A scathing audit on school funding that found the state did not meet promises made six years ago to help English language learners, foster children and students from poor families sets up a 2020 test of the clout of the California Teachers Association and the California Federation of Teachers – and of the willingness of Gov. Gavin Newsom to take on the unions who were early backers of his successful 2018 candidacy. 

State Auditor Elaine Howle’s review focused on how school districts in San Diego, Oakland and Clovis had implemented the Local Control Funding Formula, which was adopted by the Legislature in 2013 at the behest of then-Gov. Jerry Brown. The governor and then-Senate President Darrell Steinberg, D-Sacramento, were among several leaders who said the LCFF would be a game changer by getting additional assets to struggling students.

But Howle found instead that billions in extra funds the formula directed to districts with high percentages of English learners, foster kids and poor families had been used for general needs – including raises for teachers. She concluded there was little or no evidence that the LCFF had boosted these students’ performance.

“In general, we determined that the state’s approach [to Local Control] has not ensured that funding is benefiting students as intended,” Howle wrote.

Howle’s finding confirmed all the major criticisms of the formula that have been raised by education reformers and by civil rights lawyers who have repeatedly sued Los Angeles Unified over its treatment of poor minority students. 

Bill to track school funding couldn’t even get a hearing

But these groups have never gotten far with Local Control changes. Last spring, Assemblywoman Shirley Weber, the San Diego Democrat who pushed for the audit, couldn’t even get Assembly Education Committee Chairman Patrick O’Donnell, D-Long Beach, to hold a hearing on her bill to require disclosure of how LCFF dollars are being used.

Howle’s audit gives Weber new evidence to push for tracking such spending, and she has said fixing Local Control is her top priority in 2020. But O’Donnell, a former teacher who is close to the CTA and CFT, is unlikely to drop his opposition to tracking the funding.

A key question is likely to be what the governor does. While Newsom won the early endorsements of the two teacher unions, he spent the 2018 campaign telling editorial boards and the Los Angeles and Silicon Valley billionaires who back education reform that he too wanted to fix Local Control to ensure it helped struggling students and had proper accountability protections.

But any attempt to get school districts to stop spending LCFF dollars on teacher compensation – and on rapidly growing teacher pension costs – will go directly against the CTA and the CFT. They already see available school funding as inadequate and are both pushing for billions of dollars in tax hikes in two measures expected to be on the ballot in November 2020. They also won changes that will make it more difficult for charter schools to be approved or renewed using the argument that charters were diverting funding from regular public schools at a time when those schools are desperately underfunded. They are unlikely to accept the notion that the audit must be acted on.

Meanwhile, Newsom has so far used his political capital to advance an education reform that teachers unions also may question. But the reform – using metrics to track the performance of students throughout their K-12 journey – isn’t nearly as contentious as the state forcing many school districts to reorient their Local Control spending and stop using it for raises and pension bills.

After a quarter-century of explosive increases in California, charter schools experienced all-time lows in growth the last two school years. And charters may also be facing an era of much harsher treatment from school boards allied with teachers unions who more than ever see charters as taking away resources that should go to conventional schools.

That was many education observers’ takeaway this week from the Los Angeles Unified School Board’s decision to approve a local moratorium on approvals of new charters until their impact on the state’s largest district is freshly assessed. District leaders had agreed to pass the resolution as part of their deal with United Teachers Los Angeles to end a strike that shut LAUSD schools for six days earlier last month.

Charters are privately operated public schools that hope to attract students from regular schools with their freedom to follow different teaching regimens. Some also offer specialized language or academic programs. Most are non-union.

From 1992 to 2016, charter schools went from zero students to more than 600,000 – about 10 percent of total K-12 students in California. The last two years, however, there was less than 2 percent growth in the number of total charters for the first time.

Charters initially faced brisk opposition from the California Teachers Association and the California Federation of Teachers, which had heavy influence in many districts thanks to the board members that union local chapters helped elect.

But in 2000, California voters approved Proposition 39 related to school financing. One provision requires that “school districts make available to all charter schools operating in their school district … facilities that will sufficiently accommodate all of the charter’s in-district students, and that facilities be ‘reasonably equivalent’ to other classrooms, buildings, or facilities in the district,” according to the state Department of Education page outlining how school districts should comply with the state law.

CalSTRS bailout spurs scrum for limited resources

Proposition 39 gave charters a potent tool to fight attempts to block them, leading to something of a cease-fire from unions. But the passage in 2014 of the California State Teachers’ Retirement System bailout not only isn’t having the effect of stabilizing school finances that some hoped, it’s created a more intense battle for district resources than ever.

Under the bailout, total contributions to CalSTRS will nearly double from 2013-14 to 2020-21 as hikes are phased in. But districts are required to contribute 70 percent of the new money – or close to $4 billion when the phase-in ends. Even with two more contribution hikes awaiting in 2019-20 and 2020-21, many districts across the state are already struggling to make their budgets balance.

That list starts with L.A. Unified, whose board was warned by the Los Angeles County Office of Education that the district couldn’t afford the two retroactive 3 percent raises it gave teachers to end the strike. The county office raised the possibility that the district’s finances could be so broken by 2020-21 that it could be subject to an outside takeover based on a state law requiring districts maintain minimum reserves.

L.A. Unified leaders hope to get the state Legislature to provide more funding for next school year. But the L.A. teachers union also wants the district to stop providing so much funding to the district’s 225 charters, which teach 112,000 of the district’s 486,000 students.

The wild card in a new cold war between teachers unions and charters is Gov. Gavin Newsom. While he has often praised charter schools as an important part of public education, he said while campaigning last year that he would sign legislation “requiring charter schools to be more transparent with their finances and operations and to adhere to stricter conflict of interest rules on their governing boards,” according to the EdSource website.

Charter school critics see this as an obvious response to the messy finances and scandals seen in some charters. Charter advocates see it as an ominous first step toward rolling back the charter movement. They backed former Los Angeles Mayor Antonio Villaraigosa in the 2018 governor’s race.

Leaders of the Los Angeles Unified School District, by far California’s largest school district, are struggling to head off a teachers’ strike that a state judge ruled Thursday can begin Monday. United Teachers Los Angeles (UTLA), which represents 35,000 teachers, wants an immediate 6.5 percent pay hike and a two-year contract. L.A. Unified has offered a phased-in two-year raise of 6 percent as part of a three-year contract.

But while much of the focus has been on the chaos that’s likely if the district’s 640,000 students have nowhere to go Monday morning, the crisis is also drawing attention to the gigantic financial headaches facing the second-largest U.S. school district. Even if L.A. Unified sees its contract offer accepted, it’s on track for perpetual budget problems for as far as the eye can see because of its massive liabilities for retirement pensions and retiree health care.

Austin Beutner, the former executive and Los Angeles Times publisher who is the district’s superintendent, says UTLA refuses to acknowledge that the district faces a $2 billion shortfall over the next three years even if the district’s cheaper contract offer is accepted. That would wipe out LAUSD’s $1.8 billion reserve.

But union leaders, with 98 percent support among teachers for a strike, depict the $1.8 billion as money that can be tapped both for a bigger raise and for hiring more teachers and support personnel.

Superintendent: Union hopes to create ‘state crisis’

Writing in the Times, Beutner sees the union’s refusal to ever make a counter-offer as a sign of a larger agenda. “UTLA leaders have said since early 2017 – before contract negotiations even began and more than a year before I became superintendent – that they wanted ‘a strike to create a state crisis,’” he asserted.

The hope is that such a crisis would lead the Legislature and Gov. Gavin Newsom to push for increased education funding. But it’s not clear if there’s much public appetite for paying higher taxes or using “rainy day” reserves for this purpose at a time when school funding has gone up more than 60 percent over the least eight years. School funding is $78.4 billion this fiscal year, an increase of more than $30 billion from 2010-11. On Thursday, Newsom proposed spending $80.7 billion for 2019-20.

Yet the tactic makes more sense as a reflection of union leaders’ drawing the same conclusion as Beutner about LAUSD’s grim fiscal path. The total cost of pensions and retiree health care for more than 36,000 former teachers is projected to double from 8 percent to 16 percent of the annual budget as mandatory payments to the California State Teachers’ Retirement system soar under the terms of the 2014 bailout approved by the Legislature. The bailout phases in a 132 percent increase in per-teacher contributions, with the final increase in 2020-21.

And UTLA also may have confidence it will be heeded in the Capitol, based on what happened in 2013 with the Local Control Funding Formula, which gives more per-pupil funding to districts with high numbers of English language learners, foster students and students from poor families. While the law was touted by Gov. Jerry Brown as a way to help close the achievement gap by directing additional resources to individually help students, state Superintendent of Public Instruction Tom Torlakson’s 2015 ruling that the additional funds could be used for teacher raises freed up school districts to ignore the original intent of the law.

L.A. Unified got huge boost from school funding change

About 510,000 of L.A. Unified’s students fit the criteria for additional state funding, vastly more than any other district in the state. But with few signs the extra money is reaching English language learners in LAUSD, one theory heard in education circles is that the Local Control Funding Formula was more about propping up the district’s shaky finances than a principled attempt to directly help struggling students. UTLA is by far the most active and powerful local teachers union in California.

L.A. Unified’s fiscal problems were laid out in 2015 by a panel of experts brought in to examine district finances. They concluded drastic steps needed to be taken to address the combined problems of declining enrollment and increasing pension and health care costs. But the district has not followed through with work force cuts or with attempts to collectively bargain for changes in employment contracts that give teachers lifetime health care benefits for themselves and their spouses – one of the most lucrative and costly benefits in California government. The panel said without huge changes, LAUSD was headed for bankruptcy.

Five years after Gov. Jerry Brown and the Legislature passed a sweeping new school finance law meant to provide extra help to struggling students in poor, minority communities, new federal test scores raise difficult questions about the effectiveness of the 2013 measure.

Every two years, at the order of the federal government, the National Assessment of Educational Progress tests are administered to check on fourth- and eighth-graders’ progress in math and reading in all 50 states. While eighth-graders showed gains on reading, California’s overall scores for 2017 released earlier this month remained on average among the worst in the nation, as the EdSource website reported.

But a deeper dive into the data showed that California fourth-graders scored worse on math than any state but Alaska. Poor scores by African-American students caught the eye of Ryan Smith, executive director of the Education-Trust West. “At a time when California is claiming to lead on issues of what’s right in our country, we should see black students improve at far greater rates, not sliding back decades,” he told EdSource.

What made the results particularly disappointing were the high expectations that had accompanied the enactment in 2013 of the Local Control Funding Formula (LCFF) – arguably the biggest change in California public education since Gov. Pete Wilson and the Legislature approved the hiring of thousands of new teachers in 1996 as part of an ambitious effort to reduce the number of students in first-, second- and third-grade classes to no more than 20 per teacher.

Brown led the push for LCFF, calling it a commitment to social justice and education equity. The measure guaranteed additional funding to districts with high concentrations of English-language learners, impoverished families and foster children. The law’s second main component also eliminated most of the top-down funding edicts imposed on school districts.

Brown argued that local districts had a better grasp on what their students’ needs were than state lawmakers and Sacramento bureaucrats, and that LCFF would give local schools extra resources that would allow them to improve education outcomes for struggling students.

Claims that funds were diverted came early and often

But even before this month’s disappointing test scores, the Local Control program had drawn fire. In January 2015, the Legislative Analyst’s Office said none of the 50 school districts it reviewed had set up adequate standards to make sure the funds were used as they were supposed to be. Soon after, Education Trust-West and other groups which advocate for poor and minority students said funds meant to specifically help these students were instead used for overall district spending, starting with teacher raises.

Brown supported state Superintendent of Public Instruction Tom Torlakson after he formally rejected the criticism – with both saying, in effect, that local control meant local control. Efforts in recent years by lawmakers to force a stricter accounting of LCFF dollars have been blocked by teachers union allies in the Legislature, notably Assemblyman Patrick O’Donnell, the Long Beach Democrat who chairs the Assembly Education Committee. In 2016, the governor vetoed an LCFF accountability measures that managed to win the Legislature’s unanimous approval.

But in January, in presenting his final budget before being termed out, Brown offered an indirect concession to those upset with how LCFF dollars had been used.

“While many districts have seized the opportunities offered under the formula to better serve their students, others have been slower to make changes,” his 2018-19 spending plan noted. “To improve student achievement and transparency, the budget proposes requiring school districts to create a link between their local accountability plans and their budgets to show how increased funding is being spent to support English learners, students from low-income families, and youth in foster care.”

Under the law, each school district was supposed to adopt a Local Control and Accountability Plan (LCAP) to ensure English-learners and foster children were getting the extra help that Brown and lawmakers promised. These plans outline district priorities and relate them to funding decisions.

Three years later, California education reform groups increasingly question how the LCFF is working out. They cite little evidence of more resources going to struggling students and many instances of extra dollars going into general school district budgets, with the blessing of Superintendent of Public Instruction Tom Torlakson.

This frustration led to the unusual decision last week of three reform groups — Public Advocates, Education Trust-West and Californians Together — to simultaneously issue studies that question how local LCAPs are being implemented.

Difficult to impossible to determine progress

EdSource has a roundup of their concerns:

Districts are not providing the level of transparency promised in exchange for increased spending flexibility,” wrote Public Advocates, a nonprofit law firm that has threatened to sue the West Contra Costa Unified School District for failing to disclose how it planned to spend millions of dollars on high-needs students. “Most districts are missing the opportunity to use the LCAP as a comprehensive planning tool for continuous improvement.”

“The usefulness of the LCAP as a means of accountability is compromised by the difficulty in gleaning a sense of coherence and what the plan actually entails,” Californians Together, a coalition of parent, professional and civil rights organizations focused on the needs of English language learners, wrote in a report, published this month, analyzing LCAP plans to improve services for English learners.

The reports, which follow similar analyses last year, studied several dozen LCAPs for the current school year from large and small, urban and rural districts. Public Advocates’ report, released Wednesday, can be found here. Education Trust-West’s report is here.

All three reports made the same overall criticisms: that it is often difficult, if not impossible, to find out how much some districts are spending on high-needs students; to track the expenditures over time; and to find a justification or rationale for districts’ spending decisions.

Brown won’t second-guess local funding decisions

Part of the reason for the frustration of reform groups isn’t related to problems implementing the Local Control Funding Formula at the district level. It’s with Gov. Brown, whose appointees on the State Board of Education sided with Torlakson on the question of whether the funds could be used for teacher raises and other broad district expenses.

At the 2013 signing ceremony for LCFF, Brown depicted the law as reflecting a historic new commitment to helping English-language learners. But of late, Brown administration officials have emphasized the “local control” aspect of the law — not the promises that more direct help would be given to the 1.4 million students who struggle with English in state public schools.

In a January 2015 telephone interview with editorial writers after unveiling his proposed 2015-16 budget. the governor said he would look into complaints that funds were going to teacher raises, not English-language learners.

But a year later, his aides took a sharply different position. In a January telephone interview with editorial writers after the governor unveiled his proposed 2016-17 budget, state Finance Director Michael Cohen said LCFF was meant to empower officials at local districts to make their own decisions. If they considered teacher raises a priority, the Brown administration had no issues with that, Cohen said.

The reform groups will present their critical findings about the law’s implementation to the State Board of Education at a meeting in May. The board is expected to try to fine-tune LCAP rules to make them easier to comply with and complete.

State Board of Education President Michael Kirst acknowledged local concerns about how unwieldy the process had become as a February state Senate hearing. But that hearing didn’t focus on the larger question of whether the LCFF’s initial goal of directly helping English-language learners and foster children was actually driving decisions at the district level.