LAUSD at high risk of insolvency, state education finance agency finds

California’s school finance watchdog agency has found the Los Angeles Unified School District is at high risk of financial insolvency.

The Financial Crisis and Management Assistance Team presented its analysis at Tuesday’s school board meeting.

“FCMAT’s role is not to determine which programs the district should preserve, which reductions it should make or what agreements it should reach with the labor [unions],” Jennifer Noga, an intervention specialist with the agency, told the board. “That is 100% a local decision. Our goal is to help identify the fiscal risk and help the district understand what needs to be addressed to restore fiscal stability.”

How did the state make its determination?

The agency’s analysis of LAUSD is based on a series of questions the agency has identified as risk factors for insolvency.

The analysis found that LAUSD’s deficit spending, declining enrollment and increasing costs of employee salaries and special education put the district at risk of exhausting its reserves by the end of next school year.

The analysis found LAUSD is at a “moderate” risk of insolvency, but ultimately received a “high” rating because a previous evaluation by the Los Angeles County Office of Education automatically triggered a more severe label. (That LACOE evaluation is also what triggered the state evaluation in the first place.)

Union pushback

United Teachers Los Angeles, the union that represents LAUSD educators, said in a memo to the board and in public comments that FCMAT’s analysis penalized the district for paying teachers more and overstated financial risk.

“There are different ways to tell a story with numbers and statistics and data, and we just think that FCMAT is presenting the most austere version of that and we have to fight back against that,” said Julie Van Winkle, the union’s vice president. “There is declining enrollment in the district, and who is going to want to put their kids in schools if we keep cutting programs because of austerity?”

The district has a plan to cut spending, which includes eliminating thousands of jobs and funding for high-needs schools. The district must also bargain with employee unions before implementing furlough days planned for the 2027-28 school year.