With costs mounting for alleged sexual misconduct cases, the Los Angeles school board has approved $250 million in bonds — on top of $500 million already authorized less than a year ago — to fund payouts to victims.
The cost of both bond issues, including financing, is expected to be more than $1 billion, based on cost estimates provided by the district, and will be paid out of the district’s general fund over at least a decade. The gradual repayment will lessen an immediate budget strain.
The board’s unanimous action this week authorized the administration to purchase a new round of “judgment obligation bonds.” This special instrument is essentially a loan from investors that can be drawn down as needed to pay off sexual misconduct claims as they arise.
The additional money is needed, said L.A. schools Supt. Alberto Carvalho, because “we are exhausting funds available to us to satisfy sex and molestation cases that have been brought against the district, in many instances, reflecting cases that go back decades, that the district is not willing — not able — to successfully defend.
“So, these multi, multimillion-dollar judgments against the district need to be satisfied, and without the judgment-obligation bonds, we would have to use general fund as cash to satisfy them,” he said.
Carvalho explained the need for the bonds in response to a question from Karla Griego, the newest of the seven-member elected Board of Education, who appeared stunned by the dollar amounts and asked why they were necessary, what the district was doing to stop the financial hemorrhaging and whether even more claims could be expected.
The district is lobbying for legislative relief, officials told her, and more claims could be forthcoming.
Other than Griego’s questions, there was no board comment or discussion. Last year, at the time of the board’s approval of the original $500 million, there was no public board discussion at all.
Payouts linked to state law
The sex abuse liability is linked to Assembly Bill 218, passed in 2019, which opened a three-year window, concluding at the end of 2022, that allowed adults to file lawsuits over childhood sexual abuse going as far back as the 1940s.
In addition, on an ongoing basis, the law sets the deadline for filing a claim related to childhood sexual assault to the age of 40 or within five years of when victims reasonably should have understood the harm done to them — whichever is later.
Thousands of claims have been filed against religious groups, private and public schools, other government entities, sports groups and nonprofit organizations. At $4 billion, Los Angeles County paid out the largest sex abuse settlement in U.S. history to victims abused as children in county-run juvenile facilities and foster homes in about 11,000 cases.
State legislators are looking at possible changes to AB 218, which critics say is driving local governments to the brink of bankruptcy.
In L.A. Unified, between Jan. 1, 2020, and mid-2025, approximately 370 people came forward with child abuse claims under the provisions of AB 218, according to the school system. About 76 of those claimants allege abuses from the 1940s through 1970s, while an additional 45 to 50 allege abuses in the 1980s.
Dozens of cases against L.A. Unified have settled or been dismissed, according to district data. More than 275 claims were active as of the middle of last year — the most recent update provided.
The issue is not unique to the nation’s second-largest school system. Just over a year ago, an estimate of school district liability throughout California reached $3 billion.
A Times investigation found that nearly 70% of school districts faced no sexual abuse litigation from 2020 through 2024, but more than 1,100 victims have come forward and pressed claims against school districts, with the majority concentrated in Southern California.
The sex abuse payouts “directly ‘compete’ for the same funds used to pay teachers, custodians, bus drivers, textbooks, utilities,” said Michael H. Fine, chief executive of California’s Fiscal Crisis and Management Assistance Team, a state agency that works to identify and resolve financial, operational and data management issues related to school districts.
The liability burden, Fine added, can “adversely impact class sizes, ability of districts to pay competitive wages and benefits, replace aging and broken equipment like playgrounds, and afford specialized services such as mental and behavioral health interventions.”
The substantial cost of the bonds
For L.A. Unified, the payments are substantial, even in installments spread out over years. For the earlier bond authority of $500 million, the annual payment could reach as high as $50 million, based on figures supplied by the district in mid-2024.
The cost of the original bonds and financing together were estimated last year at more than $765 million. The cost of the bonds and financing for the new bonds is estimated at nearly $383 million, according to district documents.
By way of comparison, the district on Tuesday also approved job reductions to protect the solvency of the district over the long term — closing out 657 central and regional office jobs — to achieve a savings of $150 million per year.
There is no one-to-one correspondence between the sex-case payouts and layoffs or the size of employee raises. The district faces budget stress from multiple directions — including the expiration of one-time COVID 19 relief aid and declining enrollment. But the sex-abuse payouts represent a genuine drag on resources for students and employees.
“There is only so much money available to LAUSD,” said law professor David Levine of UC Law San Francisco. “If it has to pay upwards of $1 billion — counting interest on the bonds — to settle old, but worthy, claims there will be that many fewer dollars to educate our children now and in the future.
“A fix needs to come from the Legislature, which imposed this unfunded mandate,” he said.
Even before AB 218, sexual misconduct liability has long been a painful and costly legacy for L.A. Unified. A Times review of media reports — and not all settlements are covered in the news — indicates that the school system was responsible for paying more than $372 million in judgments and settlements between 2012 and 2024.
Transparency and public accountability related to the settlements has been an issue for school districts, including L.A. Unified, which inserted confidentiality clauses in at least seven sexual misconduct settlements since 2000, according to a Times investigation.
In one example, the settlement barred the plaintiff lawyer from any sort of statement — or encouraging others to make a statement — about the compensation deal. It also barred comments that could “defame, disparage or in any way criticize” LAUSD, its employees and leaders.
Only the plaintiffs, their lawyer, “immediate family” and “tax professional” could know about the settlement, according to the agreement.
“If asked about the status of this dispute, plaintiffs counsel may only state, ‘they have voluntarily and fully resolved their claims against the Los Angeles Unified School District,’ or words to that effect,” declares the settlement agreement.
