Disaster averted? -- nope!

Just a quick update.  Sen Jerry Hill valiantly tried to correct the poorly thought out budget "reform" that limits school district reserves.  Unfortunately, SB799 failed to get enough support during this legislative session.  Hopefully he will take another run at this next session.

http://www.cabinetreport.com/politics-education/reserve-cap-rewrite-fails-math-placement-goes-to-governor

Thanks, Jerry, for your efforts on behalf of our students.

Prop 2 Could hit LASD Sooner Than Expected

Last fall I wrote about Prop 2, the ballot measure that restricts the amount of reserves a district can hold.  The ballot measure was a give-away from Gov. Brown to the California Teachers Association (CTA) that was slipped in at the last minute during the budget process.  Read my original post here.

At the time, a few folks told me I was being reactionary, and that the terms of Prop 2 wouldn't kick in for a long time.  Surprise, Surprise! The State Legislative Analysts Office (LAO) has announced that Prop 2 limits might kick in as soon as this year or next year.

https://www.cabinetreport.com/budget-finance/soaring-tax-collections-could-trigger-budget-caps-in-2015-16

This is just a reminder that we need to stay active and engaged in the legislative process.  California is still near the very bottom in per student spending.  These kind of shenanigans in Sacramento aren't helping our kids.

I'd love to be able to urge you to contact Jerry Hill and Rich Gordon to ask them to correct this.  Unfortunately, the voters in California have been duped, and now it is back to us to correct this problem.  I would hope that the CSBA is looking at legal options to try to invalidate Prop 2.  At a minimum, there's a conflict between Prop 2 and Prop 98.  Hopefully someone can craft a legal argument that Prop 98 guarantees should be honored- but I'm not optimistic.

The Cost of Higher Education

I'm not really a fan of Fox News.  I find that they get drawn into ridiculous positions more often than not.  However, this article by Gail Buckner about the increasing cost of higher education is worth reading.

Buckner writes about a recently published paper by Dr Robert Iouse and Dr. Frank Mussano entitled  College Tuition: Four Decades of Financial Deception.  Both authors have significant background as college administrotors, so this isn't baseless rhetoric.  The article lays out the case that colleges are essentially out of control financially.  The system depends on students paying ever increasing tuition, and there is little or no incentive for the schools to rein in their costs.  Professors are teaching fewer and fewer hours, and spending more time on research and writing.  Administration costs have ballooned.  Worse still, the public perceives "more expensive" to equate to "better education".  I have not yet read the book, but plan to do so.  It can be found on Amazon here

As a parent of a high school junior and an eighth grader, this is very much "top of mind" for me.  I spoke to a college admissions counselor recently.  Speaking about the tuition at USC, and many other schools, she said, "I don't care how much money you make.  $64,000 per year is a lot of money."

Fine, you say.  USC is a private school.  Surely my kid can go to a state school and get a great education.  That's true- but you may not want to plan on that state school being in the state of California.  The UC system offers fewer and fewer spots to in-state students.  Chancellor Janet Napolitano blames the legislature for not funding the UC system at the level the regents demand. I'm sure the K-12 educators in California would like to have more funding too, but we don't have the option of just passing the cost on to students.

Once again, I'm reminded of my alma mater, Purdue University.  President Mitch Daniels froze tuition and forced departments to live within a budeget.  While that seems common-sense to anyone who runs a business - or even a household - budgets with limits aren't part of the equation at a lot of schools.  (See article from the Chicago Tribune)

In any case, this is a serious issue in education, and I expect to be writing more about it.  Along the way, I'd love to hear from folks with suggestions about how to fix the system.  It would be great if the collected wisdom of our community could have a lasting impact beyond First and Main streets.

Pension Reform

Do not go gentle into that good night,
Old age should burn and rave at close of day;Rage, rage against the dying of the light.

-Dylan Thomas, 1914-1953

I guess this is the answer to folks who wondered what would happen to my blog after I left office.  I still have a significant interest in public education and public policy, so I plan to continue to write as often as the mood strikes me.

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I've written in the past about the need for pension reform, stretching back to 2010.  This isn't an attack on our teachers.  To the contrary, I greatly value the work they do, and I want to make sure we can honor the commitments we've made to ensure they have a reasonable life in retirement.  However, we are burying our heads in the sand if we don't acknowledge that we have a drastically under-funded pension system.  A recent article in Cabinet Report puts the national pension shortfall for teachers at $325B, and the State of California makes up $74B.  That's a lot of money, folks.

Again, this isn't an attack on teachers.  Schools need to balance two competing goals: fulfill the promises to fund retirements, and also fund ongoing operations.  I don't think that any of our teachers would want to see a future education system in which so much money was being diverted to pensions that the quality of education is compromised for the students then in school.  At the same time, we've made a contractual promise to teachers today, and they will need to retire at some point.

Gov Brown has pushed through a pension reform bill that will substantially increase the payments school districts make to pay for pensions.  That change will take effect over 7 years, and will increase our contribution from 9.5% of payroll to 19% of payroll.  That's a massive increase.  I can accept that it is necessary to do this in order to shore up CalSTRS (the teachers' pension fund).  However, I have concerns about what happens down the line.  How do we get to a sustainable model?  How do we keep it sustainable, even if we manage to weather the "shoring up period" that is starting now?

At bargaining tables across the state, we'll be faced with the same conversations that districts and their teachers have had for years.  Teachers will want to see an increase in their current salary, and districts will point to their other expenses (pensions, health care, etc.) and be faced with cutting in-classroom staff to pay for raises.  

When I was on the Board, we were setting aside money every year to cover our unfunded medical liability, so that we wouldn't be faced with big bills down the line.  The problem is, there's little ability to do this for retirement pensions.  You see, while medical liabilities are incurred locally, and it's a local expense, the retirement pension is a state-level liability, and is managed at the state level.  Local school boards have zero control over the amount that is saved each year, what the payout will eventually be, or what investment assumptions are used to calculate the pension funding formula.  It's all completely out of our hands.

LASD has a great relationship with our staff, and I'm very proud of that legacy.  We participate in interest-based bargaining, and our staff has embraced a risk-sharing model in their compensation that means they get more when times are better, and less when times are lean.  We are truly ahead of the pack in our labor relations.  I honestly believe that we could accomplish a great deal together if we had that freedom with the pension funding equation.  So here's a thought:  How about letting local school districts manage our own pension funds.  Instead of CalPERS/CalSTRS making the investment decisions, why not let local districts make that choice?  I would guess that if local districts have to work on the investment assumptions, they'd make much better choices than the politicians in Sacramento.

It doesn't have to be the Wild West.  We could still have a state safety net, much like the federal system for various pensions out in the private sector.  However, it would incentivize the districts and teachers in CA to solve this problem together, and to keep the problem fixed in the future.  Otherwise, we're just going to get to a "new normal" where an increasing chunk of the budget goes to pensions every year, and the kids in the classroom have less.  That is hardly the way for CA to climb up from the bottom of the national education ladder.

For those who are wondering, this problem affects traditional public schools and charter schools alike.  BCS and every other charter school in the State of CA still pay into CalSTRS, just like a traditional school district.  That cliff out there- it exists for everyone.

Ethics, and Thanks

10 Nov 2014 8:15am Update:  I've added the links to the FPPC filing, as well as cross references to my prior blog posts.  At this time, Measure N is at 57.31%.

First, a massive THANK YOU to everyone who turned out and voted.  It looks like Measure N has passed, with 56.22% of the votes cast.  Likewise, it looks like we have elected three excellent trstuees to the LASD Board, returning Tammy Logan and installing first time trustees Sangeeth Peruri and Vladimir Ivanovic as new Board members.  To all three candidates, I offer my thanks for being willing to take on the task of representing our community.

I also offer my heartfelt thanks to all members of the LASD Board with whom I have served, including Mark Goines, Bill Cooper, and Margot Harrigan, as well as Tammy Logan, Steve Taglio, and Pablo Luther.  All seven of us have held strong opinions, and we often disagreed, but we managed to do so civilly, and the District is much better off for the service of all of these fine folks.


Back in October, I wrote a couple of blog posts that were critical of Martha McClatchie and John Swan, and the pro-BCS PAC that was deceptively named "LASD Parents for Great Schools".  I caught a lot of static from BCS parents when I posted this.  The most benign suggested that I was better off to merely voice support for those I liked, but not to criticize people or groups with whom I did not agree.  When I wrote those posts, I had to weigh the advice of my grandmother (If you can't say something nice...) with the need for people to understand what was going on.

Obviously I decided that transparency was more important than {fill in the blank}.  I mean that sincerely.  In one of the many emails I exchanged on this topic, I told a prominent BCS parent that I value transparency in governance above any bond campaign and above any individual candidate.  If people knew that "LASD Parents for Great Schools" was a front for BCS campaign money, but they were still willing to elect John or Martha, so be it.  But I didn't want them being elected because people were mislead by the name of the PAC, or by the campaign statements that hide the BCS connection of the candidate or their support of charter schools as a matter of policy.

Today I got a bit of vindication in the form of a late campaign filing.  A community member forwarded to me the FPPC docs for the California Charter School Association.  The last minute filing disclosed that the CCSA gave $22,000 to the "LASD Parents" PAC, and another $6,000 directly to John Swan's campaign.  Holy cow!  Really??  That's more money than any one of the three winning candidates spent.  And remember, this money is in addition to the funds Martha and John raised on their own.  In total, Martha, John, the BCS PAC, and the CCSA spent around $100,000 trying to buy a seat on the LASD Board of Trustees.

I don't expect that those folks who criticize me are suddenly going to recant and send me flowers.  However, this should serve as a cautionary tale to the rest of the community.  Leopards don't change their spots.

This election came perilously close to swinging the wrong way.  Early returns had John Swan on the Board instead of Vladimir, and likewise the early results for Measure N were grim.  We came really close to being deceived.  The message I hope people take away from this is that they need to stay involved so they can be informed.  We all have a responsibility to understand the issues on our own, not to just take the deceptive headlines of a shadowy campaign group that has neither a public face.  Look beyond the generic campaign-speak and understand where the candidates have been investing their time, so you have a deep understanding of how they will act when they're representing your interests.  If nothing else, don't drop off the map over the next two years- because I'm guessing we haven't seen the last time of sleazy big-money politics in our small California community.

Why I'm Voting No on Prop 2

I am a strong proponent for conservative spending plans.  Last year, when LASD saw our first budget surplus, I advocated setting aside some of that money to shore up our future pension liabilities.  When, then would I be voting No on Prop 2?

On the face of it, Prop 2 creates a rainy day fund to even out state expenditures in lean times.  Like much of what we see in politics, though, there's a catch.  Prop 2 also puts a cap in place, limiting the amount of reserves local school districts can carry.  In the case of LASD, that means we'll lose the ability to save for a rainy day ourselves.  We will depend entirely on Sacramento.  We won't be able to have a special reserve to cover our healthcare obligations to retirees, and we won't be able to save money for the next recession when it comes.

Gov. Brown's logic is that the State of California will carry the reserve, which will then remove the need for local Districts to carry one.  That would be great, if the State had a solid track record in this regard.  However, one only need look at how they've handled their Prop 98 obligation (wherein the voters required that at least 39% of state budgets go to education).  In the past several years, when times got tight, Sacramento said simply "we'll owe you that money".  Literally- we have an outstanding Prop 39 receivable from the State of California that we never expect to get paid.

I want to keep control here at the local level.  We know what is best for our community.  Let our local community formulate how we spend and save.  Keep control here.

{If this post sounds familiar, it should.  I wrote about this back in June.  At the time, we were hoping that the Legislature would correct this problem before Prop 2 made it onto the ballot.  unfortunately they did not.  As a result, I can't support the measure.}

Financial Responsibility

Recently a group of "community members" have been running ads in the local papers alleging that the LASD Board and administration isn't acting in a financially responsible manner.  Their ads have been riddled with factual inaccuracies (simple things that take 10 minutes on Google to confirm).  I could spend a lot of time correcting all of that, but I think it's a lot simpler to point to the professionals.

As we do every year, LASD issued some short term notes to the financial markets.  I won't bore readers with the mechanics, but it's something that schools across California do every year.  As part of the process, Standard and Poors rated us "SP1+", which is their highest rating for short term borrowing.  Their analysts cited LASD's strong financial fundamentals as a key aspect of the rating.

This isn't the first time we've received excellent marks from the rating agencies.  I wrote about it once before, but it's a common theme for LASD.  We're fortunate to have so many folks involved to make sure we do a good job of stewarding the community's resources.

 

LASD Saves Taxpayers $2.7M

LASD Assistant Superintendent for Business Affairs Randy Kenyon came to the Board last year to recommend refinancing the District's outstanding general obligation bonds.  You can't refinance bonds every time you think of it, so it has to be done wisely.  Once the Board approved, Randy lined up meetings with ratings agencies to discuss District financials.  He spent a full day going through our financials with them.  In the end, the ratings agencies were impressed, and we have one of the highest credit ratings of any school district in CA.

This week, we got to see the fruits of all that work.  We refinanced our bonds at a new low rate of 1.19%, saving our local community more than $2.5M of our tax dollars (that would eventually be used to pay the interest).  Amongst the other news this week, it would be a shame if this didn't get noticed.  When we talk about the work that Randy Kenyon has to do, this is all part of it.  Thanks, Randy!


Press Release: LASD Saves Local Taxpayers More Than $2.5M