The Brief

Despite Superintendent Alberto Carvalho’s promise two years ago to settle the conflict, Los Angeles Unified continues denying millions of dollars in federal aid that the Archdiocese of Los Angeles argues it is owed for ongoing services to low-income students in Catholic schools. The archdiocese maintains that the district is diverting the money to bolster its students’ funding.

Both the California and the U.S. departments of education have chastised the district for breaking federal regulations in dealings with the archdiocese. Now, a Los Angeles County Superior Court judge has ordered the district to turn over documents and data that it withheld.

That information, which should illuminate the district’s decisions, could either restart stalemated talks or lead the archdiocese to turn to the courts to order a settlement after seven years of fighting.

“We do not believe further litigation is necessary, and we can achieve equity for non-public school students,” said Paul Escala, the archdiocese’s superintendent of schools. “However, we will pursue all means to see that all students receive their legally entitled services.”

Title I rules for private schools

Congress requires that low-income students in private and public schools receive equivalent Title I funding to pay for counseling, tutoring, teacher aides, and learning specialists. The dispute with LAUSD concerns how much money should be allocated for the archdiocese’s schools and how to ensure the funding gets to the students.

Under Congress’s rules, private and religious schools do not receive Title I funding directly. Instead, districts determine the eligibility of private and religious schools within their borders, administer the funding, and provide the services directly or through vendors after consulting with the schools. Los Angeles Unified, until recently, hired the Title I staff and put them on its payroll (see Frequently Asked Questions by the California Department of Education).

The system worked amicably for years. Districts can choose from several ways to determine Title I eligibility, and LA Unified picked the fairest and most efficient method for the 100-plus schools within the archdiocese with low-income students, Escala said. The district used census data to determine the number of Title I-eligible students in an attendance area, then awarded a proportionate share of the money to archdiocese schools. Long Beach Unified uses the same method.

More paperwork, more confusion, less money

Then in 2018-19 and the following year, coinciding with the new administration of Superintendent Austin Beutner, the district chose another option for calculating private schools’ eligibility — student registrations for the federal school lunch program. Not only did this method require a lot more time, paperwork and verification by the schools, but the district changed the reporting rules several times with little notice and failed “to engage in timely and meaningful consultation,” the California Department of Education concluded in a 58-page report issued in June 2021 in response to a formal complaint by the archdiocese.

Los Angeles Unified’s Office of Inspector General removed hundreds of students’ eligibility after examining parents’ school lunch forms in the two dozen schools it chose to audit and failed to include any students from other schools it didn’t audit.

The result was to cut Title I funding to the archdiocese by more than 92%, from about $9.5 million in services 2017-18 for 102 schools to $767,000 for fewer than two dozen schools, according to Escala. In 2023-24, funding crept up to about $2 million for 43 schools. The district cut its total share allocated to private schools from between 2% and 2.6% of about $291 million to 0.5%, according to the California Department of Education.

‘Totally unreasonable’ demands

The state Department of Education harshly criticized the district. The timetable for demanding documentation was “totally unreasonable,” and the district “engaged in a pattern of arbitrary unilateral decisions” and failed to justify its decisions to the archdiocese, the report said.

In ignoring the archdiocese’s Public Records Act requests for documentation to justify the cuts, the district took a “hide-the-ball approach (that) breached both the spirit and the letter” of the law, the report said.

The spirit of Title I, as stated in the law’s preamble, Escala said, is to maximize participation. The intent of other options like surveys and free-lunch verification is for schools to prove they have higher proportions of low-income families than neighboring schools, he said.

LAUSD is doing the opposite, Escala said.

“The district’s using these other methods as a way of filtering and screening and reducing participation,” he said. “You’re extracting children you know qualify simply because a “t” wasn’t crossed or an “i” wasn’t dotted. It is beyond reproach, because they (LAUSD officials) don’t apply the same standard to their own schools.”

LAUSD had an obligation to give (the Archdiocese) the requested information. LAUSD’s hide-the-ball approach breached both the spirit and the letter of the duty to consult. — The California Department of Education in a June 2021 rulingLA Unified declined to comment on the state’s report, and last week, a spokesperson wrote in an email that “Los Angeles Unified does not typically comment on pending or ongoing litigation.”

Districts have a financial incentive to minimize private schools’ funding eligibility. The federal government awards the total Title I funding to districts, which determine how much should be allocated for services to private and religious school students. Lawyers for the archdiocese point out that the less money that districts award, the more Title I funding they can spend on their own students.

The district appears to understand this, said Kevin Troy, an attorney for the archdiocese, citing a Jan. 29, 2019, email from the principal auditor of the district’s Office of the Inspector General to the archdiocese, in which the auditor stated that the archdiocese “receives over $10 million of Title I funds from the LAUSD every year — money that could otherwise be allocated to LAUSD schools.”

“There’s a moral and ethical question on the table,” Escala said. “You (LA Unified) have got children in need, and you’re not serving them right,” he added, referring to students in archdiocese schools.

The impact on one high school

Mark Johnson, principal of Bishop Mora Salesian High School, has seen the effect of the cuts on students. Before the cutback, Title I paid for a reading intervention teacher and part-time aide who worked with 40 to 50 students weekly — about 1 out of 8 students at the all-boy, 400-student school in the low-income Boyle Heights neighborhood of Los Angeles. Although on the district’s payroll, the teacher fit in like any other staff member, building personal relationships with the students and collaborating with their teachers.

“She (the teacher) had her own classroom and was just a regular teacher as far as any of our kids knew,” he said. She would work with the lowest-performing students on basic reading comprehension skills. “If they were working on a tough piece of literature, she would help them break it down so that they could write an analytical paragraph or essay.”

Pulling out students also reduced the class size for the remaining students, he said. Now, there is only enough money for a two-day-a-week coach from a contractor who sees at most a dozen students a week.

“We’re serving kids who are significantly behind grade level and families that deal with poverty and all the things that come along with that,” Johnson said. “So this kind of antagonistic relationship that has developed (with the district) ultimately hurts kids.”

The California Department of Education gave the district 60 days from its June 2021 ruling to consult with the archdiocese to fix deficiencies pointed out in the report and then recalibrate the proportional share of Title I funding for archdiocese schools. It ordered the district to begin providing the increased services for 2020-21, the next school year.

Instead, the district appealed the decision to the U.S. Department of Education, which issued its own findings in November 2023. In his decision, Adam Schott, deputy assistant secretary for policy and programs, found that the district could justify reducing the eligibility count based on its analysis of parents’ forms. But by doing that, they cut the funding for the dozens of schools that the district did not audit. He credited the district with consulting with the archdiocese to an extent, but said the district’s overall approach in demanding documentation was “inconsistent and confusing.”

Schott also ruled that the district violated federal regulations by claiming it didn’t have to share data with the archdiocese on how much it spent on Title I services for students and how much was unspent at the end of each year.

In December 2021, the archdiocese sued the district in Los Angeles Superior Court for ignoring multiple requests under the state Public Records Act to turn over Title I spending records and other relevant information. The court held off ruling until the complaint process played out.

On July 16, Judge Curtis Kin ordered the district to turn over all relevant documents, emails and records to the archdiocese by Aug. 20 and to pay $82,141 to the diocese in attorneys’ fees.

An appeal to Superintendent Carvalho

Weeks after he started work as Los Angeles Unified superintendent in February 2022, Alberto Carvalho told EdSource he had familiarized himself with the case and added, “I’m going to resolve this issue sooner rather than later.” He declined to elaborate due to litigation.

“What I can tell you,” he added, “is that we need more objective, transparent tools by which we assess and fund this guaranteed federal entitlement that’s driven by poverty.”

Escala said he remains hopeful. “I believe that Superintendent Carvalho has the ability to direct his staff towards that outcome. I have a great degree of confidence that when brought to him, this can get adjudicated appropriately.”

A years-long effort to bring fast, reliable internet to Catalina Island cleared a major vote today after the California Public Utility Commission awarded $37 million to install subsea fiber internet infrastructure between Orange County and the island.

More than 4,000 residents on Catalina Island don’t have reliable internet. That’s because the rural island doesn’t have fiber broadband infrastructure, and large communication companies don’t serve the area because of high costs.

“We currently operate off of a microwave tower, and it’s time that Avalon had nothing better than the rest of the mainland, but the same,” Avalon City Councilmember Lisa Lavelle said during public comment.

Lance Ware, CEO of AVX Networks, the telecom company tasked with building Catalina Island’s broadband infrastructure, said this project is significant to the quality of life for island residents.

“No one thought Catalina really was worthy,” Ware told LAist. “It really took a long time to convince the grant makers that this is a very much underserved community … not only digitally red lined, but forgotten about from an infrastructure perspective, and I mean that beyond communications.”

The impact to the community is almost immeasurable, he added.

“The access to that technology, workforce development, economic development and just the potential outcomes change massively for everybody involved,” Ware said. “Our ability to deliver world-class health care and public safety is huge.”

What we know about the project

The commission distributed more than $96 million in federal grant funds during Thursday’s meeting to five groups for high-speed broadband projects, including AVX Networks.

The planned proposal includes building a fiber-optic network above and underground from Catalina Island to the Orange County coast.

When it comes to internet connection, the entire island is unserved, according to the commission’s agenda report. That means it has zero access to broadband internet.

According to records, the undersea cables will run under the San Pedro Channel from two points on the island to landings near Huntington Beach. Those cables will then connect to the Middle Mile Broadband Network in Stanton.

The grant will cover 100% of the project costs, records show.

What’s next?

Grantees are required to follow a set of rules to receive funds, and that includes committing to providing internet service at affordable rates.

Ware said AVX Networks will have a low-income plan at $40 a month at 100/100 Mbps — this is the download and upload speed of the service.

“We chose to go symmetrical, which means the upload is the same as the download,” Ware added. “For people doing video streaming or telemedicine or FaceTime, even, or e-learning, it's really important to have symmetrical bandwidth.”

AVX Networks also has committed to maintaining those rates for at least 10 years, the commission agenda reported.

Next, the company needs to get permits for building out the project and surveying a route on the sea floor for the cables.

The city of Anaheim spent around $17 million on credit card purchases from places like Target, Walmart and Amazon over the past two years, recently obtained records show, but the system hasn't been audited since 2018.

Anaheim spokesperson Mike Lyster, who along with city leadership did not answer detailed questions about the purchases, confirmed the lack of audit.

The absence of audits was a central issue former purchasing agent Kari Bouffard included in a tort claim in June alleging she was fired for raising concerns that the city’s top finance official, Debbie Moreno, was enabling fraud, wasting millions of taxpayer dollars and lying to the City Council.

In the legal claim, Bouffard says when she raised concerns over the lack of an audit with the city’s audit team, which then wanted to audit the credit card program, she alleges Moreno told her: “Do not let them in the door.”

“I found her response unprofessional, dismissive, and deeply concerning, particularly given her role as Finance Director and her responsibility to support accountability and internal controls,” Bouffard wrote.

In October, Lyster confirmed an external legal team is conducting “an independent outside review” of the allegations in the tort claim. But he did not answer questions about who the firm is or how much that contract has cost the city.

LAist requested and reviewed credit card monthly billing statements for all city-issued credit cards for the past two years. The statements show city employees spent tens of thousands of public money at places like Target, Walmart and Amazon on “food, office and other operational supplies for city business purposes,” according to Lyster. The statements do not show details about specific purchases.

The Amazon purchases totaled around $1.7 million of public money over the two years, according to the data. Anaheim provided a breakdown of the Amazon purchases that did not include details about what was bought at the online marketplace.

Lyster said Anaheim monitors credit card purchases appropriately.

He confirmed credit card purchases were last audited in 2018 by the city’s Internal Audit team.

“There was no larger concern with any of the findings, and we reject any mischaracterization and misinformation about oversight of the city’s purchasing cards,” Lyster said in a statement.

Lyster told LAist the city’s purchasing agent, who until recently was Bouffard, can “pursue audits at any time,” but one has not been done recently. In the tort claim, Bouffard said she raised concerns with Moreno over “lack of time and staffing within the Purchasing Division to adequately manage and audit the program.” Moreno’s solution, she said, was a temporary staffer — “an insufficient solution given the scope of responsibilities,” Bouffard wrote.

Lyster also said the financial firm KPMG conducts an annual audit of a sample of credit card transactions. LAist asked Lyster for a copy of the KPMG sample audit, but he did not share it.

Anaheim’s credit card spending amounts to about $800,000 a month.

The city of Irvine, also one of OC’s most populous cities, spends around $500,000 on credit cards every month, according to city spokesperson Kristina Perrigoue. Those purchases are audited monthly, Perrigoue said. Irvine’s purchasing staff randomly selects one department per month to audit and they audit a sample of purchases.

“We take the five users with the highest number of transactions and audit all their transactions for the prior month,” Perrigoue said.

Why it matters

Earlier this year, Anaheim grappled with how to close a $60 million budget shortfall after spending more than they were generating in revenue. City leaders closed the deficit with proceeds from capital bonds and by pulling money previously set aside to repay debt. The City Council recently declined to put a gate tax at its entertainment venues, including Disneyland, to voters. Instead, the majority of the council decided to meet at a future date to discuss revenue generating ideas. At that meeting, Mayor Ashleigh Aitken called for “tightening our belts” to boost revenue.

LAist review of the credit card purchases showed significant spending at vendors — some with which Anaheim has cooperative agreements with.

Cooperative agreements allow agencies like the city of Anaheim to pre-negotiate pricing so they get the best deals.

Anaheim’s credit card policy states that the credit card can only be used for the small dollar purchase of supplies or off-site services. Typically, for bigger purchases, cities turn to cooperative agreements.

“The vast majority of city purchasing — most purchases more than $10,000 — is done by purchase order or contract,” Lyster told LAist.

Credit cards, Lyster said, “provide an efficient, cost-effective way of making smaller purchases, rather than use of petty cash, direct payments, cash advances and check requests, which can be more cumbersome, administratively costly and bring their own risks of misuse.”

“There are cases where a purchase order or contract would be unnecessary and excessive, adding time and cost and impacting timely service to our community,” he continued.

LAist has shared our findings with Aitken, City Manager Jim Vanderpool and all council members. We have also reached out to Moreno for an interview. We will update this story if we hear back.

Here are some of our key findings from Anaheim’s credit card purchases:

• Over $800,000 spent on restaurants

City employees spent more than $800,000 on restaurants in Southern California and elsewhere over two years including around $60,000 at K&A Restaurant and over $20,000 on In-N-Out. Some restaurants from the credit card statement include Aloha Steakhouse in Ventura County, Tacos 1986 in Pasadena and BaBaLoo Lounge in Palm Desert.

Lyster told LAist the restaurant spends “are catering expenses for events or meals for special work operations.”

He said the city also provides meals when they “bring together a large contingent of our own police officers and those of other agencies to work demonstrations, high-profile dignitary visits or other occasions,” especially for work in the evening or on weekends.

Lyster added that the council meetings are also catered and the city hosts community events where they cater food for the public.

• Around $650,000 spent on hotels

LAist’s review of the credit card purchases showed thousands of dollars spent at hotels, including the Grand Hyatt in Nashville, Caesars Palace in Las Vegas and a pet hotel in Oxnard.

“The vast majority of this spending is for employee development to ensure our people are continually learning and aware of best professional standards,” Lyster said about the hotel charges. “This is an investment in our workforce that brings better service to our community.”

• Around $40,000 spent at Costco, close to $120,000 at Sam’s Club, around $120,000 at Target and around $57,000 on Walmart purchases in two years

Lyster attributed this spend to “food and supplies.”

The Community Services Department, he said, buys “food and crafts and other supplies” for the city’s Fun on Wheels program, the Mobile Library and family resource centers.

He declined to answer questions on whether employees submit a request for the purchase of goods and services and how the city tracks if these purchases are used for public benefit. The requests, called requisitions, are typical first steps in the purchasing process detailing quantity, description and use, Bouffard told LAist. When she worked at the county, all purchases went through this “checks and balances process,” she said.

• Over $600,000 spent at Home Depot, more than $550,000 at Office Depot and over $340,000 at Grainger

Lyster didn’t confirm if the purchases at these vendors were made using a purchase order.

He confirmed Anaheim has accounts with Grainger, Office Depot and others, but not if the city’s credit card purchases at the vendors are made through the dedicated account.

LAist correspondent Jordan Rynning contributed to this report.