LAUSD spends $30K per student

August 20, 2010 - By admin

AUGUST 20, 2010

By JOHN SEILER

The research by Adam Schaeffer of the Cato Institute’s Center for Education Freedom seemed shocking: The Los Angeles Unified School District spent $29,780 per student in fiscal year 2007-08. That’s way above the $10,000 as advertised by the school district, and as used in most studies.

The $29,780 per student figure means a class of 25 students would spend $744,500 a year.

I talked to Schaeffer and had him send me his research, which I’ll append to this article. He also pointed to a more comprehensive study he conducted in March, “They Spend WHAT? The Real Cost of Public Schools,” which tracked and compared school-district spending around the country. It includes data on LAUSD that was updated in his more recent research. The earlier study found a wide divergence in total spending in California school districts, such as only $11,215 for Linwood Unified and $20,751 for Beverly Hills Unified.

I also talked to the LAUSD and to Lance Izumi,  Koret Senior Fellow in Education Studies at the Pacific Research Institute, CalWatchDog.com’s parent institute.

Basically, what Schaeffer found was that the LAUSD doesn’t count capital spending, such as from local and state bond measures passed by voters. For example, $1.18 billion was spent in 2007-08 from Measure R, which 64 percent of voters passed in March 2004. And the district spent $668 million from state Proposition 55, also on the March 2004 ballot. According to Ballotopedia, it barely passed with 50.9 percent of the votes. Both were bonds.

Those and similar measures were passed during the boom times of the California economy. It’s a good question whether voters would pass them during the current deep recession. It’s also curious that these bonds, and similar ones, were passed at a time when state and LAUSD student enrollment has been declining.

Why isn’t this money accounted for in the usual per-pupil tallies? “They act as if its ‘bond revenue. Oh, it’s not tax money’,” Schaeffer told me. “What the districts do is like credit card debt. It’s revolving. When you bring it up, they always move the topic of the conversation to, ‘we froze salaries and cut positions’.”

LAUSD responds

I called up LAUSD, talked to Spokesperson Lydia Ramos, and sent her links to Schaeffer’s research. A week later I called her for her perspective. “Essentially it’s going to be difficult to comment,” she replied. “Most school districts don’t count capital funding” in budget reports. “We obviously are doing our best to pass every dollar down to the classroom.”

I pointed out that, when I buy something at Walmart, the price includes the costs of capital spending for buildings. “That’s not how we view our work,” she replied. And she said of the money sent for capital construction from Sacramento, “That’s really a state decision. When no one else does it” – includes capital spending in per-pupil spending numbers. “Why are we perceived as under-reporting when no one uses this methodology?”

I brought up Schaeffer’s number of $29,780 per student and asked if that was correct. “You’re using a methodology that only you are using,” Ramos replied. “No, that’s not accurate. That’s not what we’re doing. I’m going to have to let you go. This is an issue to take up with the state, or your local district, to see what they are doing.” [This is the first time in my 35 years of journalism that an official spokesperson has hung up on me.]

Because LAUSD gets both state and federal tax dollars, its spending is of interest to those outside the district’s boundaries.

Legitimate costs

“Those are legitimate costs to include,” Izumi told me of the capital costs. “They can say they don’t count it. But the specification for those costs always is that they will help kids.”

For example, as Ballotopedia recorded, Prop. 55’s ballot question asked state voters, “Should the state sell twelve billion three hundred million dollars ($12,300,000,000) in general obligation bonds for construction and renovation of K-12 school facilities and higher education facilities?” The bond had almost no opposition. Major funding behind the measure came from the California Teachers Association and the California Building Industry Association.

The cost of Prop. 55 is about $823 million per year, a significant contributor to the state’s current $19 billion budget deficit. LAUSD’s 694,288 students in 2007-08 were about 11 percent of the state’s approximately 6.3 million public-school students.

As to the LAUSD’s insistence on excluding capital costs, Izumi asked, “Would these kids learn the same if they were sitting in the park some place? To not include those costs is only to give half the story about what’s being spent in those schools. If the district had a disagreement with what the Cato Institute put out, then they should engage in argument about it. If the district isn’t willing to engage, then you have to wonder how strong a case they have.

“They didn’t say they disagreed with it. They just said they didn’t include the figures the Cato Institute used. That gives credence to Cato’s methodology. Public schools often aren’t willing to engage in debate.”

For its $29,780 spent per student, LAUSD’s graduation rate is 40.6 percent, second worst in the country.

John Seiler, an editorial writer with The Orange County Register for 20 years, is a reporter and analyst for CalWatchDog.com. His email: [email protected].

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Appendix: Los Angeles Unified School District Budget Data, Fiscal 2007-08:

2007-08 2007-08
C (bond) or DS? Authorized Amounts Estimated Amounts Comments Source
(millions) (millions)
General Fund – Regular Program 6,270.5 5,919.4 pdf p 325-355 http://notebook.lausd.net/pls/ptl/docs/PAGE/CA_LAUSD/LAUSDNET/OFFICES/CFO_HOME/BSFPD_HOME/SUPERINTENDENT’S%2007-08%20ADOPTED%20FINAL%20BUDGET.PDF
General Fund – Specially Funded 1,313.5 1,288.3
Adult Education Fund – Regular 211.9 189.0
Adult Education Fund – SFP 55.8 55.8
Child Development Fund – Regular 117.8 106.4
Child Development Fund – SFP 46.4 46.4
Cafeteria Fund 334.5 334.5
Deferred Maintenance Fund 200.3 50.2
Building Fund – Proposition BB C 124.9 94.6 NB some amounts in these funds are from state or local matching, i.e. not necessarily from bond revenue
Building Fund – Measure K C 1,094.5 929.5
Building Fund – Measure R C 2,905.5 1,183.5
Building Fund – Measure Y C 1,516.0 505.6
County Sch Facilities Fund – Prop 1D C (state) 703.2 358.0
County Sch Facilities Fund – Prop 55 C (state) 1,337.9 667.9
County Sch Facilities Fund – Prop 47 C (state) 710.4 260.4
County Sch Facilities Fund – Prop 1A C (state) 28.9 28.9
Special Reserve Fund 258.3 190.5
Special Reserve Fund – CRA 19.5 2.5
Special Reserve Fund – FEMA 9.9 5.9
Special Reserve Fund – FEMA – Haz Mit 2.8 2.8
Capital Facilities Acct Fund 233.3 183.3
State Sch Bldg Lease/Purch Fund 8.0 7.0
Building Fund C 2.2 1.2
Bond Interest & Redemption Fund DS 542.2 542.2
Capital Services Fund DS 39.7 39.7
Tax Override Fund DS 0.1 0.1
Health & Welfare Benefits Fund 849.1 849.1
Worker’s Compensation Fund 125.6 125.6
Liability Self-Insurance Fund 17.0 17.0
Annuity Reserve Fund 0.0 0.0
Attendance Incentive Reserve Fund 0.1 0.1
19,079.8 13,985.4
NB Early Childhood Educ. 136.6 p. 111-87 or pdf p. 225 http://notebook.lausd.net/pls/ptl/docs/PAGE/CA_LAUSD/LAUSDNET/OFFICES/CFO_HOME/BSFPD_HOME/SUPERINTENDENT’S%2007-08%20ADOPTED%20FINAL%20BUDGET.PDF
19,080.0 discrepancy with 19079.8 must be due to rounding
minus Adult Education funds and Early Childhood Educ. 18,675.7 From the ’08 CAFR
Total Governmental Funds ((Actual) Expenditures)
minus Adult Ed and Interfund Transfers 18,467.1 Debt service – principal 200.514
Debt service – bond, COPs, and capital leases interest 334.525
total DS 582.0 Debt service – refunding bond issuance cost 6.02
principal payments* 215.7 *NB this is an approximation for principal payments using actual ’08 expenditures — see right 541.059
Principal payments as fraction of total actual debt service expenditures 0.370595
total local-bond-fund capital spending 5,643.1
ADA K-12 figure 612,655.0 pdf p 437 http://notebook.lausd.net/pls/ptl/url/ITEM/55752D9E45A920BCE0430A00021020BC
Stated per pupil spending 10,053.0 their calculation uses ADA figure of 653,672.41 pdf p 153 http://notebook.lausd.net/pls/ptl/docs/PAGE/CA_LAUSD/LAUSDNET/OFFICES/CFO_HOME/LAUSD%20CAFR%20FY2007-2008WO.PDF
Disparity
minus Interfund Transfers and  Adult and Early Childhood Ed.
Per-pupil $ Disparity
Total K-12 per pupil spending 30,142.7 200%
no principal payments 29,790.7 196%

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Comments(24)
  1. Bruce Ross says:

    On my browser, at least, the spreadsheet is just unreadable.

    In fairness to LAUSD, if they passed several recent bonds and spent the money on buildings that particular year, it could make the costs look unusually high.

    They should count capital costs, but they should also count them on a reasonable time scale. If I take out a mortgage and buy a house, it would be misleading to say my living expenses were X-hundred thousand dollars that year.

  2. John Seiler says:

    Bruce,

    1. I’m sorry about the spreadsheet. My computer skills could be better. If anyone wants the Excel spreadsheet, let me know and I’ll email it to you. My email: [email protected]

    2. Another reader pointed out that the capital spending is spread out over time. I’m going to do some more research on that. Unfortunately, as I noted, the LAUSD spokesperson hung up on me. So they won’t give me their version of how the money is spent over the years. And like other school districts I’ve dealt with, they just don’t want folks looking closely at their spending. I noted that before in my article on Steve Frates’ study of school expenditures:
    http://www.calwatchdog.com/2010/07/26/new-admin-costs-crowd-out-teaching/

    What kind of lesson is this for our children?

  3. Wayne Lusvardi says:

    Reply to Bruce Ross comment – Re:”They should count capital costs, but they should also county them on a reasonable time scale.”

    Mr Ross: Are you a graduate of the L.A. Unified School District? Apparently Adam Schaeffer of Cato Institute did count the amortized cost of Prop 55. Prop 55 was $12,300,000,000 of which $823,000,000 was annual debt payment, reflecting 6.69% of the total bond.

  4. Bruce Ross says:

    Mr. Lusvardi,

    If that’s the case, then good. It was not clear in what I read.

  5. Bruce Ross says:

    Sorry, the words “amortize” or “bond” just don’t appear in Schaeffer’s article. He says the real costs include capital costs, but doesn’t say how they were tallied.

    It’s Seiler who mentioned the cost of the debt service on Prop. 55. And again, that’s a perfectly sound thing to count. It’s not clear that that is the methodology used in Schaeffer’s report.

  6. Adam Schaeffer says:

    Many thanks to John for trying to get LAUSD into this discussion.

    Excluding capital expenditures and debt service interest payments from per-pupil calculations leads to a seriously distorted picture of the resources devoted to education in any district or state. It is most problematic at the state level, where any significant year-on-year variations in capital expenditures are smoothed out.

    At the district level, there are sometimes large variations from year to year, which will be apparent if a school district is fully transparent and publishes total spending figures over a decade using different calculations side-by-side.

    One thing is clear; districts should account for current capital expenditures and debt burden explicitly and as a per-student figure in order to give taxpayers a clear sense of the resources devoted to k-12 education and the burden they are being saddled with in terms of future assets to maintain and debt to service. A note of caution as well; a good chunk of capital spending is maintenance, repairs, upkeep, not major one-off building projects. And in large districts, major building costs seem to keep cycling through the system as they renovate or rebuild schools over time.

    In order to get a clear picture of the burden on taxpayers, we can either include current bond-funded-capital-expenses+debt interest or no-bond-funded-captital+principal+interest payments. Either method presents difficulties, as some school districts do not make clear or easily accessible data on bond vs non-bond-derived capital expenses or principal vs interest in debt service. I prefer to include all capital+interest against no-bond+all debt service in order to provide citizens with a picture of the current investment and future debt commitments made on their behalf.

    But this is an inaccurate accounting of the total resources needed to run a district in any given year, which would include all bond revenue and total debt service, just as a man who spent $100k a year to live his lifestyle, including $2,000 in credit card interest and funded by $10,000 in credit card credit per year in addition to his income, would be accurately described as spending $100k per year, regardless of the source of his funds or the proportion of his expenses devoted to paying down his accumulated credit card debt.

    In any case, the standard method of accounting, excluding all capital expenses and all debt service, is a grossly inaccurate accounting of a state’s cost per pupil.

    In the case of LA, if we eliminate all local bond-revenue from the equation, we get just shy of $21,000 per pupil. Still a far cry from $10k. And even if we eliminate ALL bond revenue, state and local, we still get nearly $16,400 per student. That’s still 63 percent higher than what the district claims.

    We are being transparent about our calculations and the costs we found.

    Why isn’t LAUSD being straightforward with taxpayers?

  7. Bruce Ross says:

    On a related note, check out the L.A. Times Op-Ed about charter-school construction costs and LAUSD’s standard construction costs. $580 million for the RFK Community Schools cluster — $140,000 per student seat — just astonishing.

  8. John Seiler says:

    I want to thank everybody for joining in the discussion. You were a lot more responsive than the LAUSD functionary who hung up on me.

    In case you’re wondering, although I didn’t attend the LAUSD, I did attend the Wayne-Westland Community School District in Michigan. Motto: “Achieving Mediocrity.” But we had a lot of fun. And a couple of teachers were great.

    Seriously, I’m considering a follow-up to this story.

  9. Fred Bauer says:

    So, LAUSD is spending $73,350 per GRADUATE per year?

  10. John Seiler says:

    Fred: Looks like it. Good point.

  11. Vaughn Altemus says:

    Mr. Seiler,

    Thank you for sending me the spread sheet Adam Schaeffer used to calculate his LAUSD per student spending figure. I was asked to review Dr. Schaeffer’s original Cato piece by the Education in the Public Interest Center, http://epicpolicy.org/files/TTR-CatoSpendWhat-Altemas.pdf. A condition for writing the review was that I not contact Dr. Schaeffer, so my comments on his methods involved more conjecture than I would have liked.

    I have no idea whether the LAUSD spends too much or too little on its students. I do know that Schaeffer’s figures are misleading. In the review I found two major problems. He claimed to count both capital expenditures and debt service. And he apparently used authorized rather than estimated figures.

    In his response to readers’ reactions above, Schaeffer addresses the former.

    “In order to get a clear picture of the burden on taxpayers, we can either include current bond-funded-capital-expenses+debt interest or no-bond-funded-captital+principal+interest payments. . . I prefer to include all capital+interest against no-bond+all debt service in order to provide citizens with a picture of the current investment and future debt commitments made on their behalf.”

    Schaeffer’s all capital plus interest method does not give a clear picture of the burden on taxpayers because taxpayers do not pay directly for most capital expenditures. Taxpayers pay the interest and principal on bonds or other borrowing. Proceeds generated by the borrowing pay for the immediate cost of the capital expenditures. If you buy a car for $20,000 and take out a $20,000 loan to pay for the car, not many would consider the first year cost to be the $20,000 purchase price plus the first year’s interest on the loan. The impact on you as a consumer, or taxpayer, would be the principal and interest you pay in that year.

    He goes further: “But this is an inaccurate accounting of the total resources needed to run a district in any given year, which would include all bond revenue and total debt service . . .” He follows with a tortured analogy that would make no distinction between running up credit card debt on a trip to Las Vegas and borrowing to purchases a home. Any reputable form of accounting makes a distinction between current operating expenditures and capital expenditures. In Schaeffer’s model, the entire cost of building a school to serve generations of students would be placed on students enrolled in the year the project was authorized. Then the cost of debt service would show up each year until the debt was repaid.

    The only reason I can imagine for Schaeffer’s use of authorized rather than estimated expenditures is that the authorized amount says something about future obligations. Authorized expenditures are the amount a district is approved to spend. Estimated expenditures are the amount it expects to spend in a given year. One of the many differences between capital and current expenditures is that funding for capital expenditures, and for related borrowing, is often authorized for several years at a time. My guess is that the LAUSD authorized capital expenditures that were not intended to be made in the estimated year. Even if you accept Schaeffer’s process, it seems to me that dividing estimated expenditures by a student count would produce a number, still plagued by double counting, closer to what he claims to want.

    Schaeffer is correct that capital expenditures and debt service need to be accounted for. In the LAUSD they are. He finds them. But it is misleading to include expenditures designed to provide value over time in a single year cost per student figure. It is worse than useless. Suppose all districts in California followed Schaeffer’s advice. It may be that LAUSD is large enough that it has a relatively stable amount of new capital expenditures every year. But the per pupil costs of smaller districts will explode in the years when they undertake capital construction. One of the most reliable ways available to voters for deciding whether district education spending is reasonable is comparison of spending per student with similar districts. Such comparisons become impossible if in any given year the per pupil figure may include expenditures on a new capital project.

    I appreciate your efforts to understand a complicated subject and hope you will take it further.

    Best of luck in your endeavor.

  12. Rene Diedrich says:

    Read Lydia Segal’s book Battling Corruption in Schools and you will see just how insidious this abuse and corruption is. Our CBA and state laws conspire against students and teachers at LAUSD, where there is no accountability. Consider Lydia Ramos’ scant two years in a classroom and glib semantic grifting, and one wonders how even PR people insult our intelligence at LAUSD and get away with it.
    The answer is, the EducRAT$ make up the rules as they go along. I am glad you cornered her with the hard questions LAT and other corporate media outlets won’t. Keep up the excelent work.
    Perdaily.com

  13. […] For the 2007-08 school year, the Los Angeles Unified School District spent $29,780 per student.  The district also has the country’s second lowest graduation rate of 40.6%.       http://www.calwatchdog.com/2010/08/20/lausd-spends-30k-per-student/ […]

  14. […] public school system in Washington D.C.  The Los Angeles Unified School District spends over $29,000 per student according to 2007-2008 numbers, and has a dismal 40% graduation […]

  15. Brady says:

    What about all the stolen money? They have J.O.C. contracts with contractors and they easily manipulate the prices. They sandblasted Kester Elementary school. It had lead material in it. They didn’t have any containment! 40 PRESCHOOLERS EXPOSED!!! WELL DOCUMENTED EVENT!! nothing happened. Contractors still doing work there and the parents weren’t notified. The proof is there but they have their own Inspector General, so they keep stealing.

  16. Richard Rider says:

    Here’s the unabridged version of a letter I had recently published in the WSJ
    http://online.wsj.com/article/SB10001424052748703859304576305443547743546.html#articleTabs%3Darticle
    concerning the taxpayer savings available from vouchers:

    Vouchers Also Cost Taxpayers Less

    This excellent op-ed, “The Evidence Is In: School Vouchers Work” (op-ed, May 3) http://online.wsj.com/article/SB10001424052748703396404576283381160558552.html
    ignores what for many might be the most important reason to send kids to private school — the huge savings to taxpayers.

    The stunning total taxpayer cost of the inferior D.C public schools is over $28,000 per student.
    http://mjperry.blogspot.com/2010/02/dc-public-schools-129-trillion-28170.html [from CATO study]

    Even after pulling the special ed kids’ cost out of the average, the taxpayers are paying about $23,000 per D.C. public school student.

    Contrast that absurd public school outlay with the cost of a D.C. education voucher — up to $7,500 per student. Indeed, the actual average D.C. voucher school charges only $6,620 (many are Catholic schools).
    http://ies.ed.gov/ncee/pubs/20094050/pdf/20094050.pdf

    Taxpayers save potentially over $15,000 annually in direct costs per D.C. voucher student. Another plus for private schools — there is no unfunded public pension taxpayer liability — a massive problem lurking in most if not all public school systems.

    D.C. is running a highly restricted voucher program — complete with a lottery to pick the lucky few low income recipients. Instead, D.C. (and urban school districts throughout the nation) should be moving towards an orderly transfer of the education of our young from government to private schools via vouchers and/or tax credits.

    That is, we should do so if we care more about the kids and taxpayers than we do about the powerful education labor unions.

    Never mind. My bad.

  17. Willam D. Costigan says:

    Hello,
    My son goes to elementary school in Los Angeles(LAUNSD.) Every time something goes wrong, like a tussle in the yard or slow performance or an art project that doesn’t meet the teachers approval it is automatically the nine year olds fault. One source, CalWatchDog, says LAUSD spends $29, 780 on every student and even the district owns up to $11,000 per student per year. That’s a lot of money in a class with 25 students. Yet its always my kids fault when things go wrong. Where is the accountability?

  18. […] For the 2007-08 school year, the Los Angeles Unified School District spent $29,780 per student. The district also has the country’s second lowest graduation rate of 40.6%. http://www.calwatchdog.com/2010/08/20/lausd-spends-30k-per-student/ […]

  19. […] For the 2007-08 school year, the Los Angeles Unified School District spent $29,780 per student. The district also has the country’s second lowest graduation rate of 40.6%. LINK […]

  20. Joel Renfro says:

    Why are cost still going up and enrollment is dropping every year , also why does the burden of cost go mainly on home owners property tax bill ,? Why isn’t the cost shared equally with renters of pats and condos ,plus a small fee from the parents of every child enrolled in lausd

    • CalWatchdog says:

      Joel wrote: “Why are cost still going up and enrollment is dropping every year”? That’s the big question! The best answer is that the teachers’ unions are the most powerful force in Calfiornia.

      “Why isn’t the cost shared equally with renters.” Actually, they do pay. The apartment owners pay the property tax, then pass it along in higher rent.

      “a small fee from the parents of every child enrolled in lausd.” Courts have ruled that education is a right. So those who can’t pay don’t have to.

      — John Seiler

  21. Ken Doyle says:

    I am critical of LAUSD and i believe that a 40% non-graduation rate is basically a crime against the children and society. I need good information to support my arguments. I’m having trouble with the information in this article. Prop/55 for example. According to this article, prop/55 costs $823 million per year to service. There are 6.3 million students Statewide. Very simply, prop/55 only adds $130 per student per year. Therefore, the $30K claim is quite erroneous and should be corrected.

  22. scott says:

    even with $10,000 per year, thats over $300,000 per class, and if you gave that money all to a few intelligent wellmeaning individuals, say $100,000 each for 3, tax free maybe, what miracles they could cause!