Laguna Beach USD: special‑education costs far exceed program revenue; legal and settlement costs rising

During the May 12 budget study session the district’s chief business officer highlighted a widening gap between special‑education revenue and costs. Staff projected special‑education revenue near $2.91 million for 2026–27 and special‑education expenditures around $13.45 million, producing a large shortfall that the district covers from the general fund. "We are projecting the cost for special education to be $13,450,000," the CBO said, noting the district will continue to contribute millions from unrestricted funds to meet IEP‑related costs.

Trustees also examined legal costs and settlement trends. The CBO said legal expenses and settlements—much of which staff tied to special‑education cases and public‑records requests—have increased in recent years. He said that legal fees were a quarter‑million in earlier years and that current projections for settlements and legal work are north of $1,000,000 for the fiscal year, driven largely by special‑education settlement activity. The district reported that in the last five years it has not paid a non‑special‑education settlement; settlements cited to date are predominantly special‑education related.

Trustees asked how legal and settlement costs were allocated across funds and whether ongoing litigation (including suits arising from personnel or contract disputes) will affect future budgets. The business office said legal invoices can lag by months and that the district tracks legal costs by program when possible and will include projections in interim reports.