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Proposition 30 Millions Already Headed to Wall Street

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Millions of dollars in new tax revenue earmarked for the University of California system as part of the state’s recently passed Proposition 30 will instead be routed to major financial firms, because of bad bets made by a Wall Street-influenced UC Board of Regents.

Over the last decade, tuition and fees for undergraduates in the UC system have tripled, adding enormous debt burdens to UC graduates and pushing lower-income students into the already overburdened state college and community college systems, or out of higher education altogether. Members of the UC Board of Regents, which governs the system and which approved the tuition hikes, have blamed the increases on the bad economy and on politicians.

However, according to a new report written by five doctoral students at UC Berkeley, in the years preceding the 2008 financial collapse, members of the Board of Regents themselves had overseen “a qualitative shift in the financial practices of the University of California” by employing the same kinds of exotic financial instruments that precipitated the meltdown on Wall Street — primarily, bond issuances hedged by interest rate swaps.

An interest rate swap is essentially a bet that interest rates will rise. UC would issue a bond with a variable interest rate, then make regular payments to a third party (typically an investment bank) based on an agreed-upon fixed interest rate. The bank would then pay back to UC a dividend based on the variable interest rate of the original bond, if the variable rate were higher than the fixed rate. If the variable rate were lower than the fixed rate, then the money would go the other way: UC would owe money to the investment bank.

Between 2003 and 2007, the report explains, UC acquired interest rate swaps with five investment banks in order to issue over $600 million in bonds to finance development of medical centers on three campuses. Medical schools and hospitals are major profit centers for universities. As UC used debt financing to expand these profit engines, tuitions for students continued to rise. Since the risky contracts the Board of Regents entered into were made possible by the collateral afforded by UC student tuition costs and by the Board’s ability to jack up tuition and fees at its discretion, the same students whose ballooning debts and tuition payments to the university were making the UC system’s exotic financial bets possible were receiving no tuition relief from the university out of the profits generated by those bets.

The result of these complicated arrangements has become a familiar story since the 2008 meltdown. The Board of Regents’ pursuit of cheap money to increase UC profits left it exposed to the financial collapse. According to the report, UC’s risky bets have now cost it $57 million, which could rise to over $250 million over the next three decades. Between May 2007 and the end of last year, the Regents doubled UC’s debt load. The UC system is currently paying about three quarters of a million dollars per month to Wall Street firms as a result of the swaps.

Moreover, the LIBOR scandal earlier this year demonstrated that Wall Street bets against rising interest rates were in fact fixed by the banks. All of the interest rate swaps described in the report were based on variable rates determined by LIBOR. Through market manipulation by the banks, UC’s bets were guaranteed to be a raw deal for students, their families, taxpayers, faculty, university workers and anyone else associated with the university.

Like many other ripped-off institutional counterparties to LIBOR trades, UC has standing to sue the banks. But the Regents have not only failed to do so, they haven’t even tried to renegotiate the terms of their agreements, as other institutions have successfully done. The question is, why?

UC Regents and management have provided no explanation for why they are not re-negotiating or litigating against Wall Street to re-coup losses on these swaps stemming from the banks’ illegal interest rate manipulation,” said Charlie Eaton, a UC Berkeley Sociology graduate student and one of the authors of the report.

One possible answer is another sadly familiar story: The UC Board of Regents has become what the report describes as a “revolving door with Wall Street.” An increasing number of posts in top UC management and on the Board of Regents have been filled by former Wall Street bankers, the report explains, including a new CFO position created in 2009 and filled by Peter Taylor, who was the Managing Director of Public Finance for Lehman Brothers before he found himself out of a job following the firm’s spectacular collapse. Monica Lozano, a UC Regent, also serves on the Board of Bank of America, a position for which she has received approximately $1.5 million. Bank of America stands to make as much as $28 million from an interest rate swap at UC San Francisco, according to the report. B of A is also one of the banks under investigation for LIBOR manipulation.

Proposition 30 was passed last week by California voters in part to stem the tide of perpetual tuition hikes and the rapid decline of public higher education in the state. But because of the Regents’ predilection for gambling with student tuition money, much of that new tax revenue will be routed away from tuition relief and toward the very Wall Street firms that — with the Regents’ help — created the financial crisis that accelerated the higher education crisis in California in the first place.

Since its founding, the UC system has always played a central role, both structural and symbolic, in making the California Dream possible. Over the last decade, it appears that the Regents leveraged that dream to make the UC system a player in Wall Street’s casino economy. As with any casino, the game was fixed. Now the rest of us are being forced to pay for their mistakes.

Leighton Woodhouse is a partner and co-founder of Dog Park Media and Communications Director of the National Union of Healthcare Workers. His post first appeared on Firedoglake and is republished with permission.

Education

What the New L.A. Teachers Contract Means

Tuesday’s real winner was union president Alex Caputo-Pearl, who cited district concessions on class-size reduction and on hiring more nurses, librarians and counselors as the biggest victories for LAUSD families.

Bill Raden

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Photo by Joanne Kim

It’s over. Following a 21-hour, all-night bargaining marathon, United Teachers Los Angeles president Alex Caputo-Pearl and Los Angeles Unified School District Superintendent Austin Beutner appeared with Mayor Eric Garcetti on Tuesday morning, the sixth day of the L.A. teachers’ walkout, to announce a tentative settlement of the first Los Angeles teachers strike in 30 years. Teachers and their students will resume classes today.

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Garcetti, who last Thursday locked the two sides into a City Hall room and, for the next five days, personally mediated the negotiations, called the agreement “historic.”

“You have to be fiscally responsive but you also, as the saying goes, sometimes have to make sure that your reach exceeds your grasp,” the mayor told the hastily assembled room of reporters and negotiating team members.

Both Beutner and Caputo-Pearl took up Garcetti’s historic significance theme, as each underscored what they considered their respective wins and emphasized the need to reverse the 40 years of disinvestment in California public schools triggered by the passage of Proposition 13 in 1978.

“That issue does not go away now that we have a contract,” Beutner noted. “The importance of this moment is public education is now the topic in every household in our community. Let’s capitalize on this. Let’s fix it.”

*   *   *

The real winner in the room was Caputo-Pearl, who cited district concessions on class-size reduction and on hiring more nurses, librarians and counselors as the biggest wins for the union, for LAUSD families and for the district itself. Over the last four years he had virtually rebuilt UTLA from the bottom up and forged new alliances with students, parents and the district’s Latino communities. By positioning the strike as a continuation of last year’s “red state teacher’s rebellion” and moving beyond salary issues, the union leader also succeeded in making the strike a national symbol for the threats posed to American public education.

“So this is much more than a narrow labor agreement,” Caputo-Pearl emphasized. “It’s a very broad compact around things that get at social justice, educational justice and racial justice.”

Highlights include:

Core Issues

  • Class Size Reduction: Elimination of the old contract’s “Section 1.5,” which had allowed the district to unilaterally raise class sizes; also includes year-by-year reductions to caps spelled out in the 2014-17 contract.
  • Salary: A six percent increase, with three percent for the 2017-2018 school year and three percent for 2018-19.
  • Community Schools: Thirty schools to be designated as community schools by June 30, 2020, with additional funding and a full-time community schools coordinator.
  • Nurses & Librarians: Yearly increases to get a full-time nurse at every school and a full-time librarian at every secondary school by 2020-2021.
  • Counselors: Seventeen additional full-time counselors by October 1, 2019, to maintain a counseling service ratio of 500-to-one per secondary school.
  • Charter Co-Locations: Gives a UTLA member at each co-located school site a seat at the table to negotiate a shared-use agreement.
  • Testing: A joint UTLA/LAUSD committee will develop a plan to reduce the number of assessments by 50 percent.

Common Good Issues

  • Student searches: A pilot program ending random backpack searches will be expanded to 28 schools by the 2021-2022 school year.
  • Green Space: A joint Green Space Task Force between LAUSD, UTLA and the City of L.A. will create a plan to increase green space on LAUSD campuses that includes bungalow and asphalt removal, and creating green play areas, water retention systems, and community school parks by December 2019.
  • Immigrant Defense Fund: LAUSD will provide a dedicated hotline and attorney for immigrant families and will collaborate with UTLA for further services.

*   *   *

Perhaps the most remarkable, albeit symbolic win by UTLA negotiators, was to persuade Beutner to put a resolution for a charter school cap to a vote at the next LAUSD school board meeting. Although the resolution will certainly be voted down by the board’s pro-charter majority, for a superintendent who, only a month ago, had dismissed charter controversies as a “shiny distraction,” and who has been working behind the scenes on a plan that would accelerate charter growth through his “Re-Imagine LAUSD” plan, the concession’s symbolism is striking.

“We talked about charter schools and the importance of investing in existing schools, and really having accountability and regulation on charter schools, which is a part of this broader agreement,” Caputo-Pearl affirmed.

Afterwards, the UTLA president credited the contract breakthrough to the solidarity of the rank and file, as well as to assurances from Governor Gavin Newsom that LAUSD could expect further help from Sacramento. Those pledges included backing a union bill that would bring in more money by adjusting administrative ratios. And the governor has also agreed to statewide action on community schooling and to earmark more state funding for special education.

Newsom has already acted on at least another assurance to the union. On day one of the strike, he told reporters that he wants to see legislation on charter school transparency and accountability during this session. “I’m going to be advancing with a sense of urgency,” he vowed.

The deal immediately went before a closed session of the LAUSD school board and will get a formal vote next week. UTLA’s rank and file voted their approval on Tuesday night by what Caputo-Pearl described as a “vast supermajority.”

“What we were able to win in this agreement,” added Caputo-Pearl after the vote, “is a testament to you, our members, and you making a sacrifice by going on strike in order to improve the public education system for our students, our families and our communities.”


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Los Angeles’ Schools Strike Was a Teachable Moment for Students

The scenes unfolding outside students’ schools were dramatic by any measure, giving them daily glimpses of their teachers’ commitment and the power of collective action.

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Photo: Joanne Kim

Breaking: Striking teachers and the Los Angeles Unified School District reached a tentative contract agreement this morning.


 

Now that it’s tentatively over, the first teachers strike in 30 years to hit the Los Angeles Unified School District can be said to have given students at least one critical lesson. Since last week, when their teachers began picketing in the pouring rain across L.A., demanding both better wages and essential support and staffing, a new generation of kids has experienced first-hand the purpose and power of organized labor.

“What they are witnessing is unions standing up for the rights of teachers — but really also for the rights of the students, the needs of education,” said Ken Jacobs, chairman of the University of California, Berkeley Labor Center. “That’s an important lesson about power, no matter what happens.”

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The scenes that unfolded outside their schools had been dramatic by any measure. Each weekday at sunrise 30,000 teachers, dressed in their union’s red shirts and jackets, gathered across the city to demand not only a 6.5 percent pay raise but also that schools be fully staffed with the nurses, librarians, counselors and other support personnel once standard at L.A. Unified. This flexing of collective muscle came at a time when public awareness of labor activity had faded — along with the number of Americans who belong to unions, a  membership that has dropped by nearly half since 1983, according to the U.S. Bureau of Labor Statistics.

The strike could have a lasting influence on today’s children and teens in Los Angeles. Back in 1970, Kent Wong was a student at L.A.’s Thomas Starr King Middle School, and walked his first picket line there as a teenager during a monthlong teachers strike over wages and class sizes. It changed the direction of his life.

“I realized even then that my teachers had dedicated their lives to the teaching profession, and were deeply committed to ensuring an education for all of us,” said Wong, now director of the UCLA Labor Center. “It was a transformational event in learning about the power of collective action and the sacrifices that my teachers had to make to fight for something as basic as quality education.”

The experience set a path for Wong, who later participated in a high school walkout against the Vietnam War and would work as a volunteer for the United Farm Workers. Like his own experience, Wong said, labor activity and social movements “absolutely inspire large numbers of people to become politically conscious and aware.”

In the early 1970s California still ranked among the very best public school systems of any state in the country which, Wong noted, put it at No. 1 in terms of per-pupil funding. After the 1978 passage of Proposition 13 made severe reductions in property taxes — the main source of school funding — the Golden State’s position dropped precipitously over time. Per-pupil spending here is now at No. 43 among all 50 states.

As only the third strike in the LAUSD’s half-century history, this month’s action by United Teachers Los Angeles came after 21 months of bargaining had brought no agreement, and it emphasizes universal benefits to the school community over modest salary demands. One result is broad public support for the strike, even as student attendance dropped below 20 percent the first week, which has already cost the district millions in attendance-based state funding.

“In previous decades, students in the L.A. school district were more likely to have family members who belonged to a union . . . and to have been exposed to unions that way,” John Logan, director of Labor and Employment Studies at San Francisco State University, said in an email to Capital & Main. “In most recent teachers disputes, unions have aligned their goals with those of parents and community members, and in that sense students are more likely to gain a positive impression of labor groups than, say, in the case of a transit dispute, [when] the only impact was to inconvenience parents and students.”

Wong added that the strike is also a new experience for teachers, since most of them were not involved in the last strike, in 1989. Many became politically aware just a few years later, after voter approval of the anti-immigrant Proposition 187 and an ensuing debate about pushing a half-million immigrants out of state schools. “They confront the daily issues that their students confront in terms of immigration, poverty, homelessness,” Wong said of the current era of educators. “This is a very conscious group of teachers.”

That consciousness will inevitably leave a lasting impression on students, said Julian Vasquez Heilig, professor of education policy at Sacramento State University and the education chair for the California NAACP. “What students see is a resurgence of resistance,” said Vasquez Heilig, who grew up in a union household in Michigan. “Teachers are standing up for the students, and it is a moment that the students get to see [them] in action — teachers demanding opportunity and equity . . .  The wealthy provide excellent public education for their kids. It’s quite unfair that students in L.A. are dealing with longterm problematic conditions.

“You don’t have to go to Finland to see an example of well-resourced schools, fully unionized, that are successful,” he added. “All you have to do is go across the tracks or [to] Beverly Hills — wherever you provide a nice home, you will get nice public schools. It’s a straight correlation. Everyone knows that’s the case in their country and it’s despicable.”

UC Berkeley’s Ken Jacobs noted that even as popular media and U.S. culture emphasize the power of the individual, the teachers strike shows another way: “You have a generation of kids in the city that will understand something more about labor and the possibilities of collective action. This is a big demonstration of what happens when people come together.”


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Los Angeles Teachers Strike Rally at Grand Park (Photos)

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Over 60,000 people attended the massive rally at Grand Park in Downtown Los Angeles in support of public education and UTLA’s week-long strike.

Images by Joanne Kim 

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Deaf School’s Chants Are Heard Loud and Clear in Teachers Strike

There was one key difference between last week’s picket lines of Marlton School teachers and students, and those of other LAUSD schools: Marlton’s chanted “Strike, strike, strike!” in American Sign Language.

Judith Lewis Mernit

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Marlton School teacher and students. (Photos: Marlton School)

Teacher: Privatization and other LAUSD reorganization schemes pose a threat to the culture of Deaf education.


 

Like other educators in the Los Angeles Unified School District, school counselor Janette Durán-Aguirre spent last week on the picket line with her colleagues and their students. Draped in red plastic ponchos, and carrying the “We Stand With LA Teachers” signs seen all over the city, they danced, drummed and chanted to draw attention to the demands and grievances United Teachers of Los Angeles has brought against business as usual at LAUSD.

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But there was one key difference between their protests and the ones at other schools: These teachers and students chanted “Strike, strike, strike!” in American Sign Language. Their Baldwin Hills school, Marlton, “is the only day school in LAUSD designed for Deaf students,” wrote Durán-Aguirre, who is herself Deaf, in a text message from the picket line. “We don’t want our students to be more marginalized than they already are.” She worries that circulating plans to turn more traditional public schools into charter schools would mean the end of Marlton’s specialized, bilingual learning, which will never pencil out in any calculus of standardized test scores and per-student investment.


In the long term, schoolchildren are already collateral damage in a war that’s been fought since 1978, when California voters passed Proposition 13.


If Marlton is privatized or closed, she says, Deaf students will have to rely on interpreters in their schools, which deprives them of opportunities for “identity development in a language-rich environment.” Privatization and other LAUSD reorganization schemes pose “a threat to the culture of our Deaf students and the culture of Deaf education.”

Even before LAUSD began picketing on January 14, much ink had been spilled about how the strike would affect kids:

  • “Kids would be deprived of an education during a strike,” wrote Katie Braude, executive director of the LAUSD parents’ advocacy group, SpeakUP, on the website LA School Report. “Kids’ futures should never be collateral damage in this war between adults.”
  • “Children shouldn’t be used as pawns in a struggle over money,” said the conservative Heartland Institute, in a post by Tim Benson and Lennie Jarratt.
  • In USA Today, Kristin Lam reported the stories of parents who say that the strike could set back thousands of children “with developmental disabilities who need special education and consistency.”

Those criticisms aren’t completely off-base, says John Rogers, a professor of education at the University of California, Los Angeles. “Teachers being on strike does mean that young people across Los Angeles are not in classrooms in the appropriate way. Good teachers acknowledge that.” But that’s only in the short term. In the long term, schoolchildren are already collateral damage in a war, one that’s been fought since 1978, when California voters passed Proposition 13, limiting the state’s property tax revenues and starving schools of funds. That war has intensified with the rise of charter schools — publicly funded, privately run institutions that eat up some of the resources that would otherwise go to traditional public schools.


“Deaf” is an identity, with its own language.


“The strike is both about trying to gain some changes in district policy and informing the broader public about the inadequacy of funding, and the conditions that prevail in our schools,” Rogers says. “It holds out the possibility that students today and students in years ahead will be better off.”

The stakes and consequences of this particular battle have been put into harsh relief for children who need specialized education, as well as for their teachers and counselors. Technically, charters have to adhere to the same laws other public schools do when it comes to accepting students with disabilities. One of those laws, the Individuals with Disabilities Education Act, or IDEA, guarantees that children who need special education be guaranteed a “free appropriate public education,” complete with “auxiliary aids and services” if required.

Charter advocates say their schools do this. But data show differently. A 2014 study by Gary Miron, a professor in the College of Education at Western Michigan University, found that while enrollment for students with disabilities in public schools averages 13 percent, at charter schools it averages only eight to 10 percent. A “mystery-shopper” investigation conducted in 2018 by Peter Bergman of Columbia University and Isaac McFarlin, Jr. of the University of Florida, found that researchers posing as parents of children with special education requirements heard back from charter schools at a far lower rate than did researchers whose queries did not signal any special needs. There was no difference in response rates when public schools were contacted in the same fashion.


Marlton’s teachers, students and staff aren’t only fighting for smaller classrooms and a moratorium on new charters. They are fighting for Deaf culture.


That’s not necessarily because charters set out to be discriminatory, says Julian Vasquez Heilig, a professor in the College of Education at Sacramento State University. But they end up discriminating because students in need of specialized instruction are expensive. “When they design an individualized education plan, that costs money. If a student has to be assigned an aide all day, that costs money.” For a Deaf student in a mainstream school, an interpreter can cost an extra $50,000 a year or more.

“Not all charter schools have the resources to pay that,” Vasquez Heilig says. Some — though not all — also employ lower-skilled, uncertified (and non-union) teachers in an effort to save money, teachers who may not have experience teaching special ed kids.

But for Janette Durán-Aguirre, there’s even more to it than that. Deaf people don’t always view deafness as a disability. “Deaf” is an identity, with its own language. Marlton, which was founded in 1968, “was created to provide students with an environment where they could communicate with everyone on staff without an interpreter,” she says. Elsewhere, Deaf students have to adapt to a hearing environment. At Marlton, it’s the other way around.

Or at least it’s meant to be. Neglect from the district, she claims, has caused its standards to deteriorate. School administrators have been hired that lack fluency in ASL, and Marlton has had five principles in eight years, plus some interim administrators. Sports, drama and vocational programs have been cut, leading students to defect to the state-run California School for the Deaf in Riverside County. “That,” says Durán-Aguirre, “led to even less funding and fewer resources for those students who remain,” almost all of whom are from low-income families, and are consequently less able to move or commute. The school educates only 135 of the roughly 2,100 Deaf students in the school district.

The teachers, students and staff who stood out in last week’s downpours weren’t only fighting for smaller classrooms and a moratorium on new charters. They were fighting for Deaf culture. And for the students who joined them, there has been another benefit, in both the strike’s short and long term, says John Rogers. “It affords them opportunities to see their teachers fighting for them and for their communities,” he says. On the picket line, “they forge an understanding that we don’t have to just accept the conditions we face in daily life. When we examine them and come to the conclusion that they’re inadequate, we can change them.”


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L.A. Teachers Strike Diary: Day Five

Teacher Laura Palacios reflects on the strike during Friday’s Grand Park rally.

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Is LAUSD Crying Wolf With Its Claims of Financial Distress?

Persistent claims of poverty by the district have been the most contentious issue separating LAUSD and UTLA.

Bill Raden

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Photo: Bobbi Murray

UTLA has aggressively challenged LAUSD on its “structural deficit” narrative that the union dismisses as little more than political theater.


 

As the first Los Angeles teachers strike in 30 years entered its fifth day, negotiators from both sides returned to the bargaining table, this time at L.A. City Hall, with Mayor Eric Garcetti mediating. United Teachers Los Angeles (UTLA) bargaining team co-chair Arlene Inouye said on Wednesday that the talks, which had been arranged through a back channel that included Garcetti and state schools superintendent Tony Thurmond, would likely continue through the weekend and that teachers would remain at the pickets.

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Persistent claims of poverty by the district have perhaps been the most contentious issue separating LAUSD and UTLA. The district has steadfastly insisted that LAUSD runs an annual operating deficit of $500 million and is already projected to dip .04 percent below the threshold of its $75 million statutory reserve. The cost, it adds, of the union’s core demands, which it puts at just over $800 million, will quickly lead to insolvency.

Capital & Main’s own analysis of the LAUSD budget finds that funding exists that would more than cover UTLA’s core demands without touching the district’s surplus. Our research also raises questions over how much of LAUSD’s budget projections are more of a creative art than a hard-nosed science.

“There is a history of the district crying wolf over negative balances two years out that then never seem to arrive,” agreed former Board District 5 member David Tokofsky. “If the budget were a basketball game, LAUSD would see a 20 point, final quarter lead by the Clippers as too close to call.”


LAUSD: “Los Angeles Unified simply does not have enough money to meet all of UTLA’s demands.”


The union has framed the walkout around core educational justice demands that go beyond wages and confront foundational questions about the future of public education and what kind of schooling best serves the needs of Los Angeles families.

“This is about our students,” said Inouye of declaring an impasse at a January 11 press conference. “It is about their learning conditions and the educators’ working conditions.”

The unresolved issues include contract demands for lowered class sizes, additional nurses, librarians, counselors and social workers. The union also insists that the district commit a significant chunk of a contested, nearly $2 billion budget surplus to increases to bilingual and adult education, and to making major investments in community schooling. The union has also been advocating for curriculum reforms that include a teacher say in achievement testing (UTLA wants less testing) and ethnic studies at every school.


Class-size reduction is a basic sticking point in the negotiations.


If there has been a single deal-breaker on the table, it is the district’s lack of movement on “Section 1.5” — a contractual holdover from the Great Recession unique to LAUSD and anathema to UTLA because it allows the district to unilaterally raise class sizes. The union wants it gone; the district wants it replace with “Section 1.8,” which would raise some class sizes beyond the current memorandum of understanding that Section 1.5 has nullified.

“Class size is the fundamental issue that we’ve got to deal with,” argued UTLA president Alex Caputo-Pearl at the January 11 news conference. “Their [insistence] of continuing to . . . be an outlier in the state of California is unacceptable.”

LAUSD’s last known offer (both sides have agreed to a media blackout during the current round of bargaining) hadn’t budged from its position that the union’s demand for a 6.5 percent pay raise be contingent on cannibalizing the retirement security of future teachers to fund it. What was new on Friday, January 11, was the district’s modest offer to add 200 new hires — or 1,200 in all — for class-size reduction, nurses, librarians and counselors. But for the nation’s second-largest school district, this represented a $130 million drop in a 900-campus bucket — and the lowered levels would expire after one year.


Much if not all of LAUSD’s gap could easily be closed simply by applying for waivers.


The offer was extraordinary both for its timing and its explanation of how LAUSD would fund the classroom reductions. The $25 million increase to the $105 million it had previously offered, a district press statement said, would include a recent $10 million pledge by Los Angeles County.  It also kicked in $15 million from what LAUSD had estimated would be the $40 million in savings from $3 billion in pay-downs of rate increases and pension liability for CalSTRS, California’s giant teachers’ pension fund, that Governor Gavin Newsom unveiled January 10 in his first state budget.

UTLA immediately challenged the district’s $40 million windfall estimate, claiming that its own call to the state Department of Finance turned up an additional $100 million in ongoing revenue. By Wednesday, LAUSD had clarified that the $40 million figure merely represented the district’s share from Newsom’s recalculation of this year’s Local Control Funding Formula (LCFF) cost of living adjustment increase, which was revised upward from the November’s projected 2.57 percent to 3.46 percent. (The actual gain, which represents an additional $120 per student for L.A. Unified’s non-charter enrollment, should bring the district closer to $49.2 million).


The school district didn’t allow Governor Newsom’s recent good financial news to dispel its fiscal gloom.


The district estimated its takeaway from Newsom’s $700 million contribution rate buy-downs at $60 million over the next three years. But there will also be ongoing cash savings from lowered liability that should be dramatic. (Some have estimated that the buy-downs could be worth as much as $200 million to the district.)

Newsom’s budget had other good news for LAUSD. It included an extra $576 million to school districts in special education funding, which would be worth roughly $75 million to LAUSD. The biggest windfall, earmarked for early education, should net Los Angeles roughly $180 million as its share of $1.8 billion for expanded kindergarten and preschool and childcare infrastructure (using a longstanding ballpark calculation that LAUSD claims roughly 10 percent of many statewide education appropriations).

The district didn’t allow the new wealth to dispel its fiscal gloom. “Every independent expert who has reviewed Los Angeles Unified’s finances agrees the District has serious budget issues,” its January 11 press statement noted. “Los Angeles Unified simply does not have enough money to meet all of UTLA’s demands.”

To underscore LAUSD’s claims of near-insolvency, the Los Angeles County Office of Education (LACOE) last week waded into the disagreement — the union asserts at the invitation of schools superintendent Austin Beutner — with a LACOE “fiscal expert” expressing “great alarm and concern,” according to a LAUSD press release.


UTLA argues that a contract cannot be bargained on future promises.


UTLA, which said it has its own forensic accountant pouring over the district’s books, has aggressively challenged LAUSD on the budget and a “structural deficit” narrative that the union dismisses as little more than political theater embroidered with scripted performances from allies within LACOE.

“There’s a $2 billion reserve that we believe is not all accounted for,” Caputo-Pearl said again on Wednesday. “We’ve pointed out that in the books and supplies line item, they consistently over-project, so there is money over-projected to the tune of $200, $300 million per year. … There’s no doubt about it. California is the richest state in the country. The money’s there for kids.”

To prove its point, the union notes that the reserve has been increasing over the past five years from $500 million in 2013-2014 to today’s $1.9 billion — a yearly average of roughly $300 million more than the district is spending.  UTLA also points out a fact that has been mostly lost in the budgetary debate — namely, that neither the county, the state’s Department of Education, December’s fact-finding panel nor the other experts cited by the district have actually independently performed an audit. Never, the union adds, has it ever seen LACOE contradict a district budget when the district claims that it is in financial crisis. Everybody — the press included — has simply accepted LAUSD’s three-year projections at face value.

Capital & Main has sifted through the public reports of new and existing district revenues to see how LAUSD’s poverty claims stack up against the core contract demands that could get teachers back to the classroom.


LAUSD might have had $330 million more to bargain with had a July parcel tax resolution pushed by two school board members made it to the November ballot.


The union says that its demand to reduce the counselor-to-student ratio can be cost-neutral merely by redistributing the district’s existing counselors to meet a one-to-500 ratio at each school instead of district-wide. But we’ve thrown some new hires into our core contract offer along with more school psychologists. As such, the price tag for UTLA’s core demands works out to $411.3 million for each year of the contract.

UTLA Core Demands

  • $189 million (LAUSD’s figure) for a 6.5 percent across-the-board raise, retroactive to one year
  • $188 million for a 2,000 new-hire package of class-size reduction, and school counselor and school psychologist increase (based on a median annual salary and benefits cost of $94,000 per hire)
  • $25.3 million for a full-time nurse at each of the district’s 720 elementary, middle and high schools (or 299 new hires at $84,809 per nurse for salary and benefits)
  • $10 million for a full-time school librarian at each of LAUSD’s 223 secondary schools (or 118 new hires at $84,809 per librarian for salary and benefits)

To pay for it, we’ve included both LAUSD’s onetime windfalls from the governor’s budget plus UTLA’s less conservative estimate of $140 million in ongoing savings — a total of $944.2 million in additional revenue. But the roughly $640 million of additional annual unrestricted funding alone — new money from the governor plus excavated over-projections of books and supplies and LAUSD’s hidden annual LCFF increases — more than covers the core demands without touching a surplus that is 2533 percent over the statutory reserve of $75 million. The $217.43 million left over is enough for a generous commitment to community schooling or bringing schools up to full strength in psychiatric social workers, plant managers, assistant principals, restorative justice advisors and psychiatric social workers.

LAUSD Additional Revenues

  • $180 million for L.A.’s roughly 10 percent share of onetime early education
  • $49.2 million onetime net for the 2019-2020 Proposition 98 LCFF COLA bump to 3.46 percent.
  • $75 million onetime special ed money
  • $300 million in average ongoing hidden LCFF revenues
  • $140 million ongoing pension contribution savings
  • $200 ongoing for the pot based on annual over-projections of books & supplies spending.

Some of that, of course, represents state promises still two or three years out, but bridging revenue gaps has become a matter of routine education finance in California. A recent study by the nonpartisan research group WestEd found that 53 percent of the districts sampled did not expect revenues to cover expenditures over the period of 2017/18 to 2019/20. And many holes that appear can temporarily be patched simply by applying to the State Board of Education for waivers — for example, to shift, say, restricted special ed funds for computers to class-size reduction.

The irony is that the district might have had $330 million more to bargain with had a June parcel tax resolution pushed by LAUSD school board members Scott Schmerelson and George McKenna as an act of bargaining good faith made it to the November ballot. Despite polling that suggested strong voter support, the measure was blocked by Beutner and his allies in the pro-charter board majority. “It just seems like too ad hoc of a strategy,” said Board District 4 member Nick Melvoin in casting his no vote.

In an abrupt about-face, the same board last week signed onto a new resolution by Schmerelson and McKenna to put a parcel tax and a facilities bond on the 2020 ballot.

“This is an olive branch to try to say … we want to work with the union to generate more revenue for this district,” Melvoin explained to Capital & Main.

In fact, all the money for the education justice investments demanded by teachers could already be on the way. Backers of the Proposition 13 split-roll tax reform initiative that will be on the 2020 ballot estimate it will pump $1.4 billion more annually into Los Angeles County K-12 schools and community colleges.

Other potential revenue ideas include persuading the new U.S. Congress to fully fund federal Title I and IDEA supplemental funding for children living in poverty and students with disabilities, which could conservatively bring LAUSD as much as $400 million. The district could also begin collecting the $2 million each year in additional oversight fees allowed under the law from under-enrolled charter schools co-located on public school campuses, or, as former board member Tokofsky has urged, aggressively pursue developer fees owed the district out of billions of dollars in new construction. And Sacramento could close the carried interest income tax loophole, which would bring LAUSD a share of the estimated $1 billion that would pour into state coffers.

But, as the union has been arguing, a contract cannot be bargained on future promises. To bring the teachers in from the cold, LAUSD will need to offer concessions at the city hall negotiations that seriously address UTLA’s concerns about enrollment stabilization, which to the union means reining in the proliferation of new charter schools. And Beutner will need to finally deal teachers into his portfolio district downsizing initiative, “Re-Imagine LAUSD,” the elephant in the bargaining room that both sides know has profound implications for district-labor relations. Striking a deal will mean each side allowing the other the optics of a meaningful win in a contract that ultimately affirms L.A. Unified’s belief in itself.


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L.A. Teachers Strike Diary: Day Four

Laura Palacios and other teachers take a break from the rain to have lunch, then return to the picket line.

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‘How Long Will the L.A. Teachers Strike Last?’ May Be the Wrong Question

Co-published by the American Prospect
Important byproducts of the walkout include robust dialogues about charter schools and on how much we are willing to invest in public education.

Danny Feingold

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Photo: Bill Raden

Co-published by the American Prospect

In 1973, Philadelphia teachers went on strike for nearly two months. Cleveland teachers walked off the job in 2002 and didn’t come back for 62 days. Last year, teacher strikes in West Virginia and Oklahoma lasted 10 and nine days, respectively.

Nevertheless, just three days after teachers hit the picket line in Los Angeles, the media started to frame the strike in dire terms. One headline in a prominent news outlet asked, “Are the kids all right? LA teachers strike drags into third day with no end in sight,” while another asserted, “L.A. teachers bask in support for strike, but pressure grows to settle amid financial losses.”

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It goes without saying that no one wants a protracted teachers strike; earlier today both sides agreed to return to the negotiating table, with L.A. Mayor Eric Garcetti serving as mediator. All things being equal, kids are better off in school, as are teachers.

But strikes usually happen because all things are not equal. Indeed, the goal of a strike is almost invariably to even the playing field.

Sometimes this happens quickly. Fifty years ago, Chicago teachers staged a two-day walkout that led to pay increases and greater job protections. A year earlier, in San Francisco, a one-day strike resulted in raises and smaller class sizes. But as the teacher strikes in Philadelphia and Cleveland illustrate, quick resolutions are not always possible if progress on the underlying problems is to be achieved.

Part of why some in the media are anxiously wondering when a settlement will occur is the relative scarcity of strikes in modern American society, particularly open-ended work stoppages that affect a much larger number of people than the employees in question. This was a major factor in the reaction to last year’s teacher strikes – we are simply not accustomed to seeing labor strife, and having it impact our day-to-day lives.

The unusual nature of a citywide teachers strike in Los Angeles is underscored by the now well-reported fact that the last teacher walkout here was 30 years ago. That means an entire generation has never witnessed picket lines massed in front of a public institution they rely on. Janitors and hotel workers have staged high-profile strikes, but for most of us the direct connection of these actions to our daily routine is minimal.

Conventional wisdom is that the L.A. teachers strike will not last more than a couple of weeks. But the problems at the heart of the strike have been building for 40 years, and may not lend themselves to a quick fix – especially given the stark divide that has arisen between the two sides.

The strike has its roots in the radical defunding of public schools in California, triggered by the 1978 passage of Proposition 13. Layered on top of this is the two-decade-old battle between charter school advocates and defenders of traditional public schools, which has intensified in the past several years.

One silver lining of the L.A. teachers strike is a long-overdue civic conversation about charter schools. This is critical, because a thriving public school system and an inexorably growing charter school movement may not be compatible. Another important byproduct of the strike is a robust dialogue on how much we are willing to invest in public education. Critics of LAUSD have long focused on low test scores and graduation rates, but have seldom been willing to address the fundamental issue of how limited financial resources affect student outcomes.

As the union and the district resume talks, the questions of charter school growth and reinvestment in public schools loom large. If the two sides punt on these in order to achieve a quick settlement, we may see a replay of teacher walkouts in the not-too-distant future. The long-term interests of students, parents and teachers may be better served if the overwhelming public support for teachers forces the district to change course. That could mean looking for new revenue sources, slowing the growth of charter schools that siphon money or Superintendent Austin Beutner pulling back from the expected breakup of the district.

Whether a one-week walkout can produce such a sea change is unclear. For now, the most important question is not how long the strike will last, but how it can achieve the greatest good.


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L.A. Teachers Strike Diary: Day Three

The rain and the strike drag on for teacher Laura Palacios, who balances family duties with picket line vigils.

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L.A. Teachers Strike Diary: Day Two

Los Angeles teacher Laura Palacios confronts the second day of a citywide strike with coffee, doughnuts and a sore throat.

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