Inland Empire Outlook Spring 2018

Public Polic y Journal

Spring 2018

Amazon in the Inland Empire pg. 2-5 Vergara v. California: Educational Equality in California pg. 6-14 Photo Credit: Digital Vincent | Flickr

Trends and Challenges

W

e begin this issue of the Inland Empire Outlook with a look at the growth of Amazon.com in the Inland Empire (p. 2).

Amazon chose San Bernardino for its first California facility in 2012. It has been steadily expanding in the region since then and is now the largest private employer in the Inland Empire.

Next, we examine Vergara v. California, a case in which nine California school children challenged the state laws governing teacher tenure, dismissal, and layoffs (p. 6). The plaintiffs ultimately did not succeed, but their initial victory in the trial court sent shock waves through the state.

We then present an analysis of time spent in special education classrooms for Inland Empire school districts (p. 15). Our research suggests that poor children spend more time in dedicated special education classrooms.

Poverty and Special Education Placement pg. 15-19 California’s $15 Minimum Wage pg. 20-22

California is in its second year of a minimum wage hike that will culminate in a $15 per hour minimum wage in 2022 for large employers and 2023 for smaller ones. Some local governments in the state are increasing minimum wage at a faster pace. Our fourth article is a brief overview of the California law and examines some issues presented by minimum hikes already underway in Los Angeles and Seattle (p. 20).

Finally, this is the seventeenth issue of the Inland Empire Outlook. Back issues are now available on our website, www.RoseInstitute. org and we have included a listing of some of our best articles on page 23. Please visit our website to find them, along with information on many other Rose Institute projects and local government topics.ď ľ

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Amazon in the Inland Empire By

Charlie Harris ’19

F

or much of Amazon.com, Inc.’s history the company aggressively avoided state sales tax collection. It accomplished this by having a physical presence in only a few states. States can require retail sellers to collect sales tax if the retailer has a minimum presence in the state.

A physical presence, such as a store, obligates a retailer to collect and pay sales tax. According to the Wall Street Journal, wherever possible the company used to consolidate its warehousing in a few locations around the United States from which it could then distribute across state lines. As recently as 2011, Amazon collected sales taxes only on purchases by residents of Washington, its home state, and on sales to residents of Kansas, Kentucky, and North Dakota, where it had sales operations.

Photo Credit: Inland Empire Warehouse Space

This was an effective tactic early on in Amazon’s history and helped lure customers to the company’s online platform with cut-rate prices. By 2010, however, many states were fed up with Amazon’s aggressive sales tax avoidance strategy, and they began to pass so-called “Amazon Laws” to require online retailers operating in any capacity in their state to collect sales taxes. GoodJobsFirst.org reports that California and 28 other states now have “Amazon Laws” requiring out of state online retailers to collect and pay sales tax.

The landscape of the online retail business has also shifted towards ever decreasing delivery times. Where consumers once accepted a few days and even weeks of travel time for package delivery, there is now a demand for options like

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same-day delivery and shorter delivery times across the board. Amazon is responsible in part for fostering these expectations by offering services such as Amazon Prime with next day delivery. Observers of the company say that Amazon’s ambition is to offer same day delivery to Amazon Prime subscribers on anything in their inventory. Ultimately, shrinking that delivery window will allow Amazon to overcome the last advantage that brick and mortar stores retain, instant fulfilment of customer orders.

The Inland Empire has several additional factors that make it attractive to a company like Amazon. The region sits at the center of a well-developed transportation network that receives large volumes of imported cargo at two large ports, the Port of Los Angeles and the Port of Long Beach. There are nearly a dozen commercial airports in the region, including Ontario International Airport and the area’s vast freeway network allows goods to move quickly from suppliers to distributors.

Once Amazon committed to expanding its physical presence in California the company immediately began looking to build in the Inland Empire because of key factors that make it a desirable spot to locate logistics facilities.

Relative to the rest of Southern California, land is plentiful in the Inland Empire region, and companies looking for warehouse space can find large tracts of flat land where they can locate warehouse facilities that are still close to the major population centers in Southern California. A recent study by the Los Angeles Economic Development Council estimates that 81 percent of the industrial space Southern California added in 2015 was in the Inland Empire.

The region similarly accounted for 83 percent of the industrial space in the development at that time.

Finally, a large pool of potential workers is required to facilitate the movement of these goods, and the massive population of Southern California offers a reliable supply of labor. According to the Los Angeles Economic Development Council, as of 2015 the logistics industry directly employed 580,450 workers in Southern California and about half of those jobs were in the Inland Empire. The California Employment Development Department reports 289,091 new jobs in the Inland Empire from 2012-2017. Of those, 52,767 or almost 20 percent were in the logistics sector.

The 2008 recession left the Inland Empire in bad shape, but since then an influx of companies has looked east of Los Angeles to locate their expanding warehousing operations.

Industrial Space Added and Pipeline

Los Angeles County

Space Added in 2015 3.6 million sq ft

Under Construction 2.8 million sq ft

Orange County

1.1 million sq ft

625,000 sq ft

Inland Empire (RC & SBC)

20.8 million sq ft

16.7 million sq ft

n/a

n/a

25.5 million sq ft

20.2 million sq ft

Ventura County Southern California

Source: Goods On The Move! Trade and Logistics in Southern California, Los Angeles County Economic Development Corporation, 2017

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The explosive growth in the logistics industry over the past decade has helped spur an economic revitalization in the region. A look at air freight traffic at Ontario International Airport is indicative of the growth the logistics sector has undergone since the recession. Total freight volume at the airport reached 567,295 tons in 2016, exceeding the prerecession total of 532,865 tons in 2007. Passenger traffic, in contrast, while improving, remains far below the pre-recession totals.

Ontario International airport Ten-Year Summary Year

Passenger Total

Freight*

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

7,207,150

532,865

6,232,975

481,284

4,861,110

391,060

4,812,578

392,428

4,540,694

417,686

4,296,459

454,880

3,971,136

465,537

4,127,280

474,502

4,209,311

509,809

4,251,903

567,295

*Freight is listed per year in TONS. Totals include U.S. mail.

Source: http://www.flyontario.com/corporate/statistics, Accessed March 14, 2018

Amazon’s growth in the Inland Empire is part of this sector’s boom. The company opened its first California facility in San Bernardino in 2012 and since then has opened 20 locations throughout the state. When Amazon announced plans for a second facility in San Bernardino in 2016, it noted that “San Bernardino has proven to be an important part of Amazon’s growth in California, and we are proud to continue creating jobs and helping support the economy here in the Inland Empire.”

Today, Amazon has a significant presence

across the Inland Empire with ten facilities in the region and two more scheduled to open in 2018. According to Dr. John Husing, chief economist for the Inland Empire Economic Partnership, Amazon employs over 17,000 people at its facilities in the Inland Empire – with another 3,000 seasonal employees -- and is now the region’s largest private sector employer.

There are two main types of Amazon warehouse facilities, fulfilment centers and sort centers.

Fulfilment centers are the typical product warehouse that stores goods that Amazon is selling.

When a customer puts in an order, the fulfilment center is where that order is filled. Sort centers are more specialized facilities that act as intermediaries between fulfilment centers and parcel carrying services. By using its own sort centers to route packages closer to the intended destination, Amazon is able to control more of the delivery process and only hand off packages for the final delivery. The warehouses in the Inland Empire are mainly fulfilment focused, but there are also two sorting locations.

Amazon made headlines in recent months with its search for a home for its second headquarters. The public announcement of the company’s search appeared geared towards prodding local governments into offering large economic incentives to lure Amazon. As it has aggressively expanded across the country, Amazon has looked for incentives when choosing where to locate warehouse facilities. Since the beginning of Amazon’s expansion in 2010, it received large subsidies from cities and states around the nation. The state of South Carolina, for example, offered a package of incentives worth $61 million in 2011, and Jacksonville, Florida handed out $18 million to help lure an Amazon facility in 2016.

Most cities in the Golden State, however, have avoided offering massive incentives. The Los Angeles Times reported that Amazon did re-

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Amazon Facilities in the Inland Empire Date

City

Size

Description

October 2012

San Bernardino

1.5 million sq ft

Fulfillment center for small sortable goods

October 2013

San Bernardino

August 2014

Moreno Valley

1.2 million sq ft

Fulfillment center for small sortables

August 2014

Moreno Valley

800,000 sq ft

Inbound cross dock

October 2014

Redlands

800,000 sq ft

Fulfillment center for large items

November 2015

Rialto

900,000 sq ft

Fulfillment center for large items

March 2016

San Bernardino

1.1 million sq ft

Fulfillment center for small sortables

April 2016

Riverside

36,000 sq ft

Delivery station for small shipments

October 2016

Eastvale

1 million sq ft

Fulfillment center for small sortables

March 2017

Chino

June 2017

Redlands

800,000 sq ft

Fulfillment center for large items

October 2017

Rialto

600,000 sq ft

Inbound cross dock

March 2018 projected

Riverside

1 million sq ft

Fulfillment center

March 2018 projected

Eastvale

1 million sq ft

Fulfillment center

Sortation center to ease outbound shipping

Delivery station

Source: “Why Amazon Already Has a Strong Presence in Southern California” Fielding Buck, Los Angeles Daily News, January 18, 2018

ceive a “California Competes” business tax credit worth $1.6 million from the state in 2014, but it has not gotten anything else from cities in Southern California. That is not to say that Amazon is not trying. In 2012 when Amazon was looking to put a facility in San Bernardino the company enquired about a possible sales tax remittance deal, but the city rebuffed that inquiry and the facility was built without it. Cities in the Inland Empire have recognized that they have structural advantages for the logistics industry, and they may not need to offer huge subsidies to lure these businesses to their communities.

They know that the combination of abundant cheap land, a large potential workforce, strong infrastructure network, and proximity to high

volume ports, is a winning mix that makes the Inland Empire attractive to any logistics company, not just Amazon. Since the cities know that there are plenty of potential suitors vying to locate in their region they aren’t as pressured to give away the farm when Amazon comes knocking. While speaking at an economic conference in Ontario in 2015, Dr. Husing noted that logistics is “the sector for which we [The Inland Empire] have the greatest competitive advantage.” That’s why the logistics sector has been an engine of growth, accounting for one in five new jobs across the region from 2012-2017.

With two large facilities scheduled to open in 2018, Amazon will continue to be an important part of this growth. 

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Vergara v. California: Educational Equality in California By

Naseem Nazari ’21

O

n August 22, 2016, the California Supreme Court declined to hear an appeal by the plaintiffs of Vergara v. California. This marked the end of the line for the nine children who had brought this suit. Four years earlier, Beatriz Vergara, Elizabeth Vergara, Brandon DeBose, Jr., Clara Grace Campbell, Kate Elliott, Herschel Liss, Julia Macias, Daniella Martinez, and Raylene Monterroza sued the State of California, Governor Jerry Brown, State Superintendent of Public Instruction Tom Torkalson, the California Department of Education, and the State Board of Education.

The Los Angeles Unified School District, Oakland Unified School District, and Alum Rock School District were initially also named as defendants, but the plaintiffs soon decided to drop them from the lawsuit. The California Teachers Association and the California

Photo Credit: Adolfo Guzman-Lopez | KPCC

Federation of Teachers voluntarily intervened to join the lawsuit as defendants.

The nine Vergara plaintiffs, from seven cities in California, challenged five statutes of the California Education Code, claiming those statutes violated the equal protection clause of the California Constitution. They were assisted

by Students Matter, a national nonprofit that promotes access to quality public education.

The challenged statutes govern how California teachers are granted tenure, the procedures for dismissing teachers, and the procedures for teacher layoffs. The plaintiffs’ equal protection claims assert that the challenged statutes lead to the hiring and retention of what they call “grossly ineffective teachers” and that being assigned to a grossly ineffective teacher adversely affects the quality of their education

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and causes them significant harm. Moreover, this harm falls disproportionately on minority and low-income students. They argued that this violates their fundamental right to equal education under the California Constitution.

The case went to trial before Judge Rolf M. Treu on January 27, 2104, and the students won their case at trial. That decision, however, was overturned by the Court of Appeals. The students then appealed to the California Supreme Court, but it declined to hear their case. Two justices of the California Supreme Court, however, wrote opinions dissenting from the decision not to take the appeal, arguing that the appeals court erred in its decision to overturn the trial court. This article examines the substantive issues in Vergara. It draws on the opinions issued by all three courts: the trial court, the Court of Appeals, and the opinions of two justices of the California Supreme Court dissenting from that court’s decision not to hear this case.

The trial court based the judicial framework for its analysis on four important cases. First, it cited the landmark case Brown v. Board of Education, decided by the Supreme Court in 1954, for the holding that public education facilities separated by race were inherently unequal, and that students subjected to such conditions were denied the equal protection of the laws under the Fourteenth Amendment to the United States Constitution. It said public education is a right which must be made available to all on equal terms. Next, the trial court cited the two cases of Serrano v. Priest, decided by the California Supreme Court in 1971 and 1976, which held education to be a fundamental interest and found the then-existing school finance system to be a violation of the equal protection clause of the California Constitution. Finally, the trial court cited Butt v. State of California, decided by the California Supreme Court in 1992, for the holding that the state has responsibility to

ensure that its district-based system of common schools provides basic equality of educational opportunity. The trial court noted that the cases cited focused on the issue of the lack of equality of educational opportunity. The trial court applied those constitutional principles to the issue of the quality of the educational experience which is at the heart of Vergara.

The plaintiffs presented numerous witnesses to testify that effective teachers are vital to a child’s education and can have a profound impact on a child. Harvard economist Raj Chetty presented results from a massive study showing that “a single year in a classroom with a grossly ineffective teacher costs students $1.4 million in lifetime earnings per classroom.” Harvard Graduate School’s Thomas Kane presented the results of a four-year study showing that students assigned to teachers in the lowest 5th percentile of effectiveness lost between 9.5 and 11 months of learning in comparison to students of an average teacher.

Vergara focused on the quality of the educational experience.

The defendants presented evidence arguing against the centrality of the classroom teacher to students’ educational outcomes. David Berliner, an educational psychologist and professor from Arizona State University, testified that in-school effects on children’s achievement are generally “overrated” when compared to outof-school effects. Berliner opined that student test scores were more likely to be influenced

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Probationary Period Before Tenure for K-12 Teachers

Two Years

Three Years

Four Years

Five Years

California

Arkansas

Nevada

Connecticut

Louisiana

Mississippi

Alabama

New Mexico

Illinois

Michigan

South Carolina

Alaska

Oklahoma

Kentucky

Missouri

Vermont

Arizona

Oregon

New Jersey

New Hampshire

Colorado

Pennsylvania

New York

Ohio

Georgia

Rhode Island

Hawaii

South Dakota

Indiana

Texas

Iowa

Utah

Maine

Virginia

Maryland

Washington

Massachusetts

West Virginia

Minnesota

Wyoming

Tennessee

Montana Note: No policy for the District of Columbia and North Dakota. Florida, Kansas, North Carolina, and Wisconsin do not offer tenure.

Source: NCTQ 2017 Yearbook: Probationary Period National Results, National Council on Teacher Quality

by “peer-group composition of the group tested, including students’ social class and their parents’ educational level.” Berliner estimated that teachers account for approximately “10 percent of variation in aggregate scores, with the remaining 90 percent attributable to other factors.” Thus the defendants argued that student performance is not a direct reflection of teacher performance.

The trial court found the evidence of the specific effect of grossly ineffective teachers on students to be compelling and noted, moreover, that “it shocks the conscience.” It found that the plaintiffs had proven that the challenged statutes “impose a real and appreciable impact on students’ fundamental right to equality of education and that they impose a

disproportionate burden on poor and minority students.” It therefore examined the challenged statutes under a strict scrutiny standard.

The first statute challenged in the case is the Permanent Employment Statute, governing how teachers are granted tenure. For districts with more than 250 students, the statute requires that a probationary teacher becomes a “permanent employee of the district” after finishing “two complete consecutive school years in a position or positions requiring certification.” Further, a district must notify a probationary teacher, on or before March 15 of the teacher’s second year, whether he or she will be reelected (granted tenure) as a permanent employee. The trial court noted that districts must make a recommendation on tenure well in

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How Teachers are Dismissed in California

Source: Teacher Layoff and Dismissals in California State Law, The Education Trust-West, April 2011

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Student plaintiffs outside the Superior Court of Los Angeles on the opening day of Vergara v. California. Photo Credit: Monica Almeida | The New York Times

advance of the March 15 notification deadline and thus are forced to make that decision on much less than two years of work.

John Deasy, the superintendent of the Los Angeles Unified School District at that time, testified that there is no way the time provided by the statute is sufficient. Deasy testified that when LAUSD moved from a “passive” tenure system to an “affirmative” one, requiring a more thorough review of the probationary teacher’s teaching abilities, the rate of tenure dropped from being virtually automatic to 50 percent.

Mark Douglas, an assistant superintendent in Fullerton School District, stated that most teachers do not hit full stride until three to five years of teaching.

The defense called its own witnesses such as Susan Mills, an assistant superintendent from Riverside Unified School District, who testified that the statutory period was sufficient time to make a the decision on whether to make a teacher a permanent employee.

Lynda Nichols, a former teacher, testified that her status as a permanent employee, provided

job protections that “insulated her from potential retribution by parents and the local school board.” She cited an example of parents opposed to some subjects including Islam and Catholicism in her curriculum. The job security provided by the tenure statute allowed her to broaden the horizons of her students without fear of dismissal. The defense also argued that because a relatively short probationary period forced districts to make reelection decisions quickly, it shortened that time that ineffective teachers remain in the classroom.

The second set of three statutes challenged by the Vergara plaintiffs govern how a tenured teacher is dismissed. Justice Liu, in his opinion dissenting from the California Supreme Court’s order declining to hear this case, outlined the arduous process.

“At the time of the trial, the laws required a district to first give a teacher a written statement of specific instances of unsatisfactory behavior, allow the teacher 90 days to improve, and then provide a written statement of charges and intent to dismiss. The teacher then had 30 days to request a hearing, which had to begin

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within 60 days of the request. The hearing was conducted by a three-member panel comprised of an administrative law judge, one teacher selected by the district, and one teacher selected by the teacher subject to the hearing. The panel had to issue a written decision, and the decision was subject to judicial review. If the district lost, it had to pay the hearing expenses and the teacher’s attorney’s fee. If the district won, the parties split the hearing expenses and paid their own attorney’s fees.”

According to the plaintiffs, the dismissal statutes effectively prevent school administrators from dismissing teachers for poor performance, as they make the process unduly long and costly to the school districts. The trial court found that “it could take anywhere from two to almost ten years and cost $50,000 to $450,000 or more to bring these cases to conclusion under the dismissal statutes, and that given these facts, grossly ineffective teachers are being left in the classroom because school officials do not wish to go through the time and expense to investigate and prosecute these cases.” The plaintiffs noted that in the past decade, Los Angeles Unified School District (LAUSD) spent $3.5 million trying to dismiss seven of the district’s teachers for poor classroom performance. In addition, this process lasted for an average of five years per teacher, and the average cost of the process to LAUSD was $500,000 per teacher. These proceedings are rarely initiated for reasons of ineffective teaching. Rather, 80 percent of dismissals within LAUSD are due to illegal conduct, not teaching performance.

The defendants strenuously fought to defend the dismissal statutes. They presented multiple school administrators to testify that, under the dismissal statutory scheme, they are able to remove poorly performing teachers. Robert Fraisse, former superintendent of Laguna Beach Unified School District, testified that he was able to use various methods for resolving

dismissals without following the formal dismissal process. These included informing poorly performing teachers of serious concerns, which often led the teacher to resign; paying compensation in return for a resignation; and working with teachers’ associations to counsel suspect teachers to resign. Circumventing the formal dismissal process most frequently results in settlement, retirement, or remediation rather than a costly hearing. Between May 2007 and April 2013, LAUSD negotiated 191 settlements to resolve dismissal cases informally. These negotiations cost the school district a total of $5 million in payouts, approximately $26,000 per teacher.

It can take anywhere from two to almost ten years and cost $50,000 to $450,000 to bring a dismissal case to conclusion.

In addition to the permanent employment and dismissal statutes, the plaintiffs challenged California’s Last-In-First-Out (LIFO) statute governing teacher layoffs. The LIFO statute establishes a seniority-based layoff system using seniority as the sole factor to be considered in laying off teachers. The statute mandates that “the services of no permanent employee may be terminated while any probationary employee, or any other employee with less seniority, is retained to render a service which said permanent employee is certificated and competent to render.” Permanent teachers must be terminated in “the inverse of the order in which they were employed.” There are limited exemptions in cases where the

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district has a specific need for a teacher with special training or as necessary to comply with constitutional requirements, but a permanent teacher generally cannot be terminated unless all teachers with less seniority go first.

The plaintiffs’ witnesses testified that the seniority system often results in highly effected teachers being terminated while grossly ineffective teachers keep their jobs. Professor Chetty used data on LAUSD test scores and teacher assignments to calculate that 48 percent of teachers terminated during reductions-inforce were more effective than the average

teacher in the district, while approximately 5 percent of the teachers terminated were above the 95th percentile in terms of effectiveness.

The defense witnesses argued in favor of the LIFO statute. Jesse Rothstein, a professor of economics and public policy at the University of California, Berkeley, testified to the advantages of the seniority-based system when compared to a performance-based one. It is easier and less costly to administer, it allows teachers to focus on teaching rather than test scores, and it is not subject to dubious evaluations of effectiveness.

Susan Moore Johnson, from Harvard Graduate

Consideration of Seniority in Layoff Decision

No

State does not permit seniority to be considered.

Partial

Seniority considered among other factors.

Yes

State requires seniority as sole factor.

Full

Districts have full discretion.

Colorado

Arizona

California

Alabama

Georgia

Florida

Hawaii

Alaska

Illinois

Idaho

Kentucky

Arkansas

Indiana

Maine

Minnesota

Connecticut

Louisiana

Massachusetts

New Jersey

Delaware

Michigan

Missouri

New York

District of Columbia

Nevada

New Hampshire

Oregon

Iowa

Texas

Ohio

West Virginia

Kansas

Utah

Oklahoma

Wisconsin

Maryland

Pennsylvania

Mississippi

Rhode Island

Montana

Tennessee

Nebraska

Virginia

New Mexico

Washington

North Carolina North Dakota South Carolina South Dakota Vermont Wyoming

Source: NCTQ 2017 Yearbook: Layoffs National Results, National Council on Teacher Quality

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LAUSD board during a public hearing.

School of Education, testified that even districts which allow for performance-based layoffs opt to use seniority instead, because ranking for effectiveness is difficult and contentious.

The trial court sided with the plaintiffs and struck down five statutes governing permanent employment, dismissal, and layoffs. The trial court found that the time frame mandated by the Permanent Employment Statute does not provide nearly enough time for an informed decision on granting tenure. “As a result, teachers are being reelected who would not have been had more time been provided for the process.”

The trial court found that “both students and teachers are unfairly, unnecessarily, and for no legally cognizable reason (let alone a compelling one), disadvantaged by the current Permanent Employment Statute” and thus found the statute unconstitutional under the equal protection clause of the California Constitution.

The trial court similarly struck down the three statutes governing teacher dismissal. It acknowledged that providing teachers with due

Photo Credit: Antonie Boessenkool | Los Angeles Daily News

process before dismissal was a legitimate and even compelling interest but concluded that the dismissal statutes worked to give teachers “über due process” that leads to the retention of grossly ineffective teachers. It found “the current system required by the [d]ismissal [s] tatutes to be so complex, time consuming and expensive as to make an effective, efficient yet fair dismissal of a grossly ineffective teacher illusory” and found the dismissal statues unconstitutional under the equal protection clause of the Constitution of California.

The trial court also struck down the LIFO statute. It noted that the statute has no exception or waiver based on teacher effectiveness and thus no way to avoid a lose/lose situation where a competent junior teacher may be removed from a classroom and replaced by a more senior ineffective teacher. “Distilled to its basics, the State Defendants’/Intervenors’ position requires them to defend the proposition that the state has a compelling interest in the de facto separation of students from competent teachers, and a like interest in the de facto

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retention of the incompetent ones. The logic of this position is unfathomable and therefore constitutionally unsupportable.” The trial court found the LIFO statute unconstitutional under the equal protection clause of the Constitution of California.

The Vergara children’s victory was, however, short-lived. The defendants successfully appealed and had the trial court ruling overturned. Writing for Court of Appeals for the Second District, Judge Boren wrote: “We reverse the trial court’s decision. Plaintiffs failed to establish that the challenged statutes violate equal protection, primarily because they did not show that the statutes inevitably cause a certain group of students to receive an education inferior to the education received by other students. Although the statutes may lead to the hiring and retention of more ineffective teachers than a hypothetical alternative system would, the statutes do not address the assignment of teachers; instead, administrators—not the statutes—ultimately determine where teachers within a district are assigned to teach. Critically, plaintiffs failed to show that the statutes themselves make any certain group of students more likely to be taught by ineffective teachers than any other group of students.”

The appellate court found that the challenged statutes do not solely cause poor and minority students to receive an unequal, deficient education. It was persuaded by evidence in the trial record demonstrating that staffing decision, including teaching assignments, are made by administrators, and that the process is guided by teacher preference, district policies,

and collective bargaining agreements. “In sum, the evidence presented at trial highlighted likely drawbacks to the current tenure, dismissal, and layoff statutes, but it did not demonstrate a facial constitutional violation. The evidence also revealed deplorable staffing decisions being made by some local administrators that have a deleterious impact on poor and minority students in California’s public schools. The evidence did not show that the challenged statutes inevitably caused this impact.”

The Vergara plaintiffs appealed their case to the California Supreme Court, which declined to hear their case. Two justices, however, Liu and Cuellar, dissented from the decision to deny review. Both wrote opinions finding error in the Court of Appeal’s equal protection analysis.

Justice Liu wrote “As the state’s highest court, we owe the plaintiffs in this case, as well as school children throughout California, our transparent and reasoned judgment on whether the challenged statutes deprive a significant subset of students of their fundamental right to education and violate the constitutional guarantee of equal protection of the laws.”

The challenged statutes ultimately hinder the quality of education for low-income and minority students, given that they do not have equal access to quality instructors, giving them a less equal education than wealthier peers.

From the testimony of both the defendants and plaintiffs, it is evident that educational disparities are profound. Vergara v. California may not have been successful in tracking these disparities back to the challenged statutes, but it did shed light on the trials and tribulations faced by children from less affluent backgrounds. 

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Poverty and Special Education Placement By

Photo Credit: Woodland Elementary School | Flickr

Bruno Youn ’19

F

ederal, state, and local governments must coordinate closely to provide special education to hundreds of thousands of Californian kids with disabilities. Due to the complex bureaucratic web among the different levels of government, special education is a puzzling political topic. Some context is warranted on where special education funding comes from, how these funds are allocated, and who is responsible for implementing the programs. According to a Legislative Analyst’s Office report on the 2017-18 California state budget, 60% of special education funding comes from local source, 30% comes from the state, and 10% from the federal government.

The federal government defines special education requirements and standards. In 2004,

the passage of the Individuals with Disabilities Education Act (IDEA) required states to provide “specially defined instruction, and related services, at no cost to parents, to meet the unique needs of a child with a disability.” States can make only minor changes to the federal requirements, and incorporation of special education services falls to Local Educational Agencies—or LEAs—within each state.

Especially relevant to our analysis are IDEA’s least-restrictive-environment (LRE) provisions, which mandate that states ensure that children with disabilities are educated alongside their nondisabled peers to the maximum extent appropriate. Despite special education being a federal mandate, its implementation varies greatly across states and municipalities.

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Our analysis is based on data gathered on almost every traditional school district in the Inland Empire, defined here as San Bernardino County and Riverside County, except for eight.

Four districts were excluded for lack of data on special education enrollment and another four because of the adoption of community eligibility programs for free and reduced lunch, explained more fully below. Using simple linear regression, we have found FRL eligibility to be associated with the proportion of special education (SE) students aged 6-21 placed in general education classrooms for less than 40% of the school day. We obtained data on free and reduced-price lunch (FRL) eligibility from the California Department of Education’s EdData partnership. Placement data (including the less-than-40% figures) came from the IDEA-mandated Annual Performance Report Measures aggregated by the CDF. Thus, to the extent that FRL eligibility is a viable proxy for low-income status, SE students in school districts with a higher proportion of low-

income students are more likely to spend the majority of their school day in segregated special education classrooms. Figure 1 shows a statistically significant (p=0.0002) correlation between FRL eligibility and special education classroom placement. Each 1% increase in FRL eligibility corresponds to a 0.25% (Âą0.06%) increase in percentage of SE students spending less than 40% of their time in a regular classroom.

Studies of school districts in other states have made similar findings. A 2011 statecommissioned report on Massachusetts school districts, produced by Dr. Thomas Hehir and Associates, found that SE students in lowerincome districts were educated outside of general education classrooms at substantially higher rates than non-low-income students.

Our correlation only applies to SE students aged 6-22. We found no correlation between FRL eligibility and placement in separate pre-K

Special Education Classroom Placement and FRL Eligibility

Note: Data from 2015-16 school year. N=48.

Source: California Department of Education Special Education Annual Performance Report Measures 2015-16; CDE Ed Data Education Data Partnership

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Time in Special Education Classes Area

<40% of day in regular classroom >80% of day in regular classroom

Inland Empire sample

27.00%

49.95%

National

10.85%

65.14%

Source: California Department of Education Special Education Annual Performance Report Measures 2015-16, National Technical Assistance Center on Transition (NTACT) FFY 2015 SPP/APR Indicator Analysis Booklet

programs. Whatever causes lie behind this association may not fully take effect in early childhood.

The percentage of students eligible for free or reduced-price meals is admittedly an imperfect proxy for the socioeconomic status of a school district’s students. For instance, it is possible that some families who are not eligible game the system to become eligible. Some critics of FRL eligibility as a metric point out that recently instituted “community eligibility” programs allow school districts with over 40% of students identified as eligible to allow free lunches to all students. These programs may call into question FRL eligibility as a metric of the socioeconomic status of schools and districts in a general sense. But we exclude the only four school districts in our Inland Empire sample that have adopted community eligibility programs as of September 2016, per the Food Research and Action Center Community Eligibility Database.

Of course, these findings alone do not suggest any particular causal relationship. Several hypotheses have been put forth to explain the higher separate-classroom placement rates of lower-income students. One posits that lower-income students are more likely to have disabilities that are harder to accommodate in a regular classroom. In other words, the least restrictive environment is more often a separate classroom for kids in lower-income districts. If this hypothesis were the dominant explanation for the trends found, it is a relatively reassuring one because it supposes that the special education system is working properly. If it were the only explanation, the special education system would be identifying the right kids (and only the right kids) and placing them in the least restrictive environment feasible.

Because the severity of a given disability varies widely within disability categories, it is difficult to establish that one disability is inherently more difficult to accommodate in a regular

Inland Empire Districts – FRL Eligibility Subgroup All Districts (n=48) Districts not meeting target for <40% of day spent in regular classroom (n=27) Districts meeting target for <40% of day spent in regular classroom (n=21)

Average FRL Eligibility 65% 73.1% 53.9%

Sources: California Department of Education Special Education Annual Performance Report Measures 2015-16, CDE Ed Data Education Data Partnership

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U.S. Special Education Enrollment

6.4

6.2

6.03

Millions

6

5.97 5.90

5.8

5.77

5.80

6.02

5.99 5.90 5.79

5.77 5.71

5.62

5.6

5.67

5.67

5.70

5.49 5.4

5.35

5.2

5

5.19 5.04 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: Education Week, April 19, 2016

classroom than another. Further complicating any quantitative assessment of this hypothesis is that disability categories that are more strongly associated with separate classroom placement are largely low-incidence disabilities, such as emotional disturbance and intellectual disability. We cannot rule out this explanation altogether, but it is not necessarily the only one.

Another hypothesis suggests that poorer school districts are placing special education students in separate classrooms because of some disproportionality that causes higher special education identification rates among low-income students. What follows, according to this narrative, is that lower-income students are misidentified with disabilities whose diagnostic criteria are particularly subjective (e.g., specific learning disability) and placed into separate classrooms. The 2011 Massachusetts study found

that lower-income students were more likely to be identified for special education, even when they attend high-income school districts. Such misidentification may be the result of a failure of the general education system to meet the needs of these students.

Race may also be a factor. The disproportionate identification of African-American students, for example, is well-documented. The Massachusetts report also found that African-American and Latino special education students were more likely to receive separate classroom placements, even after controlling for low-income status. In our sample, however, very few of the school districts are marked as disproportionate in any respect for 2015-16. To be sure, a binary categorization that divides school districts into “disproportionate” and “not disproportionate” boxes cannot capture every instance of racially

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biased placement. Additionally, a lack of disproportionality in a given year does not necessarily imply a lack of disproportionality overall.

Racial disproportionality may have some explanatory power, but it appears to be of limited use in our study.

A third explanation holds that traditional school districts are denying services to SE students to avoid paying the cost of providing them. This practice, of course, violates IDEA. School districts with more low-income students would be under greater financial pressure and have more incentive to deny services. Squaring with this hypothesis is the fact that most special education funding in California comes from local sources.

Service denial is not a recent phenomenon; the Department of Education issued a letter in 2011 to warn districts away from the tactic. A 2013 investigative effort from NBC Bay Area journalists also found widespread denials among Bay Area school districts. That report counted more than 10,000 disputes between families and school districts over special education services from 2010 to 2013. The parents of poorer students are presumably less likely to have access to the legal and financial resources necessary to advocate for their children when they feel that they are being deprived of services.

One form of service denial is the inappropriate placement of SE students in separate classrooms.

It might be cheaper to place an SE student in such a classroom. For example, it may be more

expensive to hire aides to accompany some SE students in several regular classrooms than to place the students in a separate classroom. SE students who could be accommodated in a full-inclusion placement are placed instead into a separate classroom. Local educational agencies also deny services by refusing to identify children who clearly have disabilities, thus avoiding the legal obligation to provide services. Intuitively, we might expect school districts with more low-income students to be under greater financial pressure and thus practice this kind of denial to a greater extent. If the services necessary to support a regular-classroom placement are costlier than a separate-classroom placement, it stands to reason that those whose disability is not recognized would disproportionately be placed otherwise in regular classrooms.

There likely exist causes other than the three articulated here. For instance, in school districts with more low-income students, parents presumably have less access to outside therapy and other services that might influence placement outside of formal legal channels. It is difficult to form a comprehensive ordering of causes that declares some more dominant than others. Doing so would require further investigation into the explanatory power of the three hypotheses we present, as well as others not mentioned here. ď ľ The author wishes to thank Nicholas Sage â&#x20AC;&#x2122;20 and Melia Wong â&#x20AC;&#x2122;19 for their assistance researching this article.

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California’s $15 Minimum Wage Photo Credit: Ken Teegardin | Flickr

By

Zach Wong ’19

O

n April 4, 2016, Governor Jerry Brown signed into law Senate Bill 3 mandating minimum wage increases for the state of California. The law increased the minimum wage for business with 26 or more employees to $10.50 per hour on January 1, 2017, and continues annual increases until reaching $15 per hour on January 1, 2022. Businesses with 25 or fewer employees follow the same wage increase pattern, but one year behind their larger counterparts. Once the minimum wage reaches $15 per hour for all businesses (in 2023), the increases each year are indexed for inflation, as measured by the national Consumer Price Index.

Governor Brown was initially wary of the minimum wage hike and the California Department of Finance opposed an early version of SB 3. It opposed the proposed bill because it would result in significant, unbudgeted costs to the Gen-

eral Fund. The Department of Finance analysis also noted that net impact of an increased minimum wage on California’s economy is likely to be negative due to losses from higher production costs to businesses and slower employment growth. Both the governor and the Department of Finance tabled their opposition with the inclusion of an “off-ramp” allowing the governor to pause the wage hikes in the event of certain economic conditions. The law contains two sets of triggers to pause upcoming minimum wage increases. The first centers on the state’s economic performance. The governor has the authority to pause the next wage hike if sales tax revenue for the past 12 months is down from the year before or job growth is negative for either of the previous three months or six months. The second trigger focuses on the state’s own balance sheet. The governor can hit the pause button if the state has a projected deficit of more than 1 percent of general fund

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revenue in the current fiscal year or either of the next two fiscal years. With the inclusion of the off-ramp authority, the governor and the Department of Finance came out in support of SB 3.

Governor Brown was not the first California chief executive to sign a minimum wage increase. According to the UC Berkeley Labor Center, 21 cities and one county (Los Angeles) have minimum wage ordinances. Mountain View and Sunnyvale already have a $15.00 per hour minimum wage in place. The City of Los Angeles and Los Angeles County have enacted minimum wage laws that took effect one year earlier than the statewide law and also increase the minimum wage at a faster pace. Both ordinances reach $15.00 per hour in 2020 for employers with 26 or more employees and in 2021 for employers with 25 or fewer employees.

Thereafter, the minimum wage will increase based on the Consumer Price Index published by the United States Bureau of Labor Statistics.

The Los Angeles County Board of Supervisors cited three reasons for the minimum wage hike.

First, it believed the poverty rate at the time (27% of residents making below the equivalent of $30,785 for a family of four) was too high.

Second, it found that full-time workers were not earning enough to “cover bare necessities such as safe housing, healthy food, adequate clothing, and basic medical care.” Finally, the Board characterized low income workers as a social and economic issue because they relied the most on County services, and thus taxpayers and the community ultimately bear the cost of low wages.

Supporters of the minimum wage hike made additional arguments in support of the change.

Mayor Garcetti, for example, argued that every American “should be able to support themselves, and they should be able to support their families.” As the Board of Supervisors found,

the cost of living in many parts of Los Angeles County is so high that full-time, minimum wage employees were unable to pay for basic necessities. By raising the minimum wage, proponents say, these same employees should have more money in their pockets to spend on things they need. Some supporters speculated that minimum wage workers would be more motivated and productive if paid more.

California Minimum Wage Schedule

January 1, 2017

26 or More 25 or Fewer Employees Employees $10.50 $10.00

January 1, 2018

$11.00

$10.50

January 1, 2019

$12.00

$11.00

January 1, 2020

$13.00

$12.00

January 1, 2021

$14.00

$13.00

January 1, 2022

$15.00

$14.00

January 1, 2023

$15.00

$15.00

January 1, 2024

Indexed

Indexed

Source: California Labor Code Section 1182.12

Opponents of the minimum wage increase were largely concerned with the effects on businesses and the sustainability of a large increase. Ruben Gonzalez, from the Los Angeles Chamber of Commerce, was quoted by local media on the day the Los Angeles ordinance was enacted, saying that businesses will have to implement a 50-60 percent increase in wage costs over a four or five, at most six-year period. He pointed out that most families would have difficulty with such a steep rise in their expenses in that short time frame. Several commentators note that it

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may be particularly difficult for small businesses to absorb the higher wages since many employ a small, primarily hourly staff, and operate on thin cash flow margins.

The minimum wage increases in Los Angeles and statewide in California are fairly recent and thus the effects are not yet clear. Seattle began a series on minimum wage hikes in 2015. The city commissioned a team of researchers from the University of Washington to study the effects of the wage hike. The research team had access to extensive administrative records on employment, hours, and earnings from the Washington Employment Security Department. It attempted to answer two questions: Is Seattle better off than before it raised the minimum wage? Is Seattle better off than it would have been if it had not adopted a higher minimum wage?

The minimum wage study team published an analysis of the first phase of the wage increase, from $9.47 to $10.00 or $11.00 in 2016. They found Seattle’s low-wage workers did relatively well after the minimum wage increase, but attributed that largely to the strong regional economy. The team published a second report in 2017, incorporating an additional year of data and including a second increase to $13 an hour. They found that low-wage workers saw a three percent increase in wages, but also a 9 percent decrease in hours worked - a net loss

of six percent in income earned. The end result of the minimum wage increase, the University of Washington study concluded, was an average net loss in income for minimum wage workers of $125 per month. The report also estimated that there were about 5,000 fewer low-wage jobs in the city than there would have been without the law.

A competing study by researchers from University of California, Berkeley – also commissioned by the City of Seattle – found that found Seattle’s minimum wage law led to higher pay for restaurant workers without costing jobs in 2015 and 2016. The Berkeley researchers criticized the methodology of their University of Washington counterparts for not properly taking into account Seattle’s economic boom for certain methodological choices such as excluding multi-site businesses. Both reports have been gotten considerable attention in the press and are being vigorously debated.

It is hard to know what all of this means for workers in the Inland Empire. The California Legislative Analyst’s Office estimates that 3035 percent of the workers in San Bernardino County and Riverside County are low-wage earners, making less than $12.50 per hour. It remains to be seen if minimum wage hikes will realize the goal of increasing earnings for those who need it most. 

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INLAND EMPIRE OUTLOOK -- Rose Institute Articles Fall 2017 – IE Looking Up • Riverside County’s New CEO Has Big Plans • Things Are Looking Up in the IE • Legal Challenges Facing Nonclassroom-based Charters in CA Spring 2017 – We Remember, San Bernardino, December 2, 2015 • California’s Many and Varied Attacks • A Coordinated Response: Law Enforcement Response to the San Bernardino Attack • Emergency Medical Response • Legislative Responses to Terrorism: California’s History Fall 2016 – Decision 2016 • Rose Institute Video Voter Series • Implementation of the Local Control Funding Formula in Riverside County • Prop 58 and Bilingual Education • Robust Renewables: SB 350 and Its Potential in the Inland Empire Spring 2016 – ONT Free at Last • Timeline of Ontario International Airport • A Conversation with the OIAA Board • Challenges Remain for ONT • Logistics Flies High Fall 2015 – Clear Skies • Ontario Airport Comes Home • The Many Lives of March ARB

Fall 2013 – Clouds on the Horizon • Pension Liabilities Loom Large • Colton Crossing: Public-Private Partnerships Spring 2013 – New Political Geography • A Revobluetion: New Political Geography • Health Care in Riverside County: A ProceduresBased Approach for the Future • Unwinding Redevelopment Agencies Fall 2012 – Sober News from San Bernardino • Municipal Bankruptcy • Changes in the Air at ONT • Council of Governments: SANBAG and SCAG Spring 2012 – Solid Employment Gains • Councils of Government: Effective in the IE • Will Professional Football Return to SoCal? Fall 2011 – Waiting For Recovery • 2010 Census Shows Large Increase for Inland Empire • New Maps, Big Changes For the Inland Empire • Contract Cities: An Alternative Model Spring 2011 – Working Toward a Recovery • ONT: In Crisis and At a Crossroads • A First Look at IE Census Data • Renewable Energy’s Future in the Inland Empire • Redevelopment Authorities Under Fire

Spring 2015 – Inland Innovation • Body Cameras May Be Good For Police and Public • Riverside Renaissance

Fall 2010 – Rebuilding After the Recession • How exports can revive the IE economy • New Medical School Will Improve Healthcare and the Economy • Is IE District Poised to Elect Tea Party Candidate?

2014 Fall Inland Empire Outlook – Inland Empire Challenges • San Bernardino: Two Years into Bankruptcy • Tough Start for IE’s Newest Cities

Spring 2010 – Looking To the Long Term • Riverside-An Innovative ‘Capital City’ • Agua Caliente Seeks to Diversify • IE State Legislative Races in 2010

Spring 2014 – Big Changes for Corrections • Prison Realignment • Water in the Inland Empire

Winter 2010 – A Time of Crisis and Promise • Inland Empire: Trade Gateway of SoCal • Ontario: The IE’s New Urban Center • Increased IE Population Means More Reps • Congressional Races to Watch in 2010 • Cost of (Census) Undercount for Inland Empire

www.RoseInstitute.org

Inland Empire Outlook Spring 2018 Student staff. From left: Bruno Youn ’21, Zach Wong ’19, Rachel Alaynick ’20, Naseem Nazari ’21, Charlie Harris ’19

EDITORI A L B OA RD

About the Rose Institute

Andrew E. Busch, PhD Director

Ken Miller, Jd, PhD Associate Director

Bipasa Nadon, Jd Assistant Director

Marionette Moore Administrative Assistant

PUBLIC ATIO N S TA FF Rachel Alaynick ’20 Charlie Harris ’19 Naseem Nazari ’21 Zach Wong ’19 Bruno Youn ’19

The Rose Institute of State and Local Government at Claremont McKenna College was founded in 1973. An unmatched resource for information on California state and local governments, the Institute maintains extensive demographic, economic, and political databases on the Southern California region. Under the direction of nationally-recognized faculty and staff, students from Claremont McKenna College play a significant role in researching, interpreting, and presenting data. The Institute specializes in four areas: survey research, criminal justice analysis, demographic studies, and legal and regulatory analysis.

The mission of the Rose Institute of State and Local Government is to enhance the education of students at CMC, to produce high quality research, and to promote public understanding on issues of state and local government, politics, and policy, with an emphasis on California. The Institute employs close to 30 student research assistants each year, almost all of whom stay for the duration of their time at Claremont McKenna College.

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