Two weeks ago, a report (pdf) out of the University of California, Berkeley, argued that the Los Angeles Unified School District (LAUSD) shortchanged low-income and foster care students and English learners out of their share of state education funds.

Now that argument is being made to the courts in a case that could have ramifications across the state. The American Civil Liberties Union (ACLU), Covington & Burling LLP and Public Advocates Inc. filed a lawsuit (pdf) in Los Angeles County Superior Court alleging the school district is using accounting gimmicks to misdirect a couple hundred million dollars a year earmarked for programs benefiting high-needs students.

LAUSD says the lawsuit is based on a fundamental misunderstanding about how the state funding process works and the flexibility it provides school districts. “The Legislature clearly granted school districts―which serve predominantly low-income students, foster youth and English language learners―the highest degree of flexibility in determining student program needs,” a district statement said.

At stake are billions of dollars restored to school systems by the state in 2013-14 (post Great Recession) when the Local Control Funding Formula (LCFF) took effect. LCFF is a new initiative to get money to the neediest students, many of whom do not receive the kind of funding already directed at special education kids.

The state based LAUSD’s funding allocation on how much it was already spending on high needs students before LCFF. The money is supposed to go to “unduplicated pupils,” students who have high needs but are not covered by separate funding.

LAUSD had included 2013-14 special education spending of $450-million in its calculation for the state on prior spending for “unduplicated pupils.”

“In other words,” the lawsuit says, “LAUSD overstates how far it has progressed toward its target for supplemental and concentration funds at full implementation.” The maneuver cost “unduplicated pupils” $126 million in 2014-15 and $288 million in the coming school year, the lawsuit claims.

The UC Berkeley report said that rather than the creation of a comprehensive plan to spend the LCFF money programs and instruction in the neediest schools and equalize education dollars between haves and have-nots, much of the money was used to backfill positions obliterated when the state cut $2.7 billion from K-12 education from 2009 to 2013.

The report did not accuse district officials of acting nefariously: “District officials and board members appear genuinely committed to mobilizing the tools and dollars now available through LCFF to narrow historical inequalities.”

LAUSD is the only major school district known to use its LCFF accounting method. “It is so obviously inappropriate that other districts have not had the temerity to try,” Public Advocates managing attorney John Affeldt told EdSource. “Los Angeles is so big they think they can do anything.”

–Ken Broder

To Learn More:

Suit Claims LA Unified Underfunding Low-Income Kids, English Learners (by John Fensterwald, EdSource)

Lawsuit: LAUSD Misappropriated Funds for High-Need Students (by Christine Armario, Associated Press)

Suit Accuses L.A. Unified of Diverting Millions Meant for Needy Students (by Teresa Watanabe, Los Angeles Times)

Lawsuit Claims L.A. Unified Plans to Illegally Divert $2 Billion Intended to Serve High-Need Students (American Civil Liberties Union)

LAUSD Taking State Funds Away from Kids Who Need It Most, Sez Lawsuit (by Taylor Walker, Witness LA)

L.A. Schools Misapplied $145 Million Meant for High-Need Students (by Ken Broder, AllGov California)

Implementing the Local Control Funding Formula (Communities for Los Angeles Student Success) (pdf)

Community Coalition of South Los Angeles and Reyna Frias v. LAUSD (Los Angeles County Superior Court) (pdf)