State says L.A. Unified spends improperly, must redirect hundreds of millions of dollars

State officials have ordered the Los Angeles Unified School District to redirect hundreds of millions of dollars in spending, with the goal of benefiting students who need the most academic assistance.

The action won the praise of advocates who had filed a complaint with the state, while L.A. Unified officials said that complying with the order will hurt students. 

The issue is whether the school system is following the rules of a revised state funding plan that provides added dollars for students who are more difficult and costly to educate. 

Advocates, including the Community Coalition of South Los Angeles, asserted that the nation’s second-largest school system was using this money for its general program for all students or for other costs. They accused L.A. Unified of using these funds to offset an ongoing budget crisis, which, they said, is an improper diversion.

Instead, the money should go to direct services for the targeted students, they said. A year ago, they sued L.A. Unified over the matter, and they also filed a complaint with the California Department of Education, which oversees the state’s school districts. The lawsuit is pending, but state officials sided this week with the advocates.

“This district is required to implement … corrective actions,” a three-person evaluation team concluded in a report dated May 27.

State officials “delivered a clear message that LAUSD can no longer shortchange high-need families in Los Angeles,” said Alberto Retana, head of the Community Coalition. “We expect the LAUSD to comply swiftly.”

He is likely to be disappointed. District officials met in closed session over the matter on Tuesday and by late this week it appeared they were digging in for a fight.

“If the advocates have their way, all students would be harmed,” said Gregory McNair, a senior attorney for L.A. Unified. “There is no doubt there could be a lot of disruption and uncertainty over this.”

McNair said the district would challenge the ruling and has many ways to do so. 

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The heart of the dispute is how to spend increased funding meant to help students from low-income families, those learning English and students who are not living with their parents. About 84% of L.A. students fall into this category, according to district documents submitted to the state.

By all accounts, L.A. schools derive substantial benefit from the new state formula.This redistribution of education dollars was a landmark policy of Gov. Jerry Brown. It passed in the Legislature because an improving economy also permitted the state to increase funding for schools with few students in the three categories.

But L.A. Unified went a step further than other districts in its accounting maneuvers, said Victor Leung, lead counsel for the American Civil Liberties Union of Southern California.  

The district, he said, moved money into its general fund that should have been spent specifically on low-income students, English learners or foster children. The district interpretation was based on how spending for disabled students should be accounted for.

“LAUSD is the only district that has done this kind of calculation,” said Leung.

L.A. Unified counters that an improved general program directly benefits the students at the heart of the dispute. Making changes of the magnitude required could lead to unintended consequences, officials said. If the funds are redirected, for example, a foster student might be able to receive additional algebra tutoring, but there also may no longer be as many algebra classes available, leaving the remaining periods overcrowded or harder for students to schedule, said McNair.

McNair added that the state intervention is at odds with new laws giving districts more decision-making authority. 

Leung countered that L.A. Unified is diverting funds from their legally intended purpose. Other districts could be tempted to follow suit if L.A. isn’t stopped, he said.

A lot of money is at stake. Advocates claim the contested funds total $789 million over the last three years. So far, however, the state is ordering only a revised budget going forward. In coming years, the dollars under dispute will rise to at least $450 million annually. 

The L.A. Board of Education hasn’t formally decided how to address the matter, but time is running out. The new budget year starts July 1.

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