The high school's headteacher, Patrick Ottley-O'Connor, has assured pupils and parents that educational standards will remain the top priority as staff face an uncertain future.
"We are facing a major financial problem that has primarily been caused by the fact that we currently have 120 fewer students than we had six years ago.
"This has reduced our income by more than £400,000 per year, yet we have more staff than we had six years ago. The governors and I are working closely with the local authority to address the issues."
Mr Ottley-O'Connor explained that if the normal student-teacher ratios that other schools use is applied to Todmorden High, the school has spare capacity of up to 14 teachers and three support staff.
But he assured pupils and staff: "Our timetable for September is now operating at the correct levels and I can assure parents and students that class sizes will not exceed 30.
"If we had not taken action to reduce the deficit, this problem would have escalated to an unsustainable position.
"Over the past year, we have taken steps to reduce the impact and we'll continue to do this, to minimise the impact on students."
He remained positive about the future of the school and said the improvement in the exam results shown this year, with a record number of students gaining A* to C grades at GCSE and A-level, will continue.
A period of consultation with staff, governors and Calderdale Council, regarding proposed staff reductions, will take place in September and the process will be completed by early next year.
School governor Hilary Myers said the school had been over-staffed for some time and the numbers had to be brought down.
"Some reductions are necessary, which is regrettable, but we hope most will be through voluntary redundancy.
"No one is happy about this situation and there are going to have to be some painful decisions but morale at the school is high and examination results are improving," said Mrs Myers.
The governors will discuss the situation at a special meeting next Monday.