In 2026, school districts across the U.S. are grappling with significant budget shortfalls that are leading to layoffs of teachers, support staff, and administrators. These shortfalls reflect deeper structural issues including declining enrollment, rising costs, and the expiration of pandemic relief funds, forcing districts to confront tough staffing decisions.
Here are 5 reasons districts are in financial crisis …
1. Declining Enrollment Continues to Reduce Revenue
Many state funding formulas tie school budgets directly to student enrollment. When enrollment falls, revenue declines even though many operational costs, like salaries and building maintenance, remain fixed. Declining enrollment is a major factor contributing to 2026 layoffs.
Some districts experiencing enrollment-related funding pressures include:
- Detroit Public Schools Community District, which has seen steady drops in enrollment over the past several years, leading to reductions in classroom staffing. DPS has lost around 5000 students in five years.
- Cleveland Metropolitan School District, where declining student numbers have forced budget realignments and position freezes. According to the district, CMSD enrollment has dropped about 50% since 2004.
- Baltimore City Public Schools, experiencing long-term enrollment decreases affecting per-pupil revenue, losing around 2300 students since 2021.
- Chicago Public Schools, which reports declining enrollment in several neighborhoods, contributing to program reductions. CPS enrollment dropped by 9000 students from 2025-2026.
- St. Louis Public Schools, where an enrollment loss of around 3000 students since last year is compounding fiscal stress and limiting staffing capacity.
- Albuquerque Public Schools, is seeing multi-year enrollment declines from 88000 students in 2015 to 65000 in 2026, especially in elementary grades. This indicates that middle and high schools will feel the impact in just a few years.
- The School District of Philadelphia, where demographic shifts and population changes are contributing to fewer students and reduced funding. Philadelphia’s enrollment has dropped over 1000 students from last year and by 17000 students since 2025.
Declining enrollment squeezes per‑pupil funding, meaning fewer dollars for staffing even as the need for student support services remains high. Per Newsweek, districts with shrinking student populations often face difficult choices to reduce personnel while trying to maintain essential programs.
💸 2. Federal Aid Has Expired, Leaving Structural Gaps
During the pandemic and immediate post‑pandemic years, districts received substantial one-time federal relief funds, such as ESSER (Elementary and Secondary School Emergency Relief). These funds were critical in addressing learning loss and supporting students’ mental health, and they enabled districts to hire additional staff and expand programs.
Districts used this funding to add positions such as:
- Academic interventionists and tutors to help students catch up on missed instruction.
- Counselors, social workers, and psychologists to support social-emotional learning and mental health needs.
- Paraprofessionals and classroom aides to reduce class sizes and provide individualized attention.
- Technology coordinators and IT support staff to implement and maintain remote learning.
- After-school program coordinators and enrichment staff to expand supplemental learning opportunities.
Now that these funds have expired, districts are left with ongoing obligations for salaries and programs initially funded temporarily. This sudden drop in revenue directly contributes to 2026 budget deficits and the difficult decisions to reduce staff and reallocate resources.
📊 3. Rising Costs Outpace Revenue Growth
Personnel costs such as salaries, pensions, and benefits account for most school budgets. At the same time, costs for transportation, utilities, special education, and facility maintenance are rising, often faster than overall revenue growth.
This imbalance means districts are spending more just to maintain current services:
- Healthcare and retirement contributions continue to climb.
- Utility and maintenance costs have risen post‑pandemic.
- Contractual salary increases are hard to sustain without new revenue sources.
When budgets are tight, personnel is one of the largest levers districts have to save money in the short term.
🏫 4. Major Deficits and District Layoffs Across the Country
Many districts in 2026 are facing multi-million-dollar to hundreds-of-millions-of-dollars deficits.
Large Urban and Mid‑Size Districts
- Los Angeles Unified School District — Facing an estimated $877 million deficit for the 2026‑27 school year; notices sent to about 3,200 employees, with 650 potential layoffs.
- Sacramento City Unified School District — Identified an anticipated $113 million deficit, prompting plans to eliminate 400 positions.
- Anchorage School District — Approved a severe budget including a $90 million deficit and more than 500 staff cuts along with three school closures.
- Portland Public Schools — Reported a $50 million gap, requiring cuts to align spending.
Other Districts Facing Shortfalls
- Fresno Unified School District — Forecasting a $59 million deficit, with layoffs of more than 200 positions expected.
- Antioch Unified School District — Moving toward nearly 300 layoffs to make up a $30 million shortfall.
- Meriden Public Schools — Planning cuts to help close an $8.2 million deficit for 2026–27.
- Plumas Unified School District — Eliminated positions to address a $9.5 million structural deficit.
- Boston Public Schools — Facing a $53 million deficit, proposing elimination of 300–400 positions.
- Minneapolis Public Schools — Projected its deficit at over $50 million, triggering potential cuts and restructuring discussions.
These deficits vary widely from single-digit millions to hundreds of millions, highlighting how pervasive financial pressures are across regions and district types.
📌 5. Structural Funding and Legislative Issues Compound the Problem
Even outside acute deficits, districts face deeper structural challenges:
- State funding formulas often lag behind enrollment changes.
- Mandates for special education and other services increase costs without guaranteed funding.
- Local tax limits restrict revenue growth unless voters approve overrides.
Some districts pursue local ballot measures or state advocacy campaigns to secure stable funding, but these solutions take time and political support to implement.
What This Means for Schools and Communities
Budget-driven layoffs affect much more than payroll:
- Class sizes increase as fewer teachers serve the same number of students.
- Support programs like counseling and after-school activities may be reduced.
- Remaining staff face higher workloads and morale challenges.
- Community trust may erode when key programs are cut.
This situation in 2026 shows how intertwined enrollment trends, funding policies, and cost structures are and why districts are making difficult decisions to preserve financial stability while trying to maintain educational quality.
The Principal’s Desk, Assistant Principal’s Desk, and The School Counselor’s Desk, totaling over 370,000 educators from around the world was founded by Dr. David Franklin in 2026. Dr. Franklin is an award winning school administrator, education professor, curriculum designer, published author and presenter at national and international education conferences. He is the co-author of “Can Every School Succeed” and the #1 Amazon Best Seller in Education Administration: “Advice From The Principal’s Desk”.
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