The Los Angeles school district is set to sell up to $500 million in bonds to address past claims of sexual misconduct. This decision comes in response to a surge of allegations dating back to the 1970s, with the district facing around 370 claims of sexual abuse. The bonds were approved by the school board on June 3 and will allow the district to extend repayments over 15 years, easing the immediate financial burden on its budget.
Initially, the district will issue $303.6 million in bonds to cover existing short-term loans used for payouts, which have reached an eye-watering $302 million in the current fiscal year. While Superintendent Alberto Carvalho has the authority to issue up to $500 million in bonds, district officials have indicated that more funds may be necessary.
These bonds, known as judgment obligation bonds, differ from traditional school construction bonds because they do not require voter approval. Instead of being funded by property taxes, they will be paid back from the district’s regular budget.
In addition to the bond sale, the district has created its own insurance company to help manage future abuse claims. This move is part of a broader strategy to handle the financial implications of the claims arising from Assembly Bill 218, which allows adults to file lawsuits over childhood sexual abuse. The law opened a three-year window for claims that ended in late 2022 and extended the deadline for filing claims related to childhood sexual assault to age 40 or within five years of when victims realize the harm done to them.
Since the beginning of 2020, approximately 370 individuals have come forward with claims under this law, with many alleging abuse that occurred decades ago. While some cases have been settled or dismissed, over 275 claims remain active.
School board member Tanya Ortiz Franklin emphasized the need for this financial strategy, stating that if all claims were settled in a single year, it would significantly impact the district’s budget and affect current educational services. With the bond plan, the district can manage these settlements over time, paying about 10% of the total cost each year for 15 years.
If the district were to utilize the full $500 million in bonds, it would result in annual repayments of approximately $51 million, bringing the total repayment amount to over $765 million.
The Los Angeles school district is not alone in facing the financial fallout from these claims. Other public and private organizations across California are dealing with similar issues, including the Los Angeles County Board of Supervisors, which recently approved a $4 billion settlement for abuse claims related to county-run facilities.
The district’s leadership acknowledges the importance of addressing past wrongs while also highlighting the potential impact on current students and educational programs. They urge lawmakers and advocates to work collaboratively to ensure that the needs of survivors are met without compromising the quality of education for present and future students.