LA Unified School District: Financial Crisis Ahead?

Via CALmatters we have an interesting look at a potential financial crisis at LAUSD.

Why would we have a crisis when there is currently a $548 million surplus?

But in coming years, school officials project growth in employee pension and healthcare costs will eclipse the change in revenue. By 2020, projections show a $408-million shortfall. And that doesn’t account for some employees’ recently won pay raises or the impact of an increasingly likely economic recession.

Yep, here we go again, state pensions are likely to cause issues in the future. Of course, per the article, everyone knew this in 2014, but no moves have been made yet to correct for this future disaster, which is now only a couple years away. As per the article, districts prior to 2014 contributed 8% of their payroll to pensions. By 2020, that goes to 19%. That's more than a double. And read that last sentence, the $408 million shortfall doesn't take into account the 3% pay raise that was given to some employees.



And then there's this quote:

Over the next two years, the district expects its pension and healthcare costs to climb $115 million, a 6% increase, while its revenue dips about $150 million, a 2% decline. 

The reason given for the declining revenues is that parents are sending their students to charter schools.

So that's a $265 million swing in finances. It doesn't explain why we're going from a $548 million surplus to a $408 million deficit. It makes you wonder what other expenses are hitting other than just pension and healthcare cost increases.

How does the union what to make up this deficit: tax increases, of course.