LA Teachers Strike: Today The Teachers Are Tardy

LOS ANGELES, CA — Thousands of Los Angeles teachers made good on their threat and skipped school Monday.

By abandoning classrooms for picket lines members of United Teachers Los Angeles upped the ante in a prolonged and contentious labor dispute that could push the nation’s second largest school district to the brink of insolvency and force outside intervention that’s anathema to any local school board.

The walkout culminated more than a year of increasingly acrimonious labor negotiations over a new three-year contract between the Los Angeles Unified School District the union representing about 31,805 classroom teachers, librarians, nurses, psychologists and other certificated employees.

Despite the absence of regular teachers, LAUSD says schools will be open and students are expected to attend classes conducted by 400 substitutes and 2,000 administrators with teaching credentials. LAUSD will also continue to serve about one million daily meals. In a special 12-page Family Resource Guide the district suggested parents explain to children why their favorite teacher might be missing from the schoolroom and instead marching on the sidewalk outside.

Since August, when UTLA members authorized a strike, the union has used the threat of a walkout in a concerted attempt to force LAUSD to meet demands contained in the union’s 70-page bargaining proposal that includes a wage increase of 6.5%.

More than Money

Although money is a core issue, UTLA also seeks reduced class sizes, addition of support staff, changes in working conditions, more say in charter school matters and increased input into what have historically been areas of management responsibility -- demands the school district says union leaders have been unwilling to negotiate. UTLA has consistently complained that charter schools, which are predominately staffed with non-union educators, are systematically draining financial resources from LAUSD.

LAUSD says those initial union demands, which have essentially remained unchanged during negotiating sessions, would ultimately bankrupt the district.

But during last minute bargaining Friday the district sweetened its offer, proposing $130 million in additional funding to add 1,200 more educators, reduce class sizes by two students in all middle and high school classes, cap the size of classes in grades 4-6 and add mental health and nursing services in elementary schools. LAUSD stood firm on its original offer of a 6% wage increase and back pay for the last school year and said there would be no changes to health benefits for current employees. With the additional funding the package totals $565 million, the district says.

Presumably the extra money would come from increased funding proposed by Gov. Gavin Newsom in his state budget unveiled last week. If approved by the legislature an additional $2 billion would be earmarked for K-12 education and more than $576 million for special education in addition to $3 billion in one-time general fund payments to reduce pension costs.

In making the new offer, school superintendent Austin Beutner said the district “wanted to avoid a strike” and hoped “UTLA leadership will reconsider its demands, which it knows LAUSD cannot meet.”

“It’s time to resolve this,” said school board president Monica Garcia. “Our latest offer is the best we can do and includes the additional funding from the State and County.”

The union promptly rejected the district’s revised proposal.

Neither UTLA or the California Teachers Association, an affiliated labor organization deeply involved in contract negotiations and strike activities, responded to Patch requests for comment.

However, union president Alex Caputo-Pearl has said in previous statements the UTLA goes into negotiations “with an open mind every day” but Beutner’s “behavior doesn’t inspire great confidence.” The union has repeatedly accused Beutner of trying to negotiate the contract in the media.

Classrooms to Courtrooms

Last minute legal maneuvers by LAUSD also proved unsuccessful.

A superior court judge Thursday brushed aside LAUSD’s argument that union members should be prohibited from walking out because UTLA had failed to give the district a required 10-day notice its members would not continue to work under the terms their expired contract. LAUSD argued that an emailed notice on Jan. 3 failed to meet a technical requirement for giving enough advance notice of a strike. But Judge Mary Strobel ruled that by postponing the walkout until Monday the requirement had been met.

And a federal judge denied LAUSD’s request to file a third-party lawsuit seeking an injunction against UTLA prohibiting union members who services to the district’s special education students from participating in the strike. The judge told LAUSD attorneys they should file a separate lawsuit.

The school district sought permission to sue UTLA under a court rule permitting such actions in some cases where parties have been involved in previous litigation involving similar issues. Both LAUSD and UTLA were defendants in a class action lawsuit 25 years ago resulting in a consent decree drastically reforming special education in Los Angeles schools. The decree and associated legal agreements requires the district to provide special services to students with disabilities.

Had the judge permitted a third-party lawsuit LAUSD had intended to argue that if special education teachers and support staff walked off their jobs the district would be in violation of both the consent decree and the federal Individuals with Disabilities Education Act, requiring school districts to serve all eligible disabled students.

As of Friday the District had made no decision on whether it would file a separate lawsuit as the judge suggested.

High Stakes Standoff

For LAUSD the stakes couldn’t be higher. The district is spending more than it receives in property taxes, state and federal aid and other revenues. If the trend continues it could be insolvent within three years. Exacerbating the situation is declining enrollment upon which state aid is based – created in part by increasing attendance at charter schools.

An analysis last September by financial experts at Houlihan Lokey, a global investment advisory firm headquartered in Los Angeles, concluded LAUSD’s growing “imbalance caused by expenditures being consistently greater than revenues” would result in a deficit that could reach $1.4 billion by the end of the 2023 school year.

But increased wages alone won’t be the only factor contributing to LAUSD money problems. Hundreds of millions will have to be paid in added costs for pensions and other benefits calculated on the amount of total payroll. Those expenses have grown steadily over the past five years with total salaries jumping 12.9 percent and benefit costs swelling by 43 percent, increases that can be expected to multiply in coming years.

Already the district has chalked up billions in liabilities for unfunded pension and Other Post-Employment Benefits (OPEB) that include retiree healthcare. The magnitude of these liabilities only became fully apparent over the past two years since new accounting rules required them to be disclosed on the district’s balance sheet instead of simply being hidden in financial statement footnotes. At the end of LAUSD’s 2017-2018 fiscal year on June 30, its OPEB liability alone totaled almost $15 billion.

Other expenses have also increased, further reducing LAUSD’s available funds and forcing the district to tap its reserves. While LAUSD has increased spending on regular K-12 education by 4.2% over the past five years, its costs for special education jumped 24% during the same period. Last school year 85,431 students with disabilities were enrolled in the LAUSD, its affiliated charter schools and the 224 unaffiliated charter schools operating in the district – an increase of nearly 4% over those enrolled in 2014.

Breaking the Bank

One issue generating considerable debate during the course of negotiations was that of LAUSD’s financial reserves. Union negotiators claim the district is sitting on more than $1.5 billion in cash that can be used to meet their demands. School administrators say the amount is less than half that amount and UTLA is conveniently overlooking the fact much of what’s been set aside is already committed for other purposes.

According to the district’s financial statements for the 2018 fiscal year ended last June 30, that reserve was just $790 million, of which $714.7 million was “unassigned” and thus available for contract settlements. Already some of that has been earmarked for costs associated with agreements reached with other unions. By the end of December the available reserves had dwindled to $680 million and the district estimates they will continue to evaporate to the point where LAUSD may be bankrupt within three years.

This erosion of LAUSD’s financial condition hasn’t been lost on the Los Angeles County Office of Education (LACOE), which is responsible for financial oversight of the county’s 80 school districts. One of those responsibilities is approving school district budgets and expenditures, a task delegated to Dr. Candi Clark, LACOE’s Chief Financial Officer.

Clark has expressed her mounting concerns about LAUSD finances due to continuing labor negotiations, dwindling enrollment and the financial threat of the district’s “uncapped health and welfare benefits for all staff and dependents.”

In September she gave LAUSD’s current budget “conditional” – or qualified -- approval due to the instability of LAUSD’s financial situation created by its deficit spending, telling the school board “the window is closing to address the fiscal situation of LA Unified; [It] cannot continue to go down the path of drawing down its reserves. The school district must increase revenues, decrease spending or a combination of both.”

County Gets Involved

Last week County School Superintendent Dr. Debra Duardo assigned a team of financial experts to work with LAUSD in developing a stabilization plan to eliminate spending deficits and bolster required financial reserves. The team will be headed by Dr. Jim Morris, a former Bay Area school superintendent and LAUSD veteran educator.

According to a statement issued late Wednesday, Duardo’s decision to intervene in LAUSD financial affairs was largely dictated by projections of a precipitous 90.6 percent drop in critical reserve levels over the next three years that would threaten LAUSD with insolvency.

Although the county’s intervention is a preliminary move toward trying to balance LAUSD books, depending upon future developments Duardo will play the key role in deciding who will be running Los Angeles schools if LAUSD actually becomes insolvent and a state takeover occurs.

Takeover Process Revised

In 1991 state lawmakers crafted a formal process for overseeing local school district budgets and assisting districts with financial problems that left them unable to pay their bills. This procedure provided for emergency loans from the state, but in return required districts receiving the financial aid to relinquish control to an outside administrator – or trustee -- appointed by the State Superintendent of Public Instruction. These administrators enjoy full control of district budgets and policies because local school board members are stripped of their decision-making authority until loans are repaid.

Since 1991 nine school districts have received state loans the most recent being Inglewood Unified, which received a $29 million loan in 2012. Currently three other school districts have outstanding loans and are being administered by outside overseers, including Oakland Unified which received $100 million in state aid 15 years ago and won’t have its loan repaid until 2023. Besides LAUSD other school districts may be headed for troubled financial waters, including Sacramento and Elk Grove.

But a trailer bill approved last year made significant changes to the process of selecting outside administrators, transferring that authority to the county Superintendent of Schools. Trailer bills are those drafted and attached to state budget legislation without public hearings or other input and favored by unions and other special interest groups.

Under the new law, the Financial Crisis & Management Assistance Team (FCMAT), a state-funded service primarily designed to provide school districts with financial and management advice on a voluntary basis, is required to prepare a public list of potential candidates from which an administrator is selected.

This aspect of the process was criticized last month in a report by the Legislative Analyst’s Office that concluded, among other things, public disclosure of potential administrator candidates might be an area for legislative reconsideration because of the potential for undue influence by special interests.

Michael Fine, FCMAT’s chief executive officer who served as a member of LAUSD’s 2015 blue ribbon budget committee, told Patch his current, and almost daily, role is simply providing counsel to both the school district and LACOE regarding financial matters, county oversight, potential state involvement and possible “next steps.”

“We are obviously monitoring the district’s fiscal condition and the impact on it from any current or potential collective bargaining agreements, in addition to impacts from other items,” Fine said.

What those next steps might be, and how effective they may prove, is anybody’s guess.

Other Maneuvering

A day before the county’s intervention, the school board announced it had directed Superintendent Austin Beutner to create a three-year “enterprise plan” by March 18 to generate more revenue for the district and could include parcel taxes, bond measures and strategies for boosting enrollment.

Beutner and school board president Monica Garcia traveled to Sacramento last Wednesday for 11^th-hour meetings with state officials making a case for additional funding and other state action to avert a strike. Although LAUSD receives the lion’s share of its funding from the state, the district, along with hundreds of others across California have been complaining for years the state is not doing enough to alleviate local financial pressures.

It’s expected the county’s financial intervention team will work closely with Beutner and LAUSD chief financial officer Scott Price in crafting a viable solution to LAUSD’s financial problems based upon a county analysis of the district’s current situation. Public school districts are required to prepare multiyear financial projections at least twice each fiscal year. LAUSD’s most recent projections are contained in a First Interim Report submitted to the county last month and currently under review by the LACOE.

Margo Minecki, an LCOE spokesperson, told Patch the results of that review would be released Jan. 14. Yet LCOE’s intervention coming five days before it announces those results suggests conditional budget approval will continue, with an outside chance a “negative” rating might be assigned.

The interim report under review shows LAUSD has sufficient financial resources to cover the costs of a three-year UTLA contract containing a 6% wage increase, but at the current rate of district spending its uncommitted reserves will be exhausted by the end of the 2021 and deep in the red by 2023.

Third Time Around

Monday’s strike is the third time UTLA members have walked off the job since the union was created nearly 50 years ago. In 1970 UTLA members walked the picket lines for five weeks and in 1989 the union called a strike that lasted nine days, and produced what the UTLA said was a “historic” contract that provided three consecutive annual wage increases of 8% each. Since then raises have been sporadic, ranging from 8% in 1994-95 to an average of 11.9% in 2000-2001. Salary increases between 2002 and 2016 have varied between 2% and 6%. The last wage increase, of 10% phased in over three years, came in 2014.

How long the strike will last and how effective it will be can’t be immediately determined. UTLA has told its members that the length of the strike will depend on LAUSD’s position and to what extent the union can generate support from parents and the community.

Striking teachers will go unpaid, potentially creating personal financial hardships. However, in a 22-page UTLA strike manual union members were informed that although paychecks would stop, health benefits will continue because the strike would be planned early in a pay period in ensure LAUSD-paid medical coverage would be available for a month. The UTLA also told members if the strike lasted more than 10 days the union would work with the California Credit Union to provide low-interest loans guaranteed by the union’s Strike Fund.

Just how much that fund contains is unknown because public employee unions aren’t required to publish financial reports. But UTLA collects an estimated $2.7 million each month in union dues, with members paying between $21 and $84.52 depending upon employment classification. From those payments UTLA deducts $2.17 and passes that money along to other unions -- $1.75 to the California Teachers Association, 25-cents to the American Federation of Teachers and 17-cents to the National Education Association.

For LAUSD the number of students actually showing up for classes will be critical for its finances because basic state funding is calculated and paid upon the average daily attendance of students. Last year LAUSD received $5.4 billion in basic state aid, about 44% of its total revenue. By contrast, property taxes totaled $2.4 billion or about 27% of district income.

City News Service contributed to this report. Photo: Noemi De La Cruze, whose three children are attending Los Angeles Unified School District schools, makes signs before a news conference outside the LAUSD headquarters Wednesday, Jan. 9, 2019, in Los Angeles, Calif. The union representing teachers in Los Angeles has postponed the start of a possible strike until Monday because of uncertainty over whether a judge would order a delay. (AP Photo/Jae C. Hong)