LAUSD settles legal case that cut to the core of how California funds high-needs schools

Los Angeles Unified School District officials have reached a settlement agreement in a long-running legal dispute that cut straight to the heart of how California's new system for funding K-12 education is working for the state's neediest students.

As part of the deal struck with the coalition of advocacy groups that had sued the district in 2015, L.A. Unified will send an extra $151 million over the next three years to 50 of its schools that serve large populations of students in three groups the state identifies as "high need": low-income students, English learners and foster youth.

Children who are part of these three high-need categories generate more than $1 billion in annual per-student revenue for L.A. Unified under the state’s “Local Control Funding Formula,” a new system for funding K-12 schools inaugurated in 2013. In the law enacting the formula, Gov. Jerry Brown and state lawmakers directed schools to use the additional money to pay for targeted services that meet these vulnerable students’ specific needs.

Instead, plaintiffs charged in their lawsuit, L.A. Unified used the extra funding to cover more general expenses. Specifically, the plaintiffs accused district officials of violating both the spirit and letter of the law by counting more than $450 million they spent on special education services as spending that also benefited low-income students, foster youth and English learners.

Thursday’s settlement does not settle the question of whether the plaintiffs legal argument was right. L.A. Unified officials have argued counting that special education spending toward its obligations was justified, since nearly four out of every five students in special education is also a low-income student, foster child or English learner. L.A. Unified attorneys said Thursday the district hasn’t budged from that position.

“By us doing our calculations that way, [the plaintiffs] felt certain schools were not being given their share of funds,” said Christine Wood, assistant general counsel for L.A. Unified.

“What’s changed,” she added, “is … the settlement agreement allows us to give funds back to the school in a way that satisfies petitioners concerns and allows us to move forward in keeping kids first. In that way, it was a win-win and why we were able to get to an agreement.”

The plaintiffs — L.A. Unified parent Reyna Frias, the Community Coalition of South Los Angeles, and their attorneys at the ACLU and the non-profit firm Public Advocates — also said the deal represents a significant victory.

“What we’re hoping,” said Sylvia Torres-Guillen, the ACLU of California’s director of education equity, "is that this will serve as a message to districts across the state that although the law provides local control, there’s still accountability and that districts need to meaningfully focus services on high-needs students.”

Other districts are already hearing the activists' message directly. Parents and community groups — also represented by the law firm Public Advocates — recently escalated a Local Control Funding Formula complaint against the state's third-largest school district, Long Beach Unified.

While the disputes in Long Beach and in L.A. Unified differ in the details, both cases have raised the same fundamental disagreement.

On one hand, the activists have said they're trying to force the district to uphold the Local Control Funding Formula's original intent. On the other hand, district officials and other opponents counter that activists are holding them to an unfair standard; that the distinction between a "targeted" program specifically benefiting high-need students and an expenditure benefiting all students becomes somewhat abstract in a district with such widespread student need.

Most of the schools due to receive money from the L.A. Unified settlement are located in south and east Los Angeles. Plaintiffs and district officials agreed on the final list of 30 high schools and 20 middle schools based primarily on their 2016 standardized math test scores and on how many low-income, foster and English learner students they serve. School suspension rates were also a factor.

The settlement spells out how these 50 schools will receive a total of $171.6 million over the next three years. (The headline total for the settlement of $151.2 touted by the plaintiffs excluded $20.4 million the district had anticipated spending last school year, but had carried forward to the current school year.)

Principals will be able to use money from the settlement to pay for restorative justice programs, graduation initiatives, AP courses, counselors, social workers, parent engagement efforts, dropout recovery programs or other similar services specified under terms of the deal.

The timing of the settlement will make spending this money difficult. After L.A. Unified School Board members voted to begin settlement talks in July, district officials told principals at impacted schools to begin thinking about how they might spend the money.

“At that point, they could develop the plans that are required under the agreement with the plaintiffs in this case,” said L.A. Unified General Counsel David Holmquist, who noted principals will be receiving packets with further instructions on how to develop a two-year plan for spending the money at their school on Friday.

But mid-year expenditures can be tricky.

“Ideally they would’ve hired people during the summer,” Torres-Guillen said. “A lot of the really good people are oftentimes hired first. You want to make sure whoever you are hiring is top-notch. But we also feel that there are a lot of really good people out there to be hired.”

Principals will have until Oct. 31, 2017, to submit their plan. The last day the district can accept their plan is Nov. 28.

“The plan behind this,” Holmquist said, “is that as soon as the schools submit a plan that is accessible to the superintendent, that those funds would be released right away.”

The list of settlement schools includes several schools that have received additional funding from similar initiatives in the past. Two-dozen of the schools on the list for the latest settlement either received funding from L.A. Unified’s April 2014 settlement of the Reed case or from three randomly-selected years of the state-funded Quality Education Investment Act, or QEIA (pronounced "KEE-ah"), initiative, both of which targeted needy schools for extra resources.

Under the settlement agreement announced Thursday, both L.A. Unified and the plaintiffs in the case will cover their own attorneys’ fees.

This post has been updated.