Exclusive | 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.

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.”

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.

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.”

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.”

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.”

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.”

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.” 

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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