The Los Angeles Unified School District has been given 45 days to prove it can responsibly manage its own finances or risk losing significant control over its budget to outside fiscal overseers.

For the nation’s second-largest school district, that is an extraordinary humiliation. It is also entirely deserved.

The Los Angeles County Office of Education has concluded that LAUSD shows “severe” signs of insolvency and could be $231 million in the red, unable to make payroll, by November 2027. A fiscal expert is already working with the district.

If LAUSD fails to satisfy county officials, the next step could be a fiscal adviser with authority to block school board spending decisions. A state bailout could eventually strip the elected board of much of its power.

The warning signs were there for everyone to see.

In April, after tentative labor agreements were announced, I wrote that LAUSD was buying labor peace with money it did not have.

In June, before the school board formally approved those agreements, county officials warned they were too expensive. The board approved them anyway.

Less than a month later, the county’s warning became a formal finding.

The contracts add roughly $1.13 billion in costs this school year, climbing to $1.44 billion in 2027-28. They include a 24% increase over three years for SEIU support staff, nearly 14% over two years for teachers and almost 12% over two years for administrators.

At the same time, the district failed to carry out planned cuts. The board instead overruled its own chief financial officer and pulled $175 million from a retiree health trust fund to make the budget work on paper.

The county said those decisions further “erode confidence” in LAUSD’s financial management.

That is a remarkable rebuke from the government agency responsible for overseeing school district finances. In plain English, the county no longer trusts the board to manage the money.

District officials insist there is no cause for alarm. The unions say new money from Sacramento will materialize. The county’s auditors, who deal in numbers rather than hope, disagree.

LAUSD cannot claim it was blindsided. Enrollment has been falling for years. The district now educates roughly half as many students as it did two decades ago. Temporary federal COVID money was running out. As structural deficits were growing, reserves were shrinking.

A district serving half the students should not need the same bureaucracy, staffing structure and spending commitments it carried at twice the enrollment.

District leaders knew all of this and approved enormous new permanent obligations anyway, even as they contemplated more than 1,000 layoffs, unpaid furlough days and thousands of additional job cuts over the next three years.

This was not rosy forecasting. It was fiscal malpractice.

The reason is obvious: The officials supposedly representing taxpayers are politically beholden to the unions sitting across the bargaining table.

United Teachers Los Angeles and other district unions do far more than negotiate contracts. They recruit candidates, endorse them, finance their campaigns and mobilize the political machinery that puts them in office.

The Los Angeles Times reported this year that a majority of the seven-member board consists of candidates elected with UTLA’s endorsement. In this year’s primary, UTLA spent more than $800,000 defending board member Rocio Rivas alone.

The union’s own endorsement page praised another board member for signing a commitment to support an immediate contract settlement aligned with UTLA’s bargaining priorities.

The unions help elect the board, then return to that same board demanding richer contracts. When the bill arrives, they insist Sacramento should send more money.

This is not collective bargaining in any meaningful sense. The unions have political leverage on both sides of the table.

Meanwhile, LAUSD keeps failing at its core mission: educating children.

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There was no academic turnaround to justify this generosity, no sweeping reform package and no meaningful accountability demanded in return.

Census Bureau data show LAUSD spent $25,631 per student in fiscal 2024, roughly double a decade earlier. Only three of America’s 100 largest districts spent more.

Yet only 46.5% of students met or exceeded state standards in English, just 36.8% did so in math, and only 27.3% met the science standard.

LAUSD is not starved for money. It is failing to turn extraordinary spending into acceptable results.

Those students are the victims of this fiscal disaster.

While union leaders take victory laps over double-digit raises and the politicians they helped elect congratulate themselves for avoiding a strike, children remain trapped in a district that cannot balance its books or consistently teach them to read, calculate and understand basic science.

The coming cuts will land in classrooms, programs and student services. The adults who created the crisis will hold press conferences, blame Sacramento and demand more money.

The students will pay the price.

They always do.

Jon Fleischman, a longtime strategist in California politics, writes at SoDoesItMatter.com.