The Los Angeles Unified School District is barreling toward insolvency after the school board approved over a billion dollars in union contracts while ignoring its own CFO, proving once again that the government education monopoly always pays the adults and leaves the kids with the bill.
With a $12.9 billion budget and students who still can't read, LAUSD has been given 45 days to fix its financial mess. The Los Angeles County Office of Education issued a rare "Lack of Going Concern" determination on July 2, warning the nation's second-largest school district may not be able to meet payroll. County Superintendent Debra Duardo didn't mince words: "They have some serious financial concerns that they need to address. It's very serious."
Follow the money. The district now serves roughly 390,000 students—half as many as it did in the early 2000s—meaning state funding is collapsing alongside enrollment. Yet on June 16, the school board approved massive labor agreements that will add roughly $1.13 billion in costs this school year alone, rising to $1.44 billion by 2027-28 after double-digit raises for teachers, aides, and custodians. The county noted the board approved these contracts despite repeated warnings they were unaffordable.
On the very same night, the board overruled its own chief financial officer and withdrew $175 million from a retiree health benefits trust fund, a move the county said "further erodes confidence" in LAUSD's budgeting. The district also failed to execute about $231 million in planned budget cuts. Projections now show the district's cash balance plunging more than $230 million into the red.
Superintendent Andrés Chait is working to keep up appearances. "This determination does not change our commitment to students, families or employees," Chait said, insisting schools will "operate as normal." Educational consultant Jamie Bacall isn't surprised, telling KABC that the worst-case scenario is a state takeover and receivership, which strips local control over curriculum and class size. Nicolle Fefferman, co-founder of Parents Supporting Teachers, argued any cuts should be made "as far away from our school sites as possible."
For now, the county has assigned fiscal expert Octavio Castelo to work with district leaders. If LAUSD fails to correct its finances, a state bailout would strip the elected board of its authority altogether.
A $12.9 billion budget, and LAUSD still can't balance a checkbook. The only question left is whether Sacramento will force a state takeover, or just write another blank check to bail out the establishment that broke the system.
