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November 13, 2015 standard

There’s plenty of chatter today about the possibility that House and Senate education committee leaders have reached a deal on a reauthorization of the No Child Left Behind Act. Based on what your editor has learned, the proposal is likely to be a roll-back of the strong accountability measures that have spurred a decade of reforms that have helped more children succeed. But given that passage of the plan is still unlikely, your editor will offer more-comprehensive thoughts once an actual bill comes out.

Yet there is still a lot to discuss when it comes to the federal role in education policymaking, this time, courtesy of results released recently by the Obama Administration on the progress of the School Improvement Grant initiative. As with the results released three years ago, it is once again clear that the school turnaround effort is anything but a success.

The average percentage of students reading at proficient levels (as measured by state tests) in the first round of schools receiving SIG funding increased by just six percentage points between 2009-2010 and 2012-2013. Although this is steady progress, this still means that on average, one out of every two children in the first cohort of SIG-funded schools are either illiterate or barely able to read. That the average percentage of children in Cohort 1 schools performing at proficient levels in math increased by eight percentage points in that same period still doesn’t mean much. This is because three out of every five children in those schools are innumerate or barely able to do basic arithmetic.

The closer you look at the SIG data, the worse things look. Just 33 percent of schools participating in the first round of SIG made double-digit improvements in literacy between 2009-2010 and 2012-2013, while another 36 percent made single-digit gains over that time. Meanwhile 28 percent — that is, more than a quarter of all the Cohort 1 schools — experienced single-to-double digit declines in reading achievement. Essentially, one out of every four schools who have received several years of SIG funding continued to fail children academically. Which, in turn, means that 133,000 of the 475,000 children served by those schools continued to be subjected to low-quality teaching, curricula, and cultures.

This isn’t to say it is all bad news. The 9.2 percentage point increase in average elementary students in Cohort 1 reading at or above grade level between 2009-2010 and 2012-2013 is certainly to be celebrated. This bears out my assertion three years ago that the Obama administration should have geared future rounds of SIG toward overhauling elementary schools and toward providing children in the early grades with the reading and math interventions they need before they head move further along in their academic careers. That there was just a 3.5 percentage point increase in average middle-schoolers in Cohort 1 reading at or above grade level, along with an average 5.6 percentage point increase in reading proficiency for high-schoolers, further proves the point.

Yet the dismal results once raise this question: Should SIG continue to exist? Based on the data, there’s no way it should continue in its existing form. If it should even keep operating at all.

For one, the evidence is clear that only one of the three models chosen by districts as condition of SIG funding offers any demonstrable possibility of success. [There is a fourth model, which involves just shutting down the school altogether. Naturally, almost no district chose it.] That’s the Restart approach, under which a traditional district school is shut down and put under a charter school operator. On average, schools under Restart improved reading proficiency of children in their care by 8.1 percent between 2009-2010 and 2012-2013. The problem: Just 31 of the 635 schools in Cohort 1 of SIG chose that approach. Schools under the Transformation and Turnaround models, under which districts continue to operate them, did poorly in that same period; respectively, they improved achievement, on average, by just five percent and 6.2 percent. All but 49 of the schools in Cohort 1 were Transformation and Turnaround efforts.

None of this should be a surprise. As I noted five years ago in an The American Spectator column, neither the Transformation or Turnaround models would work because the schools would remain under the control of the very districts that ran them into the ground in the first place. Expecting a failure district to somehow revamp a failure mill — especially when it isn’t overhauling its own operations — is simply insane. After all, the same incompetence at the school (including an unwillingness to sophisticatedly use data to shape instruction) is usually mirrored by bureaucrats in the central office. This reality was borne out before SIG was launched; a mere 11 percent of California elementary schools forced by state officials to undergo turnarounds made “exemplary progress” three years later, according to Andy Smarick Bellwether Education Partners in his primer on school turnarounds. And as Caitlin Emma detailed in Politico, SIG hasn’t changed that reality.

Even when reform-minded school leaders are put in place at the school and district levels, the very dysfunction that has been endemic in the bureaucracy is difficult to remove and overcome. This is a culture problem. Toxic culture, be it within the school or across the district, will overcome efforts to put it asunder, especially when teachers and school leaders cannot be easily fired. As past and current reform-minded school leaders have learned the hard way — and current leaders such as Antwan Wilson in Oakland are finding out now — they often lack strong support for their efforts from boards often controlled by affiliates of the National Education Association and the American Federation of Teachers.

What has become clear is that there are likely three best approaches to school turnarounds. The first, of course, is just to shut down the schools altogether. The second, as seen in New York City, lies in overhauling the district, which will then lead to better-performing schools. The third? As demonstrated by SIG, hand over control of the schools, either to charter school operators or to families of the children who attend them. Essentially this means moving away from the traditional district model to what Dropout Nation calls the Hollywood Model of Education. The Obama Administration could have advanced this approach, by revamping SIG to only allow districts to use the Restart model and hand over control of the schools, as well as requiring them to pass Parent Trigger measures that would allow families to take control of the schools. Narrowing SIG’s focus to elementary schools would have also made sense.

But with the Obama Administration nearing the end of its tenure, with U.S. Secretary of Education Arne Duncan joining the exodus of officials heading for less-stressful work outside of federal government, and with the possibility that a reauthorized version of No Child will senselessly shut down competitive grant programs altogether, it may be too late to give SIG one more shot. Not that it ever deserved to exist in the first place.

August 27, 2015 standard

States should abandon their responsibility to provide high-quality education to all children, never take over failing traditional districts,and keep in place a model of education that no longer works for any child. That’s the only takeaway possible after reading a report released this week by the Alliance to Reclaim Our Schools, one of many front groups for the National Education Association and the American Federation of Teachers whose membership includes several of their vassals. Given that state takeovers weaken the influence of the Big Two teachers’ unions and their affiliates, that message isn’t exactly unexpected.

Yet the Alliance does have one point: That state takeover efforts have, in most cases, done little to reverse systemic educational failure of the targeted districts. One reason why? Because states themselves have continued the very traditional district bureaucracies — and the dysfunction inherent within them — that have led to the faltering. Moving away from the traditional district model, along with embracing Parent Trigger laws that allow families to restructure schools as they see fit, is the step that must be taken to transform education for the benefit of children.

The Alliance spends 24 pages attempting to argue that state takeovers of districts have somehow been more-damaging than the failures of the districts under school boards before then. Complaining that state takeovers of districts are only targeted against poor and minority communities, the Alliance declares those efforts are “undermining the financial health and stability” of districts, and have “dismantled connections” between schools and communities.”

The Alliance is also exorcised by the creation of state-operated school turnaround districts such as the Recovery School District in New Orleans and Tennessee’s Achievement School District, which have stepped in within the last decade to take over and overhaul failure mills previously under district management. From where Alliance sits, the presence of these districts are horrifying because they “[remove] the ability of local communities to govern their own schools.” The fact that these districts transform the schools into public charter schools — the bane of the existence of NEA and AFT — and essentially hand over the turnarounds to charter school operators is especially vexing.

There are several problems with the Alliance report. Let’s start with the most-obvious one: It’s a total mess, with misstatements of facts, citations of examples that aren’t tangential to the argument the Alliance and its backers are trying to make.

On one hand, the Alliance cites Michigan’s Educational Achievement Authority as a takeover of a district (even though it only runs a smattering of schools formerly run by Detroit’s spectacularly-inept district), but ignores the state’s all-but-full takeover of the main district’s operations. The omission of Detroit from the discussion isn’t a surprise. The failures of the Detroit district have been long-documented by your editor. This includes a 54 percent decline in its enrollment between 1999-2000 and 2008-2009, and the fact that it was taken over by Wolverine State government for a second time after the school board was once again caught engaging in such spectacular episodes of graft and mismanagement such as the acquisition of five floors in the landmark Fisher Building for $4 million more than the $21 million price tag paid by its owner for the entire building.

On the other hand, Alliance cites Chicago’s traditional district as an example, even though it admits that it isn’t a state takeover at all, but an example of mayoral control undertaken by the Second City’s mayor 20 years ago. This misstatement isn’t shocking; after all, the AFT and its Second City local have spent the past four years agitating to end mayoral control, including unsuccessfully spending $2.3 million on ousting current Mayor Rahm Emanuel. But this sloppy work essentially renders the report unworthy of consideration from jump street. [Even if Chicago was germane to Alliance’s report, the fact that Chicago’s district has improved dramatically since mayoral control — including an 11 percentage point decline in the number of functionally-illiterate fourth-graders between 2003 and 2013 (according to the National Assessment of Educational Progress) and a 27-percent increase in graduation rates between 2005 and 2013 — would weaken its case.]

Another problem with the Alliance’s report is its failure acknowledge the reality that the districts they cite weren’t exactly exemplars of either high-quality education or were in good financial condition before taken over. Philadelphia, for example, was in an educational state of emergency by the time Pennsylvania’s state government took over the district in 2001; this included half of its original graduating Class of 2001 dropping out by the time the district handed out sheepskins. The traditional districts in Newark, N.J., and Jersey City were basket cases for decades before falling under state control. As for tearing apart connections between schools and communities?

When it comes to state-operated turnaround districts, Alliance fails to admit that most haven’t been around long enough to draw any conclusions (other than that they can serve as exemplars of what should happen to public education in the long run). Three of the five turnaround districts cited have just come into existence this year, while the proposed turnaround district for Georgia must still be approved by voters next year. But in the particular case of RSD, the evidence so far shows that it is doing well by the Crescent City’s poor and minority children.

The percentage of New Orleans students performing at proficient levels (as measured by Louisiana’s battery of state tests) increased from 39 percent to 63 percent between 2007-2008 and 2013-2014, while the percentage of Crescent City kids attending failure mills declined from 51 percent to 13 percent between 2008-2009 and 2013-2014. Certainly RSD isn’t an unquestioned success. Far too many of its schools are warehouses of mediocrity instead of cultures of genius. Families also have a right to be upset that the implementation of these reforms happened with little of their input. But for Alliance (and ultimately, NEA and AFT) to argue that RSD hasn’t been successful for children in New Orleans is to engage in pure intellectual dishonesty.

The biggest problem of all with Alliance’s argument lies with its embrace of two myths: That of local control, the fantasy that traditional districts and the school boards are in charge of structuring education; and of the fallacy that communities have ever had real control of traditional district operations in the first place.

When it comes to local control, Alliance fails to acknowledge is that state constitutions, along with the U.S. Supreme Court’s century-old ruling in Hunter v. Pittsburgh, and federal education policy (including the No Child Left Behind Act), have long-ago established that state governments are charged with the role of providing education in one form or another, from deciding how schools should be financed to how it should be delivered to children and families. As local governments, districts are merely arms of their respective states, only given as much latitude to operate as state governments decide. This means that a state can intervene in the operations of a district — or even take them over — any time it wants.

As for the idea that communities have ever had real control over district operations? This has also been a mirage. One reason: NEA and AFT locals that have long been the most-influential players within school districts. Thanks to state laws governing collective bargaining and teacher performance management, hefty campaign donations from their coffers, and compulsory dues laws that force teachers to pay into locals regardless of their desire for membership, the Big Two have the leverage needed to stifle the will of families and other citizens. Another reason lies with the nature of traditional school district bureaucracies. School officials and teachers have long treated the families they serve, especially those from poor and minority households, with disdain. Add in the nature of bureaucracies in general to be byzantine, and thus, able to insulate those who run them from public account, essentially makes a mockery of voting. This can be seen in efforts by districts, both in big cities as well as in suburbia, to stifle intra-district choice (and the desires of families to choose schools fit for their kids) within their own boundaries.

Put simply, Alliance report is just another effort by NEA and AFT justify going back to an old order that has damaged poor and minority children decades before states stepped in to stop educational malpractice. The fact that the Alliance’s biggest backers have locals and state affiliates in all of the traditional and turnaround districts mentioned in the report — all of which have lost significant clout in the process — also ensures that the report fails to meet the smell test. Add in the reality that all but one of the members of the Alliance (including the Schott Foundation for Public Education‘s Opportunity to Learn Campaign and League of United Latin American Citizens)  are NEA and AFT dependents, and suddenly, it is clear that this group is just another bit of Big Two Astro-Turf.

Yet the Alliance report does hit upon an important reality: That state takeovers of traditional districts — from Jersey City to Philadelphia to Baltimore — have largely been a failure. This is because state education departments never dismantle the bureaucracies that, along with the intransigence of NEA and AFT locals, caused the dysfunctions in the first place. The traditional district model has long ago proven to be obsolete in an age in which the focus must be on providing high-quality teaching and curricula along with addressing particular learning needs in order to help all children attain lifelong success. That state education departments are ill-equipped to run day-to-day operations makes the already-marginal chances of success even less so. The very creation of RSD and other turnaround districts, which remove schools from control of failing districts, is tacit acknowledgement of the failure of earlier state takeovers.

Yet the solution lies not with the Alliance’s sophistic call for returning districts to control by elected-yet-unaccountable school boards. It lies with embracing what Dropout Nation calls the Hollywood Model of Education, which ditches the traditional district model altogether. Under such an approach, a district would only exist to provide buildings, deliver school lunch services, distribute funding, and serve transportation to an array of school operations.

This includes charter school operators as well as schools directly controlled by families in the communities they serve. The latter can be achieved by two means: The development of a school fund that families and communities can tap to launch their own schools, and the passage of Parent Trigger laws that allow families to take over and overhaul failure mills within their communities. Both approaches would actually achieve the family and community control of schools that Alliance proclaims it desires by abandoning an outdated approach that has never allowed for families to be lead decisionmakers in education.

Perhaps if Alliance and its backers were actually interested in building brighter futures for all children, their claptrap would actually be worth considering. What they should acknowledge is this: The traditional district model has never worked for children and families, especially those black and brown, and it is time to move towards something better.

March 27, 2015 standard

Yesterday’s Dropout Nation report on the efforts of the American Federation of Teachers’ to stop systemic reform in Philadelphia touched upon the traditional district’s fiscal woes. As longtime readers know by now, the district’s efforts to address its virtual bankruptcy — including attempting to force teachers to pay a share of their healthcare costs — is one of the key reasons why the union is devoting so much of its resources there in the first place.

Yet for all the sparring between the AFT and the School District of Philadelphia, the two sides agree on what they consider to be culprit for the traditional school system’s ills: The existence of public charter schools, which now serve 30 percent of the City of Brotherly Love’s school-aged children. But as a Dropout Nation analysis of the district’s latest comprehensive annual financial report shows, both the district and the union are engaging in delusional thinking.

The willingness of mayoral candidate Jim Kenney to fight for a moratorium on charter school expansion is one reason why the AFT is backing his candidacy. The district’s Chief Financial Officer, Matthew Stanski, argued as much to the Philadelphia Inquirer when he complained that the district may have to hand over an additional $96 million in subsidies to charters and that the state should be compensating it for those lost dollars.

Of course, the fact that families are fleeing to charters because of the district’s failures to provide high-quality education, a problem exacerbated by the AFT’s defense of failed policies and practices, never comes to the mind of either the union or the district’s bureaucracy. Nor do they keep in mind that the district isn’t even serving those students, and thus, shouldn’t even be receiving those funds in the first place; the dollars should flow directly to the schools themselves. [There’s also the fact that Philly’s enrollment has been on the decline since 1966, long before charters appeared on the scene. But that’s for a different day.]

But all the carping about allowing families to escape the Philly district’s woeful schools cannot cover up for this reality: That the school system is virtually bust. This is clear from the district’s push for an additional $105 million from Philadelphia’s main city government so it can finance its operations for the coming fiscal year. This is double the $57 million the city lent to the district over the past two years so it could continue operating.

But the district’s annual financial results show that even those dollars won’t help it address its long-term woes.

The district still lost $38 million in 2013-2014. The loss is four times lower than the $165 million loss in the previous fiscal year. But the smaller loss didn’t happen because the district generated more money; the district’s $2.8 billion revenue pull in 2013-2014 is just one percent higher than that for the previous year. What helped was a 33 percent decline in administrative support expenses (from $118 million in 2012-2013 to $78.5 million in 2013-2014) and a 16 percent reduction in student support service costs (from $180.3 million to $151.1 million in the same period).

To achieve those reductions, the district laid off 3,800 staffers during the last fiscal year. By the way: The district has reduced the number of bureaucrats, custodians, and other non-instructional staff by 57 percent between 2004-2005 and 2013-2014; they now account for 39 percent of the district’s 17,332 employees on the payroll. [The percentage of teachers on the district’s payroll, on the other hand, declined by a mere 26 percent during that same period.]

The district’s biggest costs are harder to reduce.

Philly paid out $153.4 million in interest on long-term debt during 2013-2014, little changed from the previous year’s levels. It also paid $71.3 million in interest and principle payments on debt it owes to the Keystone State’s Public School Building Authority, a 45 percent increase over 2012-2013. The district (and ultimately, taxpayers) will continue to pay the price for its fiscally feckless decision during the previous decade to float $871 million in variable-rate interest bonds in order to finance its equally-senseless $1.5 billion effort to build 20 new schools and rehab existing ones. Especially given the district’s move two years ago to shut down 24 half-empty schools and its enrollment declines in the past decade, the building spree made even less sense than ever.

The district spent $2.15 billion on teacher compensation and other instructional costs in 2013-2014, just 1.9 percent less than in the previous year. These are costs that are even harder to control. One reason why? The district’s collective bargaining agreement with the AFT’s Philadelphia Federation of Teachers, whose generous terms contributed to a 53 percent increase in teachers’ benefit costs between 2002-2003 and 2011-2012. With AFT having succeeded in its court challenge against the district’s move last October to cancel the long-expired contract (and require teachers to pay a share of their healthcare costs), and with Pennsylvania Gov. Tom Wolf doing all he can to repay the union for supporting his election campaign, Philly has even less room to maneuver on the cost front.

It isn’t as if Philly has shortchanged teachers on the pay and benefits front. Average salaries for teachers working for the district increased 21.4 percent between 2004-2005 and 2013-2014, according to the district’s own data; starting salaries increased by 20.6 percent within the same period. Put bluntly, AFT’s rank-and-file in Philadelphia are doing better than the taxpayers subsidizing the district and forced to deal with failing schools; median household income has been flat during the same period, according to data from the U.S. Census Bureau. Given the reality of Philly’s fiscal woes, it makes perfect sense for the district to cut generous benefits not in line with reality.

Then there are the contributions Philly must make to the Keystone State’s virtually-insolvent Public School Employees Retirement System. The district contributed $165 million to the pension in 2013-2014, a 27.8 percent increase over the previous year; the district’s pension costs increased by 238 percent between 2004-2005 and 2013-2014. Considering PSERS’ woeful financial condition and the increasing number of Baby Boomers in classrooms heading into retirement, the district’s retiree burden will continue to grow.

It could be even worse if the Keystone State finally forces PSERS to accurately account for its insolvency. A preliminary DN analysis of the pension’s comprehensive annual financial report concludes that it is insolvent to the tune of $41.3 billion for 2013-2014, or 27 percent higher than its officially-reported unfunded liability of $33 billion; taxpayers would have to shell out an additional $2.4 billion (based on 17-year amortization of the insolvency) or 82 percent more than the $2.9 billion in contributions made in 2013-2014. Based on those numbers and whether an effort by State Senate Majority Leader Jake Corman and his fellow Republicans controlling the state legislature can force Gov. Tom Wolf into accepting a pension reform plan, Philly’s contributions could increase by 82 percent, or to $300 million, none of which the district can actually pay.

Finally, there’s the fact that families are avoiding Philly’s failure mills in droves. The district passed through $701.2 million to charter schools in 2013-2014, an 18.6 percent increase over the previous fiscal year, thanks in part to a 7.6 percent increase in the number of kids fleeing the district to the privately-operated public schools. With so many families abandoning the district’s dropout factories — only 17 percent of children zoned to attend the notorious Strawberry Mansion High School in North Philly actually did so in 2012-2013 — the school system can’t simply count on a moratorium on charter school expansion to boost enrollment. Even with Gov. Wolf working hard on behalf of the AFT, such a ban on school choice is likely in the foreseeable future.

No matter who becomes Philadelphia mayor or what the AFT manages to convince its bought-and-paid-for ally to do, the district’s financial (as well as academic) woes are systemic, structural, and longstanding. Not one additional dollar of school funding will help it survive for the long haul.

June 28, 2014 standard

Few districts are as mired in financial morass as the School District of Philadelphia. This week, the City of Brotherly Love’s traditional system avoided another round of dire straits when the main city government agreed to lend it $30 million to continue its operations (on top of $27 million lent at the beginning of the last school year just to get the doors open). Pennsylvania state legislators also gave it an assist by increasing state funding by an additional $39 million for next school year.

Yet as a Dropout Nation analysis of the Philly district’s 2013 financial report shows, these emergency bailouts are doing little to address the consequences of Philadelphia’s long-term fiscal and academic fecklessness.

It has long ago been clear that Philadelphia no longer has unqualified status as an academic going concern. A mere 68 percent of the eighth-graders who made up the district’s original Class of 2012 were promoted to their senior year, virtually unchanged from the Promoting Power Rate for its graduating class a decade ago, according to a Dropout Nation analysis of data submitted to the U.S. Department of Education. While the percentage of fourth-graders reading Below Basic declined by four percentage points between 2009 and 2013, as measured on the National Assessment of Educational Progress, three out of every five 10-year-olds were still functionally illiterate. With a mere one percentage point increase (from 15 percent to 16 percent) in the number of eighth-graders reading at Proficient and Advanced levels, Philadelphia is also struggling to prepare kids for success in higher education and life. The consequences of shoddy quality of instruction and curricula on City of Brotherly Love kids explains why the district’s enrollment declined by 24 percent between 2002-2003 and 2011-2012.

The free fall in enrollment, along with the Philadelphia district’s status as a mega-failure mill, has exacerbated financial woes largely of its own making. The district lost $165 million in 2012-2013, more than double the $79 million loss generated in the previous year. Sure, the district’s revenue of $2.8 billion for 2012-2013 was two percent higher than the previous period. But its expenses of $2.9 billion was five percent higher than the earlier period. One reason: An 11 percent increase in interest payments, including on the $871 million in variable-rate interest bonds the district floated last decade to finance its senseless $1.5 billion effort to build 20 new schools and rehab existing buildings. The interest rate swaps, which the district undertook to offset sudden increases in interest rate payments tied to those bonds, is also weighing heavily on its balance sheet. Given that Philly shut down 23 schools this past year, the district’s building boom was a mistake of epic financial proportions.

Then there are the burdens Philadelphia faces as a result of traditional teacher compensation. The district’s instructional costs for 2012-2013 increased by five percent over the previous period thanks to the district’s contract with the American Federation of Teachers’ City of Brotherly Love local and increases in pension contributions. Between 2002-2003 and 2011-2012, Philadelphia’s expenditures for teachers’ benefits increased by 53 percent. Meanwhile Philly’s long-term burdens continue to grow. The district’s unfunded liability for retired teacher and other school employee healthcare costs for 2013 was $388 million, three times greater than the $130 million shortfall in the previous year. If Philadelphia was to liquidated today, its $2.5 billion in assets wouldn’t cover its $4.1 billion in liabilities and long-term debts.

Let’s keep in mind that these numbers don’t include any increases in contributions the district must make to the Keystone State’s Public School Employees’ Retirement System to help address its virtual insolvency. A preliminary DN analysis of the pension concludes that it is insolvent to the tune of $37 billion, or 27 percent higher than its officially-reported unfunded liability of $30 billion; taxpayers having to shell out an additional $2.1 billion a year (based on 17-year amortization) or 90 percent more than the $2.4 billion in contributions made in 2013. Based on those numbers, and on whether Gov. Tom Corbett succeeds in convincing legislators in passing any kind of pension reform plan, Philly’s contributions to the pension could be nearly double the $129 million the district paid last year (or an additional $116 million a year in contributions). In light of the district’s financial woes, and the 78 percent increase in pension contributions it has had to sustain between 2010-2011 and 2012-2013, there’s no way it can sustain itself as an education organization.

Put simply, Philadelphia is virtually bankrupt. This is a problem that an additional $96 million in funding from both the state and the main city government (as requested this week by district Supt. William Hite) cannot fix. It is finally time for reformers and others in Cheesesteak Land to finally let the district wind down its operations, and move toward a model of educational service that actually benefits taxpayers, families, and ultimately, our children.

October 26, 2013 standard

Back in July, Dropout Nation surmised that Los Angeles Unified School District Superintendent John Deasy would likely end up leaving the top job by the end of the school year. With the American Federation of Teachers’ local, United Teachers Los Angeles, effectively winning back control of the district’s board after this year’s election, and with traditionalist (and longtime Deasy foe) Richard Vladovic taking the helm as board president, the superintendent was going to have a tough time pursuing his moderate reform agenda. By the time Dropout Nation reached its conclusions, Vladovic and his allies had already begun doing all they could to frustrate Deasy’s efforts, including pushing for a three-year plan to increase teacher salaries and hire more teachers that favors their AFT patron (and effectively putting the kibosh on Deasy’s effort to move toward weighted student funding approach to budgeting that would hand more dollars to schools serving poor and minority children while allowing principals to manage their own budgets). Since then, Vladovic and company have ratcheted up the pressure on Deasy with moves such as replacing board member (and Deasy ally) Tamar Galatzan as head of the district’s budget committee with Bennett Kayser, whose loyalty is first and foremost to the AFT.

So it isn’t surprising that rumors are now coming out that Deasy may either hand in his resignation by this coming January or end up being sacked by the board as early as Tuesday after his latest performance review. Sure, reformers in the City of Angels and Los Angeles County, along with L.A. Mayor Eric Garcetti, are demanding that the board retain Deasy. But because reformers didn’t win seats during this year’s board elections, they have little leverage that they can use on Deasy’s behalf, either to keep him in the job or help him advance his agenda. The fact AFT local president Warren Fletcher has already issued a call for “new leadership”, along with the district’s troubled roll-out of its ambitious effort to equip all students with Apple iPads in place of textbooks, makes Deasy’s departure all but a certainty.

Given the dysfunction on L.A. Unified’s board and the unwillingness of the board majority to advance systemic reform that will benefit children in its care, it’s unlikely that the district can replace Deasy with a suitable successor. Which is another reason why it is time to break apart L..A. Unified altogether.

Certainly Deasy is not nearly the strong reformer those in the movement, both in L.A. and nationwide, like to think him to be. After all, his tenure at the helm of L.A. Unified has been filled with has weak moves such as striking a deal with the AFT on a teacher evaluation plan that does little to actually measure the performance of teachers based on their success with the students they instruct in classrooms. Given that Deasy has gone from working with a reform-oriented board led by Monica Garcia to one dominated by traditionalists such as Vladovic (and that reformers have struggled with providing strong and consistent advocacy), it is understandable why Deasy has taken a more moderate stance what the district actually needs. But in light of his current predicament, Deasy would have been better off going full bore on advancing reform.

At the same time, he has proven skillful at using what cover he gets from reform advocates to overhaul teacher quality, expand school choice, and undertake other moves that are starting to help L.A.’s children. He deserves praise for working with Parent Power activists and families looking to either take over or push for the overhaul of failing schools in the district such as 24th Street Elementary and Weingard Elementary. And Deasy deserves admiration for his willingness to side step traditionalists on L.A. Unified’s board (with the implicit support of Garcia and other reformers) — including backing the successful lawsuit filed against the district by a group of Southern California families organized by activist Alice Callaghan (with backing from the school reform group EdVoice) over the district’s failure to use student performance data in teacher evaluations as required under the Golden State’s Stull Act.

But it has been clear for a while that Deasy would never get much done so long as he has to work with Vladovic and his allies who now control L.A. Unified’s board — and not just because of the conflict of visions and ideologies. Vladovic’s reputation as a hot-head who abuses both his own staffers and that of Deasy’s has come out in the open over the past few months a a former staffer accused him of episodes of harassment and meddling in operational affairs beyond what is called for in his governance role. Vladovic all but affirmed these and other accusations earlier this month when he apologized for his misbehavior and said that he would seek treatment for his anger issues. But the fact that the board has so far let Vladovic off the hook for his misbehavior (and may not likely approve an effort by rival Galatzan to have him censured) means that he and his allies will likely subject Deasy, his staffers, and the rest of L.A. Unified’s already-dysfunctional bureaucracy to even more grief. Which is likely to be perfectly fine as far as the AFT and other traditionalists looking to stop future reforms are concerned.

Meanwhile Vladovic and his allies have been building a case against Deasy’s continued employment. The superintendent’s performance review this Tuesday comes amid constant sparring over the district’s future direction. Earlier this month, Deasy foe Steve Zimmer fumed at L.A. Unified’s chief financial officer, Megan Riley, after she presented a cost-benefit analysis that showed that the board majority’s feckless spending plans — including the hiring of additional teachers, new rounds of salary increases, and increases in the number of classes that don’t involve helping kids improve their literacy and numeracy — would cost at least $1.2 billion over a three-year period, a burden the district can ill-afford. Deasy’s key staffers, tired of the meddling from the board, are starting to move to greener pastures; this includes Jaime Aquino, who oversees the district’s curricula efforts (including implementation of Common Core reading and math standards), who announced his departure last month. Add in Fletcher’s threats that that the AFT may mount a work stoppage similar to that done last year by its sister local in Chicago if the district doesn’t give in to its demands for salary hikes, and it is clear that Deasy will have to leave on his own in order to avoid being given walking papers.

L.A. Unified Board President Richard Vladovic and his traditionalist allies are making an already-dysfunctional district even more so. Photo courtesy of LA School Report.

Replacing Deasy wouldn’t exactly be an easy task even under the best of circumstances. Unlike New York City, where the traditional district’s status as a department of the main city government controlled by the mayor provides for stability in leadership, L.A. Unified’s board governance structure (one typical for most big-city districts) makes the superintendent’s job inherently unstable. As seen in the case of Deasy, a superintendent chosen by one board can end up immediately falling out of favor with the next.

But the current board’s dysfunction, especially with a intemperate leader such as Vladovic at the helm, makes running the nation’s second-largest district even more unattractive than usual, both for potential candidates of a reform mindset as well as for traditionalist types. The fact that the board majority is unified more by their general disdain for Deasy and his agenda than by any philosophical agreements adds additional uncertainty. Zimmer, a former Teach For America recruit, has a penchant for going his own way that is as frustrating to traditionalists as it is to reformers; this independence streak or indecisiveness (depending on where you sit) is why he garnered no support for his bid last July against Vladovic to become L.A. Unified’s board president. Monica Ratliff, who now occupies the seat once held by reformer (and now L.A. city councilwoman) Nury Martinez, has been as much a critic of the AFT’s defense of seniority-based protections for laggard and criminally-abusive teachers has she has been a defender of the traditionalist thinking in other aspects.

One can imagine the majority splintering into two camps once Deasy hands in his resignation, making it difficult to choose his replacement. It also means that anyone who succeeds Deasy as superintendent would spend more time trying to please each of the players on the board — including Vladovic and his aforementioned anger management issues — than running district operations. This is especially problematic in light of L.A. Unified’s myriad academic woes. While Deasy and immediate predecessor Ramon Cortines helped reduce the percentage of fourth-graders reading Below Basic (as measured on the National Assessment of Educational Progress) by five percentage points between 2009 and 2011,  55 percent of L.A. Unified fourth-graders (now seventh-graders) were functionally illiterate. Meanwhile L.A. Unified is also struggling to provide kids with the college-preparatory curricula they need to do well in higher education, with just 37 percent of the district’s graduating Class of 2012 having taken courses that prepared them to do well in the colleges operated by the University of California and California State University, according to data from the Golden State’s Department of Education.

Meanwhile Deasy’s successor would be expected by Vladovic and company to do the bidding of the AFT local. But given the district’s struggles, along with the overhang of the criminal abuse scandal involving former Miramonte Elementary School teacher Mark Berndt (who was allowed by the district to damage the children he taught), no responsible superintendent can do that. If anything, that person would have to continue Deasy’s efforts to overhaul teacher evaluations and performance management, which the district has long failed to do well; 40 percent of veteran teachers and 70 percent of new hires were evaluated by the district during the 2009-2010 school year, according to the National Council on Teacher Quality. But undertaking such an effort means battling with an AFT local dead set against even the reform-light concepts such as peer review panels that most traditionalists generally support — and whose influence over the district’s board has only become stronger. And that’s before one considers the notorious intransigence of L.A. Unified’s bureaucracy, which has historically quashed anything beyond superficial attempts to improve student achievement.

Beyond the academic and operational woes facing Deasy’s possible successor, there are the financial problems plaguing the district. L.A. Unified struggled this school year to fill a $450 million shortfall; it depended on $202 million in one-time dollars just to make ends meet. It faces a $350 million shortfall for 2014-2015, thanks in part to healthcare deals with the AFT and other unions under which the district bears allthe costs; L.A. Unified expects to spend$780 million on healthcare for the coming year. Add in the $4 billion in unfunded retired school employee healthcare costs that must be paid down in the next 17 to 30 years, and the portion of the state Teachers Retirement System’s $87 billion pension deficit, and the district can be considered on the brink of insolvency. With taxpayers in Los Angeles and the 31 other cities served by L.A. Unified struggling with the pension woes of their city governments (and the woes of the state as a whole), L.A. Unified can’t hope for more help, much less $1.2 billion for the spending spree Vladovic and his cronies want to undertake.

In all honesty, Deasy is as good as L.A. Unified could get to run its operations. Vladovic and his allies won’t find anyone nearly as good willing to take on the dysfunction that plagues the district. It is definitely time for reformers to mount another effort to ditch the traditionalists on the board over the next few years. And it is also time for all to take up Dropout Nation‘s standing advice on what to do with L.A. Unified: Break it up altogether and move away from the traditional district model at the heart of its problems overall.

July 22, 2013 standard

There’s nothing surprising about last week’s news that Detroit’s main city government joined the likes of Vallejo, Calif., and Jefferson County, Ala., in filing bankruptcy. Six decades of fiscal and operational fecklessness by Motor City officials such as the abysmal Coleman Young and notorious (and now-incarcerated) Kwame Kilpatrick have led to mounting fiscal burdens that have rendered the city so insolvent that by May, the Michigan state government took over its finances and handed control of the city to an emergency financial manager. Weighing heaviest on the books are the array of retirement deals between Motown and public sector union locals that have proven to be far costlier than generations of politicians have wanted to admit. This includes pension deficits of $3.1 billion as determined by Moody’s Investors Service in its review of the city’s finances — or $2.1 billion more than the 977 million in pension deficits officially reported by Motown (which as its state-appointed financial manager Kevyn Orr, noted in his analysis released in June is higher than the $644 million the city reports in other financial statements), as well as $5.7 billion in unfunded retired civil servant healthcare costs and $1.43 billion in pension-obligation bonds outstanding. In fact, Detroit’s pensions have paid out $3 billion more in benefits over the past five years than it has generated in investment income and pension contributions.

But soon, Motown and its fellow municipalities won’t be the only ones in bankruptcy courts. The very fiscal fecklessness besetting these municipalities are now hitting traditional districts, forcing them to pay dearly for the high costs of building booms and retirement deals they made with states, and affiliates of the National Education Association and American Federation of Teachers. This, along with the woeful performance of many districts in improving student achievement, is another reminder that the traditional district model, already proven to be ineffective and obsolete in providing high-quality education to children, is even less useful in encouraging fiscal prudence.

As Dropout Nation has reported for the past few years, the full cost of traditional teacher compensation (including defined-benefit pensions, near-lifetime employment, and low-cost healthcare in retirement) have been coming home to roost as some time. The retirement of Baby Boomers in the teaching ranks, along with the current economic malaise, increasing costs of Medicaid driven in part by the Affordable Care Act, and decisions by states, districts and NEA and AFT affiliates to contribute as little as possible to pensions, has led to a perfect storm of sorts. Another decade of deal-making between districts and teachers’ union affiliates has led to generous benefits for teachers, but at a high cost to districts (and ultimately, taxpayers). Districts and states spent $73 billion on benefits in 2011-2012, a 74 percent increase over 2001-2002, according to a Dropout Nation analysis of U.S. Census Bureau data; the average district now spends 34 cents on benefits for every dollar of teacher salary, an increase from the 29 cents per dollar of salary spent a decade earlier.

Exacerbating the problem for states and districts are shoddy pension accounting and actuarial rules that obscure the true levels of the pension and retiree healthcare liabilities on their books. As a result, districts and states are likely understating their pension shortfalls by 35 percent or more. Chicago Public Schools likely faces a pension shortfall of between $11 billion and $15 billion, (depending on the exclusion and exclusion of $3.3 billion in unrealized investment losses), between 36 percent and 96 percent greater than its officially-stated shortfall of $8 billion. The pension deficit, which Chicago exacerbated with the help of Illinois state officials (who have granted the district a pension contribution “holiday” that allows it to pour less into the pension than it should), and the AFT local there (through is control of seats on the pension), is one reason why the district moved last Friday to lay off 2,000 teachers and other staff.

These issues, along with the evidence that traditional teacher compensation is ineffective in improving student achievement and rewarding high-quality teachers for their work, is why school reformers and cost-cutting governors are attempting to overhaul how teachers are compensated — including replacing defined-benefit pensions with hybrid retirement plans that have elements of defined-contribution plans — and sparring with NEA and AFT (both of which derive their influence from their promise to rank-and-file Baby Boomers members in classrooms that they will make sure that teaching is the best-compensated profession in the public sector).

At the same time, busted pensions aren’t the only problem weighing heavily on traditional districts. During the last decade, districts spent little on bolstering information technology infrastructure or developing data systems that would provide the information teachers and school leaders need for improving student achievement. Instead, they spent profligately on new and restorative construction –including high school stadiums and fixing up aging buildings — even when enrollment numbers were in decline. New buses were bought as well even when districts were operating them to full capacity only two-thirds of the time. By 2007-2008 (or at the beginning of the financial meltdown that led to the current economic malaise), districts had spent $53 billion on school construction, 35 percent more than in 2001-2002, according to the U.S. Census Bureau. Construction, along with moves by districts with their own pensions to float bonds in the hope of growing the proceeds (and reducing pension shortfalls) during that era’s bull market, are among the reasons why the nation’s districts had $407 billion in debt outstanding in 2010-2011, a 80 percent increase over the debt levels in 2001-2002, according to an analysis of U.S. Census Bureau data, while having a mere $177 billion in cash and investments on hand, a 46 percent increase in the same period.

Because so many districts floated variable-rate bonds with interest rates that could increase or decline, they used interest rate swaps — investment derivatives — to offset increases in rates on those bonds. Both moves have burned districts, with high levels of debt on the books and swaps they must continue pay for as long as 30 years even as interest rates have declined. These burdens, along with reverse-seniority layoff rules that restrict districts from reducing staff based on teacher performance and the obsolete scale-focused structure inherent within the traditional district model, have made it even harder for districts to deal sensibly with reductions in tax revenues, state dollars, and federal funding. Closing schools, as some big-city districts have done in order to stave off fiscal trouble, won’t be enough to overcome decades of bad decision-making.

Some districts have already gone bust. The Buena Vista district in Michigan near the state capital of Lansing attracted national attention in May when it shut down its operations for two weeks before the state provided emergency aid in order for its graduating class to complete their studies. But the district’s fiscal condition had been in deterioration for some time thanks in part to bad decisions such as striking a three-year contract with the NEA affiliate that required the district to pay all the costs of healthcare instead of requiring teachers to pay 20 percent of the tab. Between 2007-2008 and 2011-2012, Buena Vista’s deficits increased from $395,041 to $948,300, (according to Dropout Nation‘s analysis of Wolverine State financial data for the district. Buena Vista is one of 50 districts in the Wolverine State that are in dire financial conditions. By tonight, Buena Vista and another district, Inkster, may shut down for good if it cannot meet a state mandate to obtain a loan to finance operations for the upcoming school year.

But it isn’t just small districts that could end up filing for bankruptcy or dissolved altogether. There’s Detroit Public Schools, which like the city government, is already under state receivership. The district’s new state-appointed financial czar, Jack Martin, must deal with more than just systemic academic failures and declining enrollment. Detroit is on the hook for part of the Michigan Public School Employees Retirement System’s official pension deficit of $22.4 billion (and more like  $30.4 billion, or 36 percent more than officially reported, according to a Dropout Nation analysis of the pension using a calculation developed by Moody’s) as well as $26 billion in unfunded retired teacher healthcare liabilities. If Michigan adopted more-realistic accounting for the teachers’ pension than it does now, Detroit Public Schools would have to pay $138 million, or 35.6 percent more than it contributed to the pension in 2011-2012, the latest year reported, just to make up its share of the underfunding. Considering that Detroit’s revenue declined by 15 percent — or $187 million — between 2010-2011 and 2011-2012 (from $1.27 billion to $1.07 billion), there’s no way the district could handle any kind of double-digit hike.

But pensions aren’t the only woes weighing on the Motor City district. A successful move by the district four years ago to float $507 million in bonds (with interest rates as high as 7 percent) to fix existing buildings now seems particularly senseless given the shutdown of  91 schools during the tenure of recently-departed financial czar Roy Roberts and his predecessor, Robert Bobb. Even more infamous spending sprees — including the acquisition of 160 BlackBerry smartphones and 11 motorcycles on the taxpayers’ dime, as well as the purchase of five floors in the landmark Fisher Building for $24 million (or $3 million more than its owner had paid for the entire building) — have also been costly. Although a series of bond refinance efforts have helped reduce interest payments, the district still spent $190.2 million –or 18 percent of its revenues — to service $2.2 billion in debt outstanding. Add in the missteps by Roberts during his tenure (including the reversal of staffing reductions predecessor Bobb made during his tenure, as well as striking a new deal with the Motor City’s AFT local that will make it even harder to control payroll costs), and one can see that Detroit Public Schools is virtually insolvent. A bankruptcy filing of its own is likely.

Another big-city district that is a bankruptcy candidate is Philadelphia, whose fiscal woes have been chronicled by Dropout Nation over the past two years. Last month, the financially-strapped district announced that it would lay off 676 teachers and other staff in order to address a $304 million budget shortfall for its upcoming fiscal year. As with Detroit, the City of Brotherly Love district must also bear part of the burden for Pennsylvania’s Public School Employees’ Retirement System, which like the district is virtually insolvent. A Dropout Nation analysis earlier this year determined that  PSERS’ deficit is likely $33.5 billion, or 27 percent higher than it reported for its 2010-2011 fiscal year. Philadelphia would likely have to pay an additional 81 percent in contributions — or an additional $76 million on top of the $93 million in paid out in 2011-2012 — over the next 17 years, a burden it couldn’t sustain given that revenues declined by $201 million (or 7 percent) between 2010-2011 and 2011-2012.

As with so many districts, the woes Philadelphia faces have been years in the making. A string of deals with the AFT’s City of Brotherly Love local, along with increases in pension contributions, led to a 41 percent increase in spending on teachers’ benefits between 2001-2002 and 2010-2011. Philadelphia’s $1.5 billion school construction program, which began in 2004, added 20 new schools (in addition to rehabbing additional buildings) even as enrollment was in decline; the move by the district in March to shut down 23 schools proves how big a mistake the district made in launching a school building program in the first place. Meanwhile Philadelphia’s fiscal mismanagement would wreak havoc on its balance sheet and operations. The district’s decision in 2004 to float $871 million in variable-rate interest bonds led it to strike a series of interest rate swaps to offset any sudden increases in interest rate payments. That decision would ultimately cost the district $72 million by 2011, according to a report by the Pennsylvania Budget and Policy Center. These missteps, along with the more than a decade of bungled school overhaul efforts and a continuing failure to provide children in its care with high-quality education, has led the district to its current state of insolvency.

Detroit and Philadelphia may be the biggest names on the list of bankruptcy candidates. But they won’t be alone. More districts will end up having to face their insolvencies (if not forced into bankruptcy or dissolved altogether) before this decade is over.