The first lawsuit involving the state’s new education funding formula is a big one, with potential statewide implications. In a lawsuit filed Wednesday, civil rights attorneys charged the Los Angeles Unified School District with shortchanging English learners, low-income children and foster youth by hundreds of millions of dollars. The district disputes the claim.
Public Advocates Inc. and the American Civil Liberties Union argue that the state’s largest district is counting past spending that the federal government required for special education services to fulfill new spending requirements under the Local Control Funding Formula for English learners, low-income children and foster youth. L.A. Unified receives 33 percent more in funding for these children, which the funding law designates as “high-needs” students. The lawsuit says this money must be used to increase and improve services and programs beyond the special education funding that students are entitled to.
The lawsuit seeks to stop the Los Angeles County Office of Education from approving the district’s Local Control and Accountability Plan, which lays out goals and spending plans for high-needs students, and to order the district to redo its calculations for determining programs and services for them. The county office has not yet reviewed the proposed LCAP for the new fiscal year. Halting the LCAP would have the effect of suspending the district’s $8 billion budget, which the L.A. Unified school board passed last week. It took effect July 1 and must be approved by the county office by Aug. 15.
The lawsuit, filed in Los Angeles County Superior Court, names L.A. Unified Superintendent Ramon Cortines and Los Angeles County Superintendent of Schools Arturo Delgado, whose office reviewed and approved last year’s LCAP and budget as the district proposed. Public Advocates, the ACLU and attorneys from the law firm Covington & Burling filed the lawsuit on behalf of Community Coalition, a foundation-backed organization in south Los Angeles, and Reyna Frias, a mother of two L.A. Unified students, including an English learner who receives special education services.
In a statement Wednesday, the district said that the plaintiffs misunderstood the funding law. The Legislature, it said, “clearly granted school districts the highest degree of flexibility in determining student program needs.” Predicting it would win the case, the statement added, “we stand by our continuing commitment to serve our most disadvantaged students.”
The county office declined to comment on the lawsuit.
Failure to ‘increase and improve’ services
The issues involved are technical but critical in determining the extent of efforts under the law to “increase and improve” services for high-needs students. The conflict dates to 2013-14, the first year under the formula, when districts were asked to calculate how much they should be credited for previous spending for high-needs students.
L.A. Unified said that it spent $653 million in general funding for special education programs that state and federal funding failed to cover. Because 79 percent of special education students are English learners, low-income students and foster youth, the district said it should be credited with spending $450 million for them. That, in turn, reduced the new money that the district would have to spend on these students through supplemental and concentration dollars.
Based on annual calculations tied to increases in funding, Public Advocates and the ACLU say that between last year and the proposed 2015-16 district budget, L.A. Unified will underspend a combined $414 million on high-needs students. That amount would increase annually as the state adds money while transitioning to full funding under the formula in 2020-21. At that point and every year subsequently, L.A. Unified should be spending $450 million more annually than the district claims is required, the lawsuit says.
“It is so obviously inappropriate that other districts have not had the temerity to try. Los Angeles is so big they think they can do anything,” said John Affeldt, managing partner for Public Advocates.
If ordered to do so, L.A. Unified would have difficulty reallocating money in the budget. This spring, the district and United Teachers Los Angeles negotiated a $1 billion health care package and a 10 percent raise, phased in over two years, that will add $250 million in payroll costs.
John Deasy’s defense
The lawsuit was expected. Public Advocates and the ACLU first brought the issue to the district’s attention in a letter a year ago, and the county office of education in turn asked the district for an explanation as well. In an August 2014 response to the county, then-Superintendent John Deasy defended how the district apportioned its spending for low-income students, English learners and foster children. He said it met the county office’s “reasonableness standard” and the Legislature’s intent, under the formula, of giving districts spending flexibility. The county office approved L.A. Unified’s LCAP in September 2014 and has until Oct. 8 to sign off on the LCAP for 2015-16.
John Affeldt, managing partner for Public Advocates, said that a handful of the state’s 1,000 districts appear to be inappropriately counting special education services for high-needs students as meeting their obligations under the funding formula. However, he said the method and magnitude used by L.A. Unified are “particularly egregious.”
“It is so obviously inappropriate that other districts have not had the temerity to try,” he said. “Los Angeles is so big they think they can do anything.” He said that only L.A. Unified inflated what it spent for high-needs students in the base year by mixing in special education spending – a tactic with a ripple effect as the deficit is carried over in subsequent years.
The lawsuit says that L.A. Unified misread the funding law and the regulations guiding districts that the State Board of Education adopted last year. The law distinguishes between funding dedicated for high-needs students and funding for all students. Special education services are provided to all students who qualify for them, regardless of whether they come from low-income families and are learning English, and so these services shouldn’t be counted toward meeting the funding law’s requirements, the lawsuit says. In addition, the state board did not fold the state funding earmarked for special education into the funding formula; in deliberately separating it, the lawsuit says, the Legislature confirmed that money for special education services shouldn’t be counted as funds to increase or improve services for high-needs students.
The federal government picks up only about 20 percent of the costs of special education in California. The remainder is split between a state-funded “categorical” program and districts, through their general funds. Special education funding has become a point of contention in some districts, as it “encroaches” on base funding under the new finance system.
Deasy, in his letter last year justifying the district’s allocation of money, said that L.A. Unified has spent money to integrate special education students into general classes, to improve language skills of special education students who are English learners and to narrow the achievement gap of underperforming subgroups of special education students. And he added that “nowhere in the regulations” governing the funding formula is the district “precluded from including unrestricted General Fund expenditures” (the money spent on special education) as part of the base year’s calculation. The county office accepted that explanation when it issued a Sept. 5, 2014 letter approving the LCAP.
But Affeldt said that if L.A. Unified’s calculation is permitted, other districts may be tempted to take the same approach. In the extreme, the Local Control Funding Formula would be used to fund special education costs. That is not what the Legislature and state board intended, he said.
Brooks Allen, deputy policy director and assistant legal counselor for the state board, said the state board has not been asked to weigh in on the issue of applying special education spending to fulfill obligations to high-needs students. He declined to comment on the Los Angeles litigation or on unique “fact-specific questions” about a district’s compliance with the funding law. However, he said, if there were widespread occurrences that were inconsistent with the regulations, then the state board would consider issuing guidance.
To get more reports like this one, click here to sign up for EdSource’s no-cost daily email on latest developments in education.