LAUSD Starts the Year $2 Billion in the Red, With 378,000 Students Projected

The district plans $3.6 billion in cuts over three years, floats furloughs for all employees in 2027-28, and reopens campuses while immigration raids continue near schools.

Los Angeles Unified resumed classes Wednesday with a new superintendent, a third straight year of rising test scores — and a budget that spends about $2 billion more than it takes in, according to LAist's reporting on the start of the 2026-27 school year.

The country's second-largest district is projected to enroll 378,000 students in transitional kindergarten through 12th grade this year. California funds districts on an average of daily attendance, with additional money for each student who is low-income, an English-language learner, unhoused or in foster care. Fewer students in seats, over time, means less money.

The math behind the shortfall

For the third consecutive year, LAUSD plans to cover the gap between spending and revenue with reserves that were largely built from one-time federal pandemic relief dollars. District projections show it will be $231 million short by November 2027.

The L.A. County Office of Education, which oversees local district finances, stepped in during July after the board approved new labor contracts with LAUSD's largest unions. "The financial reality before the District raises serious concerns regarding its ability to meet its financial obligations," County Superintendent of Schools Debra Duardo wrote in a July 2 letter quoted by LAist. The county appointed a fiscal advisor to the district but did not give that person authority to override the board or the superintendent.

What the county wants is detail on how LAUSD will make $3.6 billion in cuts spread over three years. District officials said the plan envisions furloughs for all employees in 2027-28 — which would have to be negotiated with the unions. District staff have previously said the stabilization plan could mean more than 6,000 layoffs, upward of 10% of the current workforce.

The stakes of failing are specific: if district officials ask the state for an emergency loan, it would trigger a takeover that strips the board of decision-making power and would likely take years to undo.

One variable sits outside LAUSD's control. California school funding has risen in recent years, but the state's most recent budget holds back $3.9 billion for schools and community colleges. "No one is asking the state for anything more or less than what we are due," Superintendent Andrés Chait told LAist. "We are not asking for a handout."

Who's in the room

Chait is new to the top job but not to the district, where he spent nearly three decades as an educator and administrator — the first LAUSD insider to lead it in a decade, following Alberto Carvalho and, before him, Austin Beutner. Principals gave him a standing ovation at his July opening-of-schools address at James A. Garfield High School. "I was thinking about how to introduce myself," he said, per LAist. "But then I realized you don't introduce yourself to family."

He also pointed to preliminary state reading and math results showing a third consecutive year of gains. The caveat, as LAist notes, is that most students still do not meet the benchmark in either subject, and statewide results haven't been released for comparison.

Enrollment, and fear

Declining birth rates are shrinking school enrollment statewide, and the drop is steeper in high-cost areas like Los Angeles. District leaders attributed last year's larger-than-expected decline to the "fear and instability" of federal immigration raids, which continue alongside the detention of area parents and children.

Students described adjusting around it. Andrea, a sophomore at Francisco Bravo Medical Magnet High School in Lincoln Heights, told LAist that so many classmates were absent on some days that teachers paused lessons: "What's the point of teaching it if half the class is gone? That really makes everybody behind." Educators patrolled her neighborhood to alert families to ICE activity nearby, which she said made students "feel more safe and more respected." Alvira, a junior at Lake Balboa College Preparatory Magnet K-12 and an immigrant from Bangladesh, said she carried a photocopy of her passport until she got a REAL ID: "Just in case anything happens, I can prove that I'm a citizen." LAist withheld students' last names to protect their privacy.

What the source material does not settle is how many students actually showed up this week — first-week attendance figures that will start to test whether the 378,000 projection holds.