United Teachers Los Angeles president Alex Caputo-Pearl (left) speaks at a gathering of Measure EE supporters after polls close on Tuesday evening, June 4, 2019, as L.A. Unified School District Superintendent Austin Beutner (center, at back) and L.A. Mayor Eric Garcetti (right) look on. (Kyle Stokes/KPCC)

Los Angeles Unified School District leaders are going to need a new way to pay for the promises they made to end last January's teachers strike.

Election night results showed Measure EE, an LAUSD proposal for a new tax to generate operating revenues for the district's schools, falling short of the necessary two-thirds majority it needed to pass.

The outcome is a huge setback for the LAUSD officials and United Teachers Los Angeles who reached a deal to decrease class sizes and hire more staff for the sprawling school system despite, district officials said, not having the money to pay for all of it.

Because striking teachers wanted these changes — and because the teachers strike itself was broadly popular — L.A. Mayor Eric Garcetti urged the district to agree to the union's demands in hopes voters might be willing to pick up the bill.

They were not. As of early Wednesday morning — with 100% precincts reporting, but additional vote-by-mail ballots to still count — the measure hadn't gained approval from even half of the voters.

Opponents of Measure EE — chiefly, business and real estate groups who would have shouldered a large burden under the proposed 16-cent-per-square-foot parcel tax — had argued LAUSD would not be good stewards of the $500 million a year the tax would have generated, claiming the revenues would go to remedy LAUSD's projected $576 million operating deficit before they ever reached the classroom.

"This is an example and a lesson learned," said Tracy Hernandez, CEO of the L.A. County Business Federation, "that you cannot just rush to the ballot, try to pull the wool over voters' eyes. They're smarter than that."

"We hope then the district does take it seriously and get back at the business of righting the district," added Hernandez, also a representative for the "No on EE" campaign. "We're most concerned with our kids and the educational outcomes."

The measure appeared to be on track for defeat despite the support of Garcetti, who helped broker the strike-ending compromise between LAUSD and United Teachers Los Angeles (UTLA), and whose influence helped glue together a strange-bedfellows coalition of parcel tax supporters. (Charter school advocates had joined their usual foes, teachers unions, in support of Measure EE.)

"On a day which I know we're supposed to be down, I can't help but still being extremely hopeful," Garcetti told this unusual coalition gathered at a press conference at Western Avenue Elementary in South L.A. "I know I'm not going anywhere and I know they are not going anywhere."

"We're ready to keep the fight going," said teachers union president Alex Caputo-Pearl at the same press conference Wednesday afternoon.

"We got some wins that build the foundation for the next steps," Caputo-Pearl added. "The funding for public education is on the tip of everyone's tongue in Los Angeles and in California. That was helped by the Measure EE campaign ... The strong coalition of unlikely partners to move this forward— we'll continue with that."

"We're going to celebrate having brought the city of Los Angeles together," the UTLA leader said, "and get ready for whatever the next steps are."

And what might those next steps be? Many statewide political groups saw the Measure EE campaign as a dry run for a so-called "split roll" proposal on the November 2020 ballot, which would modify California's Proposition 13 to force commercial properties to pay more property taxes to fund local governments, including school districts.

FOR LAUSD, NOW WHAT?

Measure EE's apparent failure will complicate LAUSD officials' task of funding the strike-ending deal with UTLA.

The new teachers contract, approved last January, calls for modest, across-the-board decreases in class sizes and for hiring more nurses, counselors and librarians over the next three school years. This package will cost $175 million over the next two years — and another $228 million starting in July 2021. District officials have said they don't have all the money needed to cover this third year of the contract.

First, though, LAUSD officials have to successfully navigate the next few weeks.

LAUSD is not in immediate danger of running out of cash; the district projects ending the year with more than $1.8 billion in the bank.

But the L.A. County Office of Education, which monitors the district's finances, is more concerned at the rate the district is burning through money. District officials project they'll spend their available balances so fast that by the 2020-21 school year, they'll be forced to dip into, essentially, emergency reserves.

Teachers union leaders have long been skeptical of district projections that, they argue, are overly pessimistic.

Still, County regulators have given LAUSD officials until July 1 to submit a three-year budget that avoids this scenario. if the district can't do that, county officials have threatened to appoint a "fiscal advisor" — a powerful overseer who can veto school board decisions and potentially force difficult budget choices.

SHIFTING POLITICAL WINDS

LAUSD has seen tight budgets for years. Student enrollment — which helps determine the district's state funding level — has been declining steadily as healthcare and benefits costs creep upwards, slowly squeezing the school system's finances. (Competition with L.A.'s growing charter school sector certainly hasn't helped.)

But until recently, LAUSD leaders have been reluctant to ask voters to help alleviate the squeeze. Since 1997, LAUSD voters have approved five property tax increases to fund school construction — but have not passed a tax increase to fund LAUSD's operations.

In July 2018, internal LAUSD polls said a parcel tax proposal could garner as much as 65% of the vote — not quite the two-thirds majority it would need, but within striking distance.

At the time, LAUSD staff and some school board members took a glass-half-full view of this poll. They used the numbers as justification not to place the proposal on the November 2018 ballot, fearing the district was unprepared to mount a winning campaign.

Then, the teachers went on strike in January, shifting the political winds and creating new urgency for LAUSD officials to find more funding.

Suddenly, these polling numbers didn't look so bad.

A new LAUSD-commissioned poll last winter showed essentially what the July 2018 survey found — that 65% of respondents would "probably" or "definitely" vote yes on a parcel tax.

But this time, LAUSD board members used the numbers as justification to proceed, voting on February 28 to send Measure EE to the June 4 ballot.

WHO SUPPORTED 'EE' & WHO OPPOSED IT?

An unusual coalition came together in hopes of passing the parcel tax.

The teachers strike had made foes out of UTLA's Caputo-Pearl and LAUSD Superintendent Austin Beutner; the two had dueled through the press and across the bargaining table.

But Measure EE put Beutner and Caputo-Pearl on the same side. Not only did they bury the hatchet; they frequently appeared together at campaign appearances and press interviews to stump for the parcel tax.

Labor unions — including UTLA and SEIU Local 99, which represents non-teaching LAUSD employees — spent heavily on campaigns aimed at passing the parcel tax. But so did major backers of charter schools, who often oppose teachers unions' political causes.

Pro-charter philanthropist Eli Broad gave at least $350,000 to the "Yes on EE" campaign. Advocacy groups like Speak Up and Parent Revolution — both targets of teachers union criticism — received campaign funds to organize part of the "Yes on EE" ground game.

As of May 19, parcel tax supporters had raised at least $5.4 million. Though Measure EE supporters have yet to file comprehensive reports covering the campaign's final weeks, a quick addition of more recent reports of large-dollar donations show supporters may have reeled in at least another $2 million as Election Day approached.

Opponents of Measure EE rallied behind organizations like the L.A. County Business Federation ("BizFed"), L.A. Chamber of Commerce and anti-tax groups like the Howard Jarvis Taxpayers Association. Anti-parcel tax campaigns raised more than $1.4 million from developers, realtors and hospital groups.

Though they were out-fundraised, parcel tax opponents had a smaller hill to climb — they only needed one-third of those who turned out to vote "no" — and were able to buy advertising time on broadcast television.

Garcetti had harsh words for the business groups who opposed Measure EE at the Wednesday afternoon press conference.

"For those who walked with other coalitions, who said, 'Yeah, I'm a good progressive but I just don't think this is the right thing,'" Garcetti said, "and then locked arms with Donald Trump's biggest funder in the state and the Howard Jarvis Taxpayers Association, which used to be about the little guy but now is really about corporate real estate interests —we've got fights coming. And you're right, we're going to punch back."

When asked about this criticism, Hernandez said the business community has backed Garcetti on other initiatives — including tax increases to fund transit and homeless services — but felt Measure EE lacked sufficient guarantees that the money would be used wisely.

Opponents had also taken steps to derail the measure without spending on advertising. The Howard Jarvis Taxpayers Association sued, claiming LAUSD officials had made substantive changes to the ballot text without a vote of the school board.

That lawsuit is set for a hearing in L.A. Superior Court on Thursday. With the outcome of Tuesday night's vote, the result of the case appears to matter a lot less now.

UPDATES:

8:15 a.m.: This article was updated with the latest available results.

4:35 p.m.: This article was updated with details from a Wednesday afternoon press conference held by supporters of Measure EE.

This article was originally published at 12:05 a.m.