In late January, Innovate attended a budget briefing hosted by Los Angeles Unified School District (LAUSD) Superintendent Alberto Carvalho and senior district leadership. The meeting brought together a small group of trusted community partners, including parent organizations, foundations, afterschool providers, and community-based groups, to walk through the district’s financial outlook and the difficult decisions ahead.
For Innovate, understanding LAUSD’s budget is central to our work advancing equitable, student-centered policy and practice. Budget decisions shape what students experience every day in classrooms, afterschool programs, and support services, particularly in communities that have historically been under-resourced. That is why we pay close attention to how financial choices align with the district’s commitments.
The message from district leadership in January was direct: LAUSD is facing a deep and growing structural deficit.
The Big Picture: A $1.6 Billion Problem
LAUSD projects a $1.6 billion budget deficit by the 2027-28 school year, driven by two main forces:
- Sharp enrollment decline: Student enrollment is down 46% from its peak in 2001, which directly reduces state funding.
- The end of pandemic-era funding: Temporary federal and state COVID relief dollars (including Elementary and Secondary School Emergency Relief, or ESSER, funds) were used to support ongoing costs, particularly staffing. Those dollars are now gone.
To close the gap, the district has launched a Fiscal Stabilization Plan aimed at saving $1.4 billion over two years.
What’s on the Table
District leaders were clear that savings at this scale require significant structural changes.
- Staffing reductions – proposed cuts include:
- $150 million from central office staffing
- $60 million from unfunded positions
- $99 million from Student Equity Needs Index (SENI) allocations
- Up to 800 central office positions could be eliminated, reducing the capacity of the district to support school leaders and educators.
- Program and operational changes:
- Elimination of unused funds and long-vacant positions (positions open for 180+ days)
- Reduced transportation services
- No carryover of funds year to year for SENI or afterschool/Expanded Learning Opportunities Program (ELO-P) funding
Timeline
The school board is expected to vote on layoffs on February 17, 2026, and staff would be notified by March 15, 2026. Most changes will take effect in August 2026.
Priority Investments
Even amid cuts, LAUSD leadership emphasized that certain investments remain priorities in the 2025–26 budget, including:
- $175 million for the Black Student Achievement Plan
- $26 million for arts education
- $700 million for SENI funding (using the same equity-driven formula)
Funding for Title I, English learners, foster youth, and the district’s 100 priority schools (the 100 schools identified by the district to have the highest need and therefore receive targeted supports) is described as protected, and district leaders said they are trying to avoid declaring a fiscal emergency, which could trigger larger class sizes and more disruptive changes.
Complicating Factors
Several realities make this moment especially challenging:
- The district is spending more than it brings in, and reserves have dropped by $2 billion over three years
- LAUSD now employs more staff than it has enrolled students, a result of pandemic-era hiring supported by temporary COVID relief funding
- Multiple labor contracts are under negotiation, with proposals that would significantly increase long-term costs
- Ongoing Immigrations and Customs Enforcement (ICE) activity across Los Angeles County is causing many students and their families to leave the district or self-deport from the U.S. , further depressing attendance-based funding
- The district wants to avoid teacher layoffs where possible, particularly among newer educators, and is exploring alternatives to strict seniority-based layoffs
Why This Matters for Families and Communities
Fewer staff and fewer supports will be felt most acutely in communities that already face barriers to stability and opportunity.
This moment calls for transparency, meaningful community engagement, and clear answers to hard questions:
- How will the proposed reduction in central office staff affect the school experience of students day-to-day?
- What supports will replace the central office functions schools currently rely on?
- How will equity commitments hold as budgets tighten further?
Innovate appreciates the district’s ongoing efforts to continue to: 1. Continue to prioritize the needs of LAUSD students, particularly the most historically underserved students in the district, as they engage in ongoing labor negotiations, and 2. Hold community briefings with community based organizations to keep partners and communities informed about next steps.
As labor negotiations and difficult budget decisions continue, we urge both district leaders and leaders of UTLA to prioritize the following:
- Keep schools open and do everything necessary to avoid a teacher strike. Schools are one of the only safe places for many students in our community and they provide essential services beyond academic support, from nutrition to access to health. At this critical moment, it is essential to keep schools open
- Engage and communicate with families. Do everything possible to provide ongoing, accessible spaces and easy to understand materials for families to understand how the district’s budget forecast and Fiscal Stabilization Plan may affect the academic and socio-emotional experience of their children.
Looking Ahead
The choices LAUSD makes over the next year will shape the district for the next decade. For Innovate, this moment underscores why sustained analysis and community engagement matter. As LAUSD works to stabilize its finances, we will continue to track how proposed cuts and protections affect students and families, elevate questions that communities are asking, and push for transparency around decisions that will shape the district for years to come.
Budget stability is necessary, and it must be pursued in a way that protects opportunity, centers equity, and ensures that the students who rely most on public schools are not asked to bear the greatest burden.
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