In less than three weeks the Los Angeles school officials must show, under state law, how they will carry out the steepest budget cuts in a generation after county education authorities concluded they lack confidence in district leadership to prevent bankruptcy.
The options are painful and stand to dramatically down-size the nation’s second-largest school district, whose leaders are now on a legal deadline to show how they will erase a multi-billion dollar projected deficit. Employee furlough days, campus closures, job reductions and thousands of layoffs are among the looming cuts — actions the school board has largely postponed until July 1, 2027.
The county instructions require L.A. Unified to detail specifically how it will carry out the future cuts; otherwise the county superintendent will appoint a trustee with authority to veto spending decisions. If the district were to become insolvent, then an appointed administrator would take all power away from Supt. Andrés E. Chait and the Board of Education — an action without precedent in one of the nation’s largest school systems.
The warnings have sent shockwaves through the district and angered employee unions.
Parents and employees in online forums expressed a range of views, including disbelief, hand-wringing and I-told-you-so — with a wide distribution for blame.
District officials have been virtually silent about the directives from the Los Angeles County Office of Education, or LACOE.
“We have discussed this matter” with the county office “and appreciate their ongoing partnership and guidance and will work with the LACOE to ensure compliance with their requirements,” the statement said.
District officials said they were assured that busting the August 7 deadline would not lead to immediate consequences — provided they are working to address concerns: “We will remain in conversation with LACOE to ensure our financial plan remains responsible, transparent, and aligned with our long-term commitments.”
Within the jargon and legalese of a seven-page letter, county Supt. Debra Duardo essentially rebuked district budget decisions and a “fiscal stability plan” the school board approved June 16 and sent to the county for review.
The county rejected the plan, saying it lacked specificity and necessitates “an elevated level of fiscal oversight.” Among a list of eight acute budget issues, the July 2 letter faulted the L.A. Unified Board of Education for:
- Approving costly labor contracts exemplifying “mismanagement of the collective bargaining process.”
- A failure to carry out earlier approved budget cuts that “erodes confidence.”
- Raiding funds from a health benefits trust against “its own staff’s fiscal advice.”
As a result of these and other district actions, Duardo said, L.A. Unified faces a cash shortfall of $231 million by November of 2027, gradually accumulating a $3.585 billion deficit by June 30, 2029.
Two of the seven school board members asked to comment on the situation responded to The Times.
Board member Tanya Ortiz Franklin said she understands the county’s position.
“I think they’re right to to be concerned that our plan won’t come to fruition,” said Franklin, who opposed dipping into the retiree benefits fund. She also accepts the county’s analysis of the labor agreements, which all seven board members approved — but said employees deserve to be paid more even though additional future layoffs would be one outcome of the increased compensation.
Board member Kelly Gonez also defended the new contracts, which averted an April strike. She said L.A. Unified is not getting enough credit for previous major budget reductions — to central office staffing, for example — that it has made. The financial effects of declining enrollment, she added, were exacerbated by Trump’s immigration enforcement.
Newly appointed Supt. Chait — who will give his first “state of the district” address on Tuesday — said in a statement that parents would see nothing out of the ordinary when schools open in the fall.
Under the district plan sent to the county, that’s largely accurate: The major cuts are pushed into next year, with the hope that higher state funding will arrive in time to moderate the cutbacks.
Teachers union, SEIU push back
Gloria Martinez, the new president of United Teachers Los Angeles, called for revenue increases at the ballot box, raising some property taxes and for Gov. Gavin Newsom to release more funding for schools statewide.
“Labor contracts are not the issue,” Martinez said. “For far too long, it has been expected that school districts balance their budgets on the backs of students and teachers, when in reality school funding is determined at the state level.”
Max Arias, executive director of Local 99 of Service Employees International Union, focused on past projected shortfalls that did not result in catastrophe.
“For decades, dire predictions of financial collapse at LAUSD have been used to justify denying dedicated school workers the wages and resources they deserve,” said Arias, whose unions represents the largest number of non-teaching workers. “Those predictions have repeatedly failed to materialize.
“It is deeply inhumane, and outright union busting, for the County Office of Education to scapegoat the frontline school workers whose collective bargaining agreements have only begun to lift them out of poverty.”
In principle at least, L.A. Unified’s already adopted plan calls for more than 6,000 job reductions, slashing up to $500 million per year in extra services for schools with the greatest needs and seven unpaid furlough days for each worker.
But the lack of detail in the plan raised county concerns in part because $231 million in spending cuts from the previous stabilization plan “remained unexecuted and unidentified,” Duardo wrote.
“It is easy to put numbers on paper,” said Professor Jon Fullerton, executive director of the USC EdPolicy Hub. “The question is whether the reduction numbers are realistic and whether the district will act when the time comes to put specifics behind them. Given that last year’s fiscal stabilization plan was not implemented — according to the county — it is not unreasonable to be skeptical that this year’s more draconian plan will not be implemented either.”
L.A. Unified’s revised plan must identify “the exact actions, responsible departments, timelines and measurable performance metrics for executing each proposed expenditure reduction or revenue enhancement,” Duardo’s letter said.
The district also must state “who is accountable for execution, and the specific milestones that will mark successful completion. Generalized or unsupported action items will not be sufficient.”
What caused the LAUSD budget crisis?
L.A. Unified avoided layoffs for several years because it fared especially well in receiving pandemic relief funds and then had trouble spending all the money, amassing billions of dollars in reserve, edging above $6.4 billion on June 30, 2024 in a year with a total budget of $18.8 billion. These reserves prompted outrage from union leaders, who wanted these funds quickly applied to higher wages and new hires.
But much of the one-time funds did ultimately go to increasing salaries, maintaining and expanding health benefits and hiring ongoing staff. Meanwhile, district enrollment — the basis for most funding — declined steadily, with especially steep drops during the pandemic school closures and since the start of the immigration crackdown of the second Trump administration.
“The District has not adjusted staffing levels to match these declines,” Duardo wrote.
Also hurting the district is the cost of sexual misconduct settlements — a factor affecting public agencies up and down the state. The Board of Education authorized the sale of $750 million in bonds to settle hundreds of cases dating back decades.
By 2025, with the huge reserves eroding, the county required a first fiscal stabilization plan, which included significant layoffs. But earlier this year the district backed down from hundreds of the planned layoffs under union pressure.
How new union contracts impacted LAUSD budget
The teachers union contract approved in June adds more than 450 new positions, including attendance counselors, psychiatric social workers, school psychologists, and other counselors.
Separately, the largest union for non-teachers won expanded hours in for its workers, which allowed many part-time employees to qualify for the first time for health benefits for themselves and family members.
The county did not question the value of the employees or their need for higher income and health benefits; they simply challenged the district’s ability to afford them.
Prior to the school board’s June approval of the new labor contracts, the Duardo issued “express written warnings” that the “agreements were not affordable,” she recounted in her letter.
The board’s vote “has made certain the District’s structural deficits continue.”
Based on current tax revenues, increased state funding is likely over the next two years, but that is unlikely to solve all the district’s budget problems.
“It’s serious,” Franklin said. “We have to cut $3.5 billion over the next three years. Some people would say that’s fear-mongering. That’s not true.”
Howard Blume
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