LAUSD approved labor contracts on June 16 that add roughly $1.2 billion a year to district costs shortly after the Los Angeles County Office of Education warned on June 12 that the deals would create "severe" fiscal problems. Projections show a $3.6 billion negative reserve by 2029 and planned cuts of about 4,900 jobs in 2027–28 and 1,035 the following year. LACOE has placed LAUSD under heightened oversight and given the district an early-August deadline to submit a workable, revised budget.
Smoking-Gun Letter: County Warned LAUSD Of 'Severe' Fiscal Crisis Before Board Approved $1.2B In Raises
The Los Angeles Unified School District (LAUSD) approved sweeping labor contracts that add roughly $1.2 billion in annual costs days after the Los Angeles County Office of Education (LACOE) warned the board those deals would create "severe" fiscal instability, documents obtained by the California Post show.
What LACOE Warned
On June 12, LACOE sent a letter to every LAUSD board member urging caution and detailing the budgetary consequences of ratifying the agreements. The county wrote that a projected negative ending balance of the scale they modeled "is neither a sustainable operational strategy nor permissible."
"The fiscal concerns detailed below are severe, and we strongly urge the Board to weigh them carefully prior to ratifying these agreements." — LACOE, June 12 letter
Board Action And Fiscal Stabilization Plan
Despite the warning and pressure to avert districtwide strikes, the board approved a fiscal stabilization plan (FSP) and ratified the labor agreements on June 16. LACOE later issued a sharper rebuke on July 2, saying the adopted plan "reflects mismanagement of the collective bargaining process."
Projected Impact
District projections in the correspondence show the approved contracts will raise current-year costs by about $1.13 billion, rising to roughly $1.44 billion by 2027–28, and contributing to a projected $3.6 billion negative reserve by 2029. To close that gap, LAUSD’s plan includes the elimination of roughly 4,900 positions in 2027–28 and another 1,035 jobs the following year.
Key Contract Terms
- SEIU support staff: Up to 24% increase over three years
- Teachers: Nearly 14% over two years (varies by experience)
- Administrators: Nearly 12% over two years
Responses And Stakes
Parents and advocacy groups who obtained the June 12 letter described alarm and frustration that the warning was not publicly disclosed before the contracts were approved. LAUSD board member Tanya Ortiz Franklin defended the process, saying the FSP was discussed and adopted before finalizing the labor agreements and that the reductions identified would be required to afford the raises.
The Service Employees International Union (SEIU) Local 99 pushed back, arguing that fair wages are not the root cause of LAUSD's broader financial problems and noting possible additional state funding the district could pursue—though county analyses say the amounts cited by the union would cover only a fraction of the projected shortfall.
What Comes Next
LACOE placed LAUSD under heightened fiscal oversight and gave the district 45 days — with an early-August deadline cited by county officials — to deliver a revised budget and an updated fiscal stabilization plan. If LAUSD becomes insolvent, state or county authorities could appoint an administrator to assume control from the superintendent and elected board.
Bottom line: The dispute centers on whether the board responsibly balanced the urgent need to avert strikes and raise pay with the long-term fiscal health of the nation's second-largest school district.
Sonia Reiter, who has two kids in LAUSD, said the board's decision to approve the labor contracts was "bad management." Pedro Colo for CA Post
LAUSD board members defended their decision to approve $1.2 billion in labor contracts despite warnings days prior from the Los Angeles County Office of Education (LACOE) that it would create financial chaos. Jonathan Alcorn For CA Post
A spokesperson for LAUSD said the Board did receive the letter on June 12, and implemented the FSP and approved the labor agreements as LACOE instructed. Jonathan Alcorn For CA Post
Board Member Tanya Ortiz Franklin told The Post cuts will need to be made in order to afford the recently approved pay raises. LA USD Unified
Reiter obtained the June 12 letter from the Los Angeles County Office of Education that warned board members approving the labor contracts would send the district into financial chaos. Pedro Colo for CA Post
Both Reiter and Maria Luisa Palma, the executive director of the school advocacy group called Oleada, questioned the timeline of LAUSD's decision-making.
Board Member Tanya Ortiz Franklin told the Post the district will have to implement layoffs in order to afford the teacher pay raises. AFP via Getty Images
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 — money that the county underscored the district doesn't currently have in its coffers. Getty Images
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. Ringo Chiu for CA POST
CaliforniaSuperintendent of Public Instruction candidate Sonja Shaw described LAUSD's decision to approve the labor contracts as "reckless governance." Los Angeles Times via Getty Images
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