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Reason Foundation

Crippling California Schools

New law prohibits privatization savings

Lisa Snell
January 15, 2002

California is shooting itself in the foot yet again.

California's school districts are faced with a $5.2 billion funding cut as their portion of California's $35 billion budget shortfall. This means that California's 1,300 public school districts must cut at least six percent across the board or about $400 per pupil in education spending. Los Angeles Unified alone must reduce spending by $480 million over the next 18 months.

Unfortunately, a new California law will cripple the flexibility of local school officials to target spending cuts to noninstructional services and away from teachers and other instructional programs.

The privatization law, SB 1419, effective January 1, 2003, requires school officials to analyze potential cost savings from privatization, forbids the private firm from paying workers less than industry standards, and forbids the layoff or demotions of school employees as a result of the contract. The law requires school districts to use the same standards that state agencies must comply with before privatizing jobs done by classified - nonteaching - school employees. While analyzing potential cost savings is an important step of all school privatization programs, this law is a serious disincentive to privatizing school support services in California--control of personnel is one of the most crucial aspects of any successful privatization effort.

One prudent school superintendent, Capistrano Unified's James Fleming, has offered several suggestions to the state legislature and the Governor to help mitigate the impact of the budget reductions facing California public schools including deferring the privatization law. He writes:

"SB 1419 was enacted effective January 1 2003. It is recommended this law be suspended during the state fiscal emergency so that districts may achieve efficiencies through outsourcing. During these times of fiscal crisis and uncertainty, districts need maximum flexibility to review all options for accomplishing support service tasks, particularly when the only major cost cutting alternative is to drastically reduce services in the regular education program."

Superintendent Fleming's suggestions for short-term and long term financial fixes to California's education financing system deserve further attention and can be found here:

Recommendations for Budget Flexibility

Restructuring School Finance

All those cynics, who argue that focusing on noninstructional programs cannot cut school budgets, should heed this week's lesson from Philadelphia city schools. The cash-strapped Philadelphia system, which faced budget deficits the last four years, projects that it will have a surplus by the end of this academic year. In May 2002, the district passed a $1.7 billion budget that projected a $28 million deficit by the end of this fiscal year. Now, the district expects a $2 million surplus. Officials credit administrative cuts, better facilities management, and across the board cuts in programs not tied to the classroom. Philadelphia's school district has saved over $29 million in just two years by relying on privatized transportation, food service, custodial, and other support functions. Philadelphia made these financial cutbacks without a teacher hiring freeze or firing any teachers. In fact, Philadelphia is still running a robust teacher recruitment program.

One of the most clear-cut ways school districts can save money or improve services is to outsource noninstructional services. California classrooms and students will sustain less damage in this financial debacle only if local school districts have maximum flexibility to manage their budgets.

Lisa Snell is director of education and child welfare at Reason Foundation. She formerly taught speech courses at California State University, Fullerton.


Lisa Snell is Director of Education


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