We’ve been covering Southern California counties with editorial submissions on their local school districts. Today we discuss Los Angeles County. It is provided in the Los Angeles Daily News in the piece below. It’s also available on the OC Register’s website. As you may gather from a couple of the themes, it was submitted near the end of October.
LA County hosts the second largest school district in the nation, Los Angeles Unified School District. And, it gets its share of coverage by the LA Times. Its financial situation has commanded headlines for some time. We recently pointed out that all of the 27 school districts in Orange County combined were in better fiscal shape than LAUSD (see MOORLACH UPDATE — LAUSD vs. OC School Districts — September 18, 2018).
We’re also seeing that our study of the state’s school districts is being reviewed by school district superintendents and they are concerned about the fiscal condition of their districts and are taking steps to address their balance sheets (see MOORLACH UPDATE — Christmas Reflections — November 30, 2018). This link also provides the invitation flyer for our December 6th Christmas Open House (see BONUS below).
BONUS: You’re invited to visit our District Office for our annual Christmas Open House. The event will be held this Thursday, December 6th, from 4 p.m. to 6 p.m. My entire staff will be there to give you an education on what we have been doing and plan on accomplishing in the new year. Dress is Christmas comfortable. (Wearing a Reyn Spooner Christmas shirt will get you an extra cookie.)
All Los Angeles County school districts but one bleed red ink
Of Los Angeles County’s 80 public school districts, only one boasts a positive balance sheet, Gorman Joint School District. Unfortunately, the other 79 school districts have balance sheets that bleed red ink.
The scoring comes as part of my new report, “Financial Soundness Rankings for California’s Public School Districts, Colleges & Universities.” It reviews the financial soundness of all 944 California public school districts. I performed a similar review of California’s 482 cities back in March.
The rankings derive from each district’s latest Comprehensive Annual Financial Report, which you can find on their respective websites. In each CAFR, look for the “Basic Financial Statements,” starting with the page titled “Statement of Net Position.” Look at the top row for “Government Activities.” Then look down the column to where it says, first “Net Position,” then “Unrestricted.” That’s the number you want: the Unrestricted Net Position, or UNP.
The number will either be positive or, with parentheses around it, negative.
I also divide the UNP by the district’s population to get a per-capita UNP. If negative, that’s the amount each person in the district is in hock for, whether or not your children attend school. Citizens should be concerned about the trajectory of these negative balances, which are commonly attributed to unfunded pension liabilities. As school board members are auditioning for their jobs, they need to be held accountable for dealing with these liabilities.
If the negative number runs too high too long, it will mean cuts in teachers, equipment, band and sports, and ultimately calls for tax increases. In the worst cases, takeover by the state, even bankruptcy, is not out of the question.
Gorman Joint enjoyed a positive UNP per capita of $5,716, the fourth best in California. Outstanding.
Unfortunately, the good news ends there. The remaining 79 districts dip into the red. Second “best” in L.A. County is Hermosa City Beach Elementary at ($292), 210th best in the state. Third was Lowell Joint Unified School District at ($356), 247th best in the state. Fourth was Whittier Union High at ($374), 258th best in California; its most famous alumnus was President Richard Nixon – all of whose federal budgets, perhaps coincidentally, also ran red ink.
Just 18 of the county’s 80 districts were in the top half of California’s 944 districts.
What’s frightening as we approach Halloween is the bottom of the list. Worst is Wiseburn Unified at ($3,750), ranked 938 of 944 California districts; followed by El Segundo Unified ($2,541), for 930th place; and giant Los Angeles Unified at ($2,315), for 922nd place.
But what really will keep you up at night are the UNPs of the largest districts by population. LA Unified scares at ($10.9 billion). Second worst is Long Beach Unified at ($564 million). In third is William S. Hart Union High School District at ($247 million).
Let’s look a little closer at how the City of Angels is also the city of ungodly deficits. From my earlier report, the city of LA’s UNP is ($6.6 billion) and its per capita UNP is ($1,628). That ranks it 451st out of the state’s 482 cities. And for comparison, LA County’s UNP is ($18.7 billion) and its per capita UNP is ($1,829), 47th of California’s 58 counties.
Los Angeles’ Big 3 – the county, city and unified school district – report $36.2 billion in combined deficits. As with the city and county of Los Angeles, the problem with LA County school budget deficits largely rests with excessive pension costs.
Here are the per capita UNPs for the 10 best districts, the best on top:
1. Gorman Joint $5,716
2. Hermosa Beach City Elementary ($ 292)
3. Lowell Joint ($ 356)
4. Whittier Union High ($ 374)
5. El Monte Union High ($ 398)
6. Bellflower Unified ($ 418)
7. Alhambra Unified ($ 438)
8. Antelope Valley Union High ($ 490)
9. Newhall School District ($ 512)
10. Rosemead Elementary ($ 521)
And here are the per capita UNPs of the 10 lowest-scoring districts, worst to “less” bad.
· 80. Wiseburn Unified ($3,750)
· 79. El Segundo Unified ($2,541)
· 78. Los Angeles Unified ($2,315)
· 77. Duarte Unified ($2,277)
· 76. Beverly Hills Unified ($2,189)
· 75. Lennox School District ($2,176)
· 74. South Pasadena Unified ($1,969)
· 73. Las Virgenes Unified ($1,963)
· 72. Montebello Unified ($1,783)
· 71. ABC Unified ($1,755)
Next year is going to be especially revealing – and distressing – as the Governmental Accounting Standards Board for the first time will require balance sheets to include unfunded retiree medical liabilities, which will show even more city and school districts in critical condition.
And when the next economic recession hits, for even those modestly distressed, it’s going to be one big financial train wreck.
Let’s hope our elected school board members and their administrative staff get in front of this serious cash management squeeze on their horizon. It’s time to be proactive, as taxpayers are not very forgiving with those who are reactive. Especially with supposed leaders who only have one solution: raise taxes.
John M.W. Moorlach, R-Costa Mesa, represents the 37th District in the California Senate
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