The LAUSD Strike and the State Budget Deficit: Train Wreck Ahead

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Regardless of how the UTLA negotiations shake out, the question is whether the district will have the money going forward to pay for the new expensive SEIU contract and what will surely be an expensive UTLA contract once finalized.

While coverage of the recent strike by Los Angeles teachers and school staff members has focused on the immediate wage demands of the unions and the impact on students and their families, the bigger and looming issue is how California’s growing state budget deficit could impact any collective bargaining agreement.

The staff union, the Service Employees International Union (SEIU), ultimately received a 30 percent wage increase for its members in the deal struck between the union and the school district.  In separate negotiations that are ongoing, the United Teachers of Los Angeles is demanding a 20 percent raise for teachers over a two-year period.

Regardless of how the UTLA negotiations shake out, the question is whether the district will have the money going forward to pay for the new expensive SEIU contract and what will surely be an expensive UTLA contract once finalized.

University of Nevada, Las Vegas education policy professor Bradley Marianno, who has studied teacher strikes, warned, “Right now we’re coming off a substantial federal investment in education,” including the $190 billion in federal COVID relief funds to schools.

Yet, despite those extra dollars, Marianno pointed out, “a lot of urban school systems are dealing with declining enrollment, so they’re losing funds at the same time.”

In California, enrollment in regular public schools declined by more than a quarter million students during the pandemic.  Because districts receive state funding based on the number of students attending school, fewer students mean fewer tax dollars.

Going forward, the enrollment picture for Los Angeles is bleak.

It is estimated that enrollment in Los Angeles schools will nosedive by an eyebrow-raising 30 percent over the next decade.

The number of LAUSD students will fall from the current 430,000 to 309,000.

“There are a number of unsustainable trends,” warns LAUSD Superintendent Alberto Carvalho.  “The storm is brewing.”

According to Carvalho, “Los Angeles Unified is facing an alarming convergence and acceleration of enrollment decline and the expiration of one-time state and federal dollars, as well as ongoing and increasing financial liabilities.”

“You’re going to have to exit staff because you won’t need the number of teachers you have,” says Daniel Domenech, head of the American Association of School Administrators.

Even more immediate than the declining enrollment, however, is the burgeoning state budget deficit.

A recent report by the Legislative Analyst’s Office (LAO) offers gloomy news about California’s coming budget woes.

According to the LAO, “Due to a deteriorating revenue picture relative to expectations from June 2022,” the state “will face a budget problem in 2023-24.”

For 2022-23 and 2023-24, “Our best estimate is that revenues for these two years will be roughly $10 billion lower” than what Governor Gavin Newsom had estimated for those two fiscal years.

The LAO says that the lower revenues will cause an $18 billion budget deficit for 2023-24.

However, if there is a recession, which many experts are predicting, the LAO estimates “revenues would decline an additional $30 billion to $50 billion.”

The LAO concludes that the governor’s current budget proposal “will likely be unaffordable in future years.”

Indeed, even the Newsom administration projects that the state will face a cumulative operating deficit of $22 billion from 2024-25 to 2026-27.  Again, bad economic conditions could make things even worse.

These budget deficits mean that spending will have to be cut, especially if the economy falls apart.  That spending reduction could include cuts to schools, which would spell disaster for school districts that commit to expensive multi-year union contracts at the same time that state school funding dips.

Plunging enrollment, higher union labor costs, and falling state funding portend a fiscal catastrophe for districts like Los Angeles.  All the more reason to give parents greater school choice options, such as Arizona’s education savings account program, which allows funding to follow the child to non-public educational alternatives that meet his or her needs better than academically and financially bankrupt government schools.

Lance Izumi is senior director of the Center for Education at the Pacific Research Institute.  He is the author of the new book The Great Parent Revolt: How Parents and Grassroots Leaders Are Fighting Critical Race Theory in America’s Schools.





Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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