LA County officials say LAUSD risks insolvency at current spending levels

L.A. County education officials have warned Los Angeles Unified leaders that the district is at risk of financial insolvency — and the loss of local control — without immediate changes to the budget for next year.

“The financial reality before the District raises serious concerns regarding its ability to meet its financial obligations,” wrote Debra Duardo, Los Angeles County Superintendent of Schools, in a July 2 letter.

The letter said the district’s new labor agreements — which will cost an additional $1 billion next school year— along with an existing budget deficit and declining enrollment, create a “severe fiscal event.”

The county warned that the district is projected to run out of money as soon as November 2027 without changes to its spending.

LAUSD is spending more money than it brings in and the last three budgets relied on billions of dollars in reserves. The board this summer approved a fiscal stabilization plan to reduce spending that includes furloughs, the elimination of thousands of jobs and cuts to the trust that funds retiree health benefits.

The county gave the district until mid-August to revise its budget and appointed a fiscal expert to assist. The county could grant that advisor the power to overrule the board and the superintendent if the district does not make sufficient changes.

"This determination does not change our commitment to students, families or employees," Superintendent Andrés Chait said in a statement. "Our schools will continue to operate as normal while we work closely with LACOE to strengthen our long-term financial outlook. We welcome the opportunity to collaborate and remain focused on making thoughtful, responsible decisions that protect classroom instruction and student success."

The LAUSD's Board's next meeting is a closed session scheduled for 10 a.m., Tuesday, Aug. 11.