Briefing Report: Questionable Actions in State Takeover of Inglewood Unified School District Deserve Scrutiny

Thursday, April 10, 2014

Introduction

Inglewood Unified School District (IUSD) serves nearly 12,000 pupils.  In recent years, for a variety of reasons, it has fallen into near insolvency.  Because the California Constitution requires the state to keep schoolhouse doors open, IUSD was granted through legislation an emergency loan.  With that loan comes full state control under the Superintendent of Public Instruction (SPI).  Unfortunately, under the SPI’s management IUSD continues to deficit spend, even while drawing down the loan, and many in Inglewood are concerned with the Superintendent’s leadership.  The Legislature should share the people’s concern, and act on it.

Emergency Loan and State Takeover

On September 14, 2012, Governor Brown signed SB 533 (Wright), providing an emergency loan to IUSD at its request and bringing the district under state control.  The loan, more like a line of credit, provides up to $29 million for IUSD.  Additionally, up to $26 million in bank financing is authorized.  Under the bill, the SPI assumes all legal rights, duties, and powers of the IUSD governing board and is required to appoint a state administrator to act on his behalf.  The idea is to provide resources and responsible leadership to get the district’s finances under control and better serve its students.

Since 1990, the Legislature has provided seven emergency loans ranging from $2 million (West Fresno Elementary) to $60 million (Vallejo Unified).  These loans are made in recognition of the constitutional mandate that makes the state ultimately responsible for educating children; allowing a local district to go insolvent is not an option.  Typically, a state administrator, with advice from the state’s Fiscal Crisis Management and Assistance Team (FCMAT), will take aggressive cost-cutting actions, re-order the management of the district, and develop, as required by law, a realistic recovery plan.  As certain fiscal and governance benchmarks are reached, the governing board’s rights, duties, and powers are returned, although this may take several years.

Questionable Decisions, Debt, and Deficts

The state Superintendent’s management of IUSD has raised serious concerns.  On October 3, 2012, Superintendent Torlakson appointed Kent Taylor to be IUSD’s state administrator.  “My top priority is to keep Inglewood’s schools open and serving its students, while returning the district to fiscal solvency,” Torlakson said in a press release at the time.  “Kent Taylor is the right choice for this tough, but critically important job.”  Less than two weeks later, Mr. Taylor rescinded a 15 percent reduction in employee compensation made by the IUSD board prior to the SPI’s takeover, costing the district $6 million to $10 million in lost savings.  The next month, Mr. Taylor inexplicably approved a change in contracted management of the IUSD employee benefit program – allegedly without cancelling the original contract and at an additional $2 million cost to the district. It has been reported that the cancelled company is suing the district for breach of contract, which will add even more costs.  In December 2012, the state administrator entered into two memoranda of understanding (MOU) with the Inglewood Teachers Association (ITA) without first submitting the MOU to the Los Angeles County Office of Education for review and comment as required by law.  The MOU preserves ITA salaries through 2014-15, severely hindering any chance to balance IUSD’s budget, which ought to be the state administrator’s immediate priority.  Three days later, Mr. Taylor resigned.  The SPI agreed to have taxpayers buy out Mr. Taylor’s contract for $100,000 – although it appears that nothing was done to re-open the union contracts and renegotiate down the damage done by the SPI’s appointed administrator.

Superintendent Torlakson immediately replaced Mr. Taylor with LaTanya Kirk-Carter, IUSD’s business services superintendent, as Interim State Administrator of IUSD.  By this point, 103 more teacher positions were on the district payroll than had been approved by the previous IUSD board.  The district, now an additional $8 million in deficit and having drawn down $19 million in loans, filed a “Negative” financial certification with the Los Angeles County Office of Education.  A month later, in February 2013, a third emergency loan apportionment was issued, this one worth $10 million, adding to IUSD’s debt.  By March, the 2012-13 budget deficit was projected to reach $17.8 million.

Under State Administration, “No Meaningful Recovery.”

By Spring 2013, some in Inglewood had enough and began pressing the SPI to take responsibility for the district that he controls.  Finally, in April 2013 the SPI called for 15 percent salary reductions – the same amount approved by the IUSD board in September 2012 and rescinded by the first state administrator a full six months earlier.  Not surprisingly, the public employee unions would not budge.  So saddled, Ms. Kirk-Carter approved a 2013-14 budget showing a 2012-13 $18.4 million deficit and projecting a 2013-14 deficit of $10.1 million.  Days later, on July 2, 2013, Superintendent Torlakson replaced Ms. Kirk-Carter, his six-month-serving Interim State Administrator.  In her place, the SPI appointed Dr. Don Brann who, pursuant to legislation, has the same powers and responsibilities as the state administrator but is now called a state trustee.  Dr. Brann soon hired additional administrators at a reported cost to IUSD of some $1 million. 

In July 2013, FCMAT issued a 443-page comprehensive review of IUSD and the SPI’s efforts to restore it to fiscal solvency and academic effectiveness.  While noting some progress, FCMAT pointed out that during the first four months under state control, over half of the $55 million in total loan authorization had been drawn down, leaving $26 million.  This will soon be spent; the district’s own multiyear projections propose drawing $6 million in 2013-14 and $20 million in 2014-15, exhausting the legislatively approved loan authority.  What is worse is that IUSD is projected to run a structural deficit from 2013-14 through 2015-16 that will cost $32 million.  All of this is occurring while IUSD is under the legal rights, duties, and powers of the Superintendent of Public Instruction, who in October 2012 said that keeping Inglewood’s schools open and returning the district to fiscal solvency was his “top priority.”  FCMAT was direct in its assessment of IUSD’s status, observing that “To date, the district has not made the progress necessary to achieve and sustain fiscal solvency.”  About the IUSD’s future, FCMAT was equally blunt: “No meaningful recovery can take place until an effective permanent, cohesive leadership team exercises control of the deteriorating situation and begins to develop relationships with those affected in the community.”  That was written in July 2013.  In March 2014, CBS2 in Los Angeles reported that IUSD, “under state control, spent thousands of dollars to send educators on a weekend retreat to…the Estancia La Jolla Hotel and Spa, all for a junket to discuss curriculum.  They spent more than $38,000, including $9,000 for a motivational speaker.”  Given the July assessment and subsequent events, it is not difficult to conclude that the SPI has failed to exercise cohesive leadership, gain control of the deficit spending, or engage with the community. 

Who Is Minding the Minder?

A state takeover of a school district is no small matter.  In fact, it disenfranchises an entire community, disempowering the duly elected representatives on the local school board.  But more precisely, the Legislature disenfranchises the entire community.  When the Legislature approves an emergency loan, it directs the SPI to assume that school board’s legal rights, duties, and powers, trusting the Superintendent to utilize those rights and powers – and the emergency loan funding – to chart a new course for the district and provide new hope for its parents and pupils.  If the SPI has failed the students and families of Inglewood, the Legislature needs to know why so it can repair the damage and prevent future failures.  Unfortunately, based on the facts outlined above and additional allegations, it appears the Superintendent has failed and it is thus the right and responsibility of the Legislature to exercise its oversight function.  Accordingly, the Legislature should order an audit of the SPI’s management of Inglewood Unified School District.  Failing to do so is failing the community of Inglewood, whose children bear the results of continual fiscal mismanagement, not to mention failing the people of California, whose hard earned tax dollars support public schools.

For more information on this report or other Education issues, contact Roger Mackensen, Senate Republican Office of Policy at 916/651-1501.