim that the projected budget for LAUSD is $5.9 billion. Unfortunately, Mr. Hart did not in his extensive remarks cite this amount. Neither did he refer to the $4.86 billion in the first bullet. Additionally, the COLAs cited in these two lines of slide were not specifically mentioned.
Question: Is a $5.9 billion allocation by the Governor’s initial budget proposal reasonable?
I have no idea because the total Prop 98 funds is reported to be $106.991 billion by the California Legislative Analyst Office. However, the most recent projection by Mr. Hart’s office on what the LCFF allocation will be for 2023–24 was published in the First Period Interim Financial report (Dec 13, 2022). The amount is $6.5 billion. This is shown in the image below which comes from page 54 of that pdf (labeled “Page 49” at its bottom):
Why didn’t Mr. Hart address the discrepancy between $6.5 and $5.9 billion? After all, if the Governor’s proposal is lower than his office’s projections, then nothing can be trusted to be funded as projected.
Just to be clear, there are three interim reports and an unaudited actuals report that “closes the books” on the year. They are turned in to the Los Angeles County Office of Education (LACOE) who reviews them and, if approved, forwards them to the California Department of Education. The reports are done in accordance to state guidelines and list the revenues and expenditures in pre-set in categories.
Okay, perhaps these difference are due to changes in enrollment or other parts of the forecast assumptions. I just do not know. As for the rest of the numbers on his slide, they apply not to LAUSD but to the total state education budget because a quick fact-check reveals that $300 million for the Equity Index is for the entire state. So is the $3.5 million earmarked for naloxone (see here). As well as the nearly $1 billion earmarked by the implementation of Prop. 28 in 2023–24. In other words, only the first two sentences are likely about LAUSD.
David Hart (58:00): We were pleased in general terms by the actions of the State. But at the same moment, in time, saying that we are pleased we are nervous. As we had talked about, uh, when we did the first interim. As we have talked about throughout the process. We have concerns that the state is sending signals that the fiscal state of the house is thought to be on sound footing. But that footing is on a slippery slope. We expect that there will be a reduction in revenues. That is clear. Whether we Look at the governor’s proposed, or numbers directed by his administration. Or whether we look at the legislative analyst office. There seems to be a consensus that forecasts, current. As opposed to forecasts when the budget was adopted by the state, not yet even a year ago. That there are material in the, in the context of hundreds of millions of dollars difference. In interpretation on a year-by-year basis. And through the forecast period.
58:57
It appears the CBO is not going to go through the lines of the state education budget but instead is focused on forecasts…
…everyone needs to be sensible about money. We got it.
But let’s talk about tone. To be fair to Hart, since he is not the only one who has done it, there has never been a budget report given by the CFO (or CBO in this case) in the last dozen years that is not colored by fear. If our exact budget appears to be solid, then let’s be scared by the future budget. If our budget is okay and if the governor’s budget is okay, then let’s be scared by the greater influences in the nation — No matter the situation there is a patina of fear in these presentations.
Or to quote former Board Member David Tokofsky
“If the budget were a basketball game, LAUSD would see a 20-point, final quarter lead by the Clippers as too close to call.”
Here are some important questions for Parents to know:
Has LAUSD ever defaulted? NO.
Has LAUSD failed to pay its bills? NO.
Has the state ever had to take over the District and manage it? NO.
Has LAUSD ever rolled over money in the hundreds of millions of dollars? YES (almost every single year).
And yet the fear and the hand wringing is present in every presentation.
Question: Why do we stick to the doom & gloom narrative? What’s going on here?
David Hart (59:00): So, where’s the optimism coming from? If you will, and that is in the aspect of the COLA the COLA the cost-of-living adjustment is greater than what we had forecast the COLA will direct additional dollars into LCFF
I bet you are wondering about COLA — What is COLA? Cost Of Living Adjustment. Cost of Living is the cost of maintaining a certain standard of living. Changes in the cost-of-living overtime can be operationalized in a cost-of-living index.
Many employment contracts and pension benefits are tied to a cost-of-living index, typically it is consumer price index (CPI). Cost-of-living adjustments are those changes to contracts and pensions.
However, COLA does not apply to most working Americans, but it is included in Social Security benefits as well as many state retirement systems benefits.
This link explains COLA (note — it applies mostly to the US).
David Hart (59:13): That said the reason the COLA is higher is because the Consumer Price Index is higher. So, there is a give and take in this, it is also worth noting at the outset that the Consumer Price Index the CPI is an indicator it is a predictor of the COLA. But they are not one in the same. In the legislative process is very clear that the while the CPI may provide for a correlation. It does not straight jacket the legislative process. And at times in the past, a recent past, the state has elected to provide a COLA that is less than the CPI. And it is only if revenues recover that they have in subsequent periods made adjustments to bring the COLA in alignment with the CPI that will be more relevant as we talk about our forecast.
Okay, COLA is normally tied to CPI but the multi-year projections from the folks in Sacramento will vary as economical conditions change. Sure. Got it. But again, this is all based on projections. Projections are not solid and are subject to change.
Question: How many projected COLAs did Sacramento get right or get wrong in the last ten years?
We will come back to the topic of COLA later in this piece.
David Hart (1:00:02): You also see and Ms Alvarez is here to address this, in addition to myself and staff, the issue of an equity multiplier. That is new as we speak to the state’s budget. And what is being proposed would offer this commentary. Legislatures routinely, when revenues are declining, remove discretion from those that they are allocating funds to. And that is no more true than with regards to K-12. So what this Equity multiplier does, as an addition to LCFF is give us additional dollars.
Equity Multiplier. Discretion. LCFF. I am sure you are wondering about that language.
This is how the Legislative Analyst Office describes Governor Newsom’s Equity Multiplier proposal:
“Intended to Increase Funding for Highest-Poverty Schools, Improve Outcomes for Low-Performing Schools, and Subgroups. The Governor’s budget includes $300 million ongoing for the highest-poverty schools, which must be used to supplement, not supplant, existing spending.”
In other words, it is a Newsom thing to take some of the state education money and put it towards specific school populations. A noble goal. However, because it is earmarked, it does not permit districts to exert their discretion.
Question: How is that equity multiplier going to be implemented?
Discretion. This word really means: Who gets to call the shots? The state? The local district? The school? While there is much discussion that local is better, that argument can be made with not much effort. However, when the state sees money that is supposed to be put towards something specific and the local educational agency does not do it, then the state will push back and take away the discretion from the district.
As we said earlier: LCFF — Local Control Funding Formula. LCFF is hallmark legislation that fundamentally changed how all districts in California are funded. Its goal is to “allow all students to succeed to their greatest potential”. It is a specific funding formula spelled out in California’s Educational Code.
David Hart (1:00:31): So what this Equity multiplier does, as an addition to LCFF is give us additional dollars . That is a positive
YES, additional dollars good!
David Hart (1:00:38): but at the same time the strings that are attached with that are increasingly looking less like strings and more like chains.
Here comes the complaint…
David Hart (1:00:45): The amount of discretion that we have over how to use those dollars. And what are the ramifications for the use of those dollars? When one thinks about terms such as ‘supplement and supplant.’ When one thinks about whether those funds are centrally allocated or allocated to a school? When one thinks about how those funds might be applied in a current year? And what is the ramification if those funds for whatever reason remain unexpended at the end of the year? The discretion of a school district at the local board of education has increasingly been curtailed. And we will talk about that again.
The fear, the complaints — There is that doom and gloom tone again.
So, Hart just listed his “when one thinks if this… or that happens” and if we won’t have discretion to use those funds…. And how it could get harder to use that money. And how we won’t have that much leeway and we won’t be in control. Right, right, right all of that. But let’s take a deep breath before we get into a tizzy. Now is a good time to point out this Governor’s budget is on its first stage and obviously has not even been approved by the Legislature. It is a projection to allow budget development discussion as the final budget won’t be approved until June (it will be further revised during the Summer). But sure, let’s wring our hands now.
David Hart (1:01:17): As we go forward, this is an example of that of that circumstance. We also see additional dollars being provided for the universal TK. We see additional dollars though, that are not as broad as great as we might have hoped. There is not a reduction in the ratio to uh in that regard, from 1 to 12 to 1 to 10. it’s being maintained at a one to twelve. We see additional dollars here as they are spelled out and the ramifications for that will become increasingly clear as we speak to it today. But, also just again to the timeline.
Hart is talking about this section of his Slide #4 — Universal TK:
Question: Why is Hart talking about UTK for the entire state? Why doesn’t he talk about K-12 instead for LAUSD? Isn’t that the purpose of a discussion with the LAUSD Board of Education about the Governor’s Budget General Fund for LAUSD?
So, the governor’s PROPOSED budget is not as broad or as great as Hart had hoped. Once again, let’s take a big breath.
Besides, Universal TK is NOT mandated. If you live in California and you have a child who is 4 years old, you are NOT obligated to send that child to TK.
We do not know how many children will even show up for TK.
We do not even know if we have enough teachers with early education background to staff this program. The whole state is looking for staff, not just LAUSD. From the above link:
“If we can’t find staffing, we just flat can’t do it,” said Mike Martin, superintendent of the County Office of Education in Modoc County. “It’s not like we have a pool of folks lined up asking to come to work in our districts. We are competing with everybody else out there for these same folks.”
Right.
Parents and teachers in the Parents Supporting Teachers Facebook group already can see the disconnect between the UTK goals and reality.
Question: Given UTK is not mandatory, it is not known how much money will be reserved for this purpose. Isn’t setting money aside for this purpose shortchanging K-12 funding?
The teething pain around UTK is far greater than the budget. So why are we talking about it in this manner, in this tone, on February 14, 2023?
Again, one wonders about the tone and its purpose.
David Hart (1:01:54): Today is not the proposed budget this is an indication this is a, if you will, a directional indicator, a weathervane of sorts. As we work into March, April and May, and come forward with a proposed budget in May that would become the adopted budget at least the initial adopted budget in June.
Yes, it is the proposed January budget by the Governor . Got it.
Slide #5
David Hart (1:02:17): as we look at the COLAS. And this is in comparison to our first interim reports in the enacted budget. We did anticipate that there would be a COLA of 5.38 percent. And you see that that would then be maintained if you will at 4.02. 3.72 in the forecast period enacted
COLA — remember this is the Cost of Living Adjustment, an increase of the budget for the year to account for inflation. What this means is that the allocation for 2022–23 is projected to be increased by 5.38% in 2023–24 and the resulting allocation (105.38% of 2022–23) would be increased by 4.02% in 2024–25. Effectively, the increase at the end of 2024–25 is 9.8% from the allocation for 2022–23. This is known as “compounding interest with variable rate” when discussing interest rates for credit card debt and other loans.
David Hart (1:02:34): it’s worth noting then that in that our estimates, and I want to be clear, I don’t want to use the word our estimates. We are not in the business of making recommendations nor are we in the business of inserting our own numbers. We are putting into the LCFF computation those numbers that are either directed to us by one of three parties. It’s either going to be as reflected in a statute or it will be, I’ll just limit it to two, as we are directed by LACOE. So, we’re not making these determinations independently we do not have economists on staff, and we are not taking exception with anything that is coming to us by way of the state.
Okay…You are not an economist. Got it.
David Hart (1:03:14): It is the case though that in the course of the last year, as we have all witnessed inflation did go high. Simply stated, and as a result, you see an increase in the COLA from 5.38 to greater than 8.0 to 8.13.
Yes, I do know that if economic conditions change, the COLA can go up. This was mentioned while discussing Slide #4 but the percentage was never cited by Mr. Hart at that point.
David Hart (1:03:31): However, you’ll see that there is an expectation that the actions of the Federal Reserve will play out and you are seeing an expectation that inflation will come down. So, whereas the forecast used to be at 4.02 rounding of numbers it’s now down at 3.5 and in the subsequent year 3.72 is now at 3.3
Hmmm, this is feeling like an economist talking, but okay. Once again remember this is a projection of COLAs based on various economic forecasts, which might or might not be rose-colored-glasses scenarios. We just don’t know.
David Hart (1:03:50): the impact of those changes. Upon Our forecasted revenues, by way of LCFF, are shown in the depiction below. An increase of approximately, excuse me, 220, excuse me, 280 million dollars. Not insignificant to be sure. But that is, uh, that is the consequence of the Ying and the Yang of what is happening. With regard to Cola and it needs to be re-emphasized that that is a projection, it is not law, and it won’t become law until such time as the budget is enacted by the state, next slide please.
Before we go on to the next slide, let’s talk about those COLA numbers again.
When you think of COLA you might think that this money is passed to the employee. Perhaps you are thinking all that inflation and cost of living adjustment must impact the budget for their salaries, right?
Well, the fact is that LAUSD employee salaries do not include COLA. Their salaries are defined by their contract. So, if a hideous spike in cost of living happens, employees do not benefit by the COLA adjustments. They are in salary brackets dictated by a salary table/pay scale that was negotiated and memorialized in their contract. No employee at LAUSD said, “Oh thank God the COLA of 5.38% is now in my paycheck!”
They don’t get the COLA. Any increase in salary is done when they negotiate a new contract. This is what is unfolding in the streets right now.
So where is all that money from the COLA that they don’t spend? After all, the COLA can be as high as 8% (as mentioned above).
Question: Is this money in the LA County Treasury? If so, how much money is just sitting there?
And IF it is not in salaries, then it is not in schools.
According to LACOE, the unspent funds are all invested.
Invested. But it is not spent.
It is not in schools.
Slide #6
David Hart (1:04:26): In terms of impact upon us. The state giveth and the state taketh away. In that regard as we adopted the budget for 22–23 we were aware of monies in the Arts, music, instructional materials discretionary block grant.
Note: $256 million one-time only dollars were given in that grant as discussed below.
David Hart (1:04:42): That was a very sizable grant that was made available to us in the course of amending our budget for 22.23. We, we noted that. To be clear we did not make any appropriation of those dollars for this current year.
Got it. And to be clear, school communities and parents have been very vocal about the need for more arts.
David Hart (1:04:58): That is perhaps proving to be fortuitous for us. Because proposition 28 did pass this past November and those dollars will generate for us approximately 84 million dollars. In this state giveth and taketh away
No. The state is not taketh away-ing anything. The state granted a one-time only funding for arts and music because the state was perceived to have a large surplus. Prop 28 money is earmarked funding for the arts.
Prop 28 was on the November 2022 ballot and it passed. As noted, it ensures that arts will be taught in California schools starting in the 2023–24 school year.
“Proposition 28 does not raise taxes, but instead creates a guaranteed annual funding stream for music and arts education by requiring the state to set aside an amount that equals 1% of the total funding already provided to schools each year.”
Note: Prop 28 is annual, recurring funding:
“Despite a record-high state budget, and a legal requirement to offer music and arts education in some capacity, only 1 in 5 public schools in California has a full-time program, according to former Los Angeles Unified Supt. Austin Beutner, who led the effort.”
Note: Prop 28 was spearheaded by Austin Beutner. A man familiar with districts and budgets. A man well familiar with LAUSD budgeting processes. Read that twice.
David Hart (1:05:13): …, they are reducing the allocation or proposing to that was part of the budget adopted for this year the forecast is that our share of those dollars will go down almost on a dollar-for-dollar basis. When One Compares what that Grant would have provided to the district as opposed to what proposition 28 will provide as I noted last time this is a significant hit for us.
So, this is very confusing. Why is Hart talking about losing funding from a one-time only fund? It is one time. It was only going to come to us once.
Why is something that is a boost, a one-time only perk, now being framed as a loss?
David Hart (1:05:35): It is a hit because we lose those dollars. It is a hit because the dollars that are coming in as I said at the outset evidence a state that is increasingly being prescriptive. These dollars are coming in a with a very determined amount uh a determined outcome for their expenditure. And there is language such as no supplement uh or excuse me can only supplement and not Supplant
So, let’s take a moment and go back to who was key to Prop 28. Austin Beutner. He leaves his role as superintendent of LAUSD in 2021 and goes on to promote a proposition that will direct funding to arts BUT he makes sure the funds cannot be used for any other services, NOT to be used at the discretion of any school district.
Question: Why? Is it because Beutner saw money come down from Sacramento earmarked for something important but got allocated by the district for something else? Or maybe he saw that money was banked at the LA County Treasury and rolled over every year bypassing the schools?
David Hart (1:06:00): we have a bit of a of an advantage in that we did not make the allocation of the dollars in 2022–2023 that were perhaps available to us.
Okay, so, where did that allocation of money go? What line in the budget? Where did the budget office put it?
David Hart (1:06:08): Waiting instead to see what occurred and uh in this regard we have been fortuitous. Because we didn’t get caught in what would be a trap of sorts. So we we um this is where we sit we have a net loss of an of a million dollars to our forecast
1:06:22
A projection loss in a projected budget. No one likes hearing a projected loss but what does that even mean? Because, projection is not the same as what will actually be spent. It is a projection of what is going to be available to spend.
So, before we get in a tizzy about a projected net loss of one million dollars in a projected forecast, we need to stop and look at the numbers around arts before this February 14 meeting.
It looks kind of fuzzy to me. Maybe we can figure this out together?
Last year, at the June 14, 2022, LAUSD Board meeting, Carvalho’s team presented this slide (17 of 32):
The projection on the arts budget for 2022–2023 budget had an increase of $21 million from the $58 million budgeted in 2021–22. That’s a total of $79 million for the arts. Got it.
Then at the August 30, 2022, board meeting, we see that Hart offers this slide (Slide #4 of 11) for the revisions in the budget for 2022–23:
Note the $256 million increase in one-time state funding arts, music, and instructional materials. That is a lot of money. Seems good. Perhaps we can spend some of that $256 million for arts? Especially since at the beginning of the August 30 meeting (at 1:46:05) Carvalho says –
“We opened with an additional investment of 1.9 billion offering additional dual language programs, access to the arts and music, additional, bus routes for impacted areas, new partnerships for safe passage, to and from schools, a new parent academy, and much, much more”
Yet, Carvalho, in his opening remarks before discussing the proposed revisions to the June-approved budget, said this (3:03:40):
In addition … an additional $2 million into arts education programs above and beyond what was added in June…
Wait, what? Only $2 million? Yet, a little later in the meeting (3:04:37), Carvalho states that $2 million
“… elevates the importance of arts education…”
Wow. I am pretty sure this fits the definition of gaslighting.
You’ve got $256 million, so that means you are going to really boost the Arts and Music, right?
Well, based on his remarks and this box in slide #7 from the same meeting
the answer is no.
Lots of Questions: That’s it for the 2022–2023 school year? A $2 million increase for a total of $81 million dollars only (which by February is the cited $85 million)? Even though there is a potential $256 million increase?
Since we are trying to heal and strengthen our schools and hit the road running -why not take another $20 or $50 million out of that $256 million? This would bring the total 22–23 Arts Budget up to $130 million. Go big or go home.
But nope. We have around $85 million for arts in 22–23 and will have $84 million in 23–24 generated by Prop 28.
Here’s a thought. What would it take to fund full time art at schools? There are roughly 500 elementary schools and the District claims that the average cost for a full-time teacher is $110,000. You would need at least $55 million to have one full-time arts teacher at each elementary school. If you want art and music, double the number. You probably need the same amount for middle and high schools. So, a rough amount is $200 million to provide full-time art and music at LAUSD schools. If this had been done in 22–23 with that one-time only grant, wouldn’t it have been wonderful?
Prop 28 will provide almost half of this rough budget. Beutner clearly knew that Prop 28 money would be a seed and would not meet the full needs in arts and music our students deserve. One can’t blame Beutner at this point for being strict in the earmarking.
But all CBO Hart offers us at the February 14 meeting is this slide, which I am repeating so you don’t have to scroll back.
(Again) Slide #6
This slide is about comparing Prop 28 (what will be an “on-going restricted program” starting in 2023–24) with a one-time-only restricted program in 2022–23 funded by a state surplus.
So, what happened with that $256 million grant from August? Where is it now?
Later in the meeting you will see at 1:41:43 that Carvalho says “we are not losing what we got last year, we banked that.” As a parent, this (banking) is not a satisfying answer and a huge disconnect to the goals of parents for art and music in schools.
David Hart (1:06:23): it is also the case that we lose discretion, and it is also the case that in in the context of these dollars um when taken in total it evidences a state that is concerned for its budget’s forecast. And what you see is where they have discretion, they are reducing the allocations in this year. And over a forecast period fully understanding where they have no discretion and instead are investing the dollars that they have where they have no discretion. They’re they are adhering to those stipulations in law and in practice, but they are signaling very much that there is reductions on the on the horizon
Let’s examine this line: “And what you see is where they have discretion, they are reducing the allocations in this year.”
Question: That grant was $256 million. Who made the decision that $254 million would not be earmarked for arts and music? Did it go to instructional materials? Or something else? And again, why compare a one-time-only with a new on-going program?
Yes, the state is granting money and directing how it is to be spent. At this point, can you blame them? And yes, these are all projections that expand and contract — they are projections.
Yet, LAUSD seems to be in the ‘banking it’ business. Not spending it. Not sending the additional arts money to the schools but spending a lot of time talking about the projection going up and down. Got it.
Just in case you think this is a new idea by the legislature that the districts don’t do what they are asked to do with the funding, it is not.
In 2014 a bill (SB 858) was passed and signed by Governor Brown that limited the districts’ reserves (sometimes people call this the ending balance). The maximum most districts/LEAs could keep was 6%. Districts with over 400,000 students (the only one was LAUSD) could keep 3%. Legislators wanted the vast majority of the funding to be spent on improving the schools. This bill was a cap on District reserves.
In 2014, as a parent with a child in LAUSD schools and having run the rapids of the 2008 economic downturn, the thought of a smaller reserve at first blush can be scary, but that fear does not eclipse the anger and sadness I feel when money meant for schools is not being spent in the schools.
As you can imagine, the districts in CA did not like SB858 and there were lots of calls to repeal it. Lobbyists were hired and other bills drafted. Eventually, SB751 was passed in 2017 and changed the reserve to a maximum of 10 percent.
But at the end of the day, it is unclear if there is any oversight of SB751 or if any district upholds the law? It is questionable because when we look at a 2014 memo from School Services of California, a consulting firm that advises Local Educational Agencies (aka Districts), addressing this issue after SB858 was signed into law. School Services of California asked,
“What should I (LEAs) do now as a result of this bill?“ We think the answer to that is clear. “Nothing.”
Nothing? Got it. Here is the front page of that memo:
Slide #7
David Hart (1:07:10): In terms of the LCF equity multiplier, to be clear this is another instance where our discretion is being constrained. This is the state saying we are going to make a determination, on a Statewide basis of high schools that meet these criteria. Of where middle and elementary schools meet these criteria, and if they, if a school meets these criteria. They are speaking in terms of at a school will receive fifty thousand dollars no less than, for serving the students of need as defined by this multiplier but it is effectively as if the state legislature is making this allocation directly to those schools.
Right. There is that pesky theme again, discretion. All that Governor Newsom wants to make sure is that money gets to the poorest schools.
Question: How much of this $300 million set-aside is going to be granted to LAUSD? LAUSD has 10% of state school population, so that would be roughly $30 million. Why all this drama about discretion over such a small amount? Maybe the governor and perhaps the Legislature are tired of districts banking money?
David Hart (1:07:51): This is not a discretionary matter. This is not a matter by which we can push it through any of our existing or proposed, contemplated, Equity lenses now or in the future. The statute does not contemplate that we would be able to revisit this at some future date based upon the performance of these dollars relative to the purpose for which they would be allocated. What it is doing is it is in essence earmarking suggesting that the legislature has a level of dissatisfaction with school districts and is making an allocation directly to schools.
Yes, we all agree — -the Legislature has a level of dissatisfaction with school districts.
David Hart (1:08:25): I’ve been advised that for affiliated charters the narrative of the statutes may be so great as to specifically name them. Although at a state the state will, in terms of LA Unified as a whole, do it as a lump sum for which we will then have no discretion but then to allocate to the schools who make these criteria.
So, LAUSD will not be able to divert funds specifically earmarked for equity multiplier as they please. Again, we are only talking about $30 million. But sure, get in a tizzy about discretion.
Question: Does this leave the door open for LAUSD to not to allocate at the level the state makes funds available, or demands, for the regular schools?
Slide #8
David Hart (1:0847): in terms of other changes. There is the proposed accountability changes that are being voiced here on this Slide. The LCAP. There are others in the district to speak with greater certainty and eloquence than I. Derrick Chau among others, are working with myself and staff to make a determination. This language is yet to be finalized. It is at this moment, being flagged for your awareness, that there are additional matters by which we will need to be attendant. And this is yet to me a signal that the state is taking exception with Local District autonomy. And becoming increasingly focused on how it is dollars allocated to LCFF and through other means are being expended. And to what outcomes are being achieved . But I suspect that at the end of the day we will find that they are not waiting on the data and are going to be rather prescriptive, next slide.
What Hart and the slide are saying is that the state is not happy with educational outcomes after ten years of local control (aka discretion) under LCFF guidelines. They are tightening the guidelines with these new requirements.
What is LCAP anyway?
The LCAP is a requirement defined within LCFF to establish stakeholder participation, transparency and accountability. It is the law of the land in California.
Sounds good. Okay. Tell me more about what California Department of Education says about the LCAP:
“The LCAP is a three-year plan that describes the goals, actions, services, and expenditures to support positive student outcomes that address state and local priorities. The LCAP provides an opportunity for LEAs (county office of education [COE], school districts and charter schools) to share their stories of how, what, and why programs and services are selected to meet their local needs.”
Distilling it down: LAUSD has a Parent Advisory Committee (PAC). This is their focus:
The PAC break down into committees where they discuss District proposals, and they, agree, often, to any proposal. I have participated in some meetings (Not PAC) and I am not surprised to see that a lot of the PAC agendas are hammering out elections, forming committees and processes, and training. That is of course true for many of the district meetings.
While figuring goals and strategies can be complicated and each parent who gives up their free time to attend PAC meetings should be applauded. It must be noted that for those parents who have sat in at least non-PAC meetings at their school and at the broader level meetings within the district, there can be a dissatisfaction with the process. It can feel as if it is lacking an authenticity. Perhaps by not addressing issues in a head-on manner or lacking creativity or missing follow through. Gosh knows there have been complaints of meetings that create a ‘manufactured consent’. Where the one in the room with the most authority gets what he or she wants. The process can be murky.
Is any of this also true for PAC meetings?
Parents and teachers and administration at schools should review the LCAP plan authorized by the district and consider if these critical decisions are best to improve and deliver effective education program for the students at their schools.
After all, LCAP is supposed to improve outcomes. Have they?
As we saw, districts have not improved outcomes or there would not be new mandates which Hart just complained about above.
Derrick Chau works for the district; I believe he herds this process and makes sure that the PAC meets. You will find his resume here. Mr. Chau started in the privately managed publicly funded charter school industry before he landed at LAUSD.
Question: Have Board members and LAUSD leaders considered how other districts are engaging their community for LCAP? Districts like Anaheim Union High School District, where their superintendent is invested in the process? What are other districts doing to engage their community for LCAP?
Slide #9
David Hart (1:09:39): Impact of other changes. We had spoken before of a reduction in the grant. This is a mouthful. That California preschool transitional kindergarten full day kindergarten facilities grant program. That program is again one of these examples where the state has pulled back funding that was contemplated in 22–23’s budget and how it might be played out over a forecast period. Those dollars are being pulled back for future expenditure potentially. I’m skeptical that these delays will in fact not become permanent.
Question: Why is Hart talking about facilities grant when he is supposed to be talking about operating fund? Facilities grants and funding is in another part of the budget.
And here we are ten minutes later, and again our CBO is bringing up the fear of UTK, but again, before we get in a tizzy about the funding. It is not mandated it is optional.
And by the way, do we have enough teachers and staff to even fulfill this program? Where is that slide? Where is someone from human resources to talk that part of this story?
David Hart (1:10:12): But you can see what the amounts are here. What you do need to know is that we had no projects that were deemed eligible or that we had planned to apply for these funds. So, the impact upon us in direct dollars is of no consequence, But I do think it’s important for us to highlight this as indicative of where the state is headed. We also didn’t know before exactly what was going to happen with regards to Cal-strs and Cal-pers. What we were aware of is that the market forces that we’re all witnessing did not escape. If you will or did in fact impose themselves upon the funds invested by our pension systems. And accordingly, uh if one uh can view that in this regard when those Investments lost market. There is a corresponding almost predictable increase then in the employer contribution. And you see that here with regards to Cal-pers. Cal-strs has not made known of any intended change in rate but you can see that over the forecast period and I’m using that to be 23- 24 through 25- 26. Rounding of numbers, it’s about 120-million-dollar impact not something that we had had in our forecast to you previously this is new news and further impacting us.
CalSTRS is the pension program for public teachers in the state of California started in 1913. UTLA teachers are members of CalSTRS.
CALPERS is the pension program for public employees. This program started in 1932. It manages the pensions for police, firemen, lifeguards, park, and other public employees.
If you are in STRS you don’t have to pay Social Security, but anyone hired after 1986 does pay Medicare taxes. However, that makes it impossible to get Social Security on your own if you are a teacher. UTLA Teachers do NOT receive Social Security.
If you are in PERS, you will get social security provided you paid your FICA taxes as most public agencies do participate in Social Security.
While we may need to note potential changes to the teacher-employee portfolios. Let’s take a breath before…
… we convince ourselves the LAUSD house is on fire over future pensions.
First, a pension shortfall can exist, but the problem needs to be defined in a realistic manner. Pension obligations aren’t due for decades and long-term investments can tolerate market volatility.
I was an LAUSD parent during the greatest financial crisis (2008–2012) since the 1929 stock market crash. God knows it was a roller coaster that LA Times covered with full gusto. From an LA Times article from January 2010 titled “Teachers pension fund is $43 billion short:”
“The California State Teachers’ Retirement System said that as of June 30, 2009, it could meet only an estimated 77% of its future pension obligations — far less than the 100% recommended by actuaries.”
One year later, the LA Times reported in January 2011 that both funds were beating all expectations:
“The California Public Employees’ Retirement System reported Thursday that its investments grew 12.5% in the calendar year ended Dec. 31. That’s in line with a 12.1% gain posted for calendar year 2009.
The smaller California State Teachers’ Retirement System ended the year with a 12.7% return.
Both funds’ total performance bested their selected market benchmarks.”
Were these gains acknowledged by the funds and reduced their projected shortfalls? Down and up, so on and so on…and yet the retirement funds do not collapse. The house does not burn down. Why?
Let’s talk volume: CalSTRS managed $255 billion in assets in 2020, making it “the eleventh largest public pension fund in the world.” If CalSTRS goes bankrupt, what else will be happening in the world? If the state pension for the public teachers and the state pension for public employees in the most populated and highest GDP state in America were to collapse — -Would it not have dire consequences for California? Arguably we would have way more problems than our school district.
In the Great Recession, how did it get fixed? It’s the same old thing, the governor, the legislature, the pension people, the people who choose the stocks, everyone comes together and gets it done.
Also, regarding the costs of CALPERS and COLA, the effects of compound interests need to be considered. According to this document, the required rate for 2022–2023 is 25.37% and it was 22.91% for 2021–2022. So, if a classified employee’s gross salary in 22–23 was $100,000 that means LAUSD had to pay $25,370 to CalPERS for that employee in 2022–23. But because LAUSD got $100k for the 2021–22 salary PLUS $21,910 for benefits, it got $108,000 for that same salary in 2022–23 and $23,660 because of COLA increases. So, it got $131,6600 in total after COLA and had to spend only $125,3700 for that employee because ,as we discussed earlier, the COLA increase was not passed on to the employee since the contract was not re-negotiated. Bottom line :the district made an extra $6,290 on this hypothetical employee by not passing along the COLA. This is disturbing and not hypothetical because all these “savings” contribute to the ending balance, a good portion of which is invested not in schools but in Wall Street.
Question: Perhaps it is time to dial down the fear mongering on CALPERS? Is it helpful to go long on pension investments discussions in our board meetings? There are some board members who like to drill down on them, but for what purpose?
Personal observation: In my extended family, there are people on all points of the political spectrum, and I can say the handwringing over pensions fits nicely into the narrative from some family members who lean into employees’ “bloated salaries, pensions, and benefits” and how they are certain it will “destroy” California. I am not in UTLA or SEIU or CalSTRS/CALPERS but the grinding on about STRS and PERS feels like teacher/union bashing, without saying it.
Slide #10
David Hart (1:11:30): Next slide please terms of the LCFF starting in 2013 as many of you are intimately aware and as it’s played out over time, there was the thought that we could do away with the categorical per pupil funding. And instead go to a model that is more of a statewide level student weighted formula or call it what you will. But there was a base fund. And then there was a determination of what was necessary to supplement. The base, dependent upon certain criteria as you see here in the example. A language English learner, those that are in foster care, low income, those are the big three. If you will for purposes of the supplemental funds, additional dollars were then allocated in this formula for concentration. Where those students were thought by individual district to be in greater concentration there was thought to be needed additional dollars to meet the needs of those students and hence this formula came forward with a base a supplement and a concentration at such time to just refresh on this.
In terms of funding: Starting in 2013 California school districts gets money for a base fund. If a district has English learners, foster care students and students from low income the district gets supplemental funding on top of the general fund. LAUSD gets a lot of supplemental funding. Beverly Hills School District, for example, is a district that is not funded via LCFF at all (this district and a few others are known as basic aid districts). And if your district has over 55% of students who are low income, foster and English learners then yes, the district gets even more additional funding which is called concentration funding. The concentration funds are therefore dependent on the district’s overall demographics.
David Hart (1:12:29): At such time as we come forward with the budget in subsequent months, we will detail this out on a per student basis, so you have an idea of how this looks from a state level down to our individual schools next slide please
Slide #11
David Hart (1:12:47): Now, we are starting in 2021. It’s eight years removed. We are seeing the add-on of the concentration Grant. And so this is an additional dollar amount. Meant to impact those that are targeted by virtue of the particulars of this grant. Now this is on top of and not even a full decade removed from many efforts to create a student-weighted formula. That in theory would have addressed this, vis-à-vis, the prior layering of funds in the sub, excuse me, in the supplemental and concentration categories Additional emphasis being placed here.
WONK Alert Begins.
This slide is incorrect. The Concentration Grant Add-On is not an additional level to the pyramid. Instead, it is a change introduced by the Legislature in 2021 to the formula used to calculate the Concentration grant. Instead of taking as an initial amount 50% of the Base grant, it uses 65%. The old formula was
Concentration Grant = Base Grant x (UDP — 0.55) x 0.5
With the Add-On, the formula becomes
Concentration Grant = Base Grant x (UDP — 0.55) x 0.65
(the UDP for LAUSD is 86%. As you can see, nothing changed from one formula to the other but the “initial amount” from 50% (0.5) to 65% (0.65).
The old formula is described as
Concentration grants equal to 50 percent of the adjusted base grants multiplied by a district’s percentage of unduplicated pupils above 55 percent.
at https://www.cde.ca.gov/fg/aa/lc/lcfffaq.asp
The Legislature codified this change as
Section 42238.02(f) (1) (A) The Superintendent shall compute a concentration grant add-on equal to 50 percent of the base grants as specified in subparagraphs (A) to (D), inclusive, of paragraph (1) of subdivision (d), as adjusted by paragraphs (2) to (5), inclusive, of subdivision (d), for each school district’s or charter school’s percentage of unduplicated pupils calculated pursuant to paragraph (5) of subdivision (b) in excess of 55 percent of the school district’s or charter school’s total enrollment. The concentration grant shall be calculated by multiplying the base grants as specified in subparagraphs (A) to (D), inclusive, of paragraph (1) of subdivision (d), as adjusted by paragraphs (2) to (5), inclusive, of subdivision (d), by 50 percent and by the percentage of unduplicated pupils calculated pursuant to paragraph (5) of subdivision (b) in excess of 55 percent of the total enrollment in that school district or charter school.
(B) Commencing with the 2021–22 fiscal year, the concentration grant add-on referenced in subparagraph (A) shall instead be equal to 65 percent of the base grants as specified in subparagraphs (A) to (D), inclusive, of paragraph (1) of subdivision (d), as adjusted by paragraphs (2) to (5), inclusive, of subdivision (d), for each school district’s or charter school’s percentage of unduplicated pupils calculated pursuant to paragraph (5) of subdivision (b) in excess of 55 percent of the school district’s or charter school’s total enrollment. The concentration grant shall be calculated by multiplying the base grants as specified in subparagraphs (A) to (D), inclusive, of paragraph (1) of subdivision (d), as adjusted by paragraphs (2) to (5), inclusive, of subdivision (d), by 65 percent and by the percentage of unduplicated pupils calculated pursuant to paragraph (5) of subdivision (b) in excess of 55 percent of the total enrollment in that school district or charter school.
Note that 42238.02(f)(1)(A) is the old formula and the new one is at 42238.02(f)(1)(B). This can be found at this link.
It seems to me Hart’s slide 11 does not reflect the actual situation as described by the California’s Education Code.
Let’s look at his next slide.
Slide #12
Listen I love flying into Vegas and I enjoy the skyline like everyone else. But instead of using the Luxor Pyramid, Hart’s team should consider going for a bar graph because a pyramid is misleading. What are the numbers? CDE publishes them at this webpage. Opening the 2022–2023 spreadsheet reveals that the LCFF allocations for LAUSD are only for the schools it directly controls. The affiliated charters have their own allocations but are administered by LAUSD. From this spreadsheet, the 22–23 allocations as shown in this first bar graph below. The Concentration Grant includes the add-on. For comparison, the second bar shows the Concentration Grant split into the old formula plus the add-on.
As you can see the proportions of the different components presented by the pyramid image are misleading. Going forward, I suggest the CBO team ditch the pyramid and consider the bar graph. Also $189 million is not chump change and it is welcomed.
WONK Alert Ends.
David Hart (1:13:23): Next slide please. As we come forward into January, yet one more time and as each of these uh layers is added to this pyramid, you should think of it as being more prescriptive dollars. For which if we are eligible, we will receive but our latitude, our discretion, on how best to apply those uh is removed. In some regards perhaps from an advocacy’s perspective not so objectionable. If you, if you believe in that. But the challenge is is that when a district such as LA Unified has its own means by which to address the equity. And the sustainability of practices at a local level. As we uh with superintendent Carvalho are having conversations about. Bound autonomies earned autonomies. What have you, the state’s actions on top of that, are an additional hurdle for us to satisfy next slide please
Conversations about equity and sustainability and about practices at the local level are fine but the contents of the slide are not even in this conversation. Did we have a conversation when you decided to take ONLY $2million into the arts from a $256 million for arts grant? And what about Primary Promise? An early literacy program that was launched in 2021 and now it is being shut down. It had been budgeted in August under ongoing category of the Expanded Learning Opportunities. Now it is going away because of why?
Slide #13
David Hart (1:14:17): This was the projection we provided at first interim to you, the takeaway from this is that yes, there is a sizable uh undesignated fund balance at the end of 22–23. What we excuse me I’m misspoke 21–22. And that as we ran through the forecast period you can see the use of fund balance. And then what it is we assumed would be necessary for this to be flat. Uh what I would suggest to you is that if it were to remain flat that would be A-Okay from my perspective. But what the next slide will indicate is that we were foreshadowing for you that there is reason for us to be extremely cautious if not all together guarded. The use of a billion dollars in fund balance in this short of period is um is large. It is a function one of the all-time the unprecedented amount of one-time funds that we have received and the fact that those funds are stale dated as we enter into the 24–25 school year.
Question: Is the reason why the unassigned ending balance dropped from $1 billion to $140 million because funds moved into “committed” or “assigned” categories? And those that were moved into committed categories, have any of them been spent? The answer is NO. And how much is just being rolled over or, as Carvalho said, “banked”?
Slide #14
David Hart (1:15:26): But as the next slide indicates, it is also a function of our declining enrollment and while we are optimistic and have reason to believe that our optimism is not misplaced there. We remain a declining enrollment district and there are still questions to be answered about our attendance. As I’ve said before and I want to re-emphasize the point there was a time not that long ago when our attendance was at about 95 percent of enrollment. As we came out of the pandemic, we were closer to 90 percent. While we do believe that our forecasts for enrollment perhaps was overly negative, and we are hopeful that it will be higher. And the same may be applied to the attendance numbers. They still are indicative of a district that is facing a challenge with regards to overall enrollment and whether or not we have plateaued. Or will continue to be a declining enrollment district and without regard to enrollment we still have to bear in mind whether or not the attendance is going to return to our historical norms. These are not just challenges, if you will, enjoyed by LA Unified. This is a problem for virtually every Urban School District. Not just in the state but in in the United States. It seems to be that coming out of the pan endemic attendance is down, in enrollment in public education is down, on one hand we say hey that’s great that gives more money per student but as we spoke of last time. The 8.1 increase in COLA. If you’re a declining enrollment District of 2 percent, brings that down to closer to being a five percent increase. These are trade-offs that occur.
Next slide. Oh wait, before sorry go. Back one, please so what you’ll see at second interim will be an update on the enrollment. I think it’s still going to be premature for us to talk about where we stand with respect to ADA I think those numbers will come out after the second interim. Certainly, will be incorporated into our budget presentations later in the spring. But we we have what I’ll offer is a gut feel as I think our enrollment will be better. I’m not as confident that our average daily attendance will be as high as we would want it to be. And will be an area for us to mark for improvement. Not just this year but in subsequent years and we’ll have to see how that washes through our forecast.
Well, that is interesting. Your forecasts for enrollment were overly negative? Hmm. And there is a possibility that the decline in our enrollment may have plateaued? How about a slide from the LAUSD Demographer for clarity since that is their job?
Also, let’s focus on enrollment for a minute. While the media has written about declining enrollment and leaders in the district have been discussing it for years there has not always been a full-throated discussion on how LAUSD’s enrollment was predicted. In 1997, the district demographers said the decline would hit sometime between 2000–2005. It landed in 2003. The cause for the decline was cost of living in Los Angeles, immigration patterns and lower birth rate. Along the way leaders in the district and some board members and media put the decline of enrollment at the feet of ‘teachers and bad schools.’ Without talking about immigration changes, birth rates and cost of living.
The board also authorized arguably too many charter schools as no school district in California and the US has more charters than LAUSD. The fact this was done in a declining enrollment period demonstrates misguided leadership. Many charters failed and many used bond monies to construct new buildings. This certainly looks short-sighted now.
Slide #15
David Hart (1:18:00): Next slide please. Factors not included in the first Interim, and this goes to the graph of a couple slides back.
Please note that this slide has nothing to do with the finances of the District discussed in the 2022–23 First Interim Report. Instead, it refers to the required two year out budget projections for 2023–24 and 2024–25.
David Hart (1:18:06): We have not included. And there is a slide here in a moment, we’ll get to. We have not included any changes in compensation. That have not been approved by the board of education. So that which is contemplated, that which is discussed. Is not reflected here. Unless there has been an action by the Board of Education, to approve. Same additional contributions and potential liabilities. The list here, so we spoke to the higher CALPER contribution rates.
CALPERS, we are all in a tizzy over CALPERS again?
David Hart (1:18:31): Capital planning remains at the forefront. Or at least my thinking. I know I’m not alone in that. But there are significant challenges for us as we look forward to addressing the needs of the district. For those activities, those projects, those programs, those needs that are either, not eligible, to receive Bond funding. Or that the bond funding is as inadequate.
Question: First, Capital Planning is NOT part of the General Fund. Why is this being brought up in this meeting? And for the record, earlier in the presentation it was discussed that it was okay that we did not get the $500 million this year and it was not a problem. So why put it in this list? Additionally, the bulk of capital investment is bond money. Prop BB, Measure K, Measure R, Measure RR, Measure Y, Measure Q. There is a lot of money in Bonds. Those Bond Oversight Meetings are very interesting. The next one is April 27.
David Hart (1:18:51): Among those would be responding to Cyber Security threats. And the Investments necessary to protect our system.
Cybersecurity. Where to begin on that topic? Arguably, it has not been handled with the most transparency. Sigh. As for the money to upgrade it, Cybersecurity is best practices which are implemented by current employees and software updates are usually included in the cost of the contract. Updating them costs no additional funds. Ensuring that software packages are regularly patched should be part of regular maintenance. Why would this cost huge amounts of money?
Honestly, can we please stop scaring people? This is how money can get denied or wasted.
David Hart (1:18:59): The potential for unrealized loss on our investments remains. And I’m pleased to say that while we have not recovered it also hasn’t gone as low as I might have been thinking it might a month ago.
Surprise! The unrealized loss did not go as low as you were thinking a month ago. Right. Investments go up and down. This, by the way, confirms that the surpluses are being invested in Wall Street and not spent in our schools.
David Hart (1:19:12): We’ll continue to monitor that. The potential for a higher OPEB liability is real
We will visit OPEB in a little bit. We’ll get to it with Carvalho.
David Hart (1:19:17): We do, we have had a preliminary conversation with our Actuarial. It does look like the combined allocation what we used to speak of in terms of 440 million is now going to go up by about 10 percent. There’s some numbers for us to work through. But that is again a consideration for us. And we do not receive discrete funding uh from the state for this. So, when it comes out of our pocket to pay for this, it is very much coming out of our pocket. There is no dedicated, uh separate revenue for us to point to.
The last actuarial report that was made public was in 2017. What presentation of these forecasts has been made to the LAUSD Board since then?
Sure. “It comes out of pocket.” The money in our pocket is to be spent. But it has not damaged the District in the past, why would that happen now?
David Hart (1:19:52): The proposition 28 funding spoke to. It is worth noting and I imagine that we’re getting on in this. But the forecast from the state as negative or pumping the brakes as they might be thought to be. Does not contemplate a recession uh that.. Whether there’s a consensus about a recession, excuse me, recession on our Horizon. It is tough to find that consensus. I think at this moment in time; given the actions last week and what I’m speaking to last week. Is that while inflation seems to have stalled a bit, unemployment has dropped more. That is thought to cause for inflationary pressures actually and so the expectation is that the Federal Reserve will in fact continue to raise rates. And with increased rates the likelihood of a recession goes up. Because that will restrict capital. And you can go into this, if it’s of note, but I think at this moment in time you would find that the majority of economists, and folks who speak to this informing the federal reserve’s actions or being informed by the actions of the Federal Reserve, now have moved the dial to anticipating there will be some sort of a recession within the next 12 months. That those actions, by the way, pale dramatically in comparison to the potential for a congressional um freeze. I don’t know, I was trying to think of the polite word to use. But if we do not take the actions necessary to address the debt ceiling the ramifications upon our fiscal markets will be material, they will be lasting and they will all be negative. And when you look at whether it’s from the federal government’s own commentary or that of rating agencies or business executives the situation is not good. If the dis, excuse me, if the U.S government were to default on its debt. Next slide please 1:21:55
You told us you were not an economist. But here we are with this conversation. Recession. Is it here? Is it not here? It might be coming. It might not. The debt ceiling may not pass. The national economy may collapse. Etc., etc., etc..
Question: Are other school boards talking this way about the Federal Debt Ceiling? If the US Congress does not approve the increase of the debt ceiling, the United States will be in a world of hurt far greater than our school district. As noted by The Guardian:
“If the federal government defaults on its loans, investors could lose faith in the US dollar, causing the US dollar to weaken, stocks to fall and triggering job cuts.”
That was one heckuva DOOM Scroll!
Slide 16
David Hart (1:21:55): So, let’s take a moment and we’ll speak to the factors not included in first Interim, with one caveat, the column here. The first one needs to be clear that, we probably should have massaged the heading of this title. That First Column which we tried to address by using the header, of included. The five percent is included in our forecast because that was in fact acted upon by the Board of Education. The fact is though it didn’t get applied to every bargaining unit, because not every bargaining unit had closed if you will on 21–22.
And here we go: contract negotiations. This slide shows that a pay raise implied for 2021–22 did not happen because not all the contracts were negotiated. Using this slide, it means that roughly $310 million were not disbursed ($62 million for each 1%) for all labor partners.
Question: Where is that money? Is it collecting interest? Will it be given retroactively to employees after negotiations? Or will it be negotiated down?
Now Carvalho takes over.
Alberto Carvalho (1:22:34): Yeah, and uh I’ll take it from here for the next couple of slides. Actually, so, this slide in fact does reflect exactly what the CFO Hart just described. Uh that five percent, which was loaded in uh about a year ago, was applicable to the vast majority of that workforce.
Here is a list of all the unions that are contracted with LAUSD.
Question: How many of the unions (other than CSEA which is explicitly mentioned in slide #9 of the August 30, 2022, Board meeting) agreed to the 5% raise in their interim contracts with the intent of coming back to the table to negotiate the rest of the raise later?
Alberto Carvalho (1:22:51): However, there are thousands of our employees who still have not benefited from that. We’re still at the table regarding that matter. However, uh for 22- 23 and then 23- 24 uh we are in a process of negotiations. Um. That’s why we refer to what’s currently uh on the table as a dynamic proposal. What we mean by this being a dynamic proposal, is that as the board knows, there’s still room for additional offer on the table. Board authorized offer on the table. However, even at the level, that we’re currently at for 22–23 and 23–24. Five percent each year in terms of offer, with four percent with cash in hand. Reflect, as you will see in a following slide a higher level of combined compensation than anything that’s been approved or realized by our workforce in many years. The five percent for 22 23 and 23 24 are recurring increases. Meaning these will be reflected on the base salary of our workforce. The four percent for 22–23 and 5 for 23.24 are one-time investments in our workforce.
Wait. “One-time investments” sounds like they will go away the following year, just like the state grants that are one-time only. Is that what Carvalho means?
Alberto Carvalho (1:24:23): You will see below, and I want you to just uh momentarily consider. The conversation that has taken place here in the community regarding end of year fund balance. I want you to shift to the total value of these proposed Dynamic Investments. 2.159 billion dollars.
Dynamic investments? Why not call them pay raises? And why are we talking about a two-year lump sum distributed over 74,000 employees (this number of employees was taken from LAUSD’s finger-tips web page at this link; it became unavailable the day we published this article)? That works out to $1200 a month per employee. Broken down further that is a $14 an hour raise assuming all employees are C-Basis (180 days per year, 6 hours per day). This is a rough estimate because the increase will not be distributed evenly across staff because they have different pay basis.
A quick search in Google shows that the cost of living in California (2022) was $21.82 per hour for a single person ($44.18 per hour if the person has 1 child). Los Angeles is reported to be 7% higher than California. This works out to $48,500 per year. Compare that to the salary of a beginner teacher at the lowest pay scale: $56,107 per year.
Carvalho is offering a 9% increase which does not even cover the inflation in the last ten years as noted in a LA Times op-ed authored by a teacher who understands these issues from the real world.
Alberto Carvalho (1:24:50): So yes, those who assert that the district is sitting on significant amount of money. They are right. That money is being planned for and has been planned for a long time.
Correct, the ending balance has portions of it assigned and committed to certain expenditures. Yet, these portions are not spent because the total ending balance continues to grow year after year. For example, the ending balance for 21–22 was $3.4 billion as noted on line F.2.Column C in the snap shot below (this can be found on page 19 of the pdf [labeled “Page 14”] at this link):
The $3.4 billion has increased to $4.9 billion according to the “First Period Interim Financial Report Fiscal Year 2022–23” (page 19 of the pdf [labeled “Page 14”]):
So, if the total ending balance increases after three months of operating the schools, neither the assigned nor committed portions of the ending balance were spent. Clearly, the District banks or invests all this money.
I am not a member of SEIU or UTLA or any of the unions in contract with LAUSD, but I understand why they question narratives being offered here by Carvalho and Hart.
As a parent, I am saddened that money is being held in “reserves” (not mandated by the state) that are then being invested and not spent in schools.
Alberto Carvalho (1:25:07): As the board approved uh this year’s budget, we had included an inflation protection fund.
This inflation protection fund was presented and approved by the Board when they voted for the Revised Budget on August 30, 2022. Why is this inflation protection account needed when the District is given a COLA? COLA covers the increase in resources needed due to inflation. Are these funds being offered to labor partners today?
In fact, Carvalho implied his office and staff were going to do so during contract negotiations as evident by this introductory remarks prior to presenting the Revised Budget to the Board then:
Alberto Carvalho (01:58:01): The Board president and I will be signing this document [the Revised Budget], putting our entire workforce’s mind at ease over the next two years now, onto the rest of the negotiations, ensuring that inflationary pressures and workplace conditions are addressed. So we can continue to incentivize recruit and retain the most talented within our ranks.
As of this week, our most talented and essential workforce has been standing in the rain requesting that Inflation Protection Fund be used to incentivize and keep them on their jobs. The hearts and minds of Angelino families are with them, as this quote from Griselda Pérez, a Boyle Heights parent, published by in the New York Times, eloquently makes evident:
“When I see the cafeteria workers, when I see the lady at the front door, when I see the lady working at the parent center, we talk mom to mom,” she said. “The struggles that they have are the same struggles that we have.”
I wonder if Ms. Pérez and the workers from her school take comfort in the $801 million being parked in an Inflation Protection Fund?
But back to the February 14, 2023, CoW meeting, which is the subject of this piece.
Alberto Carvalho (1:25:14): Specifically, to address the inflationary pressures in our on our workforce. And we committed then as we commit now that we would meet and exceed those inflationary pressures. We committed then and we commit now that we will also bring about equity between those who earn far less than and those who are earning not what they should but significantly more.
What Carvalho left out is that these funds pledged to meet or exceed inflationary pressures were parked in the committed portion of the ending balance as will be discussed below.
If Carvalho is as committed as he says to “address the inflationary pressures” on all the employees, why doesn’t LAUSD pass along the COLA increases to employees as they become effective instead of waiting for a protracted labor strife? Seriously, as a parent, taxpayer, and human in a city where the cost of living is so high, we would ALL benefit if Carvalho passed along the COLA to all LAUSD labor partners. I don’t hear the media reporting the existence of this Inflation Protection Account as being offered to the workers. All I read is the “our Board has decided to set these funds aside.”
And then there is this Inflation Protection Fund that is parking today’s dollars on a committed portion to be spent over three years? Really?
Alberto Carvalho (1:25:41): These proposals attempt to do that. But I want to be clear about one thing, negotiations are Dynamic processes. And something is advanced on our side. Then obviously there’s an expectation that the response is proper. And that’s where we are at this point. The total value of a one percent increase for the entire workforce is around 62 million dollars.
So, you are offering $541 million (9%) for 22–23 and the unions want $620 million (10%). Why is Carvalho injecting so much drama into this narrative? Of course, now what is on the table is a moving target but in February Carvalho was adamant that whatever is in the committed portion of the ending balance could not be used for salary increases.
Alberto Carvalho (1:26:06): So, you see those 2.15 billion dollars, eats significantly into the ever-shifting value of end-of-year fund balance, that we often hear about.
As we see above the total ending balance increased by $1.5 billion dollars from July 1, 2022 (unaudited actuals for 21–22) to November 29, 2022 (first interim financial report for 22–23). This is NOT “eating into the ever-shifting value of the end-of-year fund balance.” In fact, a portion of the end-of-year fund balance is meant to be to “ensuring that inflationary pressures and workplace conditions are addressed.”
Alberto Carvalho (1:26:20): This slide does not reflect, and David stressed this point multiple times, is the accumulated the cumulative impact on OPEB and pension.
Okay, let’s now talk about OPEB. OPEB stands for Other Post-Employee Benefits. Which are promises made to retirees and future retirees to cover their healthcare. As we already noted, LAUSD does not provide the pensions, that is CalSTRS and CALPERS.
One advantage to working for LAUSD is that it offers medical, dental and vision plans for its employees AFTER they retire and until death.
What constitutes the OPEB for LAUSD?
1. The full cost of vision and dental plan for all retirees regardless of age and until death if retiree participates in LAUSD’s part D.
2. The full cost of medical plans from retirement to Medicare eligibility.
3. The full costs of Medicare Part D (Prescriptions) plans as long as the retiree participates in LAUSD Medical Advantage plan
4. The cost of providing secondary coverage to Medicare through the Medical Advantage Plans.
So, the major costs are the benefits paid by LAUSD until the retiree becomes Medicare eligible. After that, the costs are minimized as the retiree now depends on Medicare.
Carvalho says that increasing salaries increases the OPEB liability. This is inaccurate because OPEB is “other post-employment benefits” not pensions.
Question: Why is he blurring it? For LAUSD, it is health care and that is now managed through a “medical advantage” plan. The costs for this plan are totally unrelated to compensation while employed. Why is Carvalho bringing it up here?
Increases in costs due to pensions contributions will be discussed later.
Alberto Carvalho (1:26:28): As a result of these increases. Obviously if you increase compensation whether it is one time but particularly a recurring increase to the base. These will result in consequential increases which are significant to OPEB and pension. Those are not reflected here.
Ah, Kabuki Theater.
The above discussion by Carvalho, which you have noticed, is all about the contract negotiations with the various unions. SEIU members have already voted to authorize a strike. UTLA is in negotiations. This section of the presentation offers Carvalho an opportunity to make his case about how they are negotiating something he identifies as fair. Which seems to fly in the face of SEIU workers who have authorized a strike (and UTLA may be heading in that direction). Apparently, they are not so convinced it is fair. SEIU are the people on campus who are not teachers. They are the people working with your kids in classes, they are custodians, cafeteria workers, they are support staff in Special Ed, they work in various capacities.
Labor unions are within their rights to ask for a pay raise as their previous contracts are dead. Morte. Over. RIP. And sure, Carvalho is within in his right to use a public forum to say what he wants. Given the CFO/CBO works to support the superintendent, he too apparently can use a public forum to serve the Superintendent. Including this presentation. This is what happens in negotiating season. But let’s remember, at the core, it is theater.
Slide 17
Alberto Carvalho (1:26:48): I’d like the board now to see the following slide which reflects, actually, a historical analysis of the pay increase. And we took it back to 2012–2013. And then projected forward 22–24. And you see there that a number of years in fact, four years, actually five years within that cycle, there were no increases whatsoever. The other increases ranged anywhere between three percent, and that in fact is the most common increase to a 6.1 percent. Going back to 24 to 2014, 2015.
Correct. As we discussed earlier, the COLA are not passed to employees during years when the contract is active and there are no negotiations. Hart went on and on at 58:33 about the COLAs but, as we discussed they are not passed on. Employees must wait for their new contract to be negotiated to recover what was never granted. It would have been more transparent, if the Superintendent had reinforced the fact that employees have had to sit by and eat cost of living expenses until their new contract. It would have also suggested an authentic compassion by the superintendent.
Alberto Carvalho (1:27:30): As we just detailed over the past 12 months or so. Five percent have been loaded. Five percent are still available to be loaded for some workforce members. And what’s on the table at this point is an additional 10 percent spread over two years on a recurring basis. In additional to a nine percent increase one-time increase. Let’s just take a snapshot the temporary snapshot of the current condition at this point. Within the time frame of 12 months. 10 percent recurring plus five percent. Which has already been loaded that’s a 15 percent over a three-year period of time.
Add to that a nine percent non-recurring you have a total compensation investment. And I want to be very clear 15 of which is recurring. Nine percent of which is one time of 19 that is not de Minimus. That is significant particularly considering the history going back to 2012- 2013.
I want to be clear about another element. I recognize and I appreciate
deeply in a very honest and very frank way the frustration and the anxiety in the minds of people. Conditions are real, an affordability housing is real. Cost of Living increases are real, the cost of gasoline and uh and car insurance. Those are real particularly in this market. So, I understand the frustration and the anxiety We are continuing to be available to be at the table to negotiate and to react to the reaction to our proposals. As I said this board has authorized additional latitude, but the process needs to work.
I understand the frustration. We also analyze the amount of time that over the past two decades is taken to negotiate these contracts. If we are to look at those historical time frames, we’re not late now. By my own experience we are late. We shouldn’t take six months to a year to negotiate a contract. We shouldn’t. However, where we are today is in a far better position in terms of the length of time, that this contract these contracts are being negotiated then what’s taken place over the past two decades. That’s the truth. With that said I understand the frustration I understand the concern and we are determined to fully exhaust the board’s latitude in negotiating these contracts. I want to remind the board and the community that if we are to fully spend what’s currently on the table and as I said earlier. We have authorization for more. This will consume 2.15 billion dollars of that money.
As noted above, the District is offering $541 million plus $951 million for 2022–24 according to slide 16. This is for two years. It would be more accurate to discuss annual costs rather than cumulative costs. Given the 2022–23 projected ending balance as noted above, the District can certainly afford the first year of this offer. For 2023–24, part of labor demands will be covered by the COLA as well the ever-adjusting Governor’s Budget.
Why so much fear mongering?
Alberto Carvalho (1:30:33): That people are fixated on that we’re sitting on. We’re not sitting on money. The money is available based on board’s authorization to be negotiated. Another element that cannot be ignored is the initial promise that we will meet and exceed the pressures of local inflation. The bottom of that slide reflects just that. You will see what the projected California inflation is, and for any one of those years, and you match that pressure of inflation to what’s being proposed in terms of increase. And we meet and exceed that inflationary pressure. So, I wanted to take on this subject personally, because I’ve heard and I’ve read a lot. We have authorization, have put on the table significant amount of resources. This is the dynamic process based on greater board authorization for us to continue to negotiate in an upward trend.
Carvalho is referring to inflation forecasts generated by School Services of California (the same consulting firm that appears above). From his remarks, it appears that these projections were used in calculating the offers on the table in the February time frame. However, slide 5 of this same presentation has completely different projection generated by the Governor’s office for the 2022–23 Fiscal Year and beyond. It is reasonable to suspect that Carvalho’s offer is inadequate given the Governor’s Office projections.
But Carvalho appears to be missing the point. The money the district is sitting on is not to pay future wage increases. That money is money that was withheld from labor for the last 8 years as well as the August 2022 increase. The increases in salary come from what is in the till right now (and what will be coming from the state).
As a parent and taxpayer, I did not know that the District is obligated to hedge against inflation since the funding is not controlled by the District. It is the state. Besides, isn’t that why we have a “Reserve for Economic Uncertainty?” Hmm?
Alberto Carvalho (1:31:45): With that said there are limitations. And I think David clearly intelligently laid out what those limitations were two slides ago. We don’t know where this economy will go. We do not know using the governor’s own budget, what the assumptions for a potential deficit will be. We do not know what the direct impact of increased contributions to the retirement system will be. So, you take all that into account and then add to it that we have a huge amount of money that will sunset within two years. And the way forward needs to be one that’s balanced between the best interests of our workforce. But also, the financial the financial realities that are clear to us at this point.
So, Madam president, members of the board, and speaking directly to the community particularly our workforce. We are determined to negotiate these contracts in a fair transparent way. That meets and exceeds the inflationary pressures. We are determined to do it swiftly. We are determined to honor the contributions of our great Workforce and that speaks to the contributions of our SEIU employees. Our custodial staff are bus drivers, our cafeteria workers speak specifically to every single individual who works within the protection of UTLA, our teachers. It speaks to everyone, our principles our police force. It speaks to everyone within LAUSD. We’re ready to go to work. We’re ready to be at the table. We’re ready to negotiate swiftly and there is still latitude for us to exercise the benefits of what could be offered. To bring about fair compensation, that beats the current economic realities. Without conditions, that would in any way shape or form, impact the needed recovery, that our students are benefiting from. Thank you very much and I’ll throw it back to David.
As we discussed, this presentation appears to be for Carvalho an opportunity to make his case on the negotiations ongoing at the time. But as we can see, the presentation has brought out more questions than settle the argument for his case.
Parents and taxpayers certainly should have a lot of questions. I do.
Slide #18
David Hart (1:34:01): Thank you, Mr. superintendent. With regards to the deck, if you could bring that back up. Wanted to just finish in terms of uh the use of fund balance.
The numbers on his slide come from Column D of section F in page 19 of “First Period Interim Financial Report Fiscal Year 2022–23” (labeled “Page 14” as you can see):
Adding the amounts in column D of the projected year totals for the non-spendable adds up to $43 million as in the slide. It is worth noting that the original budget (approved at the regular Board meeting on June 21, 2022) was revised on September 16, 2022, as presented to the Board at its regular meeting of August 30, 2022 (materials unavailable since the hack). That’s the origin of the changes between columns A and B. Since there is no record of presentation to, and approval by, the Board of the revised budget, it is possible that such actions are not required. However, the revised budget does contain a different resolution to commit funds as discussed below.
David Hart (1:34:14): We have at various points in time addressed, for the benefit of all. I think it does matter that we walk back through this. Will be quick. The non-spendable is just that. It’s things that we prepaid for. It’s the materials that we hold in inventory.
This is misleading because the bulk of the non-spendable is in the student stores. LAUSD has no jurisdiction over the student stores cash as it also includes the student body funds. Anyone who knows about fundraising at their school, knows about the importance of the student stores. So, when Hart says “The non-spendable is just that. It’s things that we prepaid for. It’s the materials that we hold in inventory” That is not accurate. As a parent who has done a lot of fundraising, I expect my CBO to know this detail. The money in Stores belongs to the stores of the schools. Period.
David Hart (1:34:31): With regards to restricted, to be clear, this is not subject to board action. These are dollars that come to us that have strings attached. And those that attach the strings make it very clear that it is not at our latitude, as to when or how those dollars are expended. It is governed by The Entity that is providing the funds.
You can’t do anything. Got it. But as we see below LAUSD has considerable latitude or discretion on how to distribute the funds in restricted grants. For instance LAUSD is free to distribute Title I funds which are restricted federal grants in any way they want at the schools and other programs.
David Hart (1:34:50): Examples would include ELOP, and examples would include the learning recovery emergency block grant
True, but the distribution of this funding was decided by the District. For instance, Primary Promise is a literacy program launched in 2021 under Superintendent Austin Beutner and funded by ELOP. This program has been a bright spot for many students and schools. Since this February 14, 2023, report, Primary Promise is being downsized and/or cut at schools. ELOP money is currently COVID money from the state. If you go to this link, you will note ELOP is an on going program as declared by the Legislature via statute.
So, the CBO and the Superintendent Giveth and Taketh Away? Which leads to …
David Hart (1:34:55): There are dollars that we can highlight in terms of those individual grants by a year by Purpose By dollar. In terms of the committed. As we move from restricted toward committed, we are starting to step into the action of where the Board of Education in theory does have discretion.
The CBO rushed through restricted category. But why did he not mention the elephant in the room: the COVID money from both the state (ELOP) and the feds (ESSER)?
At least half of those dollars should have been spent by now because they can’t, in principle, be carried into 2023–24.
Questions: So why are they (the dollars) still sitting there? Especially the funds for learning recovery that came from the state. Which leads us back to Primary Promise. Shouldn’t we be double-downing and fixing any literacy issues ASAP?
The more we do NOW, the more it will help the students. It will also give student confidence in academics. Fix literacy now in elementary and you can lessen the path of drop out ten years later. There is a movement right now by parents and teachers to try and save Primary Promise. They may have success. But what is more salient is to ask what other programs are about to be killed? And is the issue really funding or is the issue moving money into a different line in the budget? Which leads us to…
David Hart (1:35:13): And I say in theory because some of the actions that we have set some funds aside, for are to be reflective of resolutions that the board of education has passed.
The board “has passed.” Let’s talk about that vote. in June, the CBO and Carvalho got approval from the Board where to put funds in the committed column ($1.5 billion, which later balloon to $2.3 billion as seen in line 4 of Slide 18). This effectively puts those funds out of circulation. Unfortunately, the Board did not at that time question the wisdom of such a decision.
They had an opportunity when slide 27 from the June 14, 2022, meeting was presented and Hart offered to go over what funding was parked into committed.
A significant portion of the unrestricted assigned money ($1.3 billion) for the 2021–2022 year was moved from assigned to committed. Of course, we should ask ourselves, should some of that $1.3 billion be spent on the students in 2021–22? But more to this point: Did the board members ask, “If we take this money out of play (which they did when they moved it to committed) — -can we tap it elsewhere later?” As Hart said in that meeting when discussing this slide (@7:35:16 of the meeting video),
“The takeaway for you (the Board) is to know that those dollars are committed for expenditure in a subsequent budget year.”
It would have been comforting if a board member asked, “Why is LAUSD hoarding money that can be spent on the students?” For example, $600 million of these $1.4 billion are SENI funds. Parked. Invested. Not in schools.
David Hart (1:35:25): So, examples would include SENI. It would include how we have set aside monies for inflation protection. It would include the dollars that we set aside in the course of our budgeting activities to meet the forecast obligations of OPEB.
That was a decision to “contribute” to the OPEB Trust Fund, something that hasn’t been done in years. So, why now do it? And what is the benefit? Public agencies for the most part are on pay-as-you-go, except for the US Postal Service by an act of an arguably aggressive GOP congress which forced putting aside money from its current operating budget to fund future liabilities 70 years out.
David Hart (1:35:39): As we look at the assigned balance of 426 these are mostly the funds that are unspent balances within the general fund school allocations. So these are dollars that are held by schools.
Again, if these are school funds, what are they doing here instead of in school budgets?
David Hart (1:35:52): Yes, there is discretion. It has not been an action of the Board of Education by resolution to restrict or to set aside those funds. Perhaps by resolution but by our practice those funds have not been thought of as being available to the district. Generally, for General operating expenses. That balance looking at my notes here estimated to be about 70 million. One other note when we speak of earlier on the restricted funds and we spoke to the Arts and the reduction of 85 million.
If the funds were granted but the program ended, what that means is LAUSD got the money this year but won’t get it next under the same grant. Honestly, parents and teachers should ask which programs are not being paid for and not put into use for our students because of budget recategorizing.
David Hart (1:36:29): That’s going to be a reduction to our fund balance. Those are not our dollars and so they gave it, they took it away, and where it’s going to impact us is in our fund balance. These are examples where uh just in those two, that’s 150 million dollars that in a moment’s notice move away from us. it is the case then that we also have to have a reserve for economic uncertainty, not a discretionary matter a matter of state law when I became the district’s um CFO in the spring of 2020, the amount that was required was 100 million dollars rounding since that time because of our decline in enrollment the state law requires that we contribute 2 percent which took us from 100 to two. It is also the case that it is a function of the size of our budget. So it’s indicative that our budget has gone up. So has that dollar amount. But those dollars are not available to us. They that we do not have the ability to describe to, spend those dollars except for in a fiscal exigency. When that occurs you then need to replenish those dollars within the same fiscal period. Or at the start of the outset of the nix. So it’s meant to bridge you to make a payroll is something of that egregious were to interrupt our Revenue flows. Happy to field questions. But I think it’s worth noting again that the amount of the undesignated fund balance in as of this point in time was less than 150 million when we start out with a balance that is at 4.9 billion. When you’re operating an organization that has the tens of thousands of employees we have. With the hundreds of thousands of students, that is a very narrow margin, and when you add in those matters that we have not budgeted for and the short answer is ‘well how are you paying for?’ It because we’re getting creative in the use of our fund balance. And we are using some one-time expenses for ongoing costs and that is to the board’s own policy not consistent.
Wait a minute . Back at 1:34:40 you said your hands were tied. But now you say you are creative? So, which is it? Your hands are tied, or you can be creative? Is the CBO the victim or the hero?
Based on this presentation and looking at other meetings, it seems the real victims are the students. Who is drilling down and making sure the money is available for the schools? Because on June 14, 2022, Carvalho asked for the Board to vote and agree to authorize the diversion of funds as evident from the “Resolution to Commit Fund Balance for the 2022–23 Fiscal Year” included as Attachment E of the final Superintendent Budget 2022–23 (dated 6/21/22). Below are the resolution’s “resolves,” which takes a total of $1.5 billion off the table, as noted above:
Carvalho and his staff did not stop there. At the August 30, 2022, regular Board meeting, it was announced that more funds had been granted by Sacramento. Carvalho, as we note above, then announced that a “first ever inflation protection fund” would be established in the amount of $801 million to be spent over three years. It is not clear from which state grants these $801 million came from, but, remember, the Revised Budget for 2022–23 (dated September 16, 2022) included a new resolution in Attachment C (page 33 of the pdf, labeled “I-26” in its lower-right-hand corner) to park those funds in the committed portion of the end balance. As mentioned already, this brings the total amount in the commit portion of the end balance to $2.3 billion, as reported in the First Period Interim report. As with the first resolution, here are the resolves for the second resolution, which are identical to the one submitted in June:
David Hart (1:38:22): And it is appropriate for us then to have the kinds of conversations that today begs for. How will we in time manage for this uh as Mr superintendent addressed, uh we are very intent on doing so. And want to be as transparent as possible in leading folks to an understanding of the complexities of a budget that in total approaches 20 billion dollars happy to take any questions you may have.
So, when a financial presentation is given in a public forum it is open to scrutiny and questions. As a parent and frankly as an Angeleno I am discouraged and sadden by this presentation. When “facts” are laid out with weak support, when things are left off, or focus is misdirected to something that is not meaningful, then it is clear, we have a problem. At the end of this presentation, I am left with the sad conclusion that the LAUSD budget is weaponized. What is disturbing is that Carvalho and Hart bet on a weaponized budget being presented every month since last year and no one would question it with the robustness it deserves. Not just for fair contracts with unions but for the families in LAUSD schools. The fact is that the ending balance always increases year after year because what is set aside (whether it is labeled “assigned” or “committed”) is never spent and even increases as it did when $801 million of 2022–23 dollars were parked in the Inflation Protection Fund. Rolling over this much money every year should not bring a simple nod of the head or a ‘sounds good’ by board members. Rolling this much money should not be a point of pride with the Superintendent or CBO. Parents understand from their reality, just like the Governor, the Legislature, LACOE, and even Austin Beutner, that money is not getting spent on our schools. The fact is that the practice of hoarding money (and the threat of fiscal cliffs that never come) is destructive to our neighborhoods. Hoarding money has never been a good look, but now in 2023 the repercussions of it are much more understood by families and community members. We need Board members to stand up for funding services for students. Fight when money is put into a column that closes off future spending. Instead of accepting it, fight the narrative that accompanies a weaponized budget. We need good governance which means everyone needs to stop nodding their head and instead find a warrior heart and grab a magnifying glass.
It is time to do better. Do it for schools, families and our city.
