The Los Angeles County Office of Education has issued a mea culpa in a ruling with potentially far-reaching implications. It acknowledged that it mistakenly approved Long Beach Unified’s accountability plan last year that shortchanged low-income children, foster and homeless youth, and English learners $24 million under the state’s funding formula.
The Sept. 22 ruling responds to a complaint by the nonprofit law firm Public Advocates that questioned the county office’s rationale for approving Long Beach’s spending under the Local Control Funding Formula for 2016-17. In its 10-page decision, the county office agreed to demand that districts more thoroughly justify what they intend to do with money for student groups entitled to extra funding under the formula. The office has also ordered Long Beach to recalculate how much funding should be spent on these student groups this year and moving forward.
The state’s 58 county offices are charged with annually approving documents, called Local Control and Accountability Plans, or LCAPs, in which districts set goals for improvement and explain how they will use funding formula dollars to achieve them. If other counties adopt the Los Angeles County Office of Education’s reasoning in the ruling, they too will begin to more intensely scrutinize their districts’ LCAPs.
Angelica Jongco, a senior attorney for Public Advocates, said the ruling appeared to be the first time a county office had upheld a formal complaint about a district’s LCAP compliance and credited the county for “making a course correction.”
The county office said it would hold off enforcing its ruling since Public Advocates had separately referred the issue to the California Department of Education, which can affirm or override the county office’s decision. The district, meanwhile, said in a statement, “We fundamentally disagree with the ruling,” and is exploring options to appeal it.
The issue in Long Beach involved about a quarter of the money that the district planned to spend on foster and homeless children, English learners and low-income students. Under the funding formula, school districts receive extra money, called supplemental and concentration funding, based on the enrollment of these “high-needs” student groups. Long Beach, the state’s third-largest district, received $108 million in additional funding in 2016-17, since 70 percent of its students are among the targeted student groups.
In August 2016, the county questioned the district about proposed expenditures on textbooks, salaries and benefits. In districts with large proportions of high-needs students, the funding formula allows spending supplemental and concentration dollars for all students, as long as the district can show that the funding will “effectively” increase and improve services and programs for high-needs students. Otherwise the district should use base funding, which covers general operating expenses, including employee pay.
The district approved Long Beach’s LCAP after the district justified $41 million in expenses to the county’s satisfaction. It said that $14 million would be used to hire classroom aides in schools with high-needs students and $2.5 million would improve access to technology. But in April 2017, Public Advocates filed a complaint focusing on how $24 million in supplemental and concentration funding had been used.
The biggest expense was $17 million for new textbooks. The district said the textbooks were specifically chosen to better prepare low-income, Hispanic and African-American students for college and for Advanced Placement courses. But Public Advocates countered, and the county office agreed, that textbook replacement is a basic requirement for all students, and the district failed to show that these materials went beyond that purpose.
The district also used $7 million in supplemental funding for salary raises and benefits, claiming that these increases were necessary to retain veteran teachers in low-performing schools. In a ruling two years ago, State Superintendent of Public Instruction Tom Torlakson ruled that districts generally cannot use supplemental funding for overall salary and benefits unless they can show their pay is uncompetitive, and retention is a critical issue. But the county ruled that the district “did not meet this burden,” and probably couldn’t, “given available salary and teacher retention data indicating the district’s strong position” relative to neighboring districts.
State issues clearer guidance
The county office attributed a related May 2017 ruling by the state Department of Education as a primary reason for rethinking its approval of Long Beach’s 2016-17 LCAP. That decision, involving Fresno Unified, clarified the extent to which districts must clearly and thoroughly justify how supplemental funds would increase and expand programs and update the LCAP showing how they were effective in doing so. If the Los Angeles county staff had had the benefit of the Fresno decision, it probably would not have approved the district’s LCAP a year earlier, the ruling said.
Meanwhile, the county office approved Long Beach’s 2017-18 LCAP, in which the district agreed to pay for the contested $7 million in salary increases through base funding.
In its statement, Long Beach defended its LCAP as meeting or exceeding state requirements “and the spirit of the law.” And it noted that in the Smarter Balanced test results released last week, Long Beach significantly outperformed the statewide average increases in math and reading, including for all low-performing subgroups. Some of its schools narrowed the achievement gaps by more than 50 percent, it said. (EdSource wrote about Long Beach’s gains and one of its high-achieving schools here.)
But while all groups increased, a district presentation showed that since 2015-16, white students had improved more. As a result, the disparity districtwide between African-American and white students on meeting or exceeding standards had grown 3 percentage points in reading and 2 percentage points in math (see pages 7 to 18).
“I’m glad that all students are showing improvement,” Jongco said, but the gaps between student groups must be narrowed. “Imagine what the gains could have been with more major investments in services for those facing the greatest needs.”
Regardless of the final outcome in the Long Beach case, districts in coming years will face a quandary. General expenses, which must be covered by base funding, are projected to rise faster than overall state K-12 revenue, according to most budget projections. The two big drivers are pension and special education costs. Districts will face about a $1 billion increase annually through 2020-21 in pension expenses for district employees, under a deal that the Legislature agreed to four years ago. And for many districts, special education expenses not covered by state and federal funding have been rising significantly.
To make ends meet, many districts may be tempted to encroach on supplemental and concentration funding. And that will create tension with student advocacy groups and county offices charged with enforcing the law.