Rapid pay increases are what’s driving L.A. Unified School District’s financial woes

The story behind the story

By Todd Madison | Los Angeles Unified is in financial trouble.  Anyone following the recent developments, potentially leading to a teacher strike very soon, knows this.

On September 11th the deputy superintendent of public instruction for the California Department of Education, Nick Schweizer, made an unannounced appearance along with Candi Clark, chief financial officer of the Los Angeles County Office of Education, at an LA Unified School Board meeting.

Their message?

According to education watchdog site The 74 Million, “the two warned LA school board members that time is running out for them to get their house in order — or they will lose control over it and the state will eventually take over.”

Their suggestions?

“Make more money, cut spending, or both”.

The same story is being repeated in many districts around the state, even though state funding has increased dramatically in recent years. As of this writing, 29 districts in California were at either “qualified” or “negative” status, according to the state Department of Education.

Why?

Much has been written on the impact of declining enrollment (usually blamed on the increase in charter schools) as well as increases in employee pension and healthcare costs. The Reason Foundation posted an excellent examination of these issues in June, which should be required reading for anyone interested in looking at school funding in California.

However they – along with many media outlets – only touch superficially on another key driver of the costs involved, the exceptional rate of increase in pay for existing employees.

Using Transparent California’s database of pay data for public employees we can easily look at how pay rates are rising for district employees throughout California, including Los Angeles Unified.

The Transparent California data for 2017 (the latest year available) contains records on the compensation of 104,334 employees.   The earliest data available is for 2014, when the district reported  data on 91,815 employees.

Comparing 2014 to 2017 pay data shows some interesting trends.  

To determine how quickly pay rates are increasing for existing employees (excluding new hires or those who terminated their employment during this period) we matched the two data sets by name, to select only those employees who were with the district in 2014 and still working there in 2017.

In this set of data, we find the average rate of increase in total pay for LA Unified employees has been 5.55% per year.

During this same time period, the US Bureau of Labor Statistics Consumer Price Index calculator tells us that the average rate of inflation has been 1.47% per year.

This means LA Unified has been giving itself raises at rates 3.75 times greater than inflation.

At the same time, average wages in Los Angeles County (again per the US Bureau of Labor Statistics) have risen from $55,311 to $61,794, an annual growth rate of 3.76%.

Using that measure, LA Unified has “only” been giving itself raises at a rate about 1.5 times greater than the people paying taxes to support them.

With that, we often hear a case made that education is a low-paying occupation and such high rates of increase are needed to make up for cuts that happened during the Great Recession.

Using the same pay data, we see that the average full-time LA Unified employee now makes $73,798, or about $12,000 more than the average LA County resident, annually.

And the average LA Unified teacher, about to go on strike because the 6% raise being offered is not enough?  They’re making $84,244/year, with an average increase of 4.52% per year.

We also need to keep in mind that when the media tell us the district has offered a “6% raise”, this is a raise on top of the normal annual increases teachers get from their salary schedule (called the “step-and-column”.)

In LA Unified’s case, if we look at the UTLA 2014-17 Contract Bargaining Agreement and pick a mid-point of their 2016-2017 salary schedule “T” we see their average annual raise runs 3.48%, which means in a year where their contract is given a 6% raise their total raise would then be 9.48% for that year.

Lastly, none of these compensation numbers include what are typically a very plush benefit plan.

If we include benefits in the calculations, LA Unified’s average increase goes up to 6.45% – more than four times the growth rate of inflation, and double the rate of everyone else’s raises in the county.

And the average total compensation of full time employees who have been with the district at least since 2014?  $96,520 for all employees, $108,503 for teachers.

What does this all add up to?

For LA Unified, if their raises had been held to the same as inflation (1.47%), they would now have over $352 million dollars a year extra to spend on education for our kids.  And that does not factor in savings on pension benefit costs.

If their raises had been held to the same as everyone else in the county (3.76%)?  They would still have over $157 million dollars a year that they do not have now – because they’re giving that money to themselves instead.

And this is just looking at the group of employees who have been with the district over this period.

We assume that any new employees hired during this time are also receiving comparable raises, which means the net savings by holding those raises to a level “the same as everyone else” would be even greater.

Conclusion

Given the precarious financial condition of LA Unified, is now really the time to be giving outsized raises to people who have already been getting raises significantly higher than you or I have for years?

Is now the time to cut back on services and programs for the kids of Los Angeles, to fund increases in the  paychecks of people who already are at pay levels much higher than the average county resident?

The parents of LA Unified need to know the data and make sure their board members know how they feel about continuing their high levels of annual increases into the future, at the expense of better education for their kids.

Todd Maddison is an involved parent with three school-age children and has been a leader of his school district’s Parent Advisory Committee as well as serving as a parent representative on his district’s LCAP Committee and school site council. This article cross-posted from Transparent California.

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