MOORLACH UPDATE — Dealing With Tensions — January 10, 2019

Gov. Newsom shot a volley at the White House on Monday. President Trump responded on Wednesday. The clip for KCRA 3 has me requesting the rhetoric be toned down. Their written piece, the first below, has me stating the obvious, if you fire off a cannon ball, expect one back. I expect better of both of these leaders since they started building a relationship when they met in Paradise and Santa Monica to tour the fire damage together. When will everyone learn to stay calm and quiet?

Back in Southern California, the threatened LAUSD strike was postponed until Monday. But, it still looms like a massive cloud over some 4 million-plus residents and may find itself on the Capitol front porch soon. Such is the result of spending and promising more than revenues permit. The LA School Report is back with another in depth review of the situation in the second piece below.

5 takeaways from Trump’s Twitter war with California

War of words escalates between Sacramento and Washington

Mike Luehry

https://www.kcra.com/article/5-takeaways-from-trumps-twitter-war-with-california/25838970

Less than 24 hours after Gov. Gavin Newsom praised President Donald Trump for not politicizing the disaster declaration process, the war of words between Sacramento and Washington escalated Wednesday.

Trump threatened on Twitter to withhold Federal Emergency Management Agency money to help California cope with wildfires if the state doesn’t improve its forest management practices.

That tweet led Newsom to respond.

Here are five things to know about Trump’s Twitter war with California:

1) What did Trump say?

Trump threatened to shut down federal funding for wildfire emergencies in California.

The president took to Twitter, his favorite social media platform, to announce:

Donald J. Trump

✔@realDonaldTrump

Billions of dollars are sent to the State of California for Forest fires that, with proper Forest Management, would never happen. Unless they get their act together, which is unlikely, I have ordered FEMA to send no more money. It is a disgraceful situation in lives & money!

2) How did Newsom respond?

Newsom responded on Twitter, saying in part, “Disasters and recovery are no time for politics. I’m already taking action to modernize and manage our forests and emergency responses.”

Gavin Newsom

✔@GavinNewsom

· 12h

Mr. President — Just yesterday, @OregonGovBrown, @GovInslee, and I sent a letter asking the federal government to work with us in taking on these unprecedented wildfires. We have been put in office by the voters to get things done, not to play games with lives.

Gavin Newsom

✔@GavinNewsom

Disasters and recovery are no time for politics. I’m already taking action to modernize and manage our forests and emergency responses.

The people of CA — folks in Paradise — should not be victims to partisan bickering.

3) How do Republican lawmakers feel about Trump’s tweets?

State Sen. John Moorlach, R-Costa Mesa, said, “If you want some excitement, just say something negative about Donald Trump, and he will react. That’s just how he’s built.”

Some Republicans used an even harsher tone, blasting Trump for his Twitter war.

State Sen. Jim Nielsen and Assembly member Jim Gallagher sent out a joint statement declaring:

“This Twitter war is not helpful. It will not solve the problem… The President’s threat to withhold FEMA funds from California is wholly unacceptable.”

4) Can Trump shut down the flow of disaster dollars?

UC Davis School of Law Dean Kevin Johnson said the president has no authority to cut off emergency funds.

“It doesn’t seem as if there’s any statutory authority that would allow the president to withhold emergency funds for people based on a state’s set of policies,” he added.

5) What prompted the fight?

California is the epicenter of the resistance to Trump. The state has already sued the federal government more than three dozen times.

Trump may be reacting to Newsom’s comments during his inauguration on Monday, when he said California would provide an alternative to the corruption and incompetence in the White House.

Then on Tuesday, Newsom took a different tone. At a Cal Fire station in Colfax, Newsom declared said, “Look, he’s never played politics with his disaster declarations. And he deserves credit for that, and we are grateful for that.”

Experts: Crippling long-term debt isn’t leaving L.A. schools much wiggle room to avert a teacher strike — and may doom the district to takeover

Taylor Swaak

http://laschoolreport.com/experts-crippling-long-term-debt-isnt-leaving-l-a-schools-much-wiggle-room-in-averting-a-teacher-strike-and-may-doom-the-district-to-takeover/

The looming teacher strike in Los Angeles, no matter how it’s sliced, comes down to money — but not the salary raises and cost of new hires that have kept the district and its teachers union apart during nearly two years of contract negotiations.

The real money problem, experts say, lies with the district’s skyrocketing long-term debt.

Experts warn that for the district to stay out of bankruptcy, it must slash its billions in long-term liabilities, much of it tied to massive retiree health benefit costs.

Their prescriptions ranged from making employees and retirees pay premiums to offering early retirement incentives. Most agreed that a local solution is needed to right the shipas California faces — or could already be in — a recession, meaning state taxpayers maybe unable to bail out the district.

But United Teachers Los Angeles has rejected the district’s proposal to shave off costs by adding two years to how long it takes new employees to become eligible for free lifetime health benefits — something other L.A. Unified unions have already accepted. Union officials dispute the district’s claim that it is cash-strapped, and says it is “hoarding” nearly $2 billion in reserves.

L.A. Unified’s full contract offer includes a 3 percent teacher salary raise retroactive to last year and 3 percent for this year. The district this week also offered $105 million next school year toward UTLA’s demands for lower class sizes and more nurses, counselors and librarians, and officials met Wednesday with California state legislators to “advocate for a larger investment in public education.”

UTLA, which represents more than 30,000 educators and other district employees, has offered concessions too, but union officials said Wednesday that L.A. Unified’s contract offer is still “a drop in the bucket when it comes to our students’ needs.” President Alex Caputo-Pearl said after Wednesday’s bargaining session “we did not see seriousness” from the district. Talks are set again for Friday.

The union says the strike will begin Monday if last-ditch talks fail. It would be the first L.A. teacher strike in 30 years and would affect more than 480,000 K-12 students across more than 1,000 schools.

“If you’re the union, your job is to argue for more benefits for your members,” said Andrew Crutchfield, director of the political philanthropy network Govern For California. But “I think there’s some legitimate questions [as] to what degree the union is representing the interests of current workers.”

A health care plan L.A. Unified ‘can’t afford to pay off’

L.A. Unified’s proverbial “fiscal cliff” has been years in the making and is the fault of the district and political leadership, Crutchfield said. While other public school systems across California are also facing insolvency, L.A. Unified dug itself a deeper hole beginning in the late 1960s, when it started granting eligible employees, retirees and their dependents free lifetime health benefits — including full medical, dental and visionwithout requiring them to contribute to the cost. Retiree health benefits alone are costing the district a projected $314 million in 2019.

History of changes to employee benefits. Source: L.A. Unified

The district, stated simply, has a health care plan it can’t afford to pay off, said Chad Aldeman, a senior associate partner at Bellwether Education Partners. “LAUSD has valued their retiree health promises at $15.2 billion, but [has] only saved $244 million,” Aldeman said.

Money that could be spent in the classrooms isthereforebeing siphoned off. The $314 million cost of retiree health benefits is equivalent to about $12,500 in district spending annually per teacher, Aldeman said. “That’s money that’s not going to teachers, either through salary increases or hiring new teachers.”

L.A. Unified’s health care benefits package — which school board member Nick Melvoin has calledone ofthe most generous in the country — also eats up about $2,300 of the $16,000 the state paid L.A. Unified in 2018-19 for every student it serves.

By 2031-32, the district estimates that half of L.A. Unified’s budget, which was $7.5 billion this year, will be spent on health care and pensions. Part of that is out of L.A. Unified’s control: All California school districts are facing higher employer pension contribution rates — rising from 8.25 percent in 2013 to 19.10 percent in 2020.

Health care benefits for retired employees are determined by a local Health Benefits Committee. But of its nine members, only one is a district representative; the remaining eight represent each of LAUSD’s various employee unions.

This setup, which “essentially means the district can’t control its health care benefits,” is fairly unique to L.A Unified, Crutchfield said. “[It’s] kind of madness.”

Health care benefits are negotiated separately at L.A. Unified from the salary and workplace conditions now at issue in the pending strike. A three-year health benefits contract was approved last spring, so the next opportunity to negotiate them won’t be until 2021, when the district is expected to already be running a deficit. The unions did agree in last spring’s benefits contract to use a reserve fund to cover increases in health care costs, which are projected to rise 6 percent this year.

Over time, these long-term obligations have contributedto what is now a $19.6 billion unrestricted net deficit — “obligations that a district must pay out in future years using future district revenue,” which would take away from “things such as teacher salaries and supplies,” Aaron Garth Smith, an education policy analyst with the right-leaning Reason Foundation, explained.

To put that number in context, it would take $4,140 from every woman, man and child in L.A. Unified to erase the deficit, state Sen. John Moorlach wrote in a December op-ed for the Los Angeles Daily News.

Considering its long-term debts, “LAUSD doesn’t have two nickels to rub together,” Moorlach told LA School Report. His research ranked the district’s per-person contribution cost as one of the highest among California’s 944 public school districts.

That reality is especially “crazy,” Crutchfield noted, when considering that the district received increased funding from the state over the past four years.

The state’s school funding mechanism — the Local Control Funding Formula — rolled out in the 2013-14 school year, generating over $1 billion a year in district revenue, a Reason Foundation study reported. That annual boost in funding is now winding down, however.

“The alarms should be sounding,” Crutchfield said.

Reason Foundation

Aldeman said the district’s attempt to shift the lifetime benefits eligibility back two years is a small step in the right direction, adding that another solution — though it would require agreement by the unions — could be to have employees, retirees and dependents start paying premiums. He added that having retirees “with moderate incomes” get health care coverage through Obamacare or Medi-Cal, California’s version of Medicaid, should be on the table as well.

“The district should not be a health care provider when there are either statewide or national solutions that could take a lot of the [financial] risks off the table for the district,” he said.

Righting L.A. Unified’s financial ship

Most experts interviewed agree that the responsibility largely lies with the district to fix the financial picture, though.

To that end, L.A. Unified in November announced a 15 percent reduction to its central office this year and next, saving an estimated $86 million. The school board and state voters have also green-lighted a 2020 ballot measure to bolster statewide education funding — but even if voters pass it, it would roll out just as the district projects it will become insolvent. Board members on Tuesday passed a resolution as well directing the superintendent to develop a three-year plan to increase district revenues, which could include a parcel tax, school bonds and property tax reform.

Moorlach also recommended offering early retirement incentives — though when a San Diego area school district board voted in December to do that, it prompted the San Diego County Office of Education to take away its decision-making control.

“You see who you can encourage to leave, maybe a year or two or three before when they wanted to,” he said. “There’s a cost to that, but maybe you can fill in those vacancies with newer, younger teachers [who are paid less].”

UTLA teachers are paid an average base salary of $70,141, with an additional average $14,562 in health and welfare benefits, a district spokeswoman told LA School Report. The state average base salary was $77,179 in 2016-17.

Center for Education Reform CEO Jeanne Allen is one expert who thinks state involvement will be inevitable, however.

“[L.A. Unified] could be radical and innovative: they could break up schools, they could try to create new schools, they could close schools; but fundamentally, if they don’t change the way they hire, retain, reward or pay educators, there’s not going to be a lot of change,” she said. “The district could do that, but they’re not going to. … There’s too many moving pieces. Too many vested interests.”

Those vested interests are why the district and union can’t even agree on where the district stands financially.

L.A. Unified says it’s spending about $500 million more a year than it’s taking in, and the county estimates the district’s reserves will drop from $778 million this year to $76.5 million in 2020-21. County and state officials have warned L.A. Unified that they might have to step in and take over if reserves dip too low.

Reason Foundation

Accepting all of UTLA’s demands, which include a full-time nurse in every school and more special education teachers,would add$813 million each year to the deficit and wipe out L.A. Unified’s reserves this school year, the district has said.

“If we had said yes” to all the union’s demands, “we would be bankrupt right now. We’d be under state receivership,” L.A. Unified Superintendent Austin Beutner told Speak Up in August.

UTLA, however, has pointed out that L.A. Unified has been wrong in the past about how soon it would run out of money. The district’s 2016 budget, for example, projected it wouldrun out of cash by this year. The union also believes the district is “intentionally starving our schools,” hoarding nearly $2 billion in reserves “so that cuts can be justified.” L.A. Unified had about $1.86 billion in reserves during the 2017-18 year, but it maintains the bulk of that money has been designated for teacher salary raises, funding for at-risk students, debt payments and other expenses.

Jaime Regalado, professor emeritus of political science at California State University, Los Angeles, said he understands UTLA’s skepticism with district leadership’s data and propositions.

“I don’t think any school district [administration] over the past score of years has ever been entirely truthful,” he said.

He added that while he recognizes the need to have a reserve, “if I’m a teacher and in with the kids and seeing that my class size has expanded, I’m not getting much help with teacher aides, I’m still paying out of my own pocket for certain things … then I really understand that as well.” Class sizes can climb into the 40s.

Aldeman believes district politics play a role in the current divide. “There’s a lot of education that needs to go on in terms of educating UTLA members about what the actual situation of the district is and what are the drivers of that, and how to get out of that [fiscal] hole,” he said.

And one particular point, Crutchfield said, needs to hit home.

“Tackling the long-term liability is what needs to be done,” he said. “Other measures, while they may have merit and may save meaningful amounts of money, are somewhat like moving the deck chairs on the Titanic.”

*This article has been updated with Wednesday’s negotiations ending with no deal.

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