Smoking gun letter reveals LAUSD ignored dire budget warning before approving huge staff pay raises

Los Angeles Unified School District ignored a bombshell letter from its own experts that blockbuster pay rises for staff would cause thousands of layoffs, the California Post can reveal.

Los Angeles County Office of Education (LACOE ) sent every board member a letter on June 12 telling them they would face “severe” budget concerns if they went ahead and approved the hikes.

But just four days later, amid the threat of mass strikes, they awarded the huge raises of up to 24% for some workers, including a whopping 14% for teachers depending on experience.

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

Now the district is staring down a roughly $3.6 billion negative reserve balance by 2029, with the new agreements costing about $1.2 billion per year in funds the city does not have.

Los Angeles parents were furious the letter was ignored and not disclosed, telling the California Post the mass layoffs that loom is a result of the district’s “bad management.”

LACOE’s June 12 letter said: “The fiscal concerns detailed below are severe, and we strongly urge the Board to weigh them carefully prior to ratifying these agreements.

“A projected negative ending balance of this magnitude is neither a sustainable operational strategy nor permissible.”

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

The County Office of Education placed LAUSD under heightened fiscal oversight and gave the Board 45 days to deliver a revised budget that will get the district out of the red, which will expire in mid-August.

It added if the board moved forward it must immediately submit an updated fiscal stabilization plan (FSP) that addressed the shortfall.

Despite the county’s warnings, the board, which originally signaled it would agree to the raises on April as strike action loomed, green lighted the plan just a few days later anyway.

LACOE then issued another letter on July 2 demanding they go back to the drawing board, while criticizing its handling of the labor deals.

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

The district’s fiscal stabilization plan “reflects mismanagement of the collective bargaining process,” LACOE wrote in the second note.

To close the budget gap, LAUSD’s own projections call for eliminating roughly 4,900 positions in the 2027-28 school year, followed by another 1,035 jobs the following year.

Sonia Reiter, who obtained the June 12 letter and is a parent for two LAUSD students, told the Post: “My initial reaction was I was terrified because it only leads to one answer which is massive layoffs, and it’s gonna be devastating. It’s gonna be painful.”

Board Member Tanya Ortiz Franklin said the FSP plan was discussed before approving the labor agreements, and acknowledged the district will have to implement layoffs in order to afford the pay raises.

She told the Post in a statement: “The Board publicly discussed and adopted the fiscal stabilization plan (FSP) before approving the labor agreements knowing that the cuts were necessary to authorize the raises that employees well deserve.

“The FSP specifies ambitious yet achievable and necessary reductions and its implementation will absolutely require continued collaboration with our labor partners and LACOE.”

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

Ortiz said the board held conversations with the Superintendent and budget team during the months of negotiations with the unions, debating on where grow and where to cut depending on the student needs.

“These robust discussions gave me the confidence that while we would be taking some risks, we would also be striking the right balance between increased employee compensation and student support with cuts to discretionary programs and additional solutions to be negotiated,” she added.  

Reiter called LAUSD’s decision “bad management,” underscoring that the looming cuts could have been avoided. She added: “That’s what’s upsetting. That’s what is sad.”

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

Maria Luisa Palma, the executive director of the school advocacy group called Oleada, said: “This isn’t a question of a small amount of money that they were off over the three year period, it’s 3.6 billion.” 

Both Palma and Reiter questioned the timeline of events, and why LAUSD would move forward with the labor agreements when LACOE made clear it could not afford it.

Palma said: “The July 2 letter clearly lays out LACOE’s disagreement with what LA unified did.”

Both Reiter and Maria Luisa Palma, the executive director of the school advocacy group called Oleada, questioned the timeline of LAUSD’s decision-making.

The contracts add roughly $1.13 billion in costs this school year, climbing to $1.44 billion in 2027-28.

They include a 24% increase over three years for SEIU support staff, nearly 14% over two years for teachers and almost 12% over two years for administrators.

A spokesman for LAUSD admitted the board received the letter on June 12, and implemented the FSP and approved the labor agreements as LACOE instructed.

They said: “The Board received LACOE’s June 12 letter. As called for in this letter, the Board approved a fiscal stabilization plan on June 16 that incorporated the approved labor agreements and identified specific, actionable, and ongoing expenditures to restore and maintain the District’s financial stability.”

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

Despite LACOE detailing the significant financial impact of the labor agreements, the Service Employees International Union Local 99 (SEIU) which represents education workers, argued the employee pay raises are not responsible for the district’s financial problems.

A blog post they wrote said: “Fair wages are not the cause of LAUSD’s financial challenges. Our work should be respected with fair pay and we should not be scapegoated for the district’s financial issues.”

It added: “Instead of blaming frontline workers, LAUSD must focus on fixing their mismanagement issues.” 

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

SEIU claims there is additional state funding available LAUSD can tap into. But the few hundred million dollars cited by the union would cover only a fraction of the district’s projected $3.6 billion balance.

The Post reached out to SEIU for further comment.

Sonja Shaw, who is running to become California’s next Superintendent of Public Instruction, told the Post the district prioritized the union over classroom results and taxpayer dollars.

She said: “LAUSD is proving exactly what happens when school boards put special interests ahead of students: insolvency, painful cuts, and chaos,” calling the budget crisis a “result of reckless governance.”

The nation’s second biggest district faces a county-imposed Aug. 7 deadline to deliver a workable plan to balance its books.

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