Two Ways to Reduce LAUSD’s Budget Shortfall

COMMENTARY Education

Two Ways to Reduce LAUSD’s Budget Shortfall

Sep 13, 2018 2 min read
COMMENTARY BY
Jonathan Butcher

Will Skillman Senior Research Fellow in Education Policy

Jonathan is the Will Skillman Senior Research Fellow in Education Policy at The Heritage Foundation.
L.A. Unified enrolls 245,000 fewer students today than 15 years ago. LPETTET/Getty Images

Key Takeaways

A review of the L.A. school district’s budget reveals poor spending practices, which could get in the way of long-term teacher pay increases.

The district could help its financial position in the short term by selling or leasing vacant school property.

L.A. Unified should be more responsible with taxpayer money and clean up its books before promising teacher raises — and falling deeper in debt.

The Los Angeles school district may become the first major school system to shut down over spending issues in the 2018-2019 school year. Teachers are threatening to strike for better pay, yet the district’s budget is weighed down by long-term commitments to health care and retirement benefits.

Here are two suggestions for how officials could lessen a potential budget shortfall (and perhaps even improve teacher salaries): sell the district’s underused property and cut ballooning administrative costs.

Last spring, school administrators and teachers in a half-dozen states went on strike calling for more spending on K-12 education. In Oklahoma and Kentucky, lawmakers agreed to raise taxes to boost spending. Arizona special interest groups launched a ballot initiative to raise taxes, but the state Supreme Court this week ruled the group didn’t properly describe the nature of the increase. While this measure will not appear before voters, another campaign to raise taxes in 2020 has already made headlines in the state.

California lawmakers have increased state spending on schools for seven consecutive years. Yet school budgets are set in district offices, not in Sacramento. District officials generally have the last word on teacher pay — sometimes after prolonged debates with unions, as is the case in L.A.

A review of the L.A. school district’s budget reveals poor spending practices, which could get in the way of long-term teacher pay increases. A Reason Foundation study of L.A. Unified’s budget found liabilities exceeded assets by more than $5.1 billion. By next school year, the district may face a $422 million deficit.

Spiraling health care and pension costs will necessitate an aggressive budget overhaul. But the district could help its financial position in the short term by selling or leasing vacant school property.

L.A. Unified enrolls 245,000 fewer students today than 15 years ago. L.A. Weekly called the school district “cash-poor and land-rich,” as “many of its schools are under-enrolled.”

A district task force found a sizeable parcel — 19 acres — in Woodland Hills that is the site of a former middle school, but “just two blocks from this site sits another closed school property of approximately six acres.” The former Collins Street Elementary School has been closed for 30 years, attracts vandals and has become a blight to the neighborhood, according to the school board.

The district hasn’t even reported how much property it has and what parcels are vacant, and the task force says district officials should start by taking inventory of its real estate.

Data from districts in other states demonstrate that vacant facilities are a drain on taxpayers. In Oklahoma City, officials report taxpayers are paying $2.4 million for 1,000 “vacant or underutilized classrooms.” With 2,600 teachers in the district, Oklahoma City could increase all teacher salaries by $1,000, or provide even larger raises to high-performing teachers, just with better use of empty and nearly-empty buildings. Similar conditions exist in Milwaukee, Tucson, and Philadelphia, to name a few.

District officials should also pay attention to administrative costs. While L.A. teachers have seen pay increases of 10 percent over the last five years, administrator pay increased by 18 percent. The district is still preparing to hire more staff. A district task force says L.A. Unified “spends 40 percent more per pupil on school administration than the median peer district, approximately $150 million overall.”

High administrative spending is something else L.A. has in common with districts that went on strike last spring. In Jefferson County, Kentucky, a 2014 audit found that the district spends some $119 million on administrative expenses and has 150 central office positions making $100,000 or more (problems have persisted for so long that the state may assume control of the district). Some superintendents in Arizona and Oklahoma earn six or seven times what the average teacher makes.

Expenses like these interfere with necessary budget reforms and leave less spending available for teacher pay. L.A. Unified should be more responsible with taxpayer money and clean up its books before promising teacher raises — and falling deeper in debt.

This piece originally appeared in the Orange County Register