UPDATE, May 29, 2013: The Los Angeles Times reported last night that the Inglewood School District, already under state financial custodianship, will end the the '12-'13 school year with a $17.7 million deficit. ... Without scaling back, the district will exhaust the remainder of the $55-million loan and other funds next year and will be unable to fund the school year in fall 2014. About 72% of the district's expenditures are for employee salaries and benefits.
“The situation is grim,” said Michelle Plumbtree, at left in center, chief management analyst with the state's Fiscal Crisis and Management Assistance Team.
Meanwhile, state Superintendent of Public Instruction Tom Torlakson sent a release reiterating a report released earlier this month that found fewer than half (92, down from 188) as many California districts are in financial jeopardy now as a year ago...
UPDATE, December 10, 2012: Kent Taylor, the man who State Superintendent of Public Instruction Tom Torlaon appointed to head the Inglewood Unified School District after the state's September takeover (see full story below) takeover of the nearly bankrupt district, resigned Friday "after the state Department of Education learned of tentative agreements [Taylor] made with the Inglewood Teachers Ass'n., a union, without the authority to do so," according to a story by Stephen Ceasar in Saturday's Los Angeles Times.
UPDATE, September 15, 2012: The Los Angeles Times reported last night that Governor Brown signed the bill authorizing a $55 million bailout loan to the nearly bankrupt, 15,000-student Inglewood Unified School District (IUSD). State superintendent of public instruction Tom Torlakson will take over the responsibilities of the IUSD school board.
In a statement to the press yesterday, Torlakson commented:
“The Governor’s action was necessary to keep Inglewood’s public schools operating and serving students despite the district’s extreme financial difficulties,” Torlakson said. “The Department of Education will consult with the Los Angeles County Office of Education to name an experienced administrator to oversee the long and difficult process of returning the district to solvency and, ultimately, local control.”
CDE oversight will continue until the loan is repaid; IUSD, which cut district salaries 15% on Wednesday, has 20 years to repay the loan. IUSD is the ninth California school district to declare insolvency since 1990. However,
After taking office nearly two years ago, Torlakson warned that California’s schools were in a state of financial emergency, and urged that years of severe budget cuts to schools be reversed to avoid sending more school districts into insolvency.
According to the Los Angeles Times: [State Senator Roderick] Wright said in an interview Friday that the problems afflicting the Inglewood district's 26 schools are showing up elsewhere as well, so the Legislature, which passed the Inglewood measure Aug. 31, may get more bailout requests.
"There are 10 to 15 other school districts that could very well be in the same position as Inglewood in the next fiscal year," Wright said.
UPDATE, July 30, 2012: KPCC radio reported last week that the Inglewood Unified School District has moved closer to state-takeover:
[The IUSD] school board voted [July 25] to ask the state for a bailout loan that would result in a state takeover of the 1,500-student district.
“We’re scheduled to run out of money in December of 2012," said Alena Giardina, a member of the school board who says the district's $9 million in the red. "So the problem would be if we don’t start the process now, we will have already allowed the time to lapse, so this is actually a precautionary measure."
UPDATE, NOVEMBER 13: John Fensterwald, writing in Educated Guess, announced today that the IUSD had "dodged a bullet" as the state Board of Education "reluctantly" granted the district a waiver to raise the class sizes to 36 (state ed code draws the line at 30). The waiver eliminates the fine to the district, which had been holding classes as large as 40, of between $3.9 and $5 million.Inglewood Unified School District (IUSD), south-west of Los Angeles with 12,000 students, is close to insolvency and a potential take-over by the state, reports Rob Kuznia of the Daily Breeze. The district laid off a third of its teachers last year in an attempt to stop the hemorrhaging of cash ( K-8 classes are now topping 40 students, and some high schools subjects have 50 students per class). If IUSD declares insolvency, it will be the 9th school district to move through the expensive and lengthy process since the 20 year law was enacted; however, with potential mid year cuts to school budgets just around the corner, IUSD could be the canary in the coalmine, warns Kuznia.
IUSD is projecting a negative cash balance of $26 million by the end of June, and enrollment is down by 6000 students over the last 8 years; 900 students moved to charter schools just this Fall. Inglewood Teachers Association leaders voted to support a state take-over, calling the large class numbers and morDe furlough days for teachers as " ransoming a generation of kids" (union President Pete Somberg to the Daily Breeze)
John Fensterwald detailed the process of insolvency (and what it would take to avoid it) for IUSD in his blog post "Educated Guess":
Last month, the board of the little-known but powerful state agency, the Fiscal Crisis and Management Assistance Team (FCMAT) approved a declaration of fiscal emergency for Inglewood, the first step leading to the state issuing a loan and taking over the district. It’s a four- to six-month process, requiring the Legislature’s two-thirds majority approval, and it’s still possible that the district can stave off the equivalent of bankruptcy this year, but only with a series of “ifs” breaking its way:
… if there aren’t midyear state cuts to K-12 schools;
… if teachers and classified employees agree to more give-backs: benefits cuts and more furlough days – which at this point appears doubtful;
… if the State Board of Education this week grants waivers to allow huge class sizes in grades 4 to 8, over the opposition of many parents and teachers;
… if district officials can convince its suppliers – health care providers being the biggest – to shift some bills from the end of this year to next to ease the cash flow;
… and if the district can then convince private lenders in the next few months to deem Inglewood creditworthy to receive short-term loans called TRANs (Tax and Revenue Anticipation Note).
A FCMAT analysis from last year cited declining enrollment, deficiencies in management, poor cash flow analysis, insufficient consideration of long-term bargaining agreement effects, and insufficient monitoring of out-of district placements of special education students; this mistake alone cost the district $12 million, equal to 1/6 of the general fund.
“There is a lack of direct oversight in the business office,” the report said. “Combined with an insufficient level of technical competence, this has created flawed budget assumptions, duplication of revenues and poor enrollment projections.”
From the Daily Breeze:
Though Inglewood still has time to pull itself out of the quicksand, the lengthy process for enacting a state takeover is already under way. Back in the spring, the Inglewood school board, acting on advice from a county-appointed fiscal adviser, officially requested a state loan. This essentially sets the gears in motion for state receivership.
On Thursday, state board member Dr. Carl Cohn, above (who visited the district last week) said he worries that Inglewood could be a bellwether for more ominous times.
"The list of school districts in fiscal distress has gone up dramatically in the last year," he said. "Ten, 12, 15 years ago, the state actually had money to bail them out.
"Now the big question will be is Inglewood the beginning of a process of a significant increase in the need for bailouts from a state that has no money.
Photo: Dr. Carl Cohn visits a sixth-grade classroom whose floors the students have to sweep themselves, as cutbacks have led to only having janitorial services twice a week. The classroom is also overcrowded, having 40 students when the maximum is 33. (Steve McCrank / Staff Photographer Daily Breeze)
Written for California's Children by Elizabeth J Carlyle.