Los Angeles Unified School District faces insolvency risk

The Los Angeles Unified School District (LAUSD) is facing a severe fiscal crisis, with experts warning the nation’s second-largest school district is at high risk of insolvency. The district has been running a structural deficit since the 2024-2025 school year, with annual expenditures exceeding revenues by an estimated $1.5 billion to $2 billion.

Key drivers of the deficit include falling enrollment, rising special education expenses, underutilized facilities, and the expiration of federal COVID-19 Elementary and Secondary School Emergency Relief (ESSER) funds on September 30, 2024. Critics also point to a recent 14% teacher pay raise approved to avoid strikes as a significant factor in the financial instability.

To stabilize finances, LAUSD has proposed a three-year plan that includes eliminating over 6,000 positions from its approximately 80,000-person workforce. The Los Angeles County Office of Education has previously warned the district that continued deficit spending could lead to increased county supervision and loss of financial control.