Ticking timebomb at America’s second biggest school district — as chaos looms for thousands of families

A bankruptcy deadline less than three weeks away could force Los Angeles Unified to hand over control to the county — causing even more chaos for families in the struggling district.

Faced with looming insolvency and massive deficits caused by unaffordable labor contracts, the nation’s second biggest district faces a county-imposed Aug. 7 deadline to deliver a workable plan balance its books.

If LAUSD fails to rewrite its $20.6-billion budget, the Los Angeles County Office of Education said it will seize control of the scandal-scarred district, which just saw the departure of ex-superintendent Alberto Carvalho after the FBI raided his home.

School Board member Tanya Ortiz Franklin said she understands the county’s position.

“I think they’re right to be concerned,” Franklin told the Los Angeles Times.  

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Franklin told the paper she agrees with county’s conclusion that costly deals with labor unions are causing financial ruin, even though they were approved just this year by all seven board members. 

In order to avoid a threatened strike, the district in April agreed to three different contract agreements that will cost it close to $1.2 billion annually.

Now, the district faces a budgetary shortfall of $231 million by next November, ballooning to a $3.5-billion deficit by June 2029.

LAUSD officials have also blamed cratering enrollment and the end of one-time pandemic aid for the crisis.

The County Office of Education isn’t buying LAUSD’s excuses and instead has instructed the board to detail specifically how it will carry out needed cuts. Otherwise, the county superintendent will appoint a trustee with authority to veto spending decisions.

If the district were to become insolvent, then an appointed administrator would take all power away from Superintendent Andrés E. Chait and the school board — an action without precedent in LAUSD and an unusual event for big urban school systems.

School closures, program cuts and thousands of layoffs are among the looming cuts the school board has largely postponed making until July 1, 2027.

Parents and employees have expressed disbelief, worry and blame for the mess, while district officials have remained mostly silent about the directives coming from the county office.

County Superintendent Debra Duardo in a scathing, July 2 letter rebuked the district’s budget decisions and a “fiscal stability plan” that the school board had approved June 16 and sent to the county for review.

Duardo said county has rejected the plan, because it lacks details and needs “an elevated level of fiscal oversight.”

Duardo faulted the school board for “mismanagement of the collective bargaining process,” saying it approved costly contracts with the teachers’ union and other labor groups that will drive the district to financial ruin.

She also said the district has failed to carry out earlier budget cuts it had promised to make.

As a result of these missteps, Duardo said, LAUSD faces a damning cash shortfall.

“The financial reality before the District raises serious concerns regarding its ability to meet its financial obligations,” she wrote.

In a statement provided to The Times, LAUSD officials said missing the county’s Aug. 7 deadline wouldn’t lead to dire consequences for families.

“We have discussed this matter” with the county office “and appreciate their ongoing partnership and guidance,” the district officials said.