I don’t know all the ins and outs of school financing, but, is part of this that, teachers could be laid off, if there are fewer students in the schools? Is the concern that teachers could lose their jobs?
I would be surprised to see teachers sitting in empty classrooms because of their union contracts.
Yes. This is why teacher's union are always pushing for reduced class sizes. 100 students at a class size of 20 students is 5 teachers. With a mandated class size of 10 students it would be 10 teaches, effectively doubling the dues received by the union.
The budget for teacher salaries is usually based on ADA (Average Daily Attendance). This means that if there are less students, there is less budget to pay teachers and the class size mandates can be met with fewer teachers.