LAUSD's $1.6 Billion Cushion Is Projected to Hit $5 Million by 2029

A state watchdog rated Los Angeles Unified at high risk of insolvency, and even that forecast assumes every planned cut happens.

If every cut goes through, Los Angeles Unified is projected to have $5 million of uncommitted money left when its three-year budget ends. Last June, that same line held $1.61 billion.

That forecast comes from California's school finance watchdog, the Fiscal Crisis and Management Assistance Team, which told the school board Tuesday that the nation's second-largest district is at high risk of insolvency, LAist reported. In the agency's slides, the $5 million is the improved version, and it holds only if the district carries out every reduction in its stabilization plan.

The county education office has conditionally approved a $20.6 billion spending plan for this year, EdSource reported. Measured against that, the cushion would be about 0.02% of a single year's budget.

FCMAT's tool asks 138 yes-or-no questions across 20 areas the agency says most often push districts toward insolvency. LAUSD scored 37.9%, just under the 40% line for high risk. The rating went up a notch because the Los Angeles County Office of Education had already declared a "lack of going concern," the label that triggered the review.

The agency named the drivers: labor contracts, years of spending more than comes in, rising special education contributions and shrinking enrollment. That last one is stark in the district's own budget update for the same meeting. In fall 2018 it counted 486,259 students from transitional kindergarten through 12th grade; this fall, 371,623. Nearly a quarter of the district is gone.

This fall's count also landed 1.1 percentage points below a forecast that had already assumed a 3.37% drop. By the district's math, each 1% of enrollment is worth roughly $60 million.

FCMAT's slides also warn that a fund balance on paper isn't cash in hand, and that a district can look solvent on its books and still come up short when bills are due. EdSource reported that FCMAT's figures include a $231 million cash shortfall in 2027.

The district told the Los Angeles Times, in a statement EdSource cited, that it has been open about its troubles and that the board already adopted a stabilization plan. That plan, approved in June, adds up to $3.51 billion in cuts and new revenue over three years.

Its biggest single line, labeled SENI in the update, cuts $400 million in 2027-28. The year after, the cut grows to $500 million. LAist reported the plan cuts thousands of jobs, along with money for high-needs schools.

Two pieces need union sign-off: furlough days for all employees, which the district values at $25 million each, and making workers pay more toward health insurance. Together they're counted at $100 million in 2027-28. If talks stall by June 2027, the district says it'll charge more eligible costs to restricted grants, which could squeeze the programs those grants fund.

FCMAT's Jennifer Noga told the board that choosing what to save and what to cut is "100% a local decision," LAist reported. United Teachers Los Angeles argued in a memo and in public comment that the analysis punished the district for raising teacher pay and overstated the danger.

"Who is going to want to put their kids in schools if we keep cutting programs because of austerity?" union Vice President Julie Van Winkle said, according to LAist.

The district owes the county its answer on Thursday, including a timeline for each cut and a new cash forecast. The county's final determination is due Nov. 9. On the district's own calendar, the board targets Feb. 9 to authorize layoff notices, which would go out by March 12.

Source: LAist, retrieved October 8, 2026. Other sources: media.edlio.net, edsource.org, media.edlio.net (2).