Patterico's Pontifications

6/2/2019

Just How Gullible Are Los Angeles Taxpayers? We’ll Soon Find Out

Filed under: General — JVW @ 8:08 pm



[guest post by JVW]

On Tuesday, voters who live within the boundaries of the Los Angeles Unified School District will go to the polls (though, to be sure, most of them undoubtedly will not) to vote on Measure EE, a parcel tax designed to raise $500 million per year for the next twelve years by imposing a tax of sixteen cents per square foot on business and residential buildings. This tax is the inevitable result of the teacher’s union strike settled this past winter, with district support of this measure being one of the promises made in return for the teachers returning to work.

Naturally, because this is a new tax and because it is ostensibly “for the children,” the editorial board at the Los Angeles Times is all for it, as is the resident let-me-search-for-big-truths-in-cloying-anecdotes columnist, Steve Lopez. The editorial is the usual Dog Trainer mush. After comparing the dollars per student spent in Los Angeles versus those in New York and Boston, and finding the home team wanting, they make the case that upping spending is just what the doctor ordered. Amazingly enough, they dip a toe into the water to acknowledge that maybe, just maybe, LAUSD doesn’t always spend its resources in the most sensible way, and that this tax measure has been rushed and confusing:

There are legitimate concerns being raised about the measure — including how effectively the district will spend the new money, whether the proposed oversight mechanisms are strict enough, and even about which structures will be taxed at the proposed rate of 16 cents per square foot. What’s more, the measure has been hurried onto the ballot in a June 4 special election that will almost certainly draw dismayingly few voters. The crafting of the language and the setting of priorities moved at a pace that was faster than ideal.

But hey, what’s the harm with a little bit of ram-rodding where money for the kids is concerned? The editorial also makes this economically-illiterate assertion:

Commercial, industrial and institutional landowners would pay the lion’s share, which is a major reason various business organizations are vehemently against the measure. Landlords of apartment buildings also would be significant contributors and might pass that expense along to renters in non-rent-controlled buildings.

This is Bernard Sanders-level ignorance of how markets work. So that warehouse, factory, or hotel is going to completely swallow the parcel tax and not pass it along through higher prices and rates, and landlords merely might pass it along to renters? Even our Adorably Clueless Marxist Niece is probably laughing at that unfathomable level of naïvete. And, as a commenter on the article noted, the Dog Trainer is hardly in a position to demand that Los Angeles businesses suck it up and accept a tax increase, seeing as how they moved their headquarters from downtown to El Segundo last year (one decade after moving printing operations from the San Fernando Valley to Orange County) and thus wouldn’t pay a cent towards the new tax.

For his part, Mr. Lopez starts with his usual anecdote and then tries to derive larger meaning from it. He meets up with the LAUSD Superintendent, Austin Beutner, and the head of the teachers union, Alex Caputo-Pearl, naturally at a city school of working class and immigrant families, where the two former rivals unite to deride the city’s business interests for being wary of the tax. Magnanimously, Mr. Lopez acknowledges that perhaps the business interests have a point:

It’s not hard to understand voter weariness over repeated demands for yet another tax to pay for problems that never seem to get solved, especially in the case of a school district that hasn’t always been particularly well run. L.A. Unified has agreed to pension and healthcare obligations without budgeting for the cost, it’s been embroiled in more than a few scandals, and declining enrollment means less revenue going forward.

But hey, he goes on to assure us just as the editorial board did, this time it will be different. He points out that the district and union agreed on a new healthcare program for current and retired district employees which allegedly will save the district $50 million over five years through — don’t roll your eyes now — “more efficient” spending. Never mind the fact that district employees and retirees still pay zero in monthly payments or service copays. Maybe Mr. Lopez ought to have read an article that his own newspaper published just last year:

The 60,000 employees of the Los Angeles Unified School District are not among the nation’s highest paid, but most enjoy comprehensive medical benefits for themselves and their families without paying monthly premiums. Such subsidies are rare in the workplace.

[. . .]

Healthcare costs are a major stress on the nation’s second-largest school system, particularly coverage of retirees. The district pays more than $20,000 annually for the healthcare of each retiree who is too young to qualify for the federal Medicare program, said Najeeb Khoury, the district’s chief labor negotiator, in an interview. Older retirees use district benefits as a healthcare supplement to cover what Medicare doesn’t, which costs the district about $7,100 per person each year.

As of January, the district was providing benefits for 4,768 pre-Medicare retirees and paying for supplemental coverage for 31,533 retirees old enough to receive Medicare. Retiree health benefits cost the district nearly $328 million in the 2016-17 school year, close to 6% of the budget.

Asking 100,000 active and retired teachers and an equal number of dependents to chip in a minuscule $50 per month each for a health plan — a tiny amount roughly equivalent to what I paid in my first job 30 years ago — would save the district $120,000,000 per year, or approximately 10% of what is currently spent on health benefits. Understand that the union has openly prioritized maintaining lavish benefits during contract negotiations, even at the expense of salary increases, so don’t spend too much time lending any credence to their complaints about being underpaid. Shouldering a small part of the health insurance load might have been a nice peace offering for the teachers to make before demanding another $500 million annually from the taxpayer, but the district and union have determined that the wind is at their backs, so it’s onward to Tuesday to see how gullible the voters of Los Angeles truly are.

Oh, and by the way, LAUSD has done itself no favors by sending out a mailing to senior citizens informing them they are eligible to receive an exemption from the tax, should it pass, but also including the exemption form which asks for all sorts of personal information. It’s also somewhat possible that the tax could pass (a two-thirds majority is required) but then be blocked in court because the district foolishly modified the ballot language (twice!) without going through the proper procedures. Given how badly they have botched this campaign, why would anyone think giving LAUSD more money to waste is a solid idea?

– JVW

46 Responses to “Just How Gullible Are Los Angeles Taxpayers? We’ll Soon Find Out”

  1. The interesting thing is that there is a decent argument to be made that LAUSD teachers ought to in general be paid more. But before I’m willing to take up that banner, I want to see some significant reforms in that district, not the least of which is that I think it should be broken up into at least three, and probably more like five, separate functioning districts. Smaller districts would, I believe, end the union’s and the bureaucracy’s stranglehold on the district and give parents more say in what goes on in their kids’ schools.

    JVW (54fd0b)

  2. What’s more, the measure has been hurried onto the ballot in a June 4 special election that will almost certainly draw dismayingly few voters.

    But every last employee of the LAUSD.

    Kevin M (21ca15)

  3. and landlords merely might pass it along to renters?

    Even in rent-controlled buildings they will find a way. Take some extra quarters down to the laundry room.

    Kevin M (21ca15)

  4. BTW, whatever happened to Serrano v Priest, that mandated communitarian distribution of funding among districts. Is all that money going to end up at the state level to be redistributed?

    Kevin M (21ca15)

  5. A soup-to-nuts Medicare supplement plan from Blue Cross for a 65yo current smoker costs less than $200/month. Yet the district pays three times that. This doesn’t seem all that efficient. I guess they cover things that no one else does, like dental implants. What a racket.

    Kevin M (21ca15)

  6. JVW, they don’t go for salary increases as those can legally be scaled back later. Benefits, particularly retirement benefits, are locked in by a judge-made ratchet.

    Kevin M (21ca15)

  7. I hesitate to comment because I don’t understand why people in LA and California do what they do. Some may be gullible but, at some point, don’t many feel resigned that things will never change until the money runs out?

    DRJ (15874d)

  8. Some may be gullible but, at some point, don’t many feel resigned that things will never change until the money runs out?

    There probably is something to be said for the attitude of “we might as well keep going down this road until we wreck everything.” Half the people probably hope they will be dead and gone by the time the edifice starts crumbling down, and the other half figures that bankrupting the city is the only way to bring about real reforms.

    JVW (54fd0b)

  9. Shouldering a small part of the health insurance load might have been a nice peace offering for the teachers to make before demanding another $500 million annually from the taxpayer </blockquote? Who in their right mind would trade a reduction in tax free income for an equivalent increase in taxable income?

    If the amount of money they would give up is fixed, there is not even the argument that it will case beneficiaries to pay some attention to medical costs. Not that hat is easy to do anyway.

    I don't understand the logic of this argument. Not only are your asking them to take a pay cut, and it is foolishness to claim it would be any other thing, but you're asking them to reduce their after tax income by more than it what it would save the district.

    Just say teachers are paid too much, or there are too many teachers, or too many years of school (IN Finland they have two fewer years till high school graduation)

    Or that they shouldn't hav settled the strike the way they did.

    Sammy Finkelman (db7fea)

  10. Given how badly they have botched this campaign, why would anyone think giving LAUSD more money to waste is a solid idea?

    The alternative is probably eacher layoffs, all other means of comonesating for lower income, like fewer school days, having been ruled out one way or another. Kevin M (21ca15) — 6/3/2019 @ 12:32 am

    JVW, they don’t go for salary increases as those can legally be scaled back later. Benefits, particularly retirement benefits, are locked in by a judge-made ratchet

    and most other benefits are tax free. It is in the interest of the school district to promise higher retirement benefits because they din’t have to oay till later. It’s designed to be more and more each year. And it is in the interest of the union, esoecially union officials, to have very little teacher turnover. DRJ (15874d) — 6/3/2019 @ 5:35 am

    at some point, don’t many feel resigned that things will never change until the money runs out?

    If they want the money to run out, they should vote aaginst it!

    But they don’t want the money to run out, because they’re scared of the unknown. And they never get told there’s no end to this.

    Sammy Finkelman (db7fea)

  11. 1. I wholly reject the notion that any teachers anywhere need to be paid more. You lose me starting from that premise.

    Gryph (08c844)

  12. Tha rgument that they are underpaid is based upon years of education.

    Sammy Finkelman (db7fea)

  13. Sammy, your whole point about the benefits being tax-free would make a lot more sense were it not for the fact that the teachers’ unions (1) supported candidates who voted for Obamacare, which included the Cadillac Tax on just these sort of plans, even if it was quickly suspended once the bill passed and (2) are currently supporting candidates who promise to vote for “Medicaid for All” which would be a huge degradation of their current plans. If protecting gold-plated benefits is really the priority for the unions, you would think they might have a vague awareness of this.

    JVW (54fd0b)

  14. I think teachers are generally underpaid in terms of their renumeration today, but at the back-end they receive very flush and generous pensions to make up for it. The school district in my hometown for years had a “75 Plan” which allowed any teacher to retire if their age plus their years of service added up to 75. So the teacher who started at age 23 could retire with a full pension at age 49 upon completion of their 26th year of teaching. Even more incredibly, there were cases of people who did mid-career changes and started teaching at age 50, and they were able to retire on a full pension at age 63 thanks to this program.

    If I had my druthers, teachers would be paid more, but they would be responsible for their own retirement just like most of us private sector folks are. But I would never agree to greatly increasing teacher salaries without some sort of substantive compromises from teachers on the benefits packages.

    JVW (54fd0b)

  15. I think maybe support by the teacher’s unions for “Medicaid for All” and things like that couk be the result of a deal between different unions.

    This would be where the teachers union agrees to back what will help nurses’s and other medical unions, and those unions back higher pay for public employees like teachers. They join together and get committments on both issues from the same political candidates.

    The teachers union may figure they’ll adjust if it comes to that. They’ll get back most of the savings the school districts would have from “Medicaid for All” in higher wages. But right now it doesn’t make sense to give up anything. Maybe they are looking ahead and concentrating on salary now.

    Sammy Finkelman (db7fea)

  16. Some may be gullible but, at some point, don’t many feel resigned that things will never change until the money runs out?

    The problem is that there are few voices telling them otherwise. The media are, if anything, more monolithic than elsewhere. The state GOP seems incapable of offering real solutions to real problems. You would think they’d be making all kinds of noise about traffic, crime, traffic, PC government and traffic. But they are nowhere to be seen, or if they are, they’re talking about national issues.

    As far as gullible, here’s two L.A. City ballot issues that passed in recent years:

    * New city ethics laws that do nothing!!! Oh, by the way, also increase the city council term limits to 3, up from 2.

    * Move city elections from odd-year spring to even-year November schedule (good in itself). Oh, by the way, since we have to adjust city council terms, instead of reducing current terms from 4 years to 3 1/2, increase all current terms from 4 years to 5 1/2.

    Kevin M (21ca15)

  17. Many people aren’t going to wait for the state to go broke. And having decided that the lemmings are going over the cliff, they leave.

    Kevin M (21ca15)

  18. If most are gullible and think there is always more money for a PC cause, or
    If most want to grab as much of the pie while they can, then:
    Talking about consequences won’t help because they don’t understand or believe they apply.
    Thus, I don’t see a solution other than running out of money.

    DRJ (15874d)

  19. I just hope it happens before a President decides to give California federal money, to keep the ship afloat longer.

    DRJ (15874d)

  20. are currently supporting candidates who promise to vote for “Medicaid for All” which would be a huge degradation of their current plans.

    I’m going to bet that public employees under contract will be exempted from from Medicaid for All, just as public employees were outside the social security system for a long time.

    Kevin M (21ca15)

  21. I just hope it happens before a President decides to give California federal money, to keep the ship afloat longer.

    I do believe that California progressives are banking on two key items from Washington: national healthcare to help alleviate the problems it is playing on the state’s budget, and a federal loan (bailout) to help the state get its pension problems back in line. If we ever see the day when the Democrats seize the White House and Congress, we’re in trouble. All it takes is that two-year period in which Dems run the show, and there will be no going back. This is why I am unnerved by President Trump’s unpredictability and unreliability.

    JVW (54fd0b)

  22. I’m going to bet that public employees under contract will be exempted from from Medicaid for All, just as public employees were outside the social security system for a long time.

    Maybe. But at a certain point even leftist voters are going to notice that public employees have really great health plans while the rest of us have long waits to see doctors, and they will join us in objecting to funding them. The left is all about jealousy of things that other people have, after all. Ultimately, Medicaid for All will be the death knell of lavish public employee plans. Socialist collectivism is all about everyone except for the ruling class sliding into mediocrity (or worse).

    JVW (54fd0b)

  23. The teachers union may figure they’ll adjust if it comes to that. They’ll get back most of the savings the school districts would have from “Medicaid for All” in higher wages. But right now it doesn’t make sense to give up anything. Maybe they are looking ahead and concentrating on salary now.

    Yes, that’s exactly what I think is happening. Deep down, the teachers’ unions know their platinum-plated health care plans are unsustainable, so they are now switching their focus to higher wages. But that’s why I think it would be politically astute of them to make deeper concessions on health spending ($50 per month would be peanuts, but claiming $120 million in annual savings would look good on paper) before they start asking for more tax dollars.

    JVW (54fd0b)

  24. This is why I hope Measure EE goes down to ignoble defeat tomorrow (it would be truly awesome if it fails to muster a majority of votes, let alone the 2/3 majority), because it would teach the LAUSD a lesson that they can’t keep demanding more of the taxpayer without putting their own house in order.

    JVW (54fd0b)

  25. (it would be truly awesome if it fails to muster a majority of votes, let alone the 2/3 majority)

    When I lived in California, my experience was that any ballot measure that said it was for the schools would automatically get 70% of the vote.

    Chuck Bartowski (bc1c71)

  26. Something like that already happened to City of Chicago pension recipients – there are 4 tiers in terms of age/hiring date with a significant cohort (hired after 1989) not having a health-care subsidy at all. I only know this because this extended down to CPD and CFD who of course are going to be the squeakiest wheels.

    http://www.chicagolawbulletin.com/archives/2016/09/28/city-retiree-benefit-end-9-28-16

    urbanleftbehind (5eecdb)

  27. After the scandals of (1) the Belmont property purchase; (2) free IPads for all; (3) a botched “new” payroll system that had to be replaced; (4) “rubber rooms” for teachers who should just be fired; (5) numerous recent molestation settlements, and the usual teachers’ union- politician back scratching it is inconceivable that any taxpayer could vote yes on EE. And as usual at LAUSD – nobody got fired or demoted for any of the scandals.

    LAUSD’s “teeth to tail” ratio (ratio of teachers to deadwood bureaucrats, administrators, staff, food service workers, etc.) is higher than any other school district in the country. And student learning and advancement is by any measure abysmal when compared to other school districts.

    So just ask yourself – what could go wrong in giving these people another $500 Million annually?

    Vote no on EE!

    Denis Moriarty (095342)

  28. Yes, that’s exactly what I think is happening. Deep down, the teachers’ unions know their platinum-plated health care plans are unsustainable,

    Good luck with the retirees who will claim that they worked for those plans in good faith. CA precedent is with them too.

    Kevin M (21ca15)

  29. Fact sheet about LAUSD (pdf)

    Kevin M (21ca15)

  30. Good luck with the retirees who will claim that they worked for those plans in good faith. CA precedent is with them too.

    Detroit’s pension promises were untouchable too — right up until the point that they weren’t.

    JVW (54fd0b)

  31. 30. Politicians are in the business of making promises they know they won’t be able to keep.

    Gryph (08c844)

  32. The problem isn’t with the teacher’s union, it’s with the school board. When I looked at their budget earlier this year, it’s pretty obvious the DO is top heavy and they poured a rather large amount of money down some kind of tech hole. School boards are supposed to stop stupid spending, but mostly they just nod and rubber stamp. My distract adds new positions to the DO all the time despite the fact that we are in declining enrollment and when they cut they cut student facing staff, not DO people. The board could prevent this but doesn’t. Also, yes, they should probably be contributing to their health insurance, but it’s not any better health insurance than is available elsewhere. Mostly it’s probably Kaiser.

    Nic (896fdf)

  33. Detroit’s pension promises were untouchable too — right up until the point that they weren’t.

    Yeah, different judges and a different reality.

    Kevin M (21ca15)

  34. This is the same la which is having a little complication at city hall, like you only in Caracas and calcutta?

    Narciso (053b0e)

  35. 32. Nic (896fdf) — 6/3/2019 @ 5:51 pm

    The problem isn’t with the teacher’s union, it’s with the school board…School boards are supposed to stop stupid spending, but mostly they just nod and rubber stamp. That’s begging the question. Rubber stamp for whom? That’s who to blame.

    One of the worst things in government is the practice of having a budget. It doesn’t work, or rather, works perversely. It continues bad spending while preventing good spending, even when non-spending costs far more money in the long run or is destructive..

    Corporations don’t have budgets – and stick to it. They make predictions, but not budgets.

    They react a lot faster.

    A budget is a worse than useless tool for planning or controlling spending so that things are done rationally.

    33.

    Sammy Finkelman (9974e8)

  36. 33. The different reality is that the Detroit chickens came home to roost. It’s only a matter of time before LA’s chickens do the same.

    Gryph (08c844)

  37. Politicians are in the business of making promises they know they won’t be able to keep.

    If I had to describe politicians with only one word it would be “small”. They are small people, banal and mediocre, with little talent and ability, who hunger for money and power and can only get them by getting other people to vote them to them, in place of voting them to another person as small, banal and mediocre as they are.

    nk (dbc370)

  38. @35 They rubberstamp the superintendent’s plans. They also hire the Superintendent. And school districts have to have a budget because people want to know what their taxes are being spent on.

    Nic (896fdf)

  39. Without a budget, they cannot levy taxes:
    1. The assessor assesses the properties and the valuation is the tax base;
    2. The school district submits its budget;
    3. The tax collector calculates what percentage of the valuation is needed to meet the budget.
    For purposes of illustration:
    The entire valuation of taxable properties in Metropolis is $1 billion.
    The Metropolis School District (MSD) budget is $10 million.
    That’s 1%.
    Your house is valuated at $100,000.
    The MSD’s cut on your tax bill is $1,000.
    That’s how it works up here, anyway.

    nk (dbc370)

  40. @39 I think they throw darts at the wall and expect us to figure it out.

    (not really. What they really seem to do is try to figure out if it would be popular to raise school funding this year and then raise it a little or not and expect us to figure it out.)

    Nic (896fdf)

  41. 38. Nic (896fdf) — 6/4/2019 @ 4:56 pm

    And school districts have to have a budget because people want to know what their taxes are being spent on.

    They can do that after the fact, like corporations, which report their annual and even quarterly results.

    Sammy Finkelman (9974e8)

  42. nk (dbc370) — 6/4/2019 @ 5:17 pm

    Without a budget, they cannot levy taxes:

    They can decide how much money they need to raise without having a budget.

    And they actually need to be able to adjust more quickly than once a year – in fact more than ayear in advance. It’s easy to temporarily bring in more money: Just promise a discount on future taxes, whatever they will be, if the are paid early.

    Yse, the budget is worked into the system but it is still not a good idea.

    Sammy Finkelman (9974e8)

  43. School funding doesn’t work that way. Tax money goes to the state to be distributed to school districts state wide. School districts in CA are paid on per student per day average attendance as measured September through March (IIRC) plus designated construction funds and whatever random thing they are funding in any given year (right now districts get a bit extra for CTE funding, sometimes it’s extra career counseling funds, sometimes it’s technology, it’s not always predictable). The State can also decide to yank back money even after the school year is over and the money is spent, if they want. They can underfund as well, even after the start of the year when contracts are already signed, which is why districts maintain an emergency fund. They also pay late sometimes. It’s often interesting in a “may your life be…” kind of way.

    Nic (896fdf)

  44. The problem isn’t with the teacher’s union, it’s with the school board…School boards are supposed to stop stupid spending, but mostly they just nod and rubber stamp. That’s begging the question. Rubber stamp for whom? That’s who to blame.

    They elect the L.A. school board during February of odd-numbered years, when it’s generally raining. Everyone who works for the schools shows up and votes for the union-backed candidate.

    Some years, when the fan is extra covered with brown stuff, there are popular insurgents trying to wrest the majority of the school board away from the unions. But not every year.

    Negotiations are often the union negotiating with itself.

    Kevin M (21ca15)

  45. They can decide how much money they need to raise without having a budget.

    See Serrano v Priest, the 1970’s-era decision that removed local funding from CA schools. It wasn’t fair that Beverly Hills had better schools than Compton.

    The CA Supreme Court waved their hands three times across the Constitution and declared it just that all property tax money (limited now under Prop 13) should be raised according to each district’s ability, sent to the state, and be distributed to the schools based on need.

    There is some question whether LAUSD will ever see a dime of this tax increase.

    Kevin M (21ca15)

  46. In Illinois with its school districts funded much more by local property taxes as % of total, residents in those districts used to joke that any increase was partially subsidized by the federal government, so why not vote yes for any referendum which raised the levy/millage. Some federal tax laws (reduction of deductible state and local taxes) changed for 2018 and forward and, voila.the latest round of municipal elections in April saw only very affluent Hinsdale vote to raise its levy (to save football, swim and band as well as keep a 2nd campus for the nouveau riches on the outskirts of town) out of perhaps 15 or so districts holding such referendums.

    urbanleftbehind (ff06b3)


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