Posted: Friday, April 27, 2018 – 1:21 PM
By Laura Coleman
Make no mistake, Beverly Hills Unified School District’s latest 2017-18 budget does not paint a pretty picture.
In response to BHUSD’s Second Interim Report, earlier this month the Los Angeles County Office of Education (LACOE) authored a letter addressed to Board of Education President Lisa Korbatov stating that while the office believed the district “should” be able to meet its financial obligations for the current and two subsequent years, it had some concerns.
At the crux of this concern is BHUSD’s failure to take action to address its looming budget deficit. The district’s First Interim Report for 2017-18, which was submitted to LACOE in December, had it making $5 million in staff reductions – a financial cut BHUSD has since withdrawn.
“We are concerned this action poses serious implications for the district’s solvency,” LACOE’s April 10, 2018 letter stated.
The letter further detailed LACOE’s concerns with the district’s latest projections, which has it operating with a deficit of $2.8 million for this year, and subsequently projecting out increasing operating deficits of $4.1 million for 2018-19, and $5.5 million for 2019-20.
“Over the three-year span, the combined unrestricted General and Special Reserve Funds’ ending balance is projected to decrease from $15.8 million to $3.4 million, a decline of 78 percent,” the letter codified. “We are concerned that if this deficit spending trend continues as projected, it will jeopardize the district’s fiscal solvency in 2020-21 and beyond.”
The district’s inability to optimally manage its budget means that the district’s fledgling $10 million rainy day “endowment” Fund 17 will soon be entirely wiped out. Its current budget for this year is $69.8 million.
On Tuesday, boardmember Mel Spitz underscored how LACOE’s concern about the declining reserves in the district’s multi-year projection is something that everyone throughout the district should be aware of – particlarly the teachers who are now at impasse with the district.
For the first time in almost two decades, the school district is at impasse with its teachers union and is currently poised to go into “fact-finding” in the near future, the penultimate step before the teacher’s union may decide to strike.
The last time there was a strike in the district was 1989.
At the heart of the impasse is the Board of Education’s desire to do away with the district’s teacher salary formula, passed four years ago, which ties raises to property taxes. The 2014 board decision to tie salary increases to property taxes was touted at the time as a way to ensure that BHUSD could attract and retain the brightest educators by offering salaries that would one day be the highest in the county. Today, BHUSD teachers are still not the highest paid in the county; nor even in the top 20. Neither Spitz nor board member Isabel Hacker were seated at that time.
LaTanya Kirk-Carter Latham, assistant superintendent for Business Services, like the board majority, is convinced that BHUSD must unhinge itself from the current salary formula in order for the district to extricate itself from its budget troubles.
Throughout Spitz’s campaign to run for the school board, he was vocal in his opposition to the current salary formula.
“If we had many fewer teachers (and larger class sizes), we could do some of the things (the teachers) want. But they don’t understand that,” he said on Tuesday.
Spitz also continues to advocate for the district to reconfigure the schools in order to drastically reduce expenses.
Earlier this year, the district finished a disheartening months-long exploration into reconfiguring the schools to include a dedicated middle school which centered around recommendations by the Future Focused Schools Team (FFST). The group was hand-selected by Superintendent Michael Bregy and included both community members as well as district employees (Bregy elected to not include student voices, although the 21 members on the team were all dynamic, passionate, intelligent individuals committed to exploring reconfiguration). The team spent hundreds of hours to identify various options to maximize student learning and welfare while potentially saving the district money. However, Bregy failed to direct the team to create an effective strategic plan to achieve reconfiguration, ultimately resulting in an exercise in futility that didn’t truly achieve anything palpable except frustration.
Spitz is still holding out that reconfiguration could be an option to the district’s compounding financial woes, although no one on the board has maintained as staunch a commitment to that prospect as Spitz.
As part of LACOE’s recent letter, it required the district to address its deficit spending in a board-approved fiscal stabilization plan (FSP) to be submitted with its 2018-19 Adopted Budget, along with a board resolution for the plan, by July 2.
“The reasonableness and feasibility of the FSP will be an important factor in our review and approval of the District’s 2018-19 Adopted Budget,” the letter stated.
Following an in-person meeting with LACOE which included Korbatov, Bregy, Latham and board member Howard Goldstein, Latham said the FSP is no longer required as per the original timeline.
However, she said that if the outcome of the district’s negotiation process doesn’t end the current teacher salary formula, the district will indeed need to submit the FSP.
“[LACOE has} given us to the end of July, middle of August, if our multi-year projections don’t look any better than what we submitted during the second interim,” she said.
In last week’s Courier, BHEA bargaining member Chris Bushee took the district to task in a “Letter to the Editor” for making it seem like the district’s financial predicament was a result of the teacher salary formula. He later expanded on his statements by referencing multiple “large administrative salary increases” (some have been in excess of 20 percent); a 50 percent jump in district office personnel over the past five years; and the district’s trend to over-estimate expenses and underestimate property tax revenue.
“These factors combine to make it look like the district has million of dollars less than it really has,” Bushee said. “If the district would trim the size of the district office and budget more accurately, its budget picture would improve significantly.”
Spitz referenced LACOE’s recent letter as “proof” that Bushee was “misinforming teachers and the public.”
Still the truth is clear: BHUSD is on a downward financial trajectory that needs to be taken seriously and thoughtfully addressed.
“We have some significant challenges ahead financially,” Bregy said.