District Fears Loss From Vouchers : Education: School officials say Proposition 174 could cost L.A. $70 million.

The Los Angeles Unified School District could lose up to $70 million this fiscal year if Proposition 174 passes in November, district officials predicted Thursday.

District Budget Director Henry Jones based his analysis on a scenario advanced by state education officials about the fiscal impact of the school voucher initiative, an interpretation that is hotly contested by voucher supporters.

The contention that Los Angeles schools would lose $70 million supposes that all eligible private school students statewide redeem the $2,500 tax-supported vouchers the initiative would provide. It does not take into account public school students who might leave the district, which would result in further losses.

If 2% of children statewide-which would mean 10,000 students in Los Angeles--use the vouchers to transfer to private schools, the Los Angeles district’s funding would be cut by $165 million, Jones said.

“If (vouchers are) imposed, we would ask the state to fund it or come in and make decisions,” Jones said. “We don’t have the resources to make it up.”

However, Proposition 174 supporters dispute his estimates, saying that Los Angeles and state education officials are purposely misinterpreting the measure’s fiscal impact to frighten voters into rejecting it.

“We think they are doing this simply to create fear. It’s a lie,” said David Barulich, research director for the Yes on 174 campaign. “What they are trying to do is create fear among suburban white Republican families that their public schools are going to be defunded, that if this passes they are going to lose all this money.”

Legal experts on both sides disagree on how the initiative will ultimately be interpreted by the Legislature and the courts, Barulich said. What they do agree on is that Proposition 98--approved by voters five years ago to guarantee a minimum level of public school funding--would essentially be dismantled, leaving education spending decisions up to the Legislature.

Acting Supt. of Public Education William D. Dawson has said he is making no plans to implement the initiative because he believes it will be held up by legal challenges and ultimately overturned by the courts.

Los Angeles district officials believe that if the initiative were immediately implemented, the district would be forced to turn to the state for a bailout because it would be prevented from massive midyear layoffs, the only way it could deal with a $70-million shortfall.

If the loss were to climb to $165 million, the district could be forced to eliminate up to 4,700 jobs, he said.

The $165 million takes into account an estimated $14 million in district savings because fewer students translates into decreased spending on teachers, books and supplies. The savings are not higher because the district would still have to pay fixed costs for such things as utilities, insurance and school maintenance.

The 1,000 public school systems across the state may be in similar straits this year because the measure stands to reduce public school spending by providing vouchers to students who are currently in private schools, Jones said.

Under the terms of the initiative, when a private school student receives a voucher, the state’s education budget loses about $5,000--$2,500 for the voucher and $2,500 that goes back to the state’s general fund.

State education officials predict that the budget will lose even more when children begin leaving public school for private schools because public schools are affected by the initiative in three ways:

* About $2,500--or half of the $5,000 the state spends on each child in public school--would follow the child to private school.

* The other $2,500 would revert to the state’s general fund and not be earmarked for education spending unless the Legislature and the governor decide to return it.

* The pot of money guaranteed by Proposition 98 would shrink by about $4,500 every time a public school child accepts a voucher to go to private school.

A fiscal analysis of the measure by education researchers at PACE, Policy Analysis for California Education, said the initiative would cost the state $310 million immediately, if the 120,000 private school students who would initially be eligible apply for vouchers.

If all 540,000 students currently enrolled in private schools accept vouchers when they become eligible in 1995--an unlikely scenario, the PACE report says--it would cost the state $1.35 billion.

The state could save money under Proposition 174, but it would take 1 million public school transfers to offset the cost of providing vouchers to all the state’s private school students. The resulting decrease in public school spending would also reduce the amount of the voucher, the PACE analysis indicated.

Barulich predicted that would not happen because the voucher initiative will create a “new political class that is in favor of public school spending because the value of their voucher is tied to per (student) funding of public schools. . . . People who say ‘I’d better root for public schools because then I get a bigger voucher.’ ”

In addition, a poll released Thursday by PACE shows that although California residents support the concept of vouchers by a 2-1 margin, that support diminishes when vouchers cut into public school spending.

“People want to see their public schools overhauled, not destroyed and they are leery of the fiscal implications of a voucher system that affects public school funding,” said Julia Koppich, deputy director of the Stanford University and UC Berkeley-based think tank.

This concern over potential fiscal impact on public schools was raised Thursday by a coalition of local Asian-American educators and community leaders who are opposed to the measure.

“Yes, our public schools are in trouble, but Prop. 174 is not the answer,” said Jeffrey Tung, a commissioner of the district’s Asian-Pacific American Education Commission. “We can’t abandon the very education system that some of our parents came to this country for.”

The Asian-Americans join coalitions of Latino and black education and community leaders who oppose the initiative. Aside from the potential fiscal impact, the groups contend the measure will lead to discrimination against low-income and minority youths who will not have access to costly private schools even with a voucher.

Voucher supporters say the measure, which allows any school with more than 25 students to redeem vouchers, will lead to the growth of community and church-based private schools.