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NICK’S VIEW - Mayor Karen Bass stepped into negotiations between the Los Angeles Unified School District and its unions and helped broker an agreement that kept the nation’s second-largest school district open. But while the immediate conflict was defused, the underlying fiscal problems remained. The result is only a temporary reprieve.
Worse, both the mayor and the district did not understand the math. The union contracts add nearly $1.2 billion in annual costs, with no clear funding source in sight.
Bass appears to have conceded too much, likely for political reasons. The negotiations took place just before the June primaries, creating an apparent election incentive, and LAUSD agreed to contracts it cannot afford, placing the district on a path toward insolvency.
This raises a broader question: could LAUSD’s fiscal crisis signal deeper financial trouble for the city? Although Los Angeles and LAUSD are legally separate, they draw from the same economic base and operate under similar political pressures and service demands.
Avoiding the strike was hailed as a political victory, with all sides celebrating. Yet, while Bass cast herself as a crisis solver, the district’s fiscal crisis remained unresolved.
County officials warned the LAUSD, when the school board approved new contracts with multiple unions, that the packages were too expensive, but the board approved them anyway.
Alas, the chickens finally came home to roost. Recently, Los Angeles County education officials projected LAUSD will face a $231 million cash shortfall by November next year. They have appointed a fiscal expert to help eliminate the deficit and have given the school board 45 days to fix its budget or risk outside control.
The county office of education formally issued a “Lack of Going Concern” determination to LAUSD, meaning the district may not be able to meet its obligations in the 2027-28 and 2028-29 school years. The union contracts are plainly unaffordable. County officials repeatedly warned LAUSD that it could not pay for them since it was already in structural deficit and facing declining enrollment, weaker future revenue, and rapidly shrinking reserves.
In fact, just before reversing course due to the agreements, the district had issued 3,200 layoff notices.
City Councilmember Nithya Raman, Bass’s mayoral opponent, has accused City Hall of fostering a pay-to-play culture in which special interests bankroll the establishment and gain disproportionate influence. In plain terms, major donors buy access and favor. Data from the Los Angeles Ethics Commission and Transparency USA show labor organizations consistently rank among the top contributors, often matching or exceeding corporate Political Action Committees, developers, and business associations, with multimillion-dollar operations that influence city and school elections.
LA Times reports that this year’s school district budget totals $18.8 billion. Before the three agreements, LAUSD projected a June ending balance of $3.8 billion, down from $5 billion the prior year. Since pandemic aid expired, the district has been spending $1 billion to $2 billion more each year than it takes in.
Once the raises are fully implemented, annual costs will rise by $650 million for United Teachers Los Angeles, $490 million for SEIU Local 99, and $75 million for the Associated Administrators of Los Angeles. The new agreement also requires the district to rescind more than 200 layoffs, with pressure mounting to reinstate additional positions.
State relief for LAUSD remains uncertain, even though district officials are counting on it. Spending without a sustainable revenue plan is not leadership; it is folly.
LAUSD’s budget relies mainly on state per-pupil funding, with additional support from federal programs and local property taxes. As enrollment declines and personnel costs rise, the district faces structural pressure, and each union contract directly affects that fiscal reality.
The federal government has warned LAUSD not to count on help from Washington. Citing the district’s complacency and union concessions, the U.S. Department of Education, led by Secretary Linda McMahon, gave LAUSD 45 days to submit a new budget plan. The department also flagged unaffordable contracts and $750 million in borrowing to settle decades-old sexual abuse claims.
The federal government is still investigating LAUSD’s alleged mishandling of sexual misconduct complaints, which is costing the district millions in settlements. Instead of getting rid of problematic teachers, the district often keeps them around, according to the federal report. Of course, the unions have sided with the teachers.
Based on statewide demographic projections and LAUSD‑specific historical patterns, the school district is expected to lose another 60,000–100,000 students over the next decade. In the last 25 years it has lost about 300,000 students, as I reported a few weeks ago. Declining enrollment directly cuts LAUSD’s state and federal funding, making it a serious fiscal threat. However, we have not heard, as yet, how the board plans to address this ongoing crisis.
LAUSD is currently preparing for school consolidations and closures, but it has not released specific numbers. Nearly half of all zoned elementary schools are half-full or less, and fifty-six schools have lost more than 70% of their students. However, we have not heard as yet how the board plans to address this ongoing crisis.
I have written in this space about LAUSD’s vast amount of underused space. What the district may view as a liability should be seen as an opportunity. But the board`s failure- spending without a revenue plan- is not the only shortcoming at LAUSD. The board lacks leadership, competence, vision and creative thinking.
Rather than simply closing schools, LAUSD should reimagine shuttered campuses as community assets and civic anchors—parks and green space, cultural heritage centers, arts campuses, rehearsal studios, galleries, film and media labs, affordable housing and more. School sites can be developed as "intergenerational villages" combining senior housing with nursery and pre-kindergarten facilities. This model could have statewide potential.
Closed schools can be turned into affordable artists` housing, and even artists' studios. Los Angeles risks losing a generation of young creatives as the cost of living and working space becomes prohibitive.
Another benefit of converting empty facilities built and maintained with taxes and bonds, from blight to community assets, with visionary leadership the district can also establish a steady source of revenue, so desperately needed at this time. LAUSD can enter into joint development agreements with nonprofits and developers to receive steady income from ground leases and share of the profits. LAUSD should use Metro`s policies for using surplus land, which has been used successfully for decades.
For parks-starved Los Angeles, converting closed schools into parks would be more than a land-use decision; it would be a rare step that benefits multiple systems at once, advancing equity, climate resilience, public health, youth development, neighborhood stability, and stewardship of public land.
It has been our intent to propose ways to cut city costs and improve services, and we have done so numerous times, but those ideas have gone nowhere—much like the old Greek saying, “You can knock all you want on a deaf person’s door.” In politics as usual, the incentives that drive political behavior often diverge from those that support good governance. Cost savings and better services deliver long-term, low-visibility benefits, while politicians are rewarded for short-term wins and symbolic action.
Despite repeated calls for reform, city leaders have failed to curb wasteful spending and bloated labor union packages. Fiscal irresponsibility creates crises, slows growth, and costs Los Angeles jobs. Earlier this year, I argued in a series of articles that the city should consolidate departments to improve core services and save money amid a staggering budget shortfall.
I also argued that the city does not need two utilities handling streetlight work. The Los Angeles Department of Water and Power should absorb the Bureau of Street Lighting, a move estimated to save more than $8 million. The public is tired of city failures and sent a clear message last June that it is not willing to pay more for local services. Voters overwhelmingly rejected a proposed streetlight assessment that would have tripled citywide fees. And here is the question for our city leaders: How are you now going to keep our streets safe?
When Los Angeles chronically neglects basic maintenance—streets, sidewalks, streetlights, trees, and traffic signals—it is not merely a technical failure; it is a failure of governance.
The mayor’s involvement in negotiating between LAUSD and the unions highlighted a troubling gap in her understanding of long‑term fiscal responsibility. The agreements she supported added substantial ongoing costs without identifying sustainable revenue to pay for them.
If the City and LAUSD keep making promises they cannot pay for, they are not just creating deficits; they are inviting Los Angeles County to take control.
(Nick Patsaouras is an electrical engineer, civic leader, and a longtime public advocate. He ran for Mayor in 1993 with a focus on rebuilding L.A. through transportation after the 1992 civil unrest. He has served on major public boards, including the Los Angeles Department of Water and Power, Metro, and the Board of Zoning Appeals, helping guide infrastructure and planning policy in Los Angeles. He is the author of the book "The Making of Modern Los Angeles.")
