October 7, 2025

Los Angeles School District Faces $3 Billion Deficit

News Summary

The Los Angeles Unified School District is confronting a $3 billion deficit due to declining student enrollment and rising expenses. With student numbers dropping significantly over the years, the district plans to utilize its reserves again while considering fiscal stabilization strategies. Despite increased funding in targeted programs, the financial outlook remains precarious, with questions raised about resource allocation and sustainability. As LAUSD contemplates ways to cut spending without closing schools, significant challenges lie ahead for public education in the region.

Los Angeles is facing a $3 billion deficit due to declining student enrollment and increased spending, prompting the Los Angeles Unified School District (LAUSD) to tap into its reserves for the second consecutive year. This financial situation is compounded by a statewide trend in California where school funding is heavily reliant on daily student attendance, and LAUSD’s student population has now dropped to about 408,000, a decline of more than 40% over the past two decades.

The district’s approach to managing this budget shortfall includes an $18.8 billion budget that will draw from diminishing reserves. LAUSD Superintendent Alberto Carvalho has indicated that severe financial uncertainty is affecting public education in the area. Despite these financial challenges, the district has not yet resorted to closing schools or significantly reducing staff.

The budget for the upcoming fiscal year has increased funding towards specific programs, including:

$175 million for initiatives supporting Black students.
$5 million designated for programs assisting immigrant students.
$2 million aimed at supporting LGBTQ+ students.
$1 million to enhance green space on school campuses.

Despite these allocations, the district anticipates the need for a fiscal stabilization plan, which is a requirement when a school district’s financial obligations are at risk. This plan may involve tough decisions including possible school closures, layoffs of non-school-based staff, and reductions in budget carryover for individual schools.

In the face of the current financial landscape, LAUSD’s projected structural deficit for the 2028 fiscal year stands at $1.3 billion. This has raised alarms within the district, especially since LAUSD received approximately $26,900 per student in fiscal year 2023, translating to over $537,000 per classroom of 20 students. However, between 2012-13 and 2024-25, while the district lost 164,000 students, it increased its non-teaching staff by over 17,000, raising questions about efficiency and allocation of resources.

The financial crisis has intensified with the expiration of COVID-19 relief funds, further straining the district’s budget. In contrast to LAUSD’s strategy of dipping into reserves, other districts such as Pasadena and Santa Ana Unified have taken more drastic measures by laying off hundreds of staff. Legal stipulations in California mandate the draft of a fiscal stabilization plan under these circumstances, illustrating a frontline necessity for accountability and careful management of educational resources.

There are discussions about potential restructuring in LAUSD that might involve cutting spending, expanding school choice, and focusing on academic improvements. Future fiscal decisions could have profound impacts on educational programs and staffing levels, with ongoing negotiations with employee unions about proposed budgetary amendments bringing mixed reactions.

Overall, while LAUSD strives to maintain its educational programs amidst financial turbulence, significant challenges loom as the district grapples with the implications of declining enrollment and rising operational costs, leaving educators and stakeholders with an uncertain outlook regarding the future of public education in Los Angeles.

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Additional Resources

Author: STAFF HERE LOS ANGELES WRITER

LOS ANGELES STAFF WRITER The LOS ANGELES STAFF WRITER represents the experienced team at HERELosAngeles.com, your go-to source for actionable local news and information in Los Angeles, Los Angeles County, and beyond, specializing in "news you can use" with coverage of product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise from years of dedicated reporting and strong community input, including local press releases and business updates, while delivering top reporting on high-value events like the Academy Awards, LA Auto Show, and Los Angeles Marathon, extending coverage to key organizations such as the Los Angeles Area Chamber of Commerce and the Los Angeles Tourism & Convention Board, plus leading businesses in entertainment and technology like Warner Bros. and SpaceX, and as part of the broader HERE network including HEREAnaheim.com , HERECostaMesa.com , HEREHuntingtonBeach.com , and HERESantaAna.com , providing comprehensive, credible insights into Southern California's dynamic landscape. HERE Anaheim HERE Beverly Hills HERE Coronado HERE Costa Mesa HERE Hollywood HERE Huntington Beach HERE Long Beach HERE Los Angeles HERE Mission Viejo HERE San Diego HERE Santa Ana

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