Facing pressure from labor unions over its long-term budget outlook, the Los Angeles Unified School District board on Tuesday approved last-minute changes to next year’s financial plan, scaling back a major investment in retiree health benefits while expanding support for LGBTQ+programs and other student services.

Superintendent Alberto Carvalho proposed the amendments as part of an update to the district’s fiscal stabilization plan. They include reclaiming $645 million over three years from a planned contribution to the district’s retiree health benefit trust–known as the Other Post-Employment Benefits (OPEB) fund — and transferring those funds to a newly established Fiscal and Workforce Stabilization Fund.

Carvalho said the move would put the district in a stronger position to address workforce needs and maintain stability amid uncertain economic conditions.

“It will put us in a position where we can address reasonably our workforce needs, the stabilization of our workforce, as well as prepare and be prepared for the uncertainty that awaits us,” he said.

Labor unions had previously criticized the OPED deposits as overly aggressive, warning that they could lead to unnecessary cuts in the future years.

In addition to OPEB change, the board approved new investments in student services, including $2 million for LGBTQ+ programs at secondary schools, which aims to enhance training, awareness and professional development, as well as a $1 million increase for student and family centers, bringing the total to $5 million.

Carvalho also said the district plans to reduce a previously approved $60 million cut to the Workforce Protection Fund — which supports staff in unfunded positions — down to $30 million, based on expected attrition and reassignment trends. That adjustment would be formalized at the district’s first interim budget review in December.

He said that despite concerns about the long-term outlook, there would be no employee layoffs or cuts this year or next to programs such as arts education, transitional kindergarten, mental health services, English learner support, or the Black Student Achievement Plan.

The budget reflects “ethical and moral priorities that our school district should embrace,” Carvalho said.

“We are not inviting a fight through this budget, but if there’s a need for a fight in protecting our workforce and our kids, you better believe, we are ready for it,” he said. “We are on the right side of history as we make these budgetary investments.”

The board’s amendments did not alter the overall bottom line for the 2025-26 fiscal year, which runs from July 2025 through June 2026. The district’s budget remains at $18.8 billion in planned expenditures and $15.9 billion in expected revenue.

Of that, about $11.5 billion falls under the general fund — the portion that covers core school operations such as teacher salaries, classroom instruction, and academic programs.

Ahead of the superintendent’s amendments and Tuesday’s vote, union leaders had raised concerns over the district’s plan to contribute hundreds of millions of dollars to its retiree health benefits trust fund, warning the move would strain future budgets and take resources away from classrooms.

“We are disappointed to see that the proposed 25-26 budget contains an irreversible and unnecessary allocation to the OPEB trust that will seriously hinder the district’s financial outlook over the next three years,” said Adriana Salazar Avila, a representative of Teamsters Local 572, who spoke on behalf of nearly a dozen labor groups across LAUSD.

She added: “This is not the allocation to cover the actual annual cost of retiree benefits. It’s an additional discretionary allocation to a trust fund that is neither required nor responsible. District officials are trying to squirrel away an extra $1 billion into this restricted reserve, while claiming to be in a structural deficit, and then proposing $1.6 billion in cuts to our schools in a fiscal stabilization plan.”

Nicolle Fefferman, a mother of two LAUSD students and a district teacher, said the back-and-forth over budget cuts and reversals felt all too familiar.

“​​As somebody who has been involved with LAUSD for the last 20 years, almost every single year we are told that the district is on the verge of collapse and that drastic measures have to be taken,” said Fefferman, who’s also a co-founder of Parents Supporting Teachers. “And then every single year, all of a sudden, the money is there.”

She added that while the budget may reflect district priorities, follow-through is often inconsistent.

“We want the budget to reflect our priorities, but then we also need the money that has been budgeted to actually be spent on those priorities,” she said. “And a lot of the time, the district does not do a good job of actually spending the money on the things that they say it’s going to be spent on.”

The adjustments come as LAUSD attempts to close a projected long-term budget gap, with officials warning the district is on track to face a budget shortfall of $2.2 billion by the 2027–28 school year if spending continues at current levels.