How LAUSD can deal with budget deficit, declining enrollment

Los Angeles Unified School District’s fiscal outlook is bleak, with a structural deficit projected to hit $1.3 billion in the 2028 fiscal year. “It’s not a rosy picture,” said LAUSD school board member Tanya Ortiz Franklin. “We are not getting more money.”

But despite what United Teachers Los Angeles and others might claim, LAUSD’s budget woes aren’t due to a lack of funding. According to the latest federal data, LAUSD received nearly $26,900 per student in fiscal year 2023. Taxpayers sending over $537,000 for each LAUSD classroom of 20 students is enough to provide a good education for kids.  

Instead, LAUSD’s problem is its lavish spending. Between 2012-13 and 2024-25, the district’s enrollment plummeted by 164,000 students, yet it added over 17,000 non-teachers such as instructional aides, school counselors, and social workers. The district also doled out a 21% pay raise to teachers in 2023, knowing that billions in federal COVID-19 pandemic relief dollars were set to expire the following year.   

California ranks fourth in the nation in public school spending growth since 2002, which has masked LAUSD’s financial mess. However, after two years of budget deficits and the current economic uncertainty, the state budget is projected to tighten in the coming years, and the district’s mishandling of COVID-19 reopening has accelerated its enrollment declines. 

LAUSD can do a few things to get its fiscal house in order, or it risks the same fate as school districts like Oakland and San Francisco, which are on the brink of insolvency.   

For starters, LAUSD needs to cut spending to sustainable levels. On average nationally, labor accounts for roughly 80-90% of typical public school budgets, so personnel reductions are unavoidable for LAUSD. This is never easy, but can be done in ways that minimize disruptions to classroom learning, such as trimming back on administration and non-instructional school staff. Regular attrition, such as retirements and resignations, can also be leveraged to minimize the need for pink slips.

LAUSD can also save money by reducing its facilities footprint. Research published by Available to All indicates that nearly half of the district’s elementary schools have experienced enrollment declines of 50% or worse in the past two decades, leaving an estimated 160,000 empty seats. 

Underutilized schools are costly to maintain and spread the school district’s financial resources thin, which can result in fewer elective classes and enrichment opportunities for kids. School closures are politically challenging but necessary if LAUSD is going to get on a sustainable path.  

Next, LAUSD can mitigate enrollment losses by giving families more options. States and school districts across the country are moving away from residential assignment, where students are zoned to schools and have limited or no options. Public school open enrollment gives students access to seats in schools regardless of where they live, putting parents in the driver’s seat and creating a competitive environment where public schools are incentivized to innovate, improve and attract students.

A study on LAUSD’s Zones of Choice program—a limited form of open enrollment—suggests that embracing an expansive policy would pay dividends for the school district. In their working paper on the impact of the Zones of Choice program, the University of Chicago’s Christopher Campos and the University of California-Berkeley’s Caitlin Kearns found significant gains in student achievement and college enrollment, which they attribute to increased competition. 

“The evidence demonstrates that public school choice programs have the potential to improve school quality and reduce neighborhood-based disparities in educational opportunity,” the researchers conclude.

Next, LAUSD can mitigate enrollment losses by giving families more options. States and school districts across the country are moving away from residential assignment, where students are zoned to schools and have limited or no options. Public school open enrollment gives students access to seats in schools regardless of where they live, putting parents in the driver’s seat and creating a competitive environment where public schools are incentivized to innovate, improve, and attract students.

A study on LAUSD’s Zones of Choice program—a limited form of open enrollment—suggests that embracing an expansive policy would pay dividends for the school district. In their working paper on the impact of the Zones of Choice program, the University of Chicago’s Christopher Campos and the University of California-Berkeley’s Caitlin Kearns found significant gains in student achievement and college enrollment, which they attribute to increased competition. 

“The evidence demonstrates that public school choice programs have the potential to improve school quality and reduce neighborhood-based disparities in educational opportunity,” the researchers conclude.

The solutions to LAUSD’s fiscal woes are straightforward—spend less, give parents choices, and focus on academics. The challenge will be overcoming objections from United Teachers of Los Angeles and other groups that oppose anything that disrupts the failing status quo. However, adopting these reforms would be a win-win for the district and students and would be worth the political fight.

A version of this column first appeared at the Los Angeles Daily News.

The post How LAUSD can deal with budget deficit, declining enrollment appeared first on Reason Foundation.

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