Introduction to the Issue
The Los Angeles school district will sell up to $500 million in bonds to pay for past alleged sexual misconduct — loans that must be paid back over time by the school system — part of a blizzard of claims dating back as far as the 1970s that are affecting government entities, churches and private organizations up and down the state.
The Scope of the Problem
L.A. Unified alone has faced about 370 sexual abuse claims, according to information released Monday. By issuing bonds, which were approved at a June 3 school-board meeting, the nation’s second-largest school system stretches out repayments over 15 years, diluting the toll on its annual budget — and on services and programs.
Financial Implications
Officials said Monday that L.A. Unified would initially sell $303.6 million in bonds — because that is the amount needed to retire relatively low-cost, but short-term, loans that the district had been using for payouts, which have totaled a staggering $302 million in the current fiscal year alone. While Supt. Alberto Carvalho now has the authority to go up to $500 million in bonds, “estimates indicate that additional amounts over $500 million may be required,” according to a district spokesperson.
Bond Details
The bonds being used are called judgment obligation bonds. Unlike traditional school-construction and modernization bonds, voter approval is not needed for these bonds. While local voter-approved school bonds are paid for with higher property taxes, these judgment bonds are repaid out of the school system’s regular budget.
Managing Future Claims
In a separate move, the district recently set up its own insurance company to manage future abuse claims. The payments are related 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.
Impact of Assembly Bill 218
In addition, on an ongoing basis, the law extended 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, sports groups and nonprofit organizations. In some cases, the alleged perpetrators have been dead for decades.
Claims Against L.A. Unified
Since Jan. 1, 2020, approximately 370 people have come forward with child-abuse claims under the provisions of AB 218, the district disclosed Monday. Approximately 76 of those claimants allege abuses dating back to 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 are active.
Financial Management
“Since the passage of AB 218 we’ve received lawsuits from dozens of adult plaintiffs who may have been victims of sexual abuse as students decades ago,” said school board member Tanya Ortiz Franklin. “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.” With the bonds, she added , “we can pay those settlements over time — approximately 10% of the total cost for each of 15 years — rather than all at once.”
Broader Implications
If, for example, the full $320 million were paid out at once, it would represent 2% of the district’s $18.4-billion spending plan for the current year — a huge chunk for one expenditure that would be drawn from education and employee programs and services. In a statement, the district recognized the competing imperatives of justice for victims and financial responsibility to the current generation of students.
Balancing Competing Demands
“Los Angeles Unified unequivocally believes that survivors of sexual abuse deserve to be heard, supported, and empowered to pursue justice on their own terms,” the district statement said. “AB 218 has enabled victims of childhood sexual assault to seek justice with less legal limitations. However, we must also acknowledge the very real and unintended consequences this law may have on public education, specifically that school districts — which rely entirely on taxpayer funding to serve students — may face lawsuits from decades past, even when current leadership, policies, and practices have changed dramatically. These legal actions, while rooted in rightful grievances, have the potential to bankrupt entire school systems.”
Conclusion
The payout is substantial even in installments. If the district used all $500 million of the authorized bonds, it would pay back an estimated $51 million a year in principal and interest, taking the total cost of financing above $768 million, using figures supplied by L.A. Unified. L.A. Unified is far from alone in dealing with sexual abuse settlements linked to AB 218. The school system has pushed through waves of reform meant to curb the potential for such misconduct — including tip lines, updated policies, regular employee training and special investigation teams. The school system also has been in disputes with insurance companies, which contested their responsibility to pay for misconduct claims.
FAQs
- Q: How much will L.A. Unified sell in bonds to pay for past alleged sexual misconduct?
A: Up to $500 million. - Q: How many sexual abuse claims has L.A. Unified faced?
A: About 370 sexual abuse claims. - Q: What is the purpose of the bonds being issued?
A: To stretch out repayments over 15 years, diluting the toll on the annual budget. - Q: What law has enabled victims of childhood sexual assault to seek justice with less legal limitations?
A: Assembly Bill 218, passed in 2019. - Q: How will the bonds be repaid?
A: Out of the school system’s regular budget. - Q: What is the estimated total cost of financing if the district uses all $500 million of the authorized bonds?
A: Above $768 million.
