Los Angeles Teachers’ Strike Takes Aim at Wall Street

(Bloomberg Opinion) -- When an estimated 30,000 Los Angeles teachers and other school personnel went on strike Monday, improved wages and benefits were the least of their demands.

Yes, the United Teachers of Los Angeles, which represents educators in the nation’s second-largest school district, are seeking a 6.5 percent wage increase retroactive to 2016. They’re also looking for smaller class sizes and more nurses and social workers for schools where more than 80 percent of the students are at or below the poverty line. The union also wants teachers and parents to have a greater say in both school spending and academic decisions, including the number of standardized tests students are required to take. (The district demands a battery of assessments in addition to state-mandated tests, with some elementary students taking as many as 18 standardized tests a year, according to the union.)

The school system has countered with an offer of a 3 percent pay raise retroactive to 2017 and another 3 percent for 2018.

The gap in wage expectations can doubtless be resolved by normal collective bargaining. But there are two thornier issues behind the strike, both representing changes that already are roiling cities around the country and contributed to a wave of school walkouts that swept nonunion states last year.

First, the demand for greater resources grows out of years of budget cuts that have slashed school spending in California and elsewhere, especially following the 2008 recession. Although California increased spending on schools sharply beginning in 2013, state spending on K-12 education still puts it in the bottom 20 percent of all states.

Six years after the recession, most states were still spending less on schools than they were before 2008, according to a 2016 report from the Center on Budget and Policy Priorities.

Equally important, the Los Angeles strike follows a coordinated effort on the part of philanthropists and businesspeople to embed business-management principles into the education system and to replace traditional public schools with charters, schools that are publicly funded but privately managed and usually nonunion. The push for privatization in L.A. is mirrored nationwide and led by many of the same education reformers and tactics.

The nation’s top 15 foundations contributed $844 million to K-12 education in 2010, nearly double the amount spent in 2000. Philanthropies are increasingly pooling their resources around national organizations that want schools to be managed something like stocks in a Wall Street portfolio.

“This is an existential fight for the future of public education,” said David Goldberg, secretary treasurer of the California Teachers Association, and a former Los Angeles teachers union official. “You have to see this strike in the context of a broader struggle for funding for public education and a fight for survival.”

Indeed, the union sees the issues of funding and privatization as inextricably linked. Days after announcing a strike, Alex Caputo-Pearl, president of Los Angeles union, called for a moratorium on charter school expansion, arguing that unrestricted charter-school growth is starving public schools as education funds follow each child. Enrollment in the Los Angeles Unified School District has shrunk by about 20 percent over the past decade as charter-school enrollment nearly doubled during the same period, though the enrollment decline is also due to demographic shifts.

In 2015, the Los Angeles Times uncovered a $490 million plan by Eli Broad, a local billionaire philanthropist, to turn half of all Los Angeles schools into charters, a program that could push the school district into insolvency, according to an independent panel of experts. The plan aims to tap a who’s who of wealthy philanthropists, including the Bill and Melinda Gates Foundation and the Walton Family Foundation, organizations that have promoted privatization plans nationwide.

Broad is a close ally of Austin Beutner, L.A.’s new superintendent, who is negotiating with the union. A former investment banker, Beutner has no education experience. Stoking mistrust among teachers, Beutner is working on a restructuring plan for the district and has hired a consulting firm that has helped other cities with large charter sectors, including Newark and New Orleans, adapt the portfolio-management strategy.

Broad and other wealthy businesspeople have spent millions to elect charter-friendly school boards. In 2017, in what was the most expensive school-board race in the nation, charter supporters in Los Angeles spent $9.7 million, close to double the union-backed opposition, and won a narrow majority on the board. When Ref Rodriguez, a charter-school founder who served as school-board president, was accused of campaign-finance violations, Reed Hastings, the founder of Netflix and one of the biggest spenders on the 2017 school-board race, ponied up $75,000 toward Rodriguez’s legal-defense fund.

Rodriguez pleaded guilty to felony conspiracy charges last summer and resigned, almost a full year after the charges first came to light. The board is now deadlocked and Los Angeles will face another school-board election in March.

Meanwhile, the union believes it is in a good position to win many of its demands, pointing to the district’s nearly $1.9 billion surplus, about one-quarter of its annual operating budget. Then, too, California has a far larger budget surplus than expected and a new governor, Gavin Newsom, who has signaled that he is willing to spend liberally on education, as well as putting money toward district pension obligations. The last time Los Angeles teachers went on strike, Ronald Reagan was governor.

Longer term, a new union-backed referendum on the 2020 ballot would scale back property tax protections for commercial properties that are part of California’s historic Proposition 13, which in 1978 capped real-estate taxes at 1 percent of a property’s purchase price with just small annual increases. If that initiative passes, new revenues generated by increased commercial property taxes — an estimated $6 to 10 billion — would go to schools and municipalities.

Whatever happens with the current union negotiations, the private sector’s push for restructuring public education in Los Angeles and elsewhere is not going away. In Oakland, where 30 percent of schools are now charter schools, the district lost an estimated $57 million in school funding during the 2016-2017 school year; the Oakland teachers now also are expected to go on strike.

However, less than a year after a Supreme Court ruling that found that workers who choose not to join unions need not pay union dues, the wide-ranging push by the Los Angeles teachers’ union for greater resources for students may signal the kind of outward-facing strategy that many union organizers believe will be necessary to maintain both community support and membership.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Andrea Gabor, a former editor at Business Week and U.S. News & World Report, is the Bloomberg chair of business journalism at Baruch College of the City University of New York and the author of "After the Education Wars: How Smart Schools Upend the Business of Reform."

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