Los Angeles Voters Roundly Defeat $500M Annual Parcel Tax, Leaving Nation’s Second-Largest School District On Shaky Financial Footing
Los Angeles Voters Roundly Defeat $500M Annual Parcel Tax, Leaving Nation’s Second-Largest School District on Shaky Financial Footing
This partnership between LA School Report and the article has revealed that Los Angeles voters have rejected a parcel tax that would have provided $500 million annually to schools, according to unofficial results from the county registrar. Measure EE required residents within L.A. Unified boundaries to pay 16 cents per square foot of developed property for a period of 12 years. However, it fell over 20 percentage points short of the required 66.7 percent voter threshold. Approximately 45.7 percent of the 304,321 voters approved the measure, while 54.3 percent opposed it.
Voter turnout reached 12.2 percent of the district’s 2.5 million registered voters, surpassing the average for special elections and exceeding last month’s school board race. Despite the defeat, United Teachers Los Angeles President Alex Caputo-Pearl expressed that Measure EE had already achieved a victory for public education by initiating discussions about what the city can do to support schools.
L.A. Unified and UTLA emphasized the importance of the tax in ensuring smaller class sizes, as well as the inclusion of additional nurses, counselors, and librarians, which were promised in the previous teacher contract. Opponents argued against the tax due to concerns about transparency and accountability in managing taxpayer funds.
Matt Klink, a spokesman for the Vote No on EE campaign, stated that attaining a two-thirds majority vote is a challenging feat, and the fact that the measure only received 54 percent demonstrates its flaws. The district must now submit its 2019-20 budget to county overseers by July 1, without any new local revenue source. The county has threatened to intervene if L.A. Unified fails to prove its financial stability within the next three years. Projections indicate that the district will spend $577 million more than it will generate in the upcoming year alone, resulting in a deficit of approximately $700 million by 2021-22.
Debra Duardo, the superintendent of schools for Los Angeles County, expressed disappointment over the measure’s defeat. The Los Angeles County Office of Education stated that L.A. Unified needs to align its spending with the funds it receives from the state and federal government. Despite anticipated savings from reductions in central office and healthcare costs, the district faces financial uncertainty as it prepares for the next school year.
The low passage rate for Measure EE is not surprising considering that parcel taxes are not common. Only around 9 percent of school districts, mostly concentrated in the Bay Area, have enacted or renewed parcel taxes in the past five years. Measure EE would have been L.A. Unified’s first parcel tax, as the only other attempt failed in 2010. Parcel taxes are unique to California and serve as a fallback option for financially struggling districts that do not receive sufficient funds from the state.
Supporters of Measure EE believed that the public support demonstrated during the teacher strike in January would translate to backing for the tax. February polling showed that over 80 percent of respondents recognized the need for increased investment in L.A. Unified. The "Yes on EE" campaign received endorsements from influential figures such as Mayor Eric Garcetti and several Democratic presidential candidates. It also outspent the opposing "No on EE" campaign nearly five times over, with over $9.3 million in external expenditures.
Overall, the defeat of Measure EE poses financial challenges for L.A. Unified as it moves forward. The district will need to reassess its budget and find alternative ways to address its funding shortfall.
There was significant doubt regarding the allocation of the $500 million that enters L.A. Unified’s general fund yearly, with concerns that it would be used to cover rising employee pension and healthcare expenses instead of being directed towards classroom needs. The proposed independent oversight committee consisting of nine members was met with dissatisfaction, as critics argued that it could easily be disregarded. Furthermore, there was frustration over the district’s low achievement scores despite previous investments from taxpayers, such as the five construction bonds totaling $20.6 billion since 1997. The implementation of Measure EE would have resulted in most homeowners paying between $100 and $450 per year in taxes.
The failure of Measure EE sends a clear message to LAUSD about misreading the anger of the voting public, especially in a year with a strong economy. However, this should not be seen as a reason to give up on the district. Instead, it is an opportunity to reflect and chart a new path prioritizing the needs of children. This can be achieved by bringing together stakeholders such as businesses, unions, reformers, parents, students, and teachers to form a broad coalition that can provide funding for LAUSD while also reimagining public education.
In a recent poll conducted among 400 potential voters in L.A. Unified, 44.3 percent expressed doubts about the district providing a high-quality education, while approximately 36 percent believed it did.
Stuart Waldman, the President of the Valley Industry and Commerce Association, stated that even with $500 million or $5 billion a year, there is still no clear plan on how to fix the district’s issues.
During the campaign for Measure EE, there were legal challenges that further complicated matters. The Howard Jarvis Taxpayers Association filed a lawsuit in early May, alleging that Superintendent Austin Beutner had modified the language of the parcel tax after it was approved by the school board. This change could potentially subject a larger number of residents’ properties to the tax. The same association also filed a complaint in late May, claiming that L.A. Unified’s Measure EE advertisements violated campaign finance rules.
Moving forward, L.A. Unified must submit its budget for the 2019-20 academic year to the county by July 1. This budget needs to demonstrate that the district has a minimum reserve of at least 1 percent of its total expenditures for each of the next three years. Failure to do so may result in the county appointing a fiscal adviser with the power to rewrite budgets and overturn school board decisions, although they cannot modify union contracts.
Additionally, the district will need to find an alternative method of covering the third year of the teacher contract, which is expected to cost $228 million.
Chief Financial Officer Scott Price emphasized the need to increase revenues during a March school board meeting. While Measure EE was the district’s best chance at acquiring new funds, efforts have also been made to save money. Planned reductions in the central office will save $85.8 million over two years, and a recently implemented Medicare plan will reduce L.A. Unified’s annual healthcare bill by $50 million. The district is also hopeful for additional funding from Governor Gavin Newsom’s state budget, although the final budget has not yet been determined.
Furthermore, L.A. Unified intends to request a waiver for a $105 million penalty imposed on districts with an excessive number of administrators compared to teachers. The district is also exploring potential real estate sales or leasing opportunities that could generate $100 million in revenue, as suggested by Jackie Goldberg, the newest board member.
Goldberg expressed her commitment to reviewing the budget as one of her top priorities, aiming to reconcile differing opinions regarding its state by engaging in discussions with budget experts.
"We are committed to continuing our efforts," Beutner expressed to LAist in anticipation of the EE failure. "We possess an expansive, profound, and incredibly diverse alliance advocating for public education, unlike any previous generation."
