As layoffs move forward, the Los Angeles school district is authorizing hundreds of millions more in borrowing to cover abuse settlements—raising concerns about classroom impact.
Days after the LAUSD School Board approved sending layoff notices to more than 3,200 employees due to an $877 million deficit for the upcoming school year, the same body approved requesting an additional $250 million in bonds to cover payments related to sexual misconduct cases.
This new authorization adds to the $500 million already approved in June 2025, bringing the total authorized amount to $750 million in less than a year. The total could reach $1 billion.
Superintendent Alberto Carvalho stated that the district is “exhausting the funds available” to satisfy multimillion-dollar judgments stemming from abuse cases that, in many instances, occurred decades ago.
“We are exhausting funds available to us to satisfy sex and molestation cases that have been brought against the district, in many instances, reflecting cases that go back decades, that the district is not willing — not able — to successfully defend.
So, these multi, multimillion-dollar judgments against the district need to be satisfied, and without the judgment-obligation bonds, we would have to use the general fund as cash to satisfy them,” Carvalho said, according to the Los Angeles Times.
Los Angeles Unified School District (LAUSD) is facing an institutional crisis that includes concerns about the quality of teaching and learning, declining enrollment—primarily due to immigration enforcement raids carried out by U.S. Immigration and Customs Enforcement (ICE)—and mounting budget pressures.
The wave of lawsuits is the result of California’s California Assembly Bill 218 (AB 218), which in 2019 temporarily eliminated the statute of limitations for child sexual abuse claims, allowing lawsuits for incidents dating back as far as the 1940s.
“Judgment obligation bonds” were issued—a form of borrowing that allows the district to pay settlements over at least a decade to avoid an immediate and drastic impact on its general fund.
Payments on these bonds affect children’s education primarily by diverting money from the district’s General Fund—the same funds used for daily school operations.
The impact will likely be felt in the following areas:
Staff and salary reductions: Debt payments directly compete with funds used to pay teachers, bus drivers, and custodians. This could result in larger class sizes and make it harder for the district to offer competitive salaries.
Cuts to support programs: Specialized services such as mental and behavioral health interventions, tutoring programs, and extracurricular activities are expected to face reductions.
Deterioration of facilities: Budgets for replacing outdated or broken equipment—such as playground structures—and for school renovation projects may be redirected to meet bond obligations.
Academic performance impact: Studies in California districts facing similar payouts show declines in math and reading performance (between 3.4 and 3.7 percentage points) following budget cuts made to pay legal settlements.
Long-term cost: Because the total cost (including interest) will exceed $1 billion, the district will need to dedicate tens of millions of dollars annually for at least a decade to repay this debt instead of investing in current students.
LAUSD at a Breaking Point: 3,200 Layoff Notices as Enrollment Plunges and Spending Soars
