The Abridged version:
- Sacramento City Unified School District was headed to financial trouble even before last week’s surprise $43 million shortfall was disclosed.
- School officials say the long-term projections are grim and will require sacrifices.
- Most of the unauthorized spending at the end of last year came in special education programs.
The Sacramento City Unified School District was already facing financial insolvency when officials recently found an unexpected $43 million spent at the end of last school year.
The shortfall resulted from a combination of unapproved contracts, late invoices and other last-minute, surprise expenses, representatives of the district budget services office said during a school board meeting last Thursday.
However, the unexpected spending is a “short-term challenge” for the district, compared to bigger problems in the years ahead, said Brian Heap, spokesperson for the district.
Without a course correction, the district is at risk of county and state intervention.
The extent of the problem and targets for likely budget cuts remain unknown. Heap said “sacrifices” will be necessary to keep SCUSD afloat, but that they intend to avoid disrupting students’ classroom experiences as much as possible.
District on track to hit the red sooner
Sacramento City Unified has been operating on a thin margin for years.
A projection that pre-dated not only last week’s fiscal findings but also recently settled labor contracts showed the district ending this school year with a tiny surplus — a little over $8 million. By spring 2027, this amount was projected to shrink to about $300,000. And a year later, in 2028, the district would be about $12.7 million in the red.
The recent revelations have cut the district’s runway for finding a solution. Updated projections show Sacramento City Unified with a $45 million deficit by spring.
Cost of investments catching up
The financial predicament comes after a “series of choices” made by the school board to invest in students’ success, Heap said.
Those decisions included reducing class sizes, which can require additional staff and facilities; hiring additional staff, such as nurses, librarians and behavior intervention specialists; and “significant” staff salary increases.
Heap said the decisions are paying off when it comes to student outcomes. Math scores are up more than 2% across racial demographics and graduation rates are above 88% — higher than pre-pandemic numbers, he said.
“Those are all wonderful things that we are proud of as a district,” Heap said in a statement, “but now it’s time to pay the bill and that is going to require a lot of hard decision making.”
County, state intervention a possibility
The district is on a path to joining a small and unfortunate cohort.
According to their recent report, if SCUSD is unable to get its budget in order after this school year, the Sacramento County Office of Education may be required to step in, and the district could lose local control of its budget. If fiscal issues persist, a state takeover is also on the table.
Ten California school districts have faced this reality since 1990, with Plumas Unified School District being the most recent.
What was in the $43 million surprise?
The unexpected amount included expenses for overtime, late invoices and contracts that were made by staff but not approved ahead of time by the district.
During the 2024 to 2025 school year, those unauthorized contracts totaled $62 million, Cindy Tao, assistant superintendent of business services, said at the recent board meeting. Most of those purchases — 98% — came from the special education department.
The district was also caught off guard by late invoices.
For example, the budget office received this May a nearly $1.3 million bill from the county office of education that was dated June 30, 2024.
Abridged reached out to SCOE for comment on the invoice, but they were not immediately available to respond.
Savannah Kuchar is a reporter covering education. She came to Sacramento to be a part of the Abridged team and contribute to a crucial local news source.