School Choice

LAUSD's Fiscal Crisis Can't be Blamed on Charter Schools or Declining Enrollment

Rising benefits costs and a bloated administration is putting Los Angeles' schools deep in the red.



Los Angeles Unified School District has lost 245,000 students over the last 15 years. Officials frequently claim charter schools are taking students and causing LAUSD's budget crisis in the process. But a new report shows the district's spending, including its hiring of more administrators as enrollment drops, is to blame.

A new Reason Foundation study finds only 35 percent of LAUSD's enrollment decline over the past 15 years is due to students going to charter schools. In fact, as the district continues to lose students—losing 55,000 since 2013—a smaller percentage of the loss can be attributed to charter school students. Only 13 percent of the district's enrollment loss for 2017-18 stemmed from students choosing charters.

In the last five years, LAUSD's K-12 student enrollment dropped by nearly 10 percent and the number of teachers decreased by more than 5 percent. According to the California Department of Education, LAUSD's per-student revenue went up 33 percent between FY 2012 and FY 2016 so LAUSD should have had more revenue to spend on fewer students.

But, even as it was losing students, the number of total LAUSD employees grew by 5 percent over the last five years, primarily thanks to a nearly 16 percent increase in administrators.

Additionally, the costs of the district's employee benefits have increased 44 percent since 2014. And its spending on outside consulting services rose by 110 percent since 2014. As a result of these decisions, LAUSD's long-term debt liability, which was $8 billion in 2007, tripled to $25 billion by 2017.

Just as troubling, the new Reason study finds that just four years from now, in 2022, the district's spending on pensions, health care, and special education programs will be eating up over 57 percent LAUSD's main operational funding before a single dollar is spent on a regular school program.

A growing number of families across Southern California rightly view charter schools as a high-quality option. They should not be scapegoated for LAUSD's financial troubles because they sought-out high-performing schools for their children. Los Angeles' public charter school students are outperforming students in LAUSD's traditional schools. For example, on the National Assessment of Educational Progress, also known as the Nation's Report Card, 8th-grade students in public charter schools outscored LAUSD students in traditional public schools by 26 points in reading and 28 points in math.

Southern California charter schools are also putting their students on a significantly better path to pursue college. Whereas less than half of LAUSD's traditional public-school students in the class of 2015 had passed their A–G requirements—the courses needed to enroll in University of California and California State University system schools—85 percent of Los Angeles charter students completed these courses. Just 13 percent of LAUSD students were accepted to the UC system in 2013 compared to the 20 percent of Los Angeles charter students who earned admission to UC schools.

It makes sense for parents and students to choose charter schools that are outperforming LAUSD in almost every measure, and it won't be surprising if more and more parents select charter schools in years to come. Additionally, the state's Department of Finance projects that over the next decade Los Angeles County will lose another 119,000 K-12 students, more than any other county in California.

LAUSD is going to have to stop blaming its fiscal situation on charter schools and start addressing the root causes of its own financial woes: spending more than it takes in, in large part due to long-term pension and health care costs, and its insistence on increasing staffing levels even though there are fewer students to serve.

LAUSD is going to have to right-size itself—closing some schools and reducing administrative positions to align with falling enrollment. The fiscal crisis will also force it to implement reforms that reduce long-term pension and health care costs Ultimately, the district will have to prioritize and focus on its core mission: educating kids, not providing jobs and retirement income to administrators.

Lisa Snell is director of education policy at Reason Foundation and co-author of the new study "A 2018 Evaluation of LAUSD's Fiscal Outlook."