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The Los Angeles Unified School District board has authorized issuing up to $500 million in judgment obligation bonds to settle hundreds of past sexual misconduct claims, representatives said. The move shifts the financial burden of historical liabilities onto current taxpayers and students.
Board approval occurred at a June 3 meeting, allowing Superintendent Alberto Carvalho to issue $303.6 million initially—the amount needed to replace short‑term loans used for prior payouts—while retaining authority to issue up to $500 million if required, a district spokesperson said. The district expects to spread bond repayments over 15 years, thereby diluting the impact on its annual budget.
L.A. Unified has faced approximately 370 abuse claims since Assembly Bill 218’s passage in 2019, which lifted the statute of limitations for historic claims, with 76 citing incidents from the 1940s through the 1970s and an additional 45‑50 from the 1980s. Dozens of these cases remain active; many have been settled or dismissed, according to district data.
School board member Tanya Ortiz Franklin said delaying repayments protects current students. “If they all prevailed in the same fiscal year, we would pay hundreds of millions of dollars from our current budget, forcing impossible decisions about what to take away from this year’s students in order to pay for the wrongs done to student victims of the past,” she said. She added that the bonds will spread annual payments over approximately 10% of the total settlements over 15 years.
Financial analysts estimate that the full use of the $500 million bond authorization could cost more than $765 million—including an estimated $51 million per year in principal and interest—based on current interest rates. A district financial overview indicates that a lump-sum payout of $302 million would have consumed nearly 2% of the district’s $18.4 billion annual budget, potentially detracting from education and employee programs.
To prevent future misconduct claims, the district has implemented reforms, including anonymous tip lines, updated conduct policies, regular employee training, and the development of specialized investigative teams. Superintendent Carvalho authorized the creation of a captive insurance company to manage future claims, although that coverage does not apply to older claims. Ortiz Franklin said, “The captive insurance covers current risks, not these claims from decades ago.” However, the combination of bonds and insurance is expected to “help us meet our long- and short-term liabilities.”
Supporters of AB 218 argued that it would give survivors long-delayed justice. The law extended statutes of limitations to age 40 or within five years of discovery. However, critics—including the California Association of School Business Officials and the Howard Jarvis Taxpayers Association—warned that the financial strain would undermine school operations. Jon Coupal of the taxpayers association called the resulting debt “bad policy” that would “hang around the necks of school districts for decades.”
A state review by the Fiscal Crisis and Management Assistance Team (FCMAT) indicates districts statewide may face $2 billion to $3 billion in claims under AB 218. FCMAT recommended statewide reforms, including reporting options, awareness, and consideration of a centralized victim-compensation fund to prevent individual district bankruptcy, but this has not garnered legislative support.
Other California districts face similar challenges. In April, L.A. County approved a $4 billion settlement involving over 6,800 abuse claims, financed by bonds, reserve funds, and budget cuts, with payment schedules extending into 2050.
L.A. Unified officials have stressed the district’s urgency for broader state solutions. In a statement, the district said: “The district urges lawmakers, advocates, and state leaders to work with school districts to ensure we can meet our moral obligation to survivors while still protecting the essential right to a free, high‑quality public education for all students.”
Also Read: https://www.lapost.com/articles/lausd-cell-phone-ban-officially-goes-into-effect
