How much do charter schools cost LA Unified? Fact-checking the teachers union's estimate

If a study commissioned by Los Angeles' teachers union is right — that charter schools cost the L.A. Unified School District more than $591 million annually — it's a big deal.

Only extra cash expected in this year's state budget will allow L.A. Unified to balance its books over the next two fiscal years. And by 2018-19, officials have warned creeping pension obligations, health care costs and special education spending could push the district's budget deficit beyond $450 million. Reversing a $591 million loss would make a huge difference to the district's fiscal health.

But while L.A. Unified's enrollment — which roughly determines state funding levels — has declined more than 131,000 students since 2006, charter schools have only grown by about 66,000 students. A declining birthrate and transfers to other districts have also hurt LAUSD; some charter students would've never enrolled in an L.A. Unified-run school. Calculating how much of this loss to attribute to charter schools is tricky.

Last week, the California Charter Schools Association pushed back on United Teachers Los Angeles' estimate, calling the union-backed figure "riddled with inaccuracies." The district's principals union called for reading the report with a wary eye — "trust, but verify," as their newsletter put it.

But the report concluded the district's "financial future … is threatened and charter schools contribute to that threat." Who's right?

To fact-check the report's nearly-$600 million estimate, consider the biggest "cost" it identifies: an estimated $508 million due to lost enrollment.

Here's what makes accounting for the dollars lost so tricky: for example, if one-fifth of a school's student body were to leave, administrators could theoretically slash one-fifth of the school's teachers or one-fifth of the school's supplies budget. But some costs are "fixed": the school can't cut one-fifth of a principal; the costs of heating or lighting the building won't decrease by one-fifth.

The UTLA report's authors — a consulting group called MGT of America — assume 56 percent of the district's costs are fixed. The authors derived that figure from the study materials of the blue ribbon panel L.A. Unified convened to examine the district's finances last year.

That 56 percent figure is the linchpin for much of the UTLA report's overall estimate. The district receives a little more than $8,800 in state funding for the average student. But if 56 percent of the district's costs are fixed, the report figures each departing student leaves behind fixed costs of $4,957.

The UTLA report's authors multiplied $4,957 by the enrollment in Los Angeles charter schools — around 102,000 students — to arrive at their estimate of $508.2 million in net revenues charter schools cost L.A. Unified.

The estimate is based, as the report notes, on the assumption "all students who attended direct-funded charter schools … would otherwise have attended a district school."

If there are students who might not have ever attended L.A. Unified-run schools, the use of this assumption has the effect of increasing the UTLA report's cost estimate. Charter schools that L.A. Unified oversees can also draw students from other nearby school districts, such as Compton Unified or Santa Monica-Malibu Unified. Other charter students might've enrolled in a private school or transferred to another district had a charter school not been an option.

But in their response, the California Charter Schools Association's Sarah Angel expressed skepticism in the assumption that 56 percent of a district's costs are fixed. If that much of L.A. Unified's costs are fixed, charter advocates say, then the district needs to redefine what constitutes a fixed cost.

"Their response to declining enrollment has been to do nothing," said Colin Miller, CCSA's Acting Senior Vice President of Governmental Affairs. "Other districts have looked at a whole range of things including closing schools, including reducing staffing levels, including right-sizing administration. Many schools have faced declines in enrollment and many school districts are much smaller than LAUSD and operate very efficiently and still provide high-quality services for their students."

Whether the UTLA report's estimates for the cost of enrollment decline are precisely accurate, the district has acknowledged its efforts to cut costs have not kept up with enrollment decline in certain areas.

Last week, L.A. Unified officials told school board members that though enrollment decline will cost the district a projected $127 million next school year, the district has saved only $36 million from staff reductions for 2016-17. Despite the enrollment decline, the ranks of L.A. Unified teachers have swelled since 2012. Recently, the district committed to not issue layoff notices to any teachers this year.

The UTLA report said these problems are "not the fault of the charter schools" — a phrase evocative of the warning from the district's Independent Financial Review Panel, which warned last year that the district would still face a structural deficit "even if LAUSD had no more new charter schools."

In its weekly newsletter, the Associated Administrators of Los Angeles principals union expressed hope that the UTLA's report would convene a conversation about the need to change district practices or state laws that contribute to the impact of charter schools.

The report "makes it clear that the District’s future solvency is jeopardized," the newsletter said, "and that charter schools contribute to that grim prediction."