Pre-Strike Chaos: County Sounds Alarm About LAUSD's Budget And Strike Date Is Now Moving Target

L.A. Unified School District Superintendent Austin Beutner refers to display boards outlining the school district's latest contract offer to United Teachers Los Angeles on Mon., Jan. 7, 2019. (Photo by Kyle Stokes/LAist)

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Regulators who oversee the Los Angeles Unified School District have sent their clearest message to date that they're worried about the district's finances -- and that too much spending on a new contract with LAUSD's teachers union could make the situation worse.

The L.A. County Office of Education on Wednesday appointed a "fiscal expert" to monitor the district's budget.

The appointment "means [county officials] are deeply concerned about ... our rate of spending versus the resources that we have," LAUSD Superintendent Austin Beutner told reporters.

WHAT THIS MEANS

The expert's immediate task is to help LAUSD write a cost-cutting plan by mid-March -- but the appointment could be a prelude to even more drastic interventions.

If LAUSD cannot address the fiscal expert's concerns, state law allows county officials to appoint an even-more-powerful "fiscal advisor," who can re-write budgets, overturn school board decisions, and even veto an agreement on a labor contract.

In a statement, county officials said they have "no position on ongoing negotiations with United Teachers Los Angeles."

However, in a letter sent Wednesday to LAUSD announcing the fiscal expert's appointment, county schools superintendent Debra Duardo laid out concerns that "any salary and benefit increase, if paid from reserves or other one-time resources, could adversely affect the financial condition of the district."

A CRAZY DAY

The county's announcement was only one of several curveballs thrown at the high-stakes contract negotiations Wednesday between LAUSD and its 30,000-member teachers union, UTLA.

First, UTLA postponed its possible strike to Monday, Jan. 14 amid legal confusion about its strike date. Then, word spread that district lawyers had filed court papers arguing a judge should delay the strike even further.

During negotiations, apparently, the two sides tried and failed to reconcile their starkly contrasted conceptions of the district's finances.

Finally -- minutes after UTLA president Alex Caputo-Pearl wrapped up a post-negotiation news conference -- county officials and then the LAUSD issued press releases about the fiscal expert's appointment in quick succession.

On Thursday morning, a judge finally provided some clarity: the teachers can strike on Monday.

THE TIMING

To teachers union officials, the timing of the appointment seemed suspect. In a statement, a UTLA spokeswoman said her organization "has serious questions about [the county's] independence and motivations with this latest announcement."

Back in September, L.A. County Office of Education CFO Candi Clark told school board members that LAUSD "is not a district that is too big to fail." (UTLA officials later questioned Clark's neutrality after unearthing emails showing the speech was edited on an LAUSD-owned laptop.)

LAUSD Superintendent Austin Beutner told reporters he was informed the county was appointing a fiscal of advisor as he shuttled back and forth to Sacramento Wednesday to meet with state lawmakers.

KPCC/LAist asked Beutner directly whether the timing of the announcement was connected to any effort by the county to give LAUSD officials cover in negotiations with UTLA. Beutner responded by pointing out that L.A. County's elected members of the Board of Supervisors "appoint together a county superintendent of education."

Beutner's implication, as confirmed later by a district official: if UTLA wishes to question the credibility of LAUSD's county officials, the union is also questioning the credibility of the County Supervisors -- a labor-friendly group.

WHAT THE COUNTY (OR THE STATE) CAN DO

As LAist reported in September:

California law requires school districts to update their budgets annually. But districts are also required to submit a spending plan that covers the next three years -- and a forecast of whether they'll have money left over at the end.

If a district projects a deficit in any of the next three years, state law requires county-level education officials step in. Sometimes, the extent of the county's intervention is to suggest a few edits to the budget.

But in severe cases, the county can appoint a fiscal advisor with the power to "stay and rescind" board actions he or she deems fiscally irresponsible. (L.A. County took that step [in 2017] in Montebello Unified.)

In the most dire emergencies, the state will take over the district -- as it did with Compton Unified in 1993 or Inglewood Unified in 2012. In districts that fall into "receivership," the state strips the school board and superintendent of all authority and appoints an overseer with broad powers to restructure the district's finances.

On Wednesday, Beutner told reporters he did not see the fiscal expert's appointment as an immediate precursor to more serious interventions.

That said, LAUSD board president Mónica García on Wednesday acknowledged the "struggle" of maintaining a balanced budget.

"I want to maintain my authority to do my job," said García, "and every year that I've been here, it has been a struggle to provide a three-year budget."

'EARLY WARNING SYSTEM'

The county's stepped-up oversight comes in response to the district's own budget projections. Keep in mind, those are the same projections UTLA leaders have cast doubt on for months.

LAUSD currently has nearly $2 billion in the bank. District officials say they'll need to spend almost all of that money in order to ensure their books are balanced three years from now. UTLA officials contend the $2 billion reserve is reason to question the district's forecasts of fiscal calamity in the not-so-distant future.

Michael Fine runs the state's Fiscal Crisis and Management Assistance Team, which assists financially-troubled school districts. In September, Fine rejected the notion that the county's warnings to LAUSD were hyperbolic.

"Do I think in any way it's meant to be a scare tactic? No," Fine told KPCC/LAist of the county's 'not too big to fail' warning. "The system [of school budget oversight] is built around this concept of an early warning system," he added, and the fiscal expert is one of the first responses meant to ensure school districts' problems don't worsen.

"I don't think [LAUSD] is too big to fail," Fine said. "There's no question about it."

UPDATES:

12 p.m.: This article was updated with the latest ruling from a judge about the date of the teachers strike.

This article was originally published at 12 a.m.

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