Los Angeles Schools Run Out of Other People’s Money
Covid dollars from Washington turbocharged hiring at public schools and papered over their structural budget problems. But now that the federal money is drying up, the red ink is starting to gush. According to the Labor Department’s monthly jobs report on Friday, local government education shed 49,600 jobs in July—the leading contributor to the nation’s 23,000 employment decline.
Ground zero is the Los Angeles Unified School District, the country’s second largest. Its overseers at the Los Angeles County Office of Education last month warned that the district meets the criteria for a “Lack of Going Concern” designation. In the business world, the terminology means a company is at risk of going bankrupt.
On current course, the district won’t be able to pay its bills next year. According to the county’s letter, in June the district ratified agreements with its unions despite repeated warnings by county officials that the contracts are unaffordable. The union agreements are projected to cost $1.13 billion this year and another $1.44 billion next year—money the district knew it didn’t have when it agreed to the deals.
The district even warned in February—a few months before agreeing to the labor contracts—that a looming $877 million deficit could require thousands of layoffs. “At some point, we reached a breaking point,” then-Superintendent Alberto Carvalho said. (Mr. Carvalho resigned in late June amid a Federal Bureau of Investigation probe related to district contracts and an artificial-intelligence chatbot project. He has denied criminal wrongdoing.)
Nonetheless, the district agreed to boost pay for principals and assistant principals by 12% over two years, increase average teacher pay by 14% over two years, and raise compensation for non-instructional employees such as custodians, campus aides and cafeteria workers by 24% over three years, in addition to sweetening health benefits. To pay for this, the district sought to raid its retiree health benefits fund. That’s like tapping your 401(k) at age 64 for a holiday you can’t afford.
LAUSD’s problems mirror those of other large urban school districts: unsustainable spending, particularly on administration and employee benefits, combined with shrinking enrollment. For every dollar that a teacher earns in compensation, the district and state pay 30 cents toward his pensions.
A recent study by the Reason Foundation found that LAUSD’s inflation-adjusted spending on employee compensation grew by about 27% between 2013 and 2023 even as student enrollment shrank by 35%. Noninstructional staff like counselors, social workers, school nurses and administrators accounted for nearly all of the spending growth.







