Los Angeles County Gives LAUSD 45 Days to Address Projected Budget Shortfall

The Los Angeles County Office of Education concluded that LAUSD shows severe signs of insolvency and could be $231 million in the red, unable to make payroll, by November 2027. A fiscal expert is already working with the district.

If LAUSD fails to satisfy county officials, the next step could be a fiscal adviser with authority to block school board spending decisions. A state bailout could eventually strip the elected board of much of its power. The warning signs were there for everyone to see.

In April, after tentative labor agreements were announced, the author wrote that LAUSD was buying labor peace with money it did not have. In June, before the school board formally approved those agreements, county officials warned they were too expensive. The board approved them anyway.

Less than a month later, the county’s warning became a formal finding. The contracts add roughly $1.13 billion in costs this school year, climbing to $1.44 billion in 2027-28. They include a 24% increase over three years for SEIU support staff, nearly 14% over two years for teachers and almost 12% over two years for administrators.

At the same time, the district failed to carry out planned cuts. The board instead overruled its own chief financial officer and pulled $175 million from a retiree health trust fund to make the budget work on paper. The county said those decisions further erode confidence in LAUSD’s financial management.

Enrollment has been falling for years. The district now educates roughly half as many students as it did two decades ago. Census Bureau data show LAUSD spent $25,631 per student in fiscal 2024, roughly double a decade earlier.