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Katy Grimes

Dubious Deal Between Los Angeles School District and SEIU

In a dubious deal between the Service Employees International Union and the Los Angeles Unified School District, minimum-wage workers will receive pay increases to $15 an hour, nearly doubling some workers’ salaries.

The contract agreement will significantly boost the wages of 33,000 bus drivers, janitors, school security, cafeteria workers, and teacher’s aids, according to the Los Angeles Times.

Additionally, this new agreement between the labor union and school district also requires the district to cut outsourcing, despite cost savings or efficiencies.

But the spin put out by LAUSD and the SEIU merely talks about the neediest, and not the real cost increases associated with cutting outsourcing.

The $15 plan takes effect in stages, with the first boost in pay to $11 an hour last week. The rate will be $13 next year, and will be $15 on July 1, 2016.

The pact was one of several approved Tuesday by the school board.

Only a couple of years ago, LAUSD was running budgetary deficits of hundreds of millions of dollars, Lance Izumi, reminded me. Izumi is Senior Director of Education Studies at the Pacific Research Institute, a free market think tank. “Where will that belt-tightening occur?” Izumi asked. “How much effect will that belt-tightening have on children in the classroom?”

Izumi warned with California’s topsy-turvy economy, which is so heavily reliant on property and income taxes, doubling the wages of these non-education employees is not a very good idea in the long turn.

So where did this windfall of money come from?

LAUSD new budget

Described as a “new direction in school finance,” the Los Angeles Board of Education recently passed a $6.64 billion budget – up from $6.2 billion last year — in anticipation of extra state funding for low-income students.

With this funding boost, Los Angeles schools are expected to double the number of new teachers to 1,200, add librarians, nurses and counselors, reduce class sizes, increase tutoring and improve parent education efforts, according to the Los Angeles Times.

The boost in funding comes from voter passage of Proposition 30, a temporary tax increase, which boosted income tax on upper-middle income earners, and above, and upped the sales tax on everybody in the state.

In 2012, Gov. Jerry Brown and labor unions throughout the state backing Prop. 30, promised the tax increases would be temporary; the sales tax increase is set to expire in 2016, and the income tax increase in 2018.

There is no indication of how this large increase in wages and spending in LAUSD will be sustained, given that Prop. 30 is a temporary tax.

However, only one year into Proposition 30′s five-year life, state Superintendent of Public Instruction Tom Torlakson called for an extension of the 2012 ballot initiative.

Prop. 30 was sold to voters as a temporary tax. Since then, several bills have been proposed in the Legislature.

State Sen. Mark Leno recently told attendees at an education rally in San Francisco it is time to start thinking about the need to extend the Proposition 30 tax increases. “One of the reasons Leno opposes the governor’s effort to establish a prudent budget reserve is that such a ‘rainy day fund’ would make it harder to justify a continuation of higher taxes on sales and incomes,” Jon Coupal, President of the Howard Jarvis Taxpayers Association, recently wrote. “While it is common to question the veracity of politicians, in this case, it would be wise to accept these Sacramento leaders’ comments as genuine expressions of their greed for ever greater amounts of taxpayer dollars.”

LAUSD budget

The new LAUSD budget includes an additional $838 million for low-income, English learners, or children in foster care. Known as the Local Control Funding Formula, it is based on the state’s landmark 2013 law that gives districts more dollars for those disadvantaged students — but also requires them to lay out a specific plan on how to use the money to boost their academic performance.

This boost in funding for Los Angeles schools represents the largest increase since the 2008 layoffs of more than 10,000 teachers and non-educational school employees, and eliminated services and programs, including summer school, the Los Angeles Times reported.

Local Control Funding Formula info

In 2013, Gov. Jerry Brown proposed a significant transfer of funds from suburban school districts to urban school districts, based solely on poverty and language.

The California Legislature approved the Local Control Funding Formula, which directs billions of additional dollars to school districts based on the number of poor students, English learners, and children in foster care in each district.  The plan would add additional funding where this student population exceeds 55 percent of all the students in a district. Of the six million K-12 students more than ¼ are English Learners.

This Local Control Funding Formula assumes that billions of extra dollars will dramatically boost performance between students because they are poor, are English learners, or are in foster care.

LAUSD’s ‘woefully inadequate’ budget

Despite the significant increase, Los Angeles Unified School District Superintendent John Deasy said the funding was still “woefully inadequate.”

The United Teachers Los Angeles labor union released a statement demanding changes to the proposed budget put forth by Superintendent Deasy.

“LAUSD falls far below the national average in the number of counselors, nurses, librarians and social workers per student,” the union said. “The Superintendent’s budget does not do enough to restore these key positions.”

Teachers, and other employees, have not had a pay raise in more than seven years; in fact, they took pay cuts amounting to 8 percent, the union said in a statement.

Actual budget info

The California Personal Income Tax makes up two–thirds of the annual general fund revenues.

In the Legislative Analyst’s Office 2014-15 fiscal review, the non-partisan LAO explains how education funding works: “The proportion of the general fund supported by PIT revenues likely would be growing even if Proposition 30 were not in effect due to more income concentration among the highest–income taxpayers and the other factors described earlier,” the LAO said.

The LAO warns about overcommitting the temporary tax money, which could bring back budget shortfalls.

“As Proposition 30 Personal Income Tax increases phase out, much slower revenue growth forecasted,” the LAO headline said.

“Under Proposition 30, the increase in Personal Income Tax rates for high–income taxpayers generates a much greater proportion of revenue than the sales tax increase,” the LAO report found.

Under a hypothetical recession, the LAO explained, “the revenue losses would be offset somewhat by lower Proposition 98 minimum requirements, and we assume that the state would reduce spending to the lower allowed spending levels.”

When state revenue increases, so does school funding, automatically. Proposition 98, passed in 1988 by the voters, guarantees K-12 public schools and community colleges about 40 percent of the general fund. So when general fund revenues go up, so does school spending. Conversely, when general fund revenues are reduced, school spending is also reduced.

So schools would not be receiving the bulk of the tax increase revenues. Is it any wonder Torlakson want to prolong the tax hike — other than a promise made to voters?


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