Does the Future of Public Education in the City of L.A. Depend on Measure EE

On June 4, voters in the city of Los Angeles will have the opportunity to vote on Measure EE, a local-school funding measure, that if approved by 2/3 of voters, would levy a 16 cent per-square-foot parcel tax on commercial and residential properties within the boundaries of the Los Angeles Unified School District for the next 12 years.  Though Last-minute changes to ballot language could create problems for the measure. 

Supporters, which include the United Teachers Los Angeles, LAUSD leadership, the LAUSD Board and elected officials, including Mayor Eric Garcetti, see its passage as a way to raise $400 million to $500 million annually to provide more locally-controlled school funding to hire additional teachers to lower class sizes, add staff, such as counselors and school nurses, and pay for recent board approved raises for teachers following a six-day strike.

Language in the measure highlights a general list of initiatives that would be funded by the tax and the school board passed a resolution to create an Independent Taxpayer Oversight Committee for accountability purposes.

Regardless of the outcome of the vote, the real elephant in the room is LAUSD’s long-term structural budget deficit.  The district’s current annual budget is almost $13.7.  Around $7.6 billion funds 25,430 teachers and 38,146 support staff and classified personnel in over 1,000 schools serving 572k students in both traditional and charter K-12 schools.  And another $6 billion of funds are outside of the General Fund including for things such as capital projects, debt service, adult education, etc. The district’s forecasts show that it will exhaust its reserve fund balance by 2021, leaving a $500 million shortfall in 2021-22 that will grow to over $1 billion by 2022-23.

This will only get worse over time due to three major trends – healthcare and pension costs will consume more than 57 percent of its budget by 2031,  a continued decline in enrollment of the K-12 student population in public traditional and charter schools (enrollment was 747k students in 2002-03 and is projected to decline to 550k by 2020-21, or by over 26 percent in the 18-year period) and the overall non-educational cost per student will increase to accommodate the increasing demand for more nurses, counselors, speech therapists and school psychologists.  On top of that, classified salaries for support staff such as clerical, paraprofessionals, and custodians has increased by 24 percent since 2012.

Measure EE seems to have become the most expeditious solution to this looming crisis.  But I think it would be safe to say that many of those who either support or oppose the measure see other pathways to right size the district.

To that end, there is no lack of good ideas to mitigate for these trends.  Prior to his appointment as LAUSD superintendent, Austin Beutner chaired the LA Unified Advisory Task Force, which created a series of topics that district leaders could focus on to make sure funding is aimed at providing an opportunity for all students to succeed.  Their findings were not so much about new ideas, but about timing and the need to act with more urgency.  They found opportunity to improve the management of its real estate portfolio, address chronic absenteeism (In 2016-17, LA Unified lost about $630 million in revenues due to over 80,000 chronically absent students), and noted that expenses such as admin and healthcare are higher than peer districts.

Also, in 2018, Ernst & Young delivered a report to the district that showed how a series of steps to streamline or modernize the school system could save tens of millions of dollars over the next three years.  According to the report, by 2022, LAUSD could realize more than $236 million in annual savings by adopting their recommendations.  Four areas with the most potential: procurement, food services, facilities and information technology operations.

These types of changes require coalition building and time.  For now, Measure EE supporters see an opportunity to surf the recent progress teachers have made around the U.S. in securing higher salaries and better benefits. Their strategy is to thread the needle by limiting the Measure’s impact on resident voters.

Supporters estimate that businesses and corporate landlords would pay more than 70 percent of the new tax.  Homeowners would pay only 18 percent, and more than half of them would pay less than $240 per year.  On top of that, the more than 12 percent of homeowners who are 65 years old and older who are homeowners will have an opportunity to claim an exemption.  Finally, 64 percent of households (873,137) in the city are renters and free and clear from this tax, though the measure would not interfere with existing or new rent stabilization ordinances.

The challenge becomes voter turnout.  In 2010, a less costly parcel tax failed to pass and the school board removed another from the ballot in 2012.  The March 7, 2017 Los Angeles mayoral election only attracted 20 percent (407,147 ballots cast) in a city with 2,030,173 registered voters.  With these numbers the Measure would have to garner more than 270,000 votes to pass.  Mayor Garcetti, a big supporter of this measure, received 331,310 votes in 2017 so it is possible.

Another factor to consider is the fact that voters and business owners are feeling more and more of the impact of additional tax increases, fees, licensing requirement, etc. on their budgets as the overall cost of living – housing most notably – continues to outpace wages in Southern California.  It’s a key reason why Los Angeles has one of the highest net migration losses.  Fifty-two percent of Angelinos reported thinking about moving away due to high housing costs, according to the Public Policy Institute of California’s (PPIC) March survey.

And LAUSD is not producing the outcomes expected with the additional funding approved over the years event though it has the second-lowest average class size of California’s top 10 largest school districts at 26 students per class.

Throughout the past twenty-two years, five bonds totaling $20.6 billion in loans have been floated by the district; Proposition 30, a statewide tax passed in 2012, generated about $700 million annually for L.A. Unified, which was extended in 2016 though Proposition 55; and the district also receives about $1 billion a year for high-needs student populations through the state school funding law enacted during the 2013-14 year by Governor Jerry Brown.

In return, recent state tests indicate less than 40 percent of students in LA Unified are proficient in reading and less than one-third of District students are proficient in math.  While graduation rates have risen significantly, there is compelling evidence that indicates these rates are inflated.

It’s also not clear if LAUSD will get additional financial relief from the state over the next year.  In 2020, state-wide ballot voters will have an opportunity to vote on a “split roll” for property taxes, thus increasing levies on commercial property such as office buildings and warehouses that would go to education.  It’s also not clear if LAUSD will get additional financial relief from the state over the next year.

In 2020, state-wide ballot voters will have an opportunity to vote on a “split roll” for property taxes, thus increasing levies on commercial property such as office buildings and warehouses that would go to education.  LAUSD could take in up to $1 billion annually if this passes, but for now it appears to have mild initial support.  Additionally, Governor Newsom’s budget proposes making large investments in the K-12 education system and it is likely additional funding will go to the school at some level after the budget negotiation process ends.