The Lynwood Unified School District Board of Education has approved a $45-million budget for the 1985-86 fiscal year.

The budget for the 12,000-student district, approved Tuesday, represents a nearly $4-million increase over the 1984-85 budget. Acting Supt. LaVoneia C. Steele said the district expects reserves of about $1.5 million.

Steele was appointed acting superintendent when the board voted last month to buy out the contract of former Supt. Charlie Mae Knight and to drop an investigation of her administration of school funds. The board has not decided on a permanent replacement for Knight.