05 Wednesday Apr 2017
Well…. the previous post is not actually all that long or complicated. It’s just boring. Reading about finances is boring.
So, it seems the story about LAUSD’s finances and how they’ve been competently managed and LAUSD is NOT going bankrupt will just be bleeped over. Again.
Yet, it’s not complicated; it’s not hard to understand.
And it’s important, so here it is in parable:
Your kids’ clothes are ratty. But your minimum-wage job is enough to cover rent and groceries and transportation. You’re getting by. But the kid wants new shoes.
What to do?
You’re squirrelling away a little bit, even, every month. And that nest egg is growing. It gets just a little bit bigger every day. Every now and then you have to dip into it, but you’re doing more saving than spending, so slowly it’s growing.
What to do?
Kid walks home from school. And needs new shoes because the other ones just aren’t working any longer. The shoes are needed; they’re not a first-line necessity, but they’re part of living adequately.
What to do?
Your apartment management company requires to see a bank account periodically that has more than the bottom-line rent required. This nest egg is providing that; it’s good. The apartment is good and you’re not going to get kicked out. You’re being a good money-manager.
But the shoes.
Kid needs the shoes. And what are you doing all this working for if not to provide kid with what is needed? If you just save and save, eventually kid grows up and goes away; what was it for then? Isn’t it being earned to be spent; isn’t it intended for the kid? That’s the social-mandate: earn money to take care of the kid.
So that’s all there is to it. LAUSD is not going broke (see data here), its operating expenses not only remain in the black year after year, but a little bit is being squirreled away every year; it has a growing rainy-day account.
The problem is, LAUSD is a public entity and not a private household: by design the money is meted out every year for that year; it’s supposed to be spent in that year. Plus-or-minus. Every single last penny needn’t be spent, but by-and-large it’s been handed to the District for the purpose of educating kids, and that’s what’s supposed to happen to it; all of it.
So… that means the financial story from LAUSD is good but a little bit bad too. It’s good because they’re not going broke, there’s no real chance of it, and the money has been managed responsibly all along. What’s not good is that in an abundance of caution, less has been being spent than is necessary to save; it’s not even clear that it’s correct in the context of being a big government agency, to stash money in a can for a rainy day.
And the reason that matters is: when you save the money, you can’t buy the shoes. And remember: the kid needs the shoes.
When LAUSD balances its books year after year on a 12.5% cushion of ever-growing money, that means this nest egg is accreting at the expense of kid-spending that isn’t happening.
This isn’t good. Libraries need stocking. Janitors need supporting. Our kids deserve and need money – more money – to be spent on them. Hiring adequate teachers so your kid has not 34 classmates but just 14 is pedagogically, existentially, urgently, crucial. Sorry: EVERY KID DESERVES TO BE IN A SMALL CLASSROOM.
That’s what this nest egg can buy. And when it’s preserved for its own sake, it’s not buying those vital necessities.
That’s it. That’s the story. Simple.
Wouldn’t it be nice for LAUSD, whose budget’s larger than the City of LA’s afterall, to elect a controller like Ron Galperin who slaps all this data on the internet and renders all the finances transparent? Just a thought. Then it wouldn’t matter whether you read this boring treatise: someone else could.