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The Los Angeles School District sells up to $500 million in bonds to pay past sexual misconduct allegations — loans that must be repaid over time by the school system — part of a claims snowstorm dating back to the 1970s, which has affected government agencies, churches and private organizations both up and down the state.
According to information released Monday, LA Unified Aloned faces around 370 sexual abuse claims.
By issuing bonds approved at the June 3 School Board meeting, the country’s second-largest school system has extended repayments over 15 years, diluting the annual budget and services and program sacrifices.
Officials said Monday that LA Unified would initially sell $333.6 million in bonds. This is because the district used it to pay, as it was a relatively low-cost but short-term loan amount, and it totaled a total of $32 million in the current fiscal year alone.
supt. Alberto Carvalho currently has the authority to raise bonds of up to $500 million. “The estimates are that we could potentially require an additional amount of over $500 million,” according to a district spokesperson. The bonds used are called judgement obligations.
Unlike traditional school construction and modernized bonds, these bonds do not require voter approval. School bonds approved by local voters will be paid at higher property taxes, but these judgement bonds will be repaid from the regular school system budget.
In another move, the district recently established its own insurance company to manage future abuse claims.
The payments relate to Congressional Bill 218, passed in 2019, opening a three-year window at the end of 2022, allowing adults to file lawsuits over childhood sexual abuse dating back to the 1940s. Furthermore, on a continuous basis, the law extended the deadline for filing claims related to childhood sexual assault up to the age of 40.
Thousands of claims have been filed against religious groups, private and public schools, sports groups and nonprofits. In some cases, suspected perpetrators have been dead for decades.
Since January 1, 2020, approximately 370 people have received child abuse claims under AB 218 provisions, the district disclosed Monday. Around 76 of them claim abuse dating back to the 1940s and 1970s, while another 45-50 people alleged abuse in the 1980s.
Dozens of cases have been resolved or dismissed against La Unified, according to district data. Over 275 claims are active.
“Since the passage of AB 218, I have been sued by dozens of adult plaintiffs who may have been victims of sexual abuse as students decades ago,” said school board member Tanya Ortiz Franklin. “If they win the same fiscal year, we will pay hundreds of millions of dollars from our current budget and force impossible decisions about what to take away from students this year to pay for mistakes made to past student victims.”
Along with the bonds, she added, “We can pay these settlements over time, not all at once, but about 10% of the total cost of each of the 15 years.”
For example, if the full amount of $320 million is paid at once, it represents 2% of this fiscal year’s $18.4 billion spending plan. This is a huge chunk of one spending drawn from education and employee programs and services.
In a statement, the district recognized competing orders for justice to victims and financial responsibility for current generations of students.
“Los Angeles clearly believes that sexual abuse survivors deserve to be empowered to pursue justice on their own terms,” the district statement said. “AB 218 allowed victims of childhood sexual assault to seek justice with fewer legal restrictions.
“However, the law is entirely dependent on taxpayer funds to serve students, particularly those that are likely to have on public education – must acknowledge that even if current leadership, policies and practices have changed dramatically, it could face litigation for the past few decades.
Payment is also quite important even in installments. If the district uses all $500 million licensed bonds, it will use figures provided by LA Unified to acquire funding costs in excess of $768 million and repay an estimated $51 million in principal and interest.
La Unified is far from addressing sexual abuse settlements related to AB 218.
In April, the LA County Board of Supervisors approved what is widely considered to be the biggest sexual abuse settlement in US history, and agreed to pay $4 billion to victims who were abused as children in a county-run juvenile facility and raised their homes.
With a budget of around $48 billion, the county also relies on ejecting special bonds and rainy days of funds. All money will be available to victims over the next five years, and the county is hoping to pay off the bonds with interest over the next 25 years.
While current and recent district leaders appear to have little control over sexual industry claims that have arisen for years, until this week, district officials had offered limited transparency and mostly public discussion.
The Times requested a listing six months prior to all sexual misconduct cases and claims filed against LA Unified since 2000.
Earlier this month, the school board approved a $500 million bond spending authority without discussion. The final version of the board report also does not include a general overview of dollars. The $500 million figure was revealed in a previous draft reviewed by The Times.
Franklin said the district’s owned insurance company is part of a plan to manage future liability costs. “Police Prisoner Insurance covers current risks, not these claims from decades ago,” combined to work in bonds and insurance, “help deal with long-term and short-term liabilities.”
Liability for sexual misconduct has long been a painful and costly legacy for LA integration. Not all settlements are covered in the news, and media report reviews show that they are responsible for paying more than $372 million in judgment and settlement between 2012 and 2024.
La Unified is not only addressing the ongoing financial impact of AB 218.
“The district urges lawmakers, supporters and state leaders to work with the district to meet their moral obligations to survivors while also protecting the intrinsic rights of all students to free and quality public education,” the district said in a statement.
The school system has pushed a wave of reforms intended to curb the possibility of such misconduct, including tip lines, updated policies, regular employee training and special investigation teams.
The school system is also included in disputes with insurance companies that challenged the liability for paying fraud claims.
Edsource, a statewide education news site, first reported on the total amount of ruling obligations approved by the Board of Education.
Times staff writer Matt Hamilton contributed to the story.
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