Los Angeles Budgeted $87 Million for Lawsuits. It Paid $286 Million.

Los Angeles's Council adopted an $87.37 million budget for citywide legal settlements and judgments in fiscal year 2024-25 — the amount it had budgeted, essentially unchanged, for years.▸ By June 30, 2025, the city had actually paid out $286.55 million, a $199.18 million overrun financed by $202.44 million in mid-year budget amendments, according to the City of Los Angeles's FY2025 Annual Comprehensive Financial Report, the Controller's audited year-end accounting. The year included the January 2025 Palisades fire, which the report notes burned nearly 24,000 acres and destroyed an estimated 7,800 structures, and whose recovery costs the city says are still being worked out. The overrun helped push the city's Reserve Fund below its own policy floor, even as the FY2026-27 Proposed Budget shows the Los Angeles Police Department — the department whose payouts have driven the largest share of the city's settlement bill in recent reporting — funded to run thousands of sworn officers short of what it is authorized to employ.

The city's Liability Claims account sits in the General Fund's non-departmental budget, separate from any single department.▸ The Council adopted $87.37 million for it in FY2024-25, then amended that appropriation upward by $202.44 million over the course of the year — to $289.81 million — to keep pace with actual settlements and judgments. Final claims paid came to $286.55 million, leaving $3.26 million unspent against the amended total. The pattern is not new: the original budget figure had gone essentially untouched for years even as annual payouts grew, according to reporting on the Controller's office's review of the account (see Sources). The city's own FY2026-27 budget shows the adjustment sticking only partway — the adopted FY2025-26 appropriation rose to $187.37 million and the FY2026-27 proposal to $210.37 million, both still below what FY2024-25 actually cost.

The city's Reserve Fund Policy targets a balance equal to 5.0% of General Fund revenues, with a 2.75% floor reserved for true emergencies.▸ The fund stood at $648.3 million on July 1, 2023. By July 1, 2024, it had fallen to $330.6 million — 4.12% of the General Fund budget, below the policy target — which the ACFR attributes directly to "the City using the reserves to address overspending and revenue shortfall." The Council subsequently deposited $121.8 million of FY2025-26 budgeted receipts back into the fund, lifting the adjusted balance to $401.9 million by July 1, 2025, or 4.91% — an improvement, but still short of the 5.0% target the policy sets.

The FY2026-27 Proposed Budget states plainly, in its own footnote to the Police Department's appropriation, that "the Department has 10,757 authorized sworn positions" but anticipates "a total of 8,555 sworn officers on payroll on July 1, 2026," with projected attrition of 510 during the fiscal year.▸ Funding is provided to hire 13 academy classes — 510 officers — which is enough to replace the officers expected to leave and hold the force at 8,555 through June 30, 2027, not to close the 2,202-officer gap to authorized strength. Separately, the Controller's office has reported that LAPD accounted for the largest single share of the city's FY2025 liability payouts — $152 million of the $287 million total, more than half — according to news coverage of the Controller's claims data; that department-level breakdown is not independently confirmed in this piece against a directly linkable primary table, so it is presented here as sourced through that reporting rather than as a verified headline figure.

Liability claims and Reserve Fund figures are drawn from the City of Los Angeles's audited FY2025 Annual Comprehensive Financial Report and cover fiscal year 2024-25 (July 1, 2024 – June 30, 2025) unless otherwise noted. LAPD staffing figures are the city's own FY2026-27 budget projections and are subject to revision as actual hiring and attrition unfold over the year.