Failing Grades

Overspending, poor management and lack of long-range planning continue to threaten the Los Angeles Community College District, according to a recent audit of the state’s largest junior college system, once considered a national model.

The district, which operates nine colleges in Los Angeles County, including Los Angeles City College and East Los Angeles College, has been subsisting between fiscal crises for years.

Some college administrators and union officials blame the state for under-funding community colleges, which receive a smaller share of money per student than four-year universities or K-12 schools.

But according to the report, prepared by state auditor Kurt Sjoberg, poor management and costly policies have hurt the district in recent years, depleting reserves and hobbling the district’s ability to cut costs.

On campuses, limited state and local dollars have led to potholes in parking lots, leaky roofs and rundown buildings, the report said. Although some of the fault lies with scanty state funding, long-range planning could help the district improve the appearance of campuses, the audit said.

To stay afloat, the district has relied on accounting techniques Sjoberg likened to “shell games.”

“It’s like that old saying,” Sjoberg said in an interview. “Is this any way to run an airline?”

According to the audit, ordered by state Senate Majority Leader Richard G. Polanco (D-Los Angeles), the problem is “the district’s practice of spending more than it receives.”

Polanco said the audit shows that community college districts need more state oversight. He said he would introduce both legislation and budgetary language to ensure they are monitored more closely.

“Someone was asleep at the switch,” he said. The L.A. district, he added, “is a district in denial that had no long-range planning and quite frankly, a smoke-and-mirrors budgeting approach.”

District officials counter that the audit is already out of date. They say that reforms approved by the district’s Board of Trustees last spring have already produced results, beginning with projections of a 2% budget surplus this fiscal year and a slight enrollment increase.

“I believe the district, from a financial point of view, is on its way back. If we make the correct decisions, there is no reason why the district should have fiscal problems next year,” said district Vice Chancellor Bonnie James.

What’s clear is that the district is at a key point in its history, under pressure as never before to fix a host of financial problems.

Patrick Lenz, state community college vice chancellor for fiscal policy, said improvement will depend on whether the district manages to negotiate union contracts it can afford. The district’s contract with its faculty is up in June and negotiations began this month.

The audit fingers recent union contracts in particular for locking the district into unnecessarily costly practices. The auditors questioned faculty raises granted in 1997 when the district was having financial difficulties.

Staff Costs Soar Beyond Projections

The faculty had gone years without raises. But staff costs soared by $11 million after the raises were approved, exceeding projections of what they would cost, the report said.

Costs to the district from employee benefits and salaries for nonteaching staff are above statewide averages, the auditors said.

Further, certain provisions for working conditions, including a restrictive five-day workweek schedule for faculty, duplicative committees and small minimum-class sizes, make it harder to cut costs and adapt programs to student needs, they said.

The audit also targeted excessive overtime for district police officers, saying that inadequate staffing and restrictive contract provisions contribute to the problem. District officials say they are looking into contracting out the service to the Sheriff’s Department.

On another front, the district’s long-standing losses resulting from the 1990 purchase of a $12.5-million building at 4050 Wilshire Blvd. continue to bleed its resources. The district never moved in because an analysis after the purchase showed it would be cheaper to lease space elsewhere.

The district is planning to sell the building at a loss. It had paid $18.6 million in debt service and maintenance on the empty building as of the audit, and will pay millions more on the debt even if the building sells soon.

The district has placed hope for its salvation in a recent package of reforms, which pivot on plans to decentralize administrative functions and force campuses to spend only what they receive.

But the audit said the reform package is inadequate. The decentralization plan, for example, does not contain enough specifics about cost-cutting to resolve the problems, the audit said. It may create new ones by shifting responsibilities to campuses and creating competition between them. No plans have been made to deal with such issues, the report said.

A theme that rings throughout the report is that of inaccurate budget estimates. Auditors faulted the district for its inability to come up with accurate cost projections.

The auditors said district officials were relying on flawed calculations of even the most fundamental aspects of district finances.

For example, the district has budgeted $243 million for staff costs this year; the auditors maintain the true cost will be closer to $251 million.

“The district has exercised poor budgetary control at all levels,” the audit said.

Beth Garfield, president of the trustees, said the audit is more critical than recent developments warrant. Already, she said, first-quarter financial reports show the decentralization plan is working.

All but two colleges are operating close to or within their budgets, she said, and enrollment--on which most funding is based--is projected to increase 1.1% for the year to 73,130.

The district should end the year with a planned 2% reserve--less than the 5% the state chancellor prefers but a sign of improvement, she said.

“They identified the problems that we already identified,” she said. “I’m confident that we are moving in the right direction.”

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Dependent on Enrollment

The Los Angeles Community College District has been struggling to boost enrollment, upon which most of its funding depends. The following is a summary of how each college is faring this year, compared to last year.

Full-time enrollment

Total

97-98: 71,843

98-99: 72,640

Budget balance as of Sept. 30, 1998 (parentheses indicate deficit)

CITY: ($83,964)

EASTL.A.: $685,297

HARBOR: ($777,396)

MISSION: $8,879

PIERCE: ($523,066)

SOUTHWEST: ($632,360)

TRADE-TECH: ($309,521)

VALLEY: ($281,235)

WESTL.A.: ($680,462)

Note: Figures are for full-time-equivalent students