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The Los Angeles School Board approved a $18.8 billion budget on Tuesday. This will postpone the layoff for a year, but in some cases pay higher expenditures by reducing proposed contributions to the Trust Fund for retirees’ health benefits.
After extensive discussion on Tuesday, the board approved a revised budget that would remove $645 million from contributions to retirees’ health benefits and instead contribute to accounts that are also potential uses, such as employee wage increases.
LA Schools Supt. Alberto Carvalho said the move is correct overall.
“I tried to balance it with a bit of risk aversion, but we were innovating with our children and the workforce and not to do the right thing,” Carvalho said at a meeting Tuesday.
According to that balance, “Our workforce needs to maintain our workforce, we need stability related to our workforce. And we need to be aware of the cost of living in our communities, the level of inflation in our communities, and the level of housing costs in our communities.”
Employee contracts are currently under negotiation in a school system of around 400,000 students. The district has so far provided a 2% raise to the largest union for its non-educational staff. The teachers’ union has not yet received the offer.
The employee group is promoting more than 2%.
The shift in funding from future obligations to current needs was triggered by an angry letter to the school board signed by the eight employee union.
“The district has created a massive three-year deficit forecast that will increase the contribution of trust by about 1,000% through this outrageous proposal,” the union book states. “This is a manufactured crisis and is designed to confuse people, split up and scare the school community about our health benefits.”
District officials continue to argue that the retirement benefits fund is underfunded by approximately $8 billion per actuarial study. However, the fund currently has around $890 million.
That money has not been spent yet. Instead, the district is paying these benefits from the General Fund at a cost of $335 million for the fiscal year ending June 30th. Ten years ago these benefits cost $150 million.
The revised budget moves in the direction of the union’s location. Instead of adding $335.7 million to the trust fund next year, the amount will be $142.6 million, for example.
The change was positive, but it was “far” from what the union wanted. This was to eliminate contributions entirely for the time being. Salazar also chairs the LA Uniform Health Benefits Committee, with all employee unions speaking out.
The next biggest change was to limit the staffing of schools, which was in place a year from now. These cuts were targeted at saving $60 million, but instead reduced the target to $30 million. Some examples of jobs at risk include teacher aides, supervising aides, and library aides.
Structural deficit
Next year’s revenue is currently calculated at $15.9 billion, nearly $3 billion less than what the district is planning to spend. The district continues to cut its ending balance of around $7 billion last year, and now it is around $4.8 billion.
The country’s second-largest school system has been able to maintain deficit spending as it remains from over $5 billion in one-off pandemic relief aid.
But by the end of 2027-28, there will be no cuts and the district will be financially underwater, officials say.
Red expenditure outlook required state law to approve the Board of Education to approve a “Financial Stabilization Plan” supervised by the LA County Education Department. The LA Board of Education narrowly approved the plan last week.
For another year, senior officials said services to students have not been cut and full-time workers have not lost employment and benefits, but some people are changing jobs and making money. This is not about the 2026-2027 academic year.
One of the looming cuts is the closure of as many as 10 schools, or at least underused buildings on various campuses, saving $30 million a year. Reduced Central and regional offices are expected to save $325 million over two years.
Meanwhile, union leaders and activists are hoping for more from district reserves that still contain billions of dollars. This is evidence that LA Unified can pay higher wages and spend more to strengthen its programs for black students and immigration.
Investment sector
Last week, Carvalho announced a one-time $50 million increase in the Black Student Achievement Plan (BSAP) between 2025-26, funding $175 million. BSAP offers additional psychiatric social workers and academic counselors, among other enhancements.
Although there is already a substantial budget to make the campus greener, Carvalho has agreed to add $1 million a year over the next three years.
Immigrant families are expected to benefit from more than $5 million from the Student Center. It’s an increase of $1 million since last week. Services can include legal referrals and other family support.
Activists wanted more, but celebrated these benefits at a rally outside the district headquarters, attended by school board member Cara Griego.
LA School Board member Karla Griego is the left wing of the center and will celebrate with students and activists at the district headquarters west of downtown on Tuesday.
(Howard Bloom, Los Angeles Times)
“It’s always difficult when we start debating future cuts and everything and budgets,” Grigo told the board. “So I want to take a little time to praise all those who have defended us for the past few weeks, perhaps months, for our most marginalized group.”
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