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Crooked Connections: California's Los Angeles Unified School District's Rotton Payroll Deal
Daily News editorial: "LAUSD paid $95 million for a new computerized payroll system that doesn't work. More than 10,000 employees have been without paychecks for more than two weeks. But this deal was rotten long before the payroll system left employees in financial straits. Indeed, it has more to do with the generally crooked state of affairs called government contracting in Los Angeles."
Crooked connections
LAUSD payroll contract is so bad in oh so many ways
Article Last Updated:02/18/2007 05:23:05 PM PST


WHEN it comes to working up outrage over the LAUSD's payroll disaster, it's hard to know where to start or whom to blame first.

First, there's the obvious problem that the Los Angeles Unified School District paid $95 million for a new computerized payroll system that doesn't work. More than 10,000 employees have been without paychecks for more than two weeks.

But this deal was rotten long before the payroll system left employees in financial straits. Indeed, it has more to do with the generally crooked state of affairs called government contracting in Los Angeles.

This particular bad deal began in 2005, when the LAUSD went out to bid for a new computerized payroll system. Instead of taking the lowest - or even least problematic - bid, district officials chose one put forth by SAP Public Services, which has a history of problems at other schools in other states.

That may seem like an odd choice - until one considers the connection factor.

The lobbying firm Rose & Kindel represents the LAUSD's interests in Sacramento. The firm, it turns out, was also representing SAP at the very same time - but never, everyone vows, did it lobby the LAUSD on SAP's behalf. That would have been wrong.

It gets worse.

At the same time the two clients of Rose & Kindel were involved in the bidding process for a new district payroll system, the firm was pushing legislation sponsored by Assemblyman Lloyd Levine, D-Van Nuys, that would allow the LAUSD to waive state rules requiring it to accept the lowest bid for contracts. In other words, a bill that would allow the LAUSD to accept SAP's payroll bid, even though it wasn't the lowest one submitted.

And heck if it wasn't timely.

The same day the Levine bill was signed into law in October 2005, the LAUSD announced its contract with SAP.

Coincidence? Of course not. Nothing this convoluted and connected could be mere happenstance. But its sheer complexity is perhaps what school officials are counting on for insulation.

Who can work up a proper froth when the details are so mind-numbing? Who bears the blame when so many people are involved - school officials, the school board, SAP, Levine and lobbyists at Rose & Kindel.

With responsibility for the corruption spread so far and wide, no one has to bear the brunt of it.

But that doesn't help the thousands of employees who have missed mortgage payments and other important bills. And it's little consolation to taxpayers, who pick up the tab for what the district spends daily to deal with the glitch.

School officials say they might seek legal action against the suppliers for the faulty system, which is fine, but doesn't the district share culpability for allowing politics to dictate contracting decisions?

Sadly, this labyrinthine tale of government mismanagement and waste isn't the first time the school district has failed to serve the public's interest. And it's unlikely it will be the last.

The onus is now on new Superintendent David Brewer III - a self-described change agent - to clean up the mess caused by years of cronyism. And if he can't do it, it will be all the more reason to support the mayor's quest for school control.

Jon Coupal- Columnist


Jon Coupal is an attorney and president of the Howard Jarvis Taxpayers Association -- California's largest taxpayer organization with offices in Los Angeles and Sacramento. (go to website) (go to Coupal index)

All LAUSD Scandals Seem Like Old News
Experts in dreadful management…
[Jon Coupal] 3/17/05

From Eureka to San Ysidro, and even beyond the borders of California, the Los Angeles Unified School District is the undisputed poster child of badly run school districts. To many, the district has become synonymous with its eight-year slow torture effort to build the nation's most expensive high school on an abandoned and toxic oil field. But most local observers know that it has a much longer history of dreadful management.

This is why, when an analysis by the nonpartisan Legislative Analyst's office revealed that the school district faces an unfunded $5 billion liability to provide full medical coverage to retired employees and their families, this outrageous news was met by a collective yawn. After all, if you are mugged on your way to work, it is a traumatizing experience, but if you are mugged every day, the routine of pulling out your wallet to fork over your cash becomes mundane.

The LAUSD is the nation's largest school district geographically, is second in enrollment, and has a budget greater than 20 of our 50 states. The LAUSD's size gives it major clout in the California education "industry." It is the tail that wags the dog. This is why administrators in other school districts roll their eyes at the mention of the LAUSD. They know that their work is made more difficult because of the negative image inflicted on public education by the Los Angeles district.

The LAUSD is so large, unwieldy and hidebound that it is impervious to outside stimuli. Parents have difficulty in communicating with the school board because each of the seven board members has about 600,000 constituents. School board meetings are held during the day at hours inconvenient to most parents, and they are held downtown -- meaning transportation can be difficult -- in a fortress-like environment. (Probably better to repel armed revolt).

Complaints by parents and local politicians fall on deaf ears. School board elections are held at odd times when there is little voter turnout. This allows the teachers union, whose members have the most at stake, to mobilize supporters and elect their hand-picked candidates. A few years ago, when then Los Angeles mayor Richard Riordan put money behind a slate of non-union candidates who were elected, the bureaucracy sat on its hands and waited. Sure enough, after the next election the union-sponsored candidates were back in charge and nothing had changed.

Good top administrators are hired to be replaced by bad administrators, to be replaced by mediocre administrators. Regardless of their quality, the results are the same.

So it is not surprising that news of an unfunded retirement benefit obligation -- that could reach $11 billion under a worst-case scenario -- is shrugged off by school board and union officials. Given the LAUSD's structure, it is unremarkable that the warning that liabilities this large threaten the district's ability to operate in the future is ignored.

Maybe school officials are comforted by the knowledge that the district has been able to successfully pry $10 billion in bond money from local taxpayers over the last eight years. Perhaps they feel secure knowing that a large percentage of this bond money, which was approved by voters for capital improvements, has instead -- according the district's own auditors -- gone to payroll and consultants.

One LAUSD official who has broken the mold, at least on this issue, is chief operating officer Tim Buresh. He has been warning that the school board's "live for today" approach could lead to disaster. "In the corporate world, I'd go to jail for this" he said. "Corporations could never do this. L.A. has a Cadillac free-benefits system and we haven't put any money away to pay for it."

Buresh is right, of course, but we're dealing with the LAUSD where being right is no defense. The penalty for pointing out that this obese emperor has no clothes is likely to be "off with his head." We hope that the truthful Mr. Buresh has his resume in order. CRO

Jon Coupal is an attorney and President of the Howard Jarvis Taxpayers Association.

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