LAUSD board looks for ways to cut soaring health care costs

The new board of the Los Angeles Unified School District met Tuesday in a less formal, but still public, setting than the typically-packed boardroom they use in downtown Los Angeles. Instead, they gathered at youth sports organization LA84 Foundation and, around a table and complete with Powerpoint presentations and giant paper pads on easels, dug into the nitty-gritty of governance, starting with how to communicate.

In the free-ranging discussion on “making the operation of the LAUSD Board more effective,” Board Member George McKenna brought up rising health care costs and a recently formed task force, co-led by former Deputy Mayor of Los Angeles and former LA Times publisher Austin Beutner, that is to advise LAUSD Superintendent Michelle King. Both the board and the advisory task force are giving King direction, he said.

“I’m not critical of the concept, but I don’t know who all those people are, other than what I read in the newspaper,” McKenna said. “We got elected. … We give the superintendent advice too, and our advice is more meaningful.”

The members also touched on the recent election, the most expensive in the district’s history, which saw members Nick Melvoin and Kelly Gonez elected and which had charter schools as a divisive issue.

“To get elected to this board, it’s $1 million, minimum,” said Board Member Richard Vladovic. “When you spend that much money, and you take that much money … there’s an expectation that there’s a philosophy,” but not necessarily a vote, he said.

“Our biggest challenge is to get over the polarization” on the board, he added.

The meat of the board members’ discussion centered on the district’s massive health care costs for its employees and retirees. Those costs make up $1.1 billion a year, out of a $7.5 billion budget.

District Chief Financial Officer Scott Price noted the financial challenges facing the district, including declining enrollment and structural deficit. The school district’s health care spending has more than doubled since 2001, according to the figures Price presented.

“We’ve been losing our (student) enrollment as the years progress,” Price said. “But even though we’re losing enrollment, what we pay for health care benefits continues to rise.”

The district’s chief risk officer, Janice Sawyer, laid out a detailed explanation of scenarios that could drastically cut the district’s health care costs if there were changes to what the district covers for its employees.

The district currently covers 100 percent of health care premiums of its eligible employees, retirees and the dependents of both if they meet certain parameters, such as years of service. But if, for example, the district paid only for employees’ and retirees’ health costs, and not dependents, it could save $434 million a year, Sawyer said. If the district paid for employees, retirees and just one dependent for each, it could save $138 million a year.


Of course, any change would have to be negotiated with labor groups representing teachers and other district staff, she added.

“All these are negotiable, as part of collective bargaining,” Sawyer said.

Board Member Scott Schmerelson cautioned against impacting retirees and long-time district staff, who may have foregone higher wages elsewhere, too heavily.

“We’ve conceded that something needs to be done,” Schmerelson said. “What we really should do is plan on something for new hires. You just can’t pull the rug out from people who have worked all their lives for the district.”

Vladovic suggested the district should better take advantage of its size and even join forces with other government entities, such as the county, to negotiate health care costs.

“We can bargain,” he said. “We’re not the ant in the room, and if we combine with several other city groups, there’s a buying power.”


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