LAUSD faces lawsuit claiming the district defrauded taxpayers

CBS News

11-02-2025

A lawsuit filed against the Los Angeles Unified School District and Superintendent Alberto Carvalho on Monday claims they defrauded taxpayers over millions of dollars in funding.
The district's former superintendent is spearheading the lawsuit. Austin Beutner and Hollywood's biggest stars helped get nearly a billion dollars set aside specifically for new art teachers and classes, through Proposition 28.
More than two years ago, artists and educators across California came together to reverse declining arts education through a new state law. The change would come from Prop 28, which passed overwhelmingly across California, with 70% of LA County in favor of it.
Now, there is nearly $1 billion in additional art funding for all schools, with a larger portion promised to underserved communities and a full 80% specifically earmarked to hire new art teachers.
However, after LAUSD got the largest arts funding check in the state parents began noticing a problem.
"The district wasn't doing what was intended with the money," parent Vicky Martinez said.
Former Superintendent Beutner said the district received $77 million for new teachers.
"$77 million and how much of that went to new teachers? Beutner said while making a zero with his hand.
Beutner and heads of the LAUSD's largest unions said zero new teachers meant zero real growth in arts education — the very reason he wrote and they backed the law.
"It's a loss of opportunity," SEIU Local 99 Executive Director Max Arias said.
The loss has led to this lawsuit from parents such as Martinez and Beutner. The legal action says Carvalho and the district "defrauded the State of California and its taxpayers' over "millions of dollars in funding" that was not used to "hire new art teachers" and that "hundreds of thousands of students have been harmed."
The lawsuit claims that LAUSD's own data proves that almost no new teachers were hired. The majority of zeroes listed in the complaint show little or no change in teacher hours, year-over-year, for some elementary schools.
"They should have hired more than a thousand teachers," Beutner said.
Before filing the suit, Beutner and his associates sent a letter to the governor and state leaders last May, claiming that this "violate(s) the law."
By June, the Los Angeles School Board demanded answers, telling Superintendent Carvalho, "We must be able to show the public that we are complying with funding regulations."
"Parent groups, schools, art teachers, every single time I'm getting these calls and complaints that it's not happening like it should be happening at the schools," LA School Board member Scott Schmerelson said.
Carvalho said, "The district prioritized the use of Prop 28 funds to cover existing staff as well as hire new staff."
"He says he used the money to cover, to pay existing staff," Beutner said. "The law says you may not use the money, in plain language."
The money they believe was illegally "redirected" to other things such as "to increase senior staff salaries" claiming their pay has "increased fivefold since 2010, while student enrollment has plunged."
"We want to make sure the money that's supposed to go to the schools gets there," Beutner said.
This includes the school Martinez's son attends.
"It would mean he would have no arts in the middle school, high school," she said. "In his middle school, there's none."
She added that she just wants more art, less questionable math, and for her son to dance and not suffer any sidestepping around his opportunities.
"It's sad because you want the best for your kids," Martinez said. "I'm not asking for more. I'm asking for what's rightfully theirs."
LAUSD said it had increased the total arts budget, beyond $77 million, and nearly doubled staffing.
The district issued a statement with their explanation:
"Los Angeles Unified recognizes the profound importance of the arts and prioritizes arts instruction, programming and investments. We are committed to providing arts exposure for every student in Los Angeles Unified regardless of their zip code.
When Prop. 28 was approved by voters in 2022, the law required school districts to increase arts funding to provide equitable access to the arts districtwide rather than at individual school sites. Los Angeles Unified has done just that by increasing our total arts budget from $114 million in 2022-23 to over $206 million in 2023-24. Additionally, on average, schools saw an $82,000 increase in their total arts budget in 2023-24 compared to 2022-23. Arts staffing also increased from 273 full-time employees (FTE) in 2022-23 to 520 in 2023-24, nearly doubling. With additional funds being allocated for elementary arts teachers, the total FTE in 2024-25 is projected to be 726. This represents an increase of 206 FTE (~40%) from 2023-24. The District consulted and received guidance from CDE in how we are allocating Prop. 28 funding.
Some have questioned how the District has allocated funding by identifying school site variances, but this is a misunderstanding of the law, or a disagreement with the stipulations of Prop. 28 itself and how the District determined to allocate other arts funding. Per CDE guidance, the determination of supplement/supplant is tested at the District level rather than at the individual school level. Further, though some individuals may have promised the public that every school across California would see an increase in arts funding, this was not included in the requirements of Prop. 28. Families are welcome to view their school budgets through our school directory website.
Important background: School variance in expenditures is due, in part, to how the state calculates Prop. 28 funding and is adjusted as school enrollment changes. The CDE's Prop. 28 allocation is based on $111 per enrolled student and $78 for each student receiving free or reduced-price meals (FRPM)."