Los Angeles schools are breaking because a shrinking enrollment base is carrying a school system built for a larger city—not because teachers discovered somebody else’s money. In “Los Angeles Schools Run Out of Other People’s Money”, Wall Street Journal editorial-board member Allysia Finley argues that pandemic aid, wealthy taxpayers, and union contracts inflated spending until the money ran out. Her receipts are real. Her conclusion is upside down.
Let’s concede the strongest point first. LAUSD agreed to expensive labor contracts while facing an $877 million projected deficit. The agreements are expected to cost $1.13 billion this year and $1.44 billion next year. Teacher pay is set to rise 14% over two years. Compensation for non-instructional employees—including custodians, aides, and cafeteria workers—is set to rise 24% over three years. Principals’ and assistant principals’ pay will rise 12%. Pensions add roughly a quarter to 30 cents to every dollar of teacher compensation.
That is not a minor budget detail. A district cannot promise permanent costs against temporary money and then act surprised when the bill arrives.
Retiree health funds are not a spare checking account. Tapping them to cover current promises is not budgeting. It is moving the bill to a darker room.
But the bill did not arrive because teachers discovered a secret vault marked “other people’s money.” It arrived because the district lost children while keeping too much of the machinery built to serve them. Between 2013 and 2023, LAUSD enrollment fell 35% while inflation-adjusted compensation spending rose about 27%, according to the Reason Foundation study Finley cites. Over the past two decades, enrollment has fallen to nearly half its former size.
The district is funded largely according to daily attendance. Fewer students means less revenue. Salaries, buildings, pensions, transportation, nurses, counselors, administrators, and other fixed costs do not shrink at the same speed.
That is the mechanism.
Not socialism. Not a morality tale about irresponsible teachers. Not “wealthy Californians” wandering into the classroom with a blank check.
California funds districts like a vending machine: one student arrives, one dollar appears. The building still needs a roof when three students leave.
A school district with fewer children needs fewer classrooms and a different staffing plan. It also needs time to make that change without throwing thousands of workers and families into a ditch. LAUSD used temporary federal pandemic aid to preserve a larger payroll, then signed contracts that made the temporary arrangement permanent. The district mistook a bridge for a foundation.
The unions deserve criticism for accepting contracts the district could not afford. They do not deserve to become the entire explanation. The Reason study says non-instructional staff accounted for nearly all of the spending growth. Counselors, social workers, nurses, and administrators are not interchangeable, and some are essential. But a district that loses more than a third of its students cannot keep every line on the organization chart and call the result compassion.
A union contract can be unaffordable. A funding formula can be foolish. Both facts fit in the same paragraph.
Finley’s column performs the familiar trick of treating the contract as the whole expense and the funding structure as weather. Enrollment fell sharply, especially after the pandemic. Families face high housing costs. Whatever combination of housing, migration, family choice, and post-pandemic change drove them away, the financial fact is plain: fewer students do not automatically make a school system proportionally cheaper.
The wealthy are not a stable funding formula either. California’s 2012 tax increase raised the top income-tax rate from 10.3% to 13.3%, and much of the resulting revenue goes to schools and other public services. Per-pupil spending more than doubled after the tax increase. That money helped build a larger floor for students. It did not solve the underlying problem that families left, enrollment fell, and the state still tied funding closely to attendance.
A buoyant stock market can produce large capital gains. An AI boom can produce wealthy engineers. Neither is a durable operating base for elementary schools. An education budget built on capital gains, tech windfalls, and a hoped-for IPO is a budget wearing a party hat.
Public institutions should not have to pray for the next initial public offering.
Nor is “tax the rich” a school-finance plan. California needs broad, durable revenue and honest long-term planning. But the answer is not to pretend that every dollar of state support is evidence of decadence, or that every public worker is a trespasser on somebody else’s fortune. The question is whether the state will pay for schools through a formula that matches the costs schools actually carry.
So what do we build instead?
California needs a multiyear transition fund for districts facing sharp enrollment declines. The money should preserve classroom services while districts reduce buildings, contracts, and administrative layers over time. It should be tied to a public plan with visible benchmarks, not handed over as a blank check. A district cannot safely cut around children in one budget cycle. It also cannot preserve every old commitment forever.
The state should separate core school funding from the daily-attendance roller coaster. California should provide a base payment for the building and core staff each campus must maintain, then add money for actual enrollment and student needs. That base should cover fixed costs, special education, nurses, transportation, and essential support staff. It should decline on a published schedule as districts consolidate excess capacity.
Children do not become cheaper to educate because three families move away.
Labor contracts need a different bargain. Workers should receive decent pay, strong benefits, and a real voice. In return, contracts must recognize enrollment, staffing needs, and the difference between protecting a worker and preserving every position forever. Contracts should include automatic triggers when revenue falls. They should support retraining, reassignment, and time to move into needed roles before layoffs become the only tool left.
Protect the worker. Do not fossilize every job.
The district also needs genuine public accountability. It should publish multiyear revenue and contract projections before bargaining begins. Residents deserve a plain accounting of what any raid on retiree health funds, Medicaid billing, or lawsuit against social-media companies is meant to buy and when. A school budget is not a casino ticket. It is a promise made to children.
The state should make school quality worth staying for: smaller class sizes where they matter, counselors and nurses, safe buildings, reliable transportation, and community-school services families can use. That costs money. So does every functioning public institution.
The alternative to this cycle is not austerity dressed up as moral instruction. It is a public school system with a guaranteed floor, stable state funding, honest bargaining, deliberate consolidation, and enough room to adjust when enrollment changes. Build that, and California can protect students, pay workers properly, and let bad financial plans fail without making the schools fail with them.
The money was never the whole problem. The missing piece was a durable institution built around the children who are actually there.