By Gregory N. Lippe On January 31 , 2008 Assembly Member Cameron Smyth introduced a bill (co-authored by Senator George Runner) that would require, by July1, 2012, the reorganization of a unified school district with an annual enrollment of at least 500,000 pupils into multiple school districts enrolling no more than 50,000 pupils. The primary target of this bill is, of course, LAUSD. This is not the first time that the topic of breaking up the LAUSD has been raised. Parents and employers are continually frustrated by the lack of performance of students, high dropout rates, campus violence and inappropriate expenditures of the district and actions of the Board. In 2005 Harvard Researchers reported that the dropout rate in LAUSD was approximately 50 percent (compared to a statewide average of 13 percent). Additionally (in the LAUSD) only 39 percent of Hispanic (who now represent approximately 73 percent of the LAUSD student population) and 47 percent of African American students graduate in four years. Although I was unable to locate actual dropout percentages for the 2007 school year it is estimated that there has been only slight improvement since 2005. In addition to the high dropout rate, student performance, although somewhat improved, is still dismal. According to the California Department of Education, in 2005 only 27 percent (a 9 percent increase over 2001) of LAUSD students tested proficient or advanced in English-language arts on the California Standards Test (“CST”). Test results for the California High School Exit Exam (“CHSE”) presented much better results: 66 percent of 2007 LAUSD graduates passed the English-language arts portion and 59 percent passed the math portion. Although this looks good on the surface, these pass rates are significantly lower than the statewide averages of 88 percent for both English-language arts and math in 2006. Additionally, with such a significant difference in pass rates between the 2007 CHSE and the 2005 CST one must wonder if a comparison of the levels of difficulty between the two tests is similar to a comparison between apples and oranges. As indicated above, poor performance is only one of the sources of frustration people have with the LAUSD. Amid cries of funding deficits and under conditions where teachers must dig into their own pockets to provide supplies to their students, the following expenditures are strong examples of a school district that appears to be out of control: 1. Four years ago the district decided that it needed to adopt a new, computerized, pay system. It purchased a German program that had performed poorly in the past. Deloitte Touche Tohmatsu was given a $55 million contract to customize and install the software. Despite repeated failures upon testing (due to a significantly flawed database) and inadequately trained payroll clerks, the new system was implemented at the beginning of 2007. The results included overpayments of an estimated $53 million to approximately 36,000 teachers and others and underpayments or lack of payments to thousands more. Finally after seven months of errors the school board members ordered the superintendent to devise a recovery plan. To date, approximately $13.5 million has been paid to 10 new consulting firms and the system still isn’t reliable. Total estimated costs to fix the system are in excess of $35 million. 2. The Belmont Learning Center, originally estimated to cost $45 million, will finally open (under a different name due to the tainted image) at a cost of approximately $400 million. 3. As reported in the Los Angeles Daily News in November 2007, due to a barrage of negative publicity the LAUSD quietly hired two consultants at a combined cost of approximately $300,000 to improve the districts image. Previously, the district engaged the Rogers Group to focus exclusively on repairing their image due to the payroll system debacle. It is estimated that adding the cost of the two new consultants to the cost of the Rogers Group will result in a combined cost approaching $700,000. Now, as if the above information as to performance and expenditures is not enough to make the case for dismantling the LAUSD, the president of the School Board has decided that it would be an appropriate use of the Board’s time to debate and take positions regarding non-school-related politics. On Feb. 26, the LAUSD Board was scheduled to vote on a motion (authored by their president) to impose a district boycott of non-union hotels on Century Boulevard (near LAX). The boycott motion brings the LAUSD into the debate over mandated wages for workers at non-union hotels. For those who wonder what the LAUSD does at these hotels, start with spending almost $400,000 for meetings at three of these hotels just last year for meeting and conference rooms. Perhaps this money could have been saved by meeting at school facilities? Should the LAUSD be dismantled? Based on the information above and the findings of both a nine-member team at UCLA’s Anderson School of Management that centralized management led to higher district spending on administration and Harvard economist Caroline Hoxby that smaller and more numerous school districts are linked to higher student achievement, I say, unequivocally, YES. — Gregory N. Lippe, CPA, is Managing Partner of the Woodland Hills-based CPA Firm of Lippe, Hellie, Hoffer & Allison, LLP, Chairman of the Valley Industry and Commerce Association (VICA)and a Director of First Commerce Bank.
