MOORLACH UPDATE — Charter School Fiscal Impacts — December 13, 2019

School Rankings Report

I reviewed the California school districts that have charter schools to see if they were a fiscal drag on their host districts.  I didn’t find it, so I provide my findings in the Voice of OC piece below.  There’s an old phrase, “Liars can figure, but figures don’t lie.”   To steal a 25th-anniversary remark, charter schools are getting a bum rap.

The California Globe includes my school ranking study for the fiscal year ended June 30, 2018, in its piece on even more spending by the Los Angeles Unified School District (see MOORLACH UPDATE — Second Annual School Districts Report — December 11, 2019).

25th Anniversary Look Back

On December 12, 1994, the stories were reflective and apologetic (see MOORLACH UPDATE — Harbor Patrol — December 12, 2009).

On December 13, 2004, Rick Reiff provided a reflection piece, as he served as moderator for a tenth-anniversary panel at the Nixon Library the week prior (see MOORLACH UPDATE — LOOK BACKS — December 13, 2009).

On Wednesday, the Orange County Public Affairs Association hosted an anniversary panel.  Former Supervisor Bill Steiner was a panelist as well. Supervisor Steiner served from 1993 to 1999 and helped work the county out of Chapter 9 in eighteen months.  His perspectives were honest and well received.

I had the chance to thank him for appointing me to the position of Orange County Treasurer-Tax Collector, as his vote changed the course of my life.  

One of the points I tried to make during the luncheon event is that people run  governments. And people are still subject to greed and fear, so they don’t always make the most rational long-term decisions when money is involved, especially if they don’t have to write an immediate check for those commitments.  Consequently, elected officials continue to make strange and nonsensical financial decisions. They believe sales pitches or campaign threats from public employee unions and, unfortunately, often make poor math decisions. It does not make sense to change a defined benefit pension formula midstream when private corporations are shutting down such plans; it only spoils future balance sheets and annual budgets.


Data Shows Charters Do Not Hurt School District Finances


California charter schools took a beating in the state Capitol this year. Charters are cost-effective alternatives created by parents, cities, universities and foundations. The parents want their children to receive an education that exceeds that provided by the host districts. For the most part, charters are succeeding, so strong forces in Sacramento want them to disappear.

The worst misnomer was the contention, put into legislation, that charters hurt school district finances. My analysis of California’s 283 school districts with independently run public charter schools shows this is not the case.

Of Orange County’s 29 school districts, seven include charter schools. Data are for 2019 and come from the state Department of Education.

The vast majority of charter schools are non-unionized. This allows charters to avoid many of the burdensome costs unions impose on school districts.

Public charter schools have close to no fiscal effect on their respective school districts. Yet in May, California Teachers Association President Eric Heins claimed they drain funds from public schools “working on starvation wages since the 1970s.” For the record, charter schools did not come into existence in California until 1992. And total teacher compensation, which includes a retirement plan, is a “steak dinner,” thank you.

Of many charter bills passed this year, the main one was Assembly Bill 1505, by Assembly member Patrick O’Donnell, D-Long Beach. It mandated of charter proposals, “Analysis of this finding shall include consideration of the fiscal impact of the proposed charter school. A written factual finding under this paragraph shall detail specific facts and circumstances that analyze and consider the following factors:… (8) The school district is not positioned to absorb the fiscal impact of the proposed charter school.”

Charter schools and parents should rest assured the schools are not causing financial strain. The proliferation of charter schools since 1992 has not hurt district finances.

What has hurt school districts? Granting overly generous salaries, pension formulas and lifetime medical benefits to teachers’ union members.

The key thing to analyze is the positive or negative per capita Unrestricted Net Position (UNP). It’s located on each district’s audited annual basic financial statements for the fiscal year ending June 30, 2018.

For the 283 districts with charters, I paired the per capita UNP with the percentage of charter students in a district. The chart nearby shows the correlation with school finances as the percentage of charters rises, from 1 percent in some districts to 100 percent in others, with most districts being somewhere in-between.

The trendline inclines upward to the right with a correlation of 0.141. That is, in general those school districts with more charter schools have healthier balance sheets. Although I’d like to claim charters improve a district’s finances, that isn’t the case because standard statistical practice is the correlation must be 0.3 or above to have “a moderate positive linear relationship,”

The point is charter schools do not appear to hurt district finances.

Specifically, let’s look at the Oakland Unified School District, which is in severe fiscal distress. In June, the school board cut $20 million in spending to balance the district’s budget for fiscal 2019-20.

As early as 1999, when it had just 2 percent of students in charters, the state warned Oakland Unified its fiscal meltdown “was looming,” reported the Sacramento Bee.

In 2003, the state took over the school district to straighten out its failing finances. At that time, it had 13 charters, compared to 45 today. Student enrollment in charters was just 4 percent in 2003, but 43 percent in 2018.

This was a policy direction strongly encouraged by former Gov. Jerry Brown when he was Oakland’s mayor from 1999 to 2007. So, why would a 20-fold increase in charter students over 16 years now be the main scapegoat? Can you say, “Shiny object”? “Jealousy”? “Misdiagnosis”? “Balderdash”?

Historically, according to a report by the Legislative Analyst’s Office, of nine school districts receiving state loans to fix their finances since 1991, seven were granted in 2004 or before – that is, before charters began to become popular in California. Three even occurred between 1991 and 1993. Again, charters had close to no effect on those schools’ finances.

The financial problems of most public school districts in California are caused by their own fiscal mismanagement and kowtowing to teachers’ union demands. For these unions, if you can’t beat them, destroy them.

Don’t blame charters, which remain a bright spot of choice for fiscally distressed school districts. Charter schools are the model for opportunity and achievement in the state’s otherwise dismal education picture.

John M. W. Moorlach, R-Costa Mesa, represents the 37th District in the California Senate

LAUSD Opening 50 Planned Parenthood Clinics in California’s Failing Public Schools

Newest California school district financial rankings show LAUSD one of the worst

By Katy Grimes

Sen. John M. W. Moorlach. (Kevin Sanders for California Globe)

While 15 California abortion businesses have closed, LAUSD is opening 50 Planned Parenthood clinics in California’s failing public schools.

California Senator John Moorlach just released his 2019 Financial Soundness Rankings for California’s Public School Districts, Colleges & Universities, and the news is worse than last year. Much worse.

Los Angeles Unified School District, already on Sen. Moorlach’s very naughty list last year, dropped 16 places, from an already abysmal 922nd place in per capita UNP, to an even worse 938th place. “It is now the third worst in the state per capita.”

LAUSD also has some of the poorest performing schools in the state.

However, this week, the nearly bankrupt LAUSD diverted $10 million to allow Planned Parenthood to open clinics at 50 Los Angeles high schools.

“Planned Parenthood is pioneering a new model of reproductive health services for Los Angeles County teens by opening 50 clinics at area high school,” MSN reported. “The program — announced Wednesday and launched in partnership with the school district and county health department — is believed to be the most ambitious effort in the country to bring these types of services to at-risk students in public schools.”

California public officials are now inviting Planned Parenthood right into its public schools?

LAUSD has the biggest unrestricted net deficit in the state — $19.6 billion, and they just committed $10 million to Planned Parenthood, the country’s largest abortion provider.

“The program, funded by an initial investment of $10 million from Los Angeles County and $6 million from Planned Parenthood over three years, will offer a full range of birth control options, testing and treatment for sexually transmitted infections, and pregnancy counseling, but not abortion, for an estimated 75,000 teens,” MSN reported. “The program will also train hundreds of teens to be ‘peer advocates’ to help provide information about safe sex and relationships.”

Also this week, Californians for Life reported, “Despite the pro-abortion Democrat Party politicial domination here in California, California leads the nation with 15 abortion businesses CLOSED, contributing to the 32% decrease nationwide as documented by the abortion industry’s report released today!

A new report from the pro-abortion Abortion Care Network found that almost one third of all independent abortion facilities have closed since 2012, reported.

Worst Ranked School Districts Also Had Teacher Strikes

Sen. Moorlach explains his rankings:

“For the first time, new regulations by the Governmental Accounting Standards Board (GASB) required municipal audited financial statements to include retiree medical liabilities. Balance sheets refer to this as Other Post-Employment Benefits (OPEBs). With their addition, more districts are seeing their unrestricted net positions (UNPs) tip further into the red. Of 944 districts, 90 percent have a negative net position. Total Deficits: I tried to find some positive news, but couldn’t. Total combined UNPs for the 944 public school districts in the state worsened to a deficit of $70.9 billion for fiscal 2018, from $50.6 billion in 2017. It increased by $20.3 billion, or 40 percent, in just one year.”

In monetary terms, Financial Soundness Rankings for California’s Public School Districts, Colleges & Universities, December 11, 2019 p. 2, its negative UNP dwarfs every other district, almost doubling its net deficit to $19.6 billion in 2018 from $10.9 billion in 2017. As I explained in an op-ed in the Los Angeles Daily News, “The reason was, for the first time, municipalities are now required to include unfunded liabilities for retiree medical care on their balance sheets.” I warned that, if the LAUSD’s UNP keeps getting worse, it could be big enough to take down the state budget – even though the state’s budget surplus this year was $21.5 billion.

Sacramento City Unified dropped 60 positions, to 929th from 867th. Its net deficit about doubled, from $539.7 million in 2017 to $1.07 billion in 2018. In May, it barely avoided a state takeover.

Fresno Unified dropped 25 places, to 935th from 910th. Its net deficit also nearly doubled, from $849 million to $1.5 billion.

San Diego Unified improved 34 places, moving from 831st to 797th. Yet its deficit continued to deteriorate, dropping to $1.7 billion from $1.5 billion.

Oakland Unified improved 90 places, from 683rd to 593rd. Despite that, its deficit dropped to $448 million from $427 million.

Amazingly, three school districts in the worst shape suffered teacher strikes earlier this year: LAUSD: Oakland, and Sacramento.

More to come from Sen. Moorlach’s rankings.

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