California dystopia update, October 2021 edition
Even with an infusion of new state and federal funds, the San Francisco Unified School District got a grim warning on Sept. 15 from the state Department of Education: a state takeover loomed unless district officials offered a plausible plan to wipe out $116 million in red ink by Dec. 15. Even as enrollment plunges in San Francisco, compensation costs — which make up about 90 percent of general operating budgets in most urban districts — have kept going up.
Some teachers union officials hoped that state Superintendent of Public Instruction Tony Thurmond — the California Teachers Association’s and the California Federation of Teachers’ candidate since the day he announced he was running for the job in the 2018 election — would somehow protect vulnerable districts that were poorly managed from being held to account.
Instead, the former Richmond state assemblyman has followed state law — which does not bode well for future teacher pay raises in San Francisco. His staff has triggered a process under which if the district can’t fix its finances, the state’s Fiscal Crisis Management and Assistance Team (FCMAT) will take primary control of district financial decisions.
But if San Francisco Unified is on the brink of a grim new era, the state’s largest and the nation’s second largest school district — Los Angeles Unified — is on course for catastrophe. LAUSD got so much in additional revenue from the supersized state budget and from federal pandemic relief that the school board passed a record $20 billion budget in June, up from $13.7 billion in 2018-19.
Last month, the school board approved a retroactive 5 percent increase in pay for teachers as well as providing them a one-time $2,500 bonus.
Yet lost in the euphoria over increased funding are some brutal realities. Even as the teachers’ raise and bonus were approved, district budget experts warned LAUSD faced structural budget deficits in future years — massive ones. The most obvious reason is the plunge in enrollment. It went down by 4 percent in the 2020-21 school year and is down 6 percent this school year. Enrollment peaked at about 747,000 in 2002-03. Now it is 439,000.
Given that the fundamental determinant of state aid to districts is the average daily attendance (ADA) formula, the Los Angeles Unified board would have been better served by setting up as big a rainy-day fund as possible, not handing out raises and bonuses. Instead, the district budget’s “unassigned ending balance” — the amount of money left in the coffers at the end of the school year, an ideal source of rainy-day funding — is estimated to drop from $1.3 billion in 2021-22 to $113 million in 2023-24.
But the single biggest reason that L.A. Unified is headed for its rendezvous with FCMAT is that it was on course to do so three years ago when state funding was at regular levels, and not fueled by vast capital-gains tax revenue. And state funding is sure to return to regular levels. As Jerry Brown loves to point out, it is folly to make long-term budget plans that presume this most volatile of all revenue sources will never go down.
But that is just what LAUSD has done. Buried in the 156-page budget is a note that says the district expects the state to supplement the baseline Proposition 98 funding going to schools by the same amount in 2022-23 as in 2021-22. The stock market boom, you see, is never going to end.
Such thinking produced chaos in Sacramento after the Great Recession’s onset led to a 20 percent loss in state revenue in 2009. An encore looms. And when it happens, California’s biggest school district will fall the hardest.
Memory Lane Department: Twenty-two years ago this month, Time magazine ran a piece with this headline and teaser: “Gray Davis: The Most Fearless Governor in America. California thought it was electing a timid, inoffensive Governor. Instead, Gray Davis is knocking heads, even passing HMO reform.” When an editor in The Orange County Register newsroom told me the headline, I laughed, thinking he was making a joke. The Time article was published two weeks after Davis gave final approval to Senate Bill 400, providing most state employees — whose unions were the main force behind Davis’ 1998 election — a 50 percent retroactive pension increase. Pension payments from the state general fund have gone up nearly 400 percent since then as a result. Many adjectives to describe Davis come to mind before “fearless.”
Penal Rental Department: In Alameda County, a 714-square-foot, one-bedroom apartment in the AVE Emeryville complex is going for $3,400 a month. Evidently the fact that Emeryville has the highest violent crime rate of any city in California isn’t keeping housing costs down. A website that covers the city — the amusingly named E’ville Eye — notes that there is “no significant slowdown in sight” to surging rent. But there is good news for city residents. The growth in the homeless population has leveled off, and a repeat of the 513 percent increase seen in 2019 is unlikely.
Chris Reed is a contributing editor to California Policy Center, and an editorial writer and columnist for The San Diego Union-Tribune. You can follow him on Twitter @calwhine.