Despite the recent settlement of the Los Angeles teachers strike, mostly in the teacher union’s favor, the deal largely ignores the shaky financial realities of the school district. While the union crows about its apparent victory, the potential fiscal disaster should make teachers consider leaving the union, not rallying around it.
In addition to a 6 percent raise for teachers, the settlement deal includes more staff at schools and a cap on class sizes. Yet, the district’s finances mean that the deal is built on quicksand.
As the New York Times pointed out, “the deal essentially punted on the question of how the district would come up with the $403 million to pay for the additional staff members.”
Further, the district can only afford the deal if it can pass a local parcel tax in 2020 and receive increased state funding from Sacramento.
These glaring financial questions clash with the district’s current bottom line.
For example, state law requires the district to maintain a minimum 1 percent budget reserve, and the district has a structural deficit, spending more than it takes in.
That structural deficit will soon end up causing the district to dip below the state-mandated 1 percent minimum.
Los Angeles County Office of Education superintendent Debra Duardo recently told the education group Speak Up, “it’s gotten to the point where [the district] can’t show us that they can maintain a 1 percent reserve in their third year out.”
The County estimates that by 2021-22, “the district will be bankrupt.”
Duardo points out, “Especially at a district as large as LAUSD, if they were to go insolvent, then they would be in really big trouble.”
What kind of trouble? For teachers, here is the chilling warning.
The district, says Duardo, “would actually run out of the cash they need to pay their teachers and all of their salaries.”
Duardo explains that a budget reserve is a one-time pot of cash, and “that’s not money you [will] have [again in the future].”
In response to a question about the district giving in to the union’s demands, Duardo is clear about the ramifications: “The law is set up where if they were to show us in their budget that they don’t have enough money to maintain that reserve, and even go further into the negative — which would concern us that they may be at risk of becoming insolvent — then the next step would be for us to assign a fiscal advisor.”
The kicker: “And a fiscal advisor has stay-and-rescind authority, which means that if there are decisions being made that put the district at risk of becoming insolvent, then we could override decisions that the board is making.”
The union claims that the district is not deficit spending, but Duardo points to the simple fiscal fact that the district’s reserve is plunging, so if there were no deficit spending “we wouldn’t see this reserve dwindling down to below 1 percent.”
The new settlement deal, therefore, may be a Pyrrhic victory for teachers that could cause harm to them and their students.
Instead of blindly following their union, teachers should consider taking advantage of their new rights under the Supreme Court’s Janus decision, which held that public employees cannot be forced to pay dues or fees to unions.
Justice Samuel Alito, who authored the Janus majority opinion, wrote that it is an unconstitutional infringement on the rights of public employees to require them “to provide financial support for a union that ‘takes many positions during collective bargaining that have powerful political and civic consequences.’”
L.A. teachers should make use of their Janus rights and walk away from the union, not walk with it over a cliff.
Lance Izumi is senior director of the Center for Education at the Pacific Research Institute.