Susan Shelley: LAUSD chose to drive itself into the ground

Some deals are so sweet they really should be illegal.

On June 16, the Los Angeles Unified School District approved new collective bargaining agreements with multiple unions representing teachers, administrators, school nurses, bus drivers, custodians, cafeteria workers, teaching assistants, trades and construction workers.

The school board members did this despite a letter they received four days earlier from the Los Angeles County Office of Education warning that the district could not afford the agreements, and that ratifying the contracts would further weaken LAUSD's already teetering financial position.

But here's what the LAUSD school board members know about math: union support equals election victory.

That's the whole textbook.

The typical collective bargaining negotiation with unions representing school district employees starts off with the district's solemn pronouncement that the unions' demands are unaffordable and ends by giving the unions everything they wanted.

Surprisingly, there are laws designed to prevent corrupt, negligent or incompetent school district officials from recklessly overspending the district's funds and putting the education of children at risk.

"Pursuant to California Education Code (EC) Section 42127.6, the Los Angeles County Superintendent of Schools (County Superintendent) is required to determine whether a school district may be unable to meet its financial obligations in the current fiscal year (FY) or either of the two subsequent fiscal years," reads a July 2 letter from County Superintendent Debra Duardo to LAUSD board president Scott Schmerelson.

The county superintendent determined that LAUSD’s approval of the new collective bargaining agreements, "compounded by the District's existing structural deficit and continuing enrollment decline," add up to a "severe fiscal event that impairs the District's ability to fulfill its multiyear financial commitments and reflects mismanagement of the collective bargaining process."

So, who's going to prison for it?

Apparently no one, although the former LAUSD superintendent, Alberto Carvalho, is entangled in an ongoing FBI investigation related to an artificial intelligence chatbot venture between the district and a company that's now out of business. Carvalho took a leave of absence after the FBI executed a search warrant at his home and he later resigned. The board replaced him with Andrés E. Chait, who officially became superintendent on June 24, about a week before the county declared that LAUSD meets the criteria for a "Lack of Going Concern" designation.

The immediate consequence of that dire designation is the assignment of a "fiscal expert," paid by the county, to "advise and assist" with "corrective actions." The district is required to make any budget revisions "necessary to fund the multi-year commitments created by the ratified collective bargaining agreements."

This likely means layoffs of some of the very people who so recently celebrated their new contracts, which include compensation increases that "outpace the state's funded Cost-of-Living Adjustment." The increased labor costs contrast with a projected decline in enrollment and average daily attendance of about 6.6% between fiscal years 2026-27 and 2028-29. "The district has not adjusted staffing levels to match these declines," the county observed.

Another consequence is a mandate from the county that restricts new debt. For example, the district is now prohibited from issuing "Judgment Obligation Bonds," a type of borrowing that doesn't require voter approval and is used to pay off liability judgments. The nation's second-largest school district could be one slip-and-fall lawsuit away from bankruptcy.

The county superintendent chided the board for a "decision to override its own staff's fiscal advice," calling into question the district's "willingness and ability" to faithfully execute its own fiscal stabilization plan.

If LAUSD fails to make the required budget revisions, the "fiscal expert" will be replaced by a "fiscal advisor" with more power to stop or reverse the actions of the school board.

LAUSD has been ordered to cooperate with the fiscal expert's review and to implement a plan of action. Reductions-in-force, also known as layoffs, could be announced in January to meet legal notice requirements.

But the school board members delivered for the unions that helped elect them. The ruinous collective bargaining agreements were negotiated the usual way, with everyone sitting on the same side of the table.

Write Susan@SusanShelley.com and follow her on X @Susan_Sheley

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This story was originally published July 23, 2026 at 6:01 AM.