February 2018 Advocate: District violates 50% law

BUDGET PRIORITIES

District chooses to violate 50% law… again

Decreasing percentage of budget spent on classroom instruction each year

by Monica Malamud, AFT 1493 President

Our District is out of compliance with the 50% law, a well-known section of the Education Code which requires that a minimum of 50% of a district’s Common Expense of Education (CEE) be spent on salaries of classroom instructors each fiscal year. In the 2016-2017 academic year our District spent only 45.63% of its CEE on the salaries of classroom instructors, falling short of the required 50% by a significant amount. As a result of this, our District is significantly out of compliance with Ed Code §84362.

Not all faculty compensation counts towards “classroom instruction”. Compensation for non-instructional assignments is “on the other side” of the 50% Law, but the vast majority of faculty assignments are instructional. AFT 1493 highly values and strongly supports expanded student services and the need for non-instructional faculty positions, as well as for non-faculty employees, who perform important duties in our District under the umbrella of Student Services. Funding expanded student services, however, does not make it acceptable to underfund the core educational role of classroom instructors.

Lower percentage spent on classroom instruction each year

AFT previously reported on our District’s failure to comply with the 50% law in the March/April 2017 issue of The Advocate. That article was based on 2015-2016 expenditures, which showed that only 48.38% of CCE was expended for salaries of classroom instructors. And this came on the heels of two years when the 50% minimum was just barely met (2014-2015: 50.21% and 2013-2014: 50.53%).

It is clear that our District is spending decreasing percentages of their budget on the salaries of classroom instructors each year. What’s more troubling is that, after violating the law in 2015-2016, instead of taking any measures to rectify this, our District continued to divert funding from instruction and violated the law by an even greater margin in 2016-2017. The District’s own most recent audit report, produced by Crowe Horwath LLP and based on the fiscal year ending on June 30, 2017, reads: “2017-001 STATE COMPLIANCE – SIGNIFICANT DEFICIENCY – SALARIES OF CLASSROOM INSTRUCTORS (50 PERCENT LAW.)” (p. 92, text in all caps and bold in the report. See page 192 of the 1-24-18 Board Packet)

Why does our District violate the 50% Law?

The District fell below the 50% goal in 2015-2016, and it was noted in the corresponding audit. According to the most recent audit report, in 2016-2017 “the District has chosen to not be in compliance with the 50 Percent Law” (see page 192 of the 1-24-18 Board Packet). In other words, our District knowingly violates the law. Is this the kind of example that an educational institution should be giving to our students and our community?

At the Board of Trustees meeting of January 24, 2018, after a representative from the auditing firm gave a summary of the audit findings, highlighting the violation of the 50% Law, Board President Richard Holober asked if there were any questions or comments. Since there were none, Board President Holober himself asked: “What is the gap that would exist to be in compliance with the 50% Law?” The representative responded that the answer was on pages 78-79 of the audit report, and referred to those pages for his response. In 2016-2017 the total expenses of our District were $134,541,331. So 50% of CEE would be $67,270,666. However, the District spent only $61,397,825 on the salaries of classroom instructors, or only 45.63% of the CEE budget. The Board of Trustees proceeded to vote to accept the audit report without further discussion.

How to comply with the 50% Law

The audit report gives the following recommendation: “The District should come into compliance with the 50 Percent Law by expending a higher amount of the District’s CEE for salaries of classroom instructors, or by reducing non-instructional costs.”
Sound familiar? In the March/April 2017 issue of The Advocate, Dan Kaplan wrote: “The intent of the 50% law is to assure that the District does not spend excessively on administrative costs, and focus on paying fair wages to classroom instructors. To meet the 50% standard, our District could increase the percentage of their budget spent on faculty salaries by paying more adequate faculty salaries and/or hiring additional instructors, which could help alleviate workload issues our faculty face.”

District has budget to adequately fund classroom instruction, but does not make it a priority

Could it be perhaps that it’s difficult for the District to find the money it takes to bring us into compliance? Absolutely not. Our District’s income actually exceeds what we would receive if we relied on state apportionment, thanks to our status as a community-supported District, which started in 2011-2012. Since 2011-2012 our District’s revenues have continued to increase year after year. For 2017-2018, the amount over our District’s revenue limit is expected to be around $46 million. In other words, our District is wealthy, and its income stream is stable and predictable, as our District revenue is determined mostly by property taxes.

By law, in 2016-2017, the District should have spent close to an additional $6 million in salaries of classroom instructors. AFT 1493 negotiators, representing all faculty, advocated for more significant improvements in salaries and benefits than what we ultimately received in the 2017 contract settlement. When we went to fact finding, the fact finder did not find that the District lacked the ability to pay. So it all comes down to choices: The District has more money due to its very healthy income stream, but the District chooses to not spend more money in the classroom, and to violate the law.