Audit Calls for Major Overhaul of L.A. Schools : Education: $100 million in savings could be realized over five years, study says. Report urges more decision-making at campus level.

The Los Angeles Unified School District could save about $100 million over the next five years if it undertakes a dramatic overhaul of central administration, which is plagued by confusing, inefficient management, according to a hard-hitting audit publicly released Monday.

The $500,000 audit by Arthur Andersen & Co. calls for eliminating the district’s four regional offices, consolidating several business units, and turning over major decision-making on education and budget issues to school sites.

The district would realize the $100-million savings only if it invests about $44 million to improve its computer systems that handle financial and budgeting systems.

The savings will come through streamlining administration and making workers more efficient by providing training and modern equipment. In addition, the report said, about 300 management and clerical jobs will be eliminated over the next five years if the district is restructured and its computer system is improved.

After listening to an hourlong presentation by Jonathan Copley, who directed the audit, Supt. Sid Thompson and school board members vowed to press ahead with reforms.

“I can guarantee you (this audit report) . . . will be in my hands 12 hours a day,” Thompson said. “This is a blueprint. These are marching orders.”

Thompson said that he will announce within a week a round of cost-saving central management changes, including reductions in top supervisorial positions.

“I’m attempting to squeeze central management more toward the school management level,” he said, adding that some administrative salaries will be cut to be in line with the pay scale of high school principals.

One major theme of the audit stressed that Thompson and his top deputies must be empowered by the board to make tough decisions and be held accountable for their performance.

“There is a strong perception that this board is overly involved with the day-to-day management of the district,” said Copley.

School board President Leticia Quezada echoed the sentiments of other board members in saying she is committed to overhauling district administration.

“We are at a crossroads. We are saying we do need to change, we do need to evaluate ourselves,” Quezada said. “The board can be an important driver of this new motion to the degree we support the superintendent.”

The audit provides the first major test for Thompson, formally appointed district chief last month. Thompson had called for the outside evaluation last fall.

The report describes a district where employees are demoralized, labor strife is high and teamwork is minimal. Auditors surveyed employees, visited schools and conducted extensive interviews with district officials to reach the findings.

Generally, the three-volume, 559-page document presents a profile of a district with confusing and ineffective layers of management that is often incapable of making timely decisions.

Many managers have blurry job descriptions, fail to accept responsibility and are eager to pass the buck, according to the audit. The centerpieces of the document emphasize the need to make managers accountable, consolidate downtown administration and restructure schools according to the LEARN reform plan.

Despite the resolve of Thompson and board members to move forward with reform, the audit casts doubts on the district’s ability to improve its management and said employees are likely to be resistant to change because of exceptionally low morale and deeply rooted bureaucratic inertia.

Quezada, however, pointed to a survey of employees that showed 91% are concerned and care about the future of the district--a sign of hope, she said.

Board member Jeff Horton said the audit recommendations and the LEARN plan, which is designed to bring power to schools by giving greater decision-making authority to principals, “give the district the two best shots we have.” But, he added, neither LEARN nor the audit address the core problem: the lack of adequate education funding.

United Teachers-Los Angeles President Helen Bernstein said Monday that she “does not have much to complain about. . . . (The audit) brings out most of the criticisms we have had with the district. . . . It validates what we have been saying in terms of the lack of communication and accountability in this district.”

Bernstein said the challenge is for Thompson to rapidly implement the recommendations.

“Can he make the dramatic changes that are needed so that the public does not vote for vouchers or the breakup?” she asked. “And will board members get out of the way?”

In related action Monday, the school board gave tentative approval to cutting $11 million by reducing central administration workers and leaving other district vacancies unfilled. The cuts include funding for 100 janitorial positions, prompting three board members to ask Thompson to determine if there were alternatives.

The district’s $3.8-billion budget is slated to be approved next week. The budget may be the first in four years that will not call for widespread layoffs and class-size increases. Officials have warned that the budget is dependent on the state keeping per-pupil funding at the same level next year.

Grading the Schools

A $500,000 management audit of the 640,000-student Los Angeles Unified School District was undertaken by Arthur Andersen & Co. Here are some of the key findings and recommendations.

TROUBLE SPOTS * Management: The district has excessive layers of management, tangled by bureaucratic red tape, unclear job responsibilities and lack of accountability. Disciplinary procedures for poor managers are cumbersome and incompetence cannot be quickly addressed. * Planning: Administrators do little long-term planning and cannot efficiently assemble information. Many are unwilling to accept responsibility for their actions. * Decision making: Decisions are made too slowly and are driven more by rules than by the needs of students and parents. * Finances: The budget process is unduly complex and does not encourage accountability.

PROPOSED SOLUTIONS * Administration: First priority should be given to streamlining procedures by making top deputies directly accountable to the superintendent. * Authority: The school board must give greater decision-making power to the superintendent and top administrators. * Organization: The district’s four regional offices should be eliminated. Reorganize schools into clusters of high schools and their feeder campuses so that decision making--including budget and curriculum planning--is decentralized. * Support: Form a districtwide “educational cooperative” to provide local schools with support on issues such as budgeting, curriculum, grant writing and forming partnerships with private business. * Business reorganization: Consolidate more than 15 separate business units into three main departments: finance and information, business operations and real estate.