LAUSD confronts looming fiscal crisis in debate over $18.8-billion budget

Los Angeles Times

23-06-2025

The Los Angeles Board of Education on Tuesday is slated to vote on an $18.8-billion spending plan for the next school year that officials say will keep cuts and layoffs at bay for exactly one more year.
Union leaders and activists, meanwhile, want more from a district reserve that still contains several billion dollars. This is evidence, they say, that L.A. Unified can pay higher wages and spend more to enhance programs for Black students and immigrants — efforts that defy President Trump's push to end programs that promote racial or ethnic diversity.
The budget proposed last week would spend about $400 million more than the 2024-25 academic year — but about $200 million less than the year before that — when school systems were flush with one-time state and federal pandemic aid.
For parents and workers, the big picture is that L.A. Unified services and staffing for next year will look a lot like the year that just ended — a better outlook than in some districts, including San Francisco Unified and Oakland Unified. However, L.A. officials said the fiscal 'planning year' ahead will focus on identifying future cuts.
Revenue next year is currently calculated at $15.9 billion, nearly $3 billion less than what the district plans to spend. The district will continue to draw down an ending balance that stood at nearly $7 billion last year and now stands at about $4.8 billion.
Absent cuts, by the end of 2027-28, the district will be financially underwater, officials say.
With a spending outlook in the red, state law requires the Board of Education to approve a 'fiscal stabilization plan' and send it to the L.A. County Office of Education, which is responsible for oversight to keep school systems from going bankrupt.
But the district's workers also face financial pressures. They want raises and preserved health benefits. The district has offered a 2% raise to one of its largest unions, which union leaders say is not nearly enough. That 2% offer has not yet been incorporated into the district's budget projection.
Just like other school systems, L.A. Unified has had to deal with the end of pandemic relief aid that was paying for added staff and recovery programs.
Among the factors that helped L.A. Unified more than other school systems was a nearly $500-million boost to L.A. from the Biden administration. This was reimbursement for a comprehensive and costly COVID-19 testing program that other school systems did not undertake.
In addition, L.A. Unified never hired hundreds, maybe thousands, of people it had hoped to bring on via pandemic relief aid, including mental health workers, nurses and counselors — mainly because of shortages in those high-demand fields.
The state has helped by delaying the financial hit of having fewer students. L.A. Unified — like many school systems — has declining enrollment, which eventually will lead to decreased funding.
Senior officials say no services to students are being cut and no full-time workers are losing employment and benefits — although some people are changing jobs and making less money. This will not be the story in the 2026-27 academic year.
Other school districts have not been so fortunate.
The Santa Ana Unified School hasapproved 262 layoffs, including teachers, counselors and other staff. The district has experienced a 28% enrollment decline over the last decade and has had to confront a $154-million budget deficit.
Other districts with layoffs include Berkeley Unified, Pasadena Unified, Coachella Valley Unified and San Ramon Valley Unified. Still, other school systems made steep budget cuts last year.
For L.A. Unified, significant cuts are targeted to start July 1, 2026. Schools are likely to lose workers — possible examples would be teacher aides or supervision aides — when the individual school is limited by its own budget restraints. These workers had been funded by the central office. This is expected to save at least $60 million a year.
As many as 10 schools or, at the very least, underused buildings at various campuses would be closed — saving $30 million per year. Shrinking central and regional offices is expected to save $325 million over two years.
The projected budget cuts add up to $1.6 billion over two years — which is not enough to end the deficit spending but keeps the district out of the red for three years, which is all that state law requires.
L.A. Unified hired permanent employees with one-time COVID-19 relief funding that exceeded $5 billion. Without additional funding, workers will be laid off. There have been no specific discussions about which workers would lose jobs, but Supt. Alberto Carvalho said the goal would be to keep cuts as far away from the classroom as possible.
A major — and largely unaccounted for — cost in the last year has been payouts related to sexual misconduct claims dating back as far as the 1940s. Last year alone, L.A. Unified paid out more than $300 million in claims. These claims will be funded through special bonds to stretch the financial burden across 15 years, but the cost still could be $50 million per year or more.
Declining enrollment means state funding will decrease. At the same time, many costs have risen.
This year, the district had about 408,083 students in transitional kindergarten through 12th grade. Next year's number is expected to be about 396,070, and then about 385,091 the year after that.
The school system also approved larger wage packages for employees than many other districts. Another cost is unfunded retiree health benefits. There are more than 35,000 district retirees covered by post-retirement benefits. In 2023-24, for example, these expenses added up to about $331.8 million.
The budget is a complex document — with money streaming in or drying up from sources with different spending rules. So, although an elementary school with declining enrollment is struggling to hold on to all of its teachers, funding for after-school programs and field trips is enormously expanded compared with a decade ago.
But in the main, the district's priorities and spending are fairly consistent.
At this time of year, the Board of Education is under tremendous salary pressure from unions. No employee group is satisfied with the 2% wage increase offer.
Local 99 of Services Employees International Union says the district has been underhanded by keeping many employees working fewer than four hours per day. When workers reach four hours per day, they qualify for health benefits. United Teachers Los Angeles says early-career teachers need a major pay hike.
A coalition of advocates wants more money targeted toward schools that have the highest needs — even if that means less money for other schools. District spending already works this way, but the advocates say the current distribution does not go far enough.
The teachers union and a coalition of allies are especially pushing for a pro-immigrant, pro-Black student agenda, leaning hard on school board members they helped elect.
Last week, Carvalho tried to placate them — and his board — by putting an additional one-time augmentation of $50 million into the Black Student Achievement Plan, or BSAP, for the 2025-26 school year, bringing funding to $175 million. BSAP provides extra psychiatric social workers and academic counselors, among other enhancements.
Under an agreement with the Biden administration, the benefits of BSAP have to be available to all students with similar needs, not just Black students. Some of the activists want the district to return BSAP to a Black-only focus.
Immigrant families are expected to benefit from $4 million more for student centers, whose services can include legal referrals and other family support. Activists wants more.
There's already a sizable budget for making campuses greener, but Carvalho has agreed to add an additional $1 million a year over the next three years.
So far, Carvalho's budget moves have been met with uneven support from school board members — a slim majority of four voted last week to approve the fiscal stabilization plan.
Former L.A. schools Supt. Austin Beutner is leading a group that is suing L.A. Unified, accusing the district of violating voter-approved Proposition 28 — which he wrote and which provides new arts funding for every public school in California.
That infusion for arts instruction was supposed to begin in the 2023-24 school year. Under the rules, the new money had to be added to arts instruction funding on top of what a school already was providing. But L.A. Unified parents and staff noticed no change in the level of arts instruction at many schools.
Under pressure, Carvalho set aside more money for the arts — and he said he's also adding more in the proposed budget.
The critics are not satisfied — and said it's likely that the district either must return millions of dollars in arts funding to the state or use it as intended.
District officials insist that their use of arts money has been legal and appropriate.
Separately, a group of student, parent and union activists continues to call for the elimination of the school police force — which a different and large contingent of parents wants to maintain and even expand.
Projecting ahead three years takes in many uncertainties — including potential cuts from Trump and a Republican-controlled Congress.
Trump's proposed education budget lays out cuts that would affect L.A. Unified. At-risk programs or grants include those for teacher training, and those helping students who are learning English, who are children of migrant workers or who are experiencing homelessness. The district has set aside $46 million for that possibility.
A revived state economy could erase the need for cuts. At the moment, however, the state budget appears to be trending in the wrong direction.