The Cost Shift Hiding in LBUSD’s Budget

Employee benefits are complicated, but the question is simple: will the Laguna Beach School Board protect its staff or ask them to absorb more?

In LBUSD’s proposed 2026–27 budget materials, one line immediately stood out to me.

The Budget Overview shows planned spending dropping from about $93.49 million to $90.15 million. Certificated salaries increase from about $35.57 million to $36.10 million, classified salaries increase from about $13.22 million to $13.58 million, and combined, salaries increase by about $892,000.

Employee benefits go down.

They decrease from about $21.60 million to $21.45 million, a drop of roughly $145,000. The budget shows certificated salaries up 2.1%, classified salaries up 2.7%, and employee benefits down 0.7%.

That is what sent me down the rabbit hole.

I know school district budgets are mostly people, as they should be. Public education runs on teachers, aides, counselors, office staff, custodians, specialists, nurses, administrators, and the people who keep the system functioning every day.

In California, roughly 80% of current school spending goes toward staffing and LBUSD is right in that range. The district’s 2025–26 budget stated that compensation accounted for 77% of the general fund. For 2026–27, LBUSD lists about $71.14 million in personnel and staffing costs against a $90.15 million spending plan. That is about 79%, with the caveat that overall planned spending is lower, which makes compensation a larger share of the budget.

So the issue is not that Laguna spends too much on employees, but what happens when a small raise meets rising healthcare costs.

LBUSD’s benefits line is not just health insurance. It includes STRS, PERS, Medicare, unemployment insurance, workers’ compensation, retiree benefits, OPEB, and health and welfare benefits. In the proposed 2026–27 budget, total employee benefits are about $21.45 million. Health and welfare benefits are about $5.50 million of that total, or roughly 6.1% of the district’s entire spending plan.

Healthcare costs themselves are moving fast. Nationally, the average employer-sponsored family premium rose 6% in one year, and single coverage rose 5%. California is even higher, with family premiums increasing 24% since 2022, outpacing both inflation and wages.

So when LBUSD shows a small salary increase and a decrease in benefits, the public should ask what employees are actually gaining.

A 2% raise can disappear very quickly when healthcare premiums increase. A raise on paper can become a wash in real life. For some employees, especially those covering a spouse or family, it can become a loss.

The Michael Bishop healthcare review helped me understand why this is so complicated.

LBUSD’s health plan year begins October 1, and the district’s fiscal year begins July 1. That means the district builds and adopts its budget before final healthcare renewal rates are fully known. The district is budgeting on one calendar while healthcare costs move on another.

Then there are the plans: PPO, HMO, individual, spouse, children, family. Employees get married, divorced, have babies, retire, change jobs, add dependents, lose dependents, and move between eligibility categories. Those changes do not always happen neatly at the start of a fiscal year.

I am not pretending to be a healthcare expert. I am learning this as I go because the budget number did not sit right with me. But the more I learn, the clearer it becomes that this system is easy to get wrong without serious guardrails.

The review found that from 2022–23 through 2025–26, employee contributions were not set in accordance with the collective bargaining agreements. The district covered a larger share of the total annual healthcare costs than it should have under the contract.

The review also points to a systems problem: timing issues, multiple plans, multiple tiers, changing employee census data, contribution caps, and the need for better coordination between Human Resources and Business Services. The recommendations focus on controls, communication, budget comparisons, review of the cap structure, review of plan design, and possible alignment of the plan year with the fiscal year.

But this should not become a quiet excuse to reduce benefit support.

Under the contract, the district pays up to a negotiated cap, and employees pay what is above it. For example, certificated PPO family coverage, the annual district cap is about $25k. The 2025–26 PPO family premium is about $39k, leaving the employee responsible for about $14k, or $1.4k per contribution period.

For Kaiser HMO family coverage example, the annual district cap is about $21k. The 2025–26 premium example is about $28k. That leaves the employee responsible for about $7k, or about $700 per contribution period.

Those are not small numbers, and that is why salary and benefits have to be discussed together. A district can offer a modest raise, hold to the cap, reduce its benefit costs, and still leave employees carrying a larger share of the burden.

That may be legal under the contract or clean on a spreadsheet, but it still deserves public scrutiny.

The 2021 MOU shows that the district has used bargaining to address healthcare pressure before. LBUSD and LaBUFA agreed to cover increased health and welfare benefits of about $350,000. To me, that says the pressure on healthcare costs was already obvious. The district and union saw the strain and reached an agreement to address it.

Now we are back in a similar moment, only with active negotiations.

I know the public is not privy to what either side is proposing and I understand bargaining has rules, which exist for a reason.

But the budget, review, caps, and board’s financial choices are public. So the community should come to the board with direct questions at June 8th’s meeting.

What is the board’s plan to protect employees from rising healthcare costs?

Is the district budgeting for a real compensation increase, or only a raise that gets eaten by premiums?

Will the board consider additional benefit support, a different cap structure, or better plan design?

How will the district address administrative failures without turning the correction into a cost shift?

What solution is the board willing to own?

LBUSD is not a district scraping by. Our proposed 2026–27 budget describes strong financials, full funding of LCAP goals, healthy reserves in other funds, and a AAA stable rating. Money is never unlimited, but choices exist.

This district prides itself on excellence. But excellence is expensive because good teachers, classified staff, counselors, specialists, and support employees do not stay because a district says nice things about them at board meetings. These people stay when compensation reflects the cost of living, healthcare costs, and the value of the work.

I started with one line in the budget and ended up with a much bigger concern.

Healthcare benefits are complicated, and the review proves that. Rising healthcare costs are real, and the state and national numbers prove that too.

Now the board needs to prove that fixing an administrative problem does not mean lowering support for employees and that a small raise will not be allowed to disappear into healthcare costs.

They need to prove that Laguna Beach Unified is still willing to invest in the people who make the district worth bragging about.