The California Department of Education is sticking with its ruling in May that Los Angeles Unified has underspent, by hundreds of millions of dollars, money it should have used to increase and improve services for high-needs children under the state’s new school funding law. In reaffirming its decision, the department gives the district until the 2017-18 school year to comply.

The ruling, released Friday, is likely to lead to the first major lawsuit challenging a district’s spending obligations under the Local Control Funding Formula, since Los Angeles Unified remains fundamentally at odds with the department on the issue. The ACLU of California and the nonprofit law firm Public Advocates, which filed the complaint challenging the district’s position, expressed satisfaction with the ruling in a statement Monday but displeasure with the delay in enforcing it. “It is not within the State Superintendent’s authority to allow (L.A. Unified) to continue violating the law,” said Rigel Massaro, attorney with Public Advocates.

The dispute is over $450 million that L.A. Unified spends annually on federally mandated services for special education students who are also English learners, foster and low-income children. Considered high-needs students under the funding formula, they draw significant additional dollars from the state that are intended to be used to address economic disparities and school conditions that contribute to low academic performance.

The district asserts that all special education services paid for from a district’s general fund also count toward meeting its obligation under the funding formula. Each special education student’s Individualized Education Plan includes funding for whatever services a child needs, the district asserts.

But Public Advocates and ACLU dispute that interpretation. They argue that the funding formula requires spending for programs and services beyond what all special education students are mandated to receive in response to their disabilities. This higher threshold applies especially when funding formula dollars for high-needs students are targeted for schoolwide or districtwide programs or services.

Special needs students are the state’s lowest-performing student subgroup; learning impairments are the most prevalent form of student disabilities.

In its ruling, the department said that the district could make the case that some special education spending, such as language tutoring for English learners, could satisfy the funding formula requirement. However, it said the district has not provided the documentation showing that is the case.

With 84 percent of its students qualifying for extra money because they are high-needs, L.A. Unified has received a significant financial boost under the formula. However, it faces financial troubles because of declining enrollment, a loss of students to charter schools, contracted staff raises and increased retiree pension and health-care obligations. The district calculated that, without the one year-reprieve, it would have to spend an additional $245 million on high-needs students this year, $380 million in 2017-18 and eventually $450 million when the funding formula is fully implemented. That would force big layoffs and cuts to programs, Superintendent Michelle King said.

But Public Advocates and ACLU said that the district was first alerted to its violation two years ago and should additionally have to compensate students $422 million for the years they’ve already been shortchanged.

Other districts have not followed L.A. Unified’s lead by making similar claims over the use of special education dollars but will be watching the case closely. Federal law mandates rehabilitative services for all students with disabilities but federal and state funding for decades hasn’t covered the cost. Districts pay about 40 percent of the total costs of special education – money that they must cover from “base” dollars under the funding formula that also must go toward general costs of operation, from salaries to electricity.

Greg McNair, an attorney for L.A. Unified, said that the district remains willing to work with the department on resolving the issue, but acknowledged that there is no other process for an appeal other than file a lawsuit. That decision hasn’t yet been made, and the district is facing no specific deadline, he said.

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  1. Manuel 1 year ago1 year ago

    As I've said before, LAUSD should have been told, when it published on April 8, 2014, its proposed budget for 2014-15, that this was not appropriate. That budget clearly stated that $449.88 million of supplemental/concentration grand monies were going to be spent on special education while a significantly smaller amount was earmarked for the "unduplicated pupils" the monies were meant for. Superintendent Deasy was very proud of how he had earmarked the funds and assured … Read More

    As I’ve said before, LAUSD should have been told, when it published on April 8, 2014, its proposed budget for 2014-15, that this was not appropriate. That budget clearly stated that $449.88 million of supplemental/concentration grand monies were going to be spent on special education while a significantly smaller amount was earmarked for the “unduplicated pupils” the monies were meant for. Superintendent Deasy was very proud of how he had earmarked the funds and assured the Board that his proposal fully complied with the spirit and the law of LCFF.

    Public Advocates and LAUSD stated very clearly their opposition, as covered by John in at least two reports, but the effort went nowhere precipitating the lawsuit the following year.

    Meanwhile, Superintendent Deasy “resigned” but the spending policy was not modified under his successors.

    Perhaps this is due to how budgets are produced in school districts: they are a creature of both long-standing commitments to programs and the vision of the serving superintendent. In this case, it appears, the educrats know that they must pay for the Special Education services one way or another and a shuffling of the account names and their sources is in order. But the educrats instead took a shortcut: instead of re-arranging all programs and their sources, they simply relabeled S/C grants and called it a day. After all, the Legislative Analyst Office has stated that Special Ed services must be paid for by the “general fund” in the absence of earmarked full funding.

    Now the advocates have managed to force the hand of the State Board, probably because of changes in its personnel, and the chickens have come home to roost: the SBoE wants districts to pay more attention to Ed Code 42238.07(a)(1), where it says:

    “(1) Require a school district, county office of education, or charter school to increase or improve services for unduplicated pupils in proportion to the increase in funds apportioned on the basis of the number and concentration of unduplicated pupils in the school district, county office of education, or charter school.”

    The key phrase here is “in proportion to the increase in funds apportioned.”

    I am not surprised that LAUSD is not required to fix it now but has been given a year to re-arrange how the budget will be presented. To me, the only way to split the baby is to re-label many of the services for unduplicated students being paid from the base grant to being paid from the supplemental/concentration grant as the total funding is fixed. But what I’d really like to know is how do the advocates suggest that special ed services be funded going forward. Or do they expect LAUSD to solve that problem all by itself?

    The best solution would be for the advocates to tackle how special ed is funded. It would be good for all if they were able to bring their legal expertise to bear on this problem.