How the $168 million reduction works
Louisiana Gov. Jeff Landry's Executive Order 26-047, effective July 1, 2026, reduces the state's Minimum Foundation Program (MFP) appropriation for fiscal year 2026-27 by $168 million. The cut is drawn from non-instructional dollars in House Bill 1 and required approval from two-thirds of both legislative chambers. The Department of Education and the Board of Elementary and Secondary Education must identify which budget categories are reduced, though spending on security, transportation, and food services is protected.
The redirected money funds one-time stipends: $2,000 for classroom teachers and $1,000 for support staff, with employer retirement contributions added at rates of 19.11 percent for Teachers' Retirement System of Louisiana members and 19.5 percent for Louisiana School Employees' Retirement System members. Administrators, counselors, principals, assistant principals, school nurses, and employees on sabbatical are excluded from receiving stipends.
The reduction amounts to roughly 5 percent of state aid per district on average, according to the American Press. The governor later offered an adjustment: districts that already provided stipends or raises of at least $2,000 for teachers and $1,000 for support staff during the 2026 calendar year may use the MFP stipend allocation to backfill their budgets. Local raises or stipends that went into effect before 2026 do not qualify for that exemption.
Legislative approval and legal challenge
More than two-thirds of members in both the Louisiana House and Senate voted in favor of the $168 million reduction, according to the Advocate. Lawmakers cast ballots remotely after the regular legislative session ended; vote tallies were released on a Wednesday following the June 23 deadline.
A Baton Rouge judge issued an 11-day temporary restraining order blocking Landry from using the redirected money and from continuing to collect legislative ballots. The order came after education advocates filed a lawsuit arguing that Landry exceeded his legal authority by reallocating education funding that is controlled by the Legislature and BESE. The lawsuit alleges the cut will cause irreparable harm to public schools, as reported by WWNO.
District financial impact
The Louisiana Legislative Auditor, Mike Waguespack, analyzed district reserve levels and found that 44 of the state's 69 traditional K-12 school districts have enough savings to absorb the cut while maintaining the recommended reserve level of 16.7 percent of revenue, according to the Louisiana Illuminator. The remaining 25 districts would fall below that recommendation. Waguespack said most districts could probably operate with less savings than the recommended level, which is intended to cover large unexpected expenses and disasters such as hurricanes.
The executive order directs non-instructional spending to absorb the cuts, with categories typically covering insurance, building maintenance, grounds upkeep, and general administration, according to the state education department. Landry also directed school districts and charters to use unassigned fund balances to prevent reductions where feasible.
The Tangipahoa Parish School System offers an example of preexisting financial strain. The district's revised budget for 2024-25 shows MFP revenue decreased by $5.4 million from the original budget due to enrollment decline. The net change in fund balance across all governmental funds was negative $19.9 million, with total ending fund balance dropping from $146.9 million to $127.0 million.