The Los Angeles Unified School District faces high fiscal solvency risk as enrollment continues to decline, according to a new state report. The second-largest US school district is burning through cash, with its unrestricted general fund balance expected to drop from $1.6 billion in fiscal year 2026 to just $5 million in fiscal year 2029.
District officials warn figures could worsen if attendance falls short, as it did by about 1% this year. Each percentage point decline reduces revenue by up to $60 million. The budget woes triggered a state review and downgrades from two credit rating agencies over the summer. Administrators have considered closing campuses, which state analysts said will be necessary to align staffing and facilities with enrollment.
LAUSD is one of many US districts facing declining enrollment due to falling birth rates and rising housing costs. The district approved raises and benefits earlier this year to avert a teachers' strike, but now plans worker furloughs and community sessions on consolidating campuses. State officials found the district understated school capacity; 481 of 738 schools operate at or below 60% capacity. A "lack of going concern" warning from the Los Angeles County Office of Education pushed the district into the higher-risk category.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing