LAUSD Says It Can Make Do Without Measure EE -- But The Budget Projections Aren't Great

Measure EE's defeat at the ballot box this week may have been a blow to the Los Angeles Unified School District's hopes to sustain its promises to, among other things, decrease class sizes across the school system (over the long-term).

But if it's any consolation for Measure EE supporters, district officials unveiled new budget projections on Thursday, showing the rejection of the proposed parcel tax will not drive LAUSD into insolvency -- at least not yet.

LAUSD's projections continue to show the district's spending will outpace its revenues by, on average, around $500 million annually. But the newly-released figures show LAUSD officials will not need to dip into what is essentially an emergency reserve to balance its books over the next three years.

That's a change from March, when district officials said they wouldn't be able to avoid dipping below the "reserve standard" -- a statutory minimum amount of money that LAUSD is required to keep in the bank at all times.

That alarmed L.A. County Office of Education regulators, who were already concerned that the district is burning through its savings too quickly. In April, the county threatened to appoint a "fiscal advisor," with veto powers over the school board, who could force the district to make potentially drastic cuts.

On Thursday, the L.A. County Office of Education released a statement saying that the district's latest budget makes steps in the right direction, but the county "remains concerned that the district continues to spend more than it receives from the state and federal government."

Superintendent Austin Beutner said LAUSD was able to avoid dipping below the reserve standard by enacting $43 million in cuts to the district's central office -- which could result in layoffs of as many as 289 employees before July, though retirements and attrition may lower that overall number. He also said the district could realize other savings, including $50 million from consolidating its retirees under one health care coverage plan.

So LAUSD may be able to avoid the worst-case scenario, at least for now. Beutner told reporters Thursday that the district's projections still leave little room for error over the course of the three-year budget.

"The first two years are pretty solid," Beutner said. "They have been before the strike, during the strike and after the strike. The third year is still quite tenuous." After ending this school year with more than $811 million in "unassigned" balances, district officials project LAUSD will have only $10 million left by 2022.

And those forecasts don't factor in inevitable, future increases in the district's health care costs -- and don't leave much room for future salary hikes either, which Beutner says he wants the district to offer.

"We're not going three years without a wage increase. I don't think that's appropriate," Beutner said, explaining the district's forecasts follow guidelines from the L.A. County Office of Education.

LAUSD board members will hear comments on the budget at their meeting next week. And they're set to vote on it June 18.

UPDATE, 8:25 p.m.: This article was updated to reflect a correction sent by the Los Angeles County Office of Education to its statement, which originally said the LAUSD budget fails to meet "the legal requirement of a three-year balanced budget." A LACOE spokesman said the erroneous statement was the result of a miscommunication.