The San Diego Unified School District on Tuesday adopted a $1.1 billion unrestricted budget for the next fiscal year that assumes a $114 million deficit, which the district will cover by eating up reserves.

The district is facing a significant shortfall despite having already made $94 million in cuts this spring, including five dozen layoffs of non-teacher employees and the elimination of more than 550 staff positions in areas ranging from classroom teaching to special education to English learner support.

The school district is one of many across California that is dealing with budget pressures as COVID-19 relief funding expires this year and as the state is giving them less new funding than they had been hoping for.

“We’re not asking to do the same with less; we are actually saying that we are going to do fewer things. That is a reality,” Superintendent Lamont Jackson said at last week’s board meeting, when the board discussed a first reading of the budget for the fiscal year that begins July 1.

District leaders warned there may be even more budget pain next school year, when the district will have to figure out how to make $176 million in cuts for the 2025-26 fiscal year; the year after that, the district projects having to make $230 million in cuts.

And a big difference is that next year, the district will have much less in reserves to make ends meet as it is using up reserves to make ends meet this fiscal year. Its unrestricted ending balance will shrink from $158 million to $43 million in the upcoming school year, according to the district.

“I just want to, I guess, prepare the community, prepare ourselves psychologically,” board Trustee Cody Petterson said at last week’s meeting. “There’s going to be some serious conversations next year and serious decisions we’ll have to make.”

District leaders have attributed the budget shortfall to several factors. The state, which is facing a multibillion-dollar deficit of its own, has indicated it would provide public schools an incremental cost-of-living increase in base funding, which district leaders argue is effectively a cut because it’s not enough to pay for their increasing costs.

San Diego Unified leaders also attribute the shortfall to the expiration of COVID-19 relief funding, chronically declining enrollment, lower student attendance rates — which the state uses to determine funding — and increasing special education costs.

The district also increased its spending last year when it gave 15 percent raises to all employee groups, which at the time were estimated to cost an additional $208 million a year.

The budget for the fiscal year that begins July 1 assumes a districtwide enrollment of 94,800, down from 102,270 in 2019, before the pandemic hit. But of that 94,800, the district estimates an average daily attendance of only 87,900 students, which means the district would only be paid by the state for that many students, as state funding is based on attendance and not enrollment.

The district’s total budget, including both unrestricted and restricted monies, totals $1.9 billion. Unrestricted dollars are monies the district can choose how to spend, while restricted dollars must be used for certain purposes such as Title I or career and technical education.

District leaders have said they tried to keep budget cuts away from schools by prioritizing cuts in the central office first. But even the central office cuts will impact schools, at least indirectly, Jackson said.

“When you cut $93 million … there is no way I can sit here and say sites will not be impacted,” Jackson said at last week’s meeting.

Still, just under half of the more than 550 staff positions eliminated were at schools. Some schools lost teachers because of declining enrollment, and some lost extra teachers they had been given during the COVID-19 relief funding era.

Just over half the positions eliminated were based in the district’s central office, including 50 special education positions, 48 literacy positions, 29 multilingual education positions and 29 maintenance, custodial and other grounds-related positions.

Most staff positions that were cut did not lead to layoffs. Some eliminated positions were already vacant, while staff in other positions were moved into different jobs. Some jobs were cut after employees resigned or retired.

At the past two board meetings, district officials addressed two other issues that had caused parent and staff concerns this school year.

In the spring, several parents had voiced concerns at board meetings that the district might be reducing or cutting fourth- and fifth-grade music programs for the next school year because of how it is using new money from Proposition 28 to pay for arts enrichment for all elementary grades.

At last week’s board meeting, Jackson promised that fourth- and fifth-grade music programs would not change or be reduced during the upcoming school year.

“In the case of (visual and performing arts), we recognize we made some missteps of engagement,” Jackson said at the meeting. “So now, guess what we did, we went back and we talked about, ‘What does this look like?’”

When asked for details about how the fourth- and fifth-grade programs would be staffed while also expanding arts enrichment for other elementary grades, a district spokesperson said in an email that schools that have both fourth- and fifth-grade music will keep them in the upcoming school year. Meanwhile, schools that did not have both will now be able to have both by using Prop. 28 money and other funding.

On Tuesday, the district also approved an agreement with the teachers union that aims to eliminate the district’s years-old practice of shuffling teachers around schools, months into the school year, to right-size for enrollment. Parents and staff have complained that the practice is disruptive to students and teachers, and district leaders said they agree.

Now the district will move teachers around schools, if needed, during the summer rather than the fall semester, based on enrollment projections that are being updated more frequently. Limited transfers may have to be made during the fall no later than Oct. 31 based on actual enrollment, according to the district’s agreement.

“We’re just trying to do everything we can to minimize the disruption,” said Drew Rowlands, deputy superintendent of operations, in an interview after Tuesday’s meeting.