Suit accuses L.A. Unified of diverting millions meant for needy students

The Los Angeles Unified School District has illegally shortchanged high-needs students of millions of dollars meant for them under the state’s new school finance system, a lawsuit filed Wednesday alleges.

The suit claims that improper accounting will cost those students more than $400 million by next June and up to $2 billion by 2020.

Under the state’s landmark reform of its school funding system two years ago, districts receive more dollars for students who are low-income, learning English or in foster care. But districts are required to invest in increased or improved services for them.

At issue is $450 million in special education funds that L.A. Unified counted in 2013-14 as part of its existing spending on high-needs students -- a figure that helped set the amount of new required investments for them. The district has said it is only counting dollars spent on special education students who are also low-income, learning English or in foster care -- all told, 79% of them.

But John Affeldt of Public Advocates Inc., one of three organizations that filed the suit, said that money is being spent on special education needs -- not primarily to help students overcome learning challenges based on language, income or foster placement, as required by state law. He said L.A. Unified appears to be the only major school district in California counting special education funds in this way and that it has artifically inflated its current spending on needy students, lowering the additional amount that will be required.

“L.A. Unified is clearly violating the rules, and when L.A. violates rules the impact is felt in a very large way,” Affeldt said. “That’s undercutting the heart” of the law.

District officials said they were “disappointed” by the lawsuit, saying its allegations were based on a misinterpretation of the funding law.

“The Legislature clearly granted school districts -- which serve predominantly low-income students, foster youth and English language learners -- the highest degree of flexibility in determining student program needs,” a district statement said. “We are confident that the District will be vindicated in this litigation. More importantly, we stand by our continuing commitment to serve our most disadvantaged students.”

The lawsuit, filed on behalf of two plaintiffs — the Community Coalition and Reyna Frias, a parent — also names Los Angeles County Supt. of Schools Arturo Delgado, who in a letter last September approved the district’s accounting methods. County education officials declined to comment.

In addition to San Francisco-based Public Advocates, the lawsuit was also filed by the ACLU Foundation of Southern California and the Covington & Burling law firm of San Francisco. The lawsuit asks that L.A. Unified immediately recalculate its spending and increase funding for the targeted students.

“LAUSD is breaking its promise to provide my children and millions of other students in the future, with the services they need and the law says they should receive,” Frias, mother of two students in district schools, said in a statement.

Twitter: @TeresaWatanabe