District May Use Surplus for Benefits

Los Angeles Unified School District Supt. Roy Romer said Wednesday that he will propose using as much as $38.5 million in surplus funds from the last fiscal year for employee health benefits.

He said the money would come from a $60-million to $65-million surplus that the district recently discovered after overestimating last year’s expenditures.

Though union leaders have been negotiating with the district for months, staged a series of rallies and even threatened to strike this fall over health benefits, they said they will reject Romer’s proposal. They say it would only be a stopgap measure to cover them for next year.

“If they were serious they would have come up with ongoing money so we wouldn’t have the same problem on June 30, 2003,” said John Perez, president of United Teachers-Los Angeles, the district’s largest union, with 47,000 teachers, librarians, counselors, school nurses and other members.

Perez said that Romer was trying to undermine the union’s morale by offering the onetime funding arrangement.

Romer said the district may be able to find permanent funding for health coverage by drawing from other programs.

Health benefits have been a main sticking point because of increasing costs. A union-controlled L.A. Unified health benefits committee found that the district would have to pay an additional $78.5 million to keep its current level of coverage in 2003.

Romer said the district paid $495 million for benefits last year and estimated that at present growth rates, annual health coverage costs could reach $995 million in five years.

“Efficiencies and incentives need to be put into this program,” Romer said.

He suggested, for example, that couples working at the district should not get two health plans. Romer also said that the district could offer district employees incentives to use their spouse’s health coverage.

The district has already paid $40 million to cover increased health-care costs for next year, and until this week Romer had repeatedly said he didn’t know where to find the extra $38.5 million.

Perez said that the district has always had enough money to pay for health benefits for its employees, but unwisely spent the money on outside consultants and construction projects.

In addition to health benefits, the union is seeking a 5% raise for its teachers, which would cost the district $125 million. Romer says there is not enough money to satisfy the union’s demands. But union leaders say the district will not be able to attract and retain qualified teachers without better pay.

About 200 teachers and other union members held a rally at Manual Arts High School in South-Central Los Angeles and are planning another today at Sepulveda Middle School to protest the district’s failure to permanently fund health benefits and to provide the raises they seek.

Romer said it was unfortunate that he did not have a better handle on how much money the district had--especially because the Board of Education had to make deep midyear cuts to make up an unexpected $110-million shortfall. But he said finding a year-end surplus is not unusual.

“I have a budgetary system that is very complex and large,” said Romer, explaining that L.A. Unified has more than 6,000 accounts and that $65 million was a little more than 1% of the district’s total general fund budget.

“You saw me before that board cutting and cutting and cutting with the understanding that we had no ending balance,” Romer said.

Now Romer said he would be able to pay for health benefits through 2003, and perhaps use some of the remaining money for salary increases or to cushion the district against more budget cuts in Sacramento.