Roza & Drew: L.A. District Is Asking for a $500 Million Parcel Tax. In Return, Let the Schools Decide How to Spend Their New Funds

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Many of the country’s largest school districts decentralize funding to schools (yes, schools) and let the schools — not the district — design budgets that work best for their particular mix of students. Not the Los Angeles Unified School District. LAUSD is the country’s second-largest district, yet its financials remain stubbornly centralized — and widely criticized. There have been proposals to divide it into smaller or regional districts, but no serious consideration of shifting dollars and spending decisions directly to schools.

For LAUSD, a decentralized model would be a smart move as it asks local voters to approve a $500 million annual parcel tax on June 4. Trust in the district’s financial leadership is low, schools feel squeezed with reports that performance is lagging, and the district is bleeding cash to cover commitments made in years past.

Some groups are rightly asking for financial reform in return for approving the parcel tax. Health care benefits alone consume a whopping $2,300 per pupil per year (much of it for retirees) — more than in within-state urban peer districts. Some of that is money that otherwise could be going toward educating every student sitting in classrooms right now. And yet LAUSD leadership has been unable to muster the support needed to rein in these expenses.

That’s where a decentralized model can help. When finances are shifted to schools, schools get to make trade-offs with their money, choosing where and how to trim to save valued staff. Where those choices bump up against labor contract provisions, schools can and should make their case for more flexibility. In the long run, doing so could influence negotiations between the district and union.

Districts in New York City, Chicago, Denver, Houston, San Francisco, Boston, Baltimore, Indianapolis, Nashville, Atlanta, Newark, Las Vegas and elsewhere have shifted to a student-based formula model that puts schools in the driver’s seat on spending. The district allocates its funds to schools based on the number and type of students in each building, better aligning dollars to student needs, and in doing so boosts equity and transparency. Schools then have flexibility to make trade-offs that do more for students with the money at hand.

We’ve seen schools choose not to replace a retiring vice principal or librarian and instead keep a counselor or chess team coach, as those positions are more important to the school community. When principals weigh the trade-offs for their schools, instead of the district, they are more likely to engage the community, factor in what matters most for their students and staff, and communicate the rationale for the compromise alongside a plan to mitigate any downsides. That’s why principals can pull off trade-offs that districts can’t. In controlling the budget from the top, as LAUSD continues to do, it’s no surprise that when tempers flare over finances (as they did in the latest teacher walkout), the district was a fair target of the fury.

In the decentralized model, the district can continue to maintain central services (such as transportation, HR and accounting). Since all the district’s funding gets allocated to schools, costs for these central services are then charged proportionately to each school’s account.

All schools contribute, and the charges are clear for all to see. Schools can be billed some fixed per-student amount for central leadership, some amount for nutrition services, for purchasing, for retiree costs and so on. If a district reports all funding by school, there can still be central or shared services, but those costs are on the up and up and there is no hidden money. Not only does this enhance trust in the district financials, but it helps schools see what’s at stake. When retiree costs hit a school’s bottom line, support for change may swell from school leaders and communities as they understand what investments hang in the balance.

Those who defend the centralized framework talk about efficiency. But those in schools know that when it comes to student learning, the many human variables at play are very important. Relationships between students and staff matter, individual teachers and staff matter, and community factors matter. What does that mean for districts? The biggest mistake is to establish centralized one-size-fits-all policies as if all this human stuff didn’t matter.

That’s why many larger districts have shifted to a model designed to harness — rather than ignore — each school’s unique human strengths. That recognizes that schools are best positioned to make decisions on how to leverage resources to maximize value for students. LAUSD should follow suit and commit to student-based allocation in return for receiving funding from the parcel tax. That would be a promise worth making.

Marguerite Roza is a research professor and director of the Edunomics Lab at Georgetown University. Anthony Drew is a research analyst at the lab.

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