Auditors say ‘substantial doubt’ Sacramento City Unified schools can stay afloat

The Abridged version:

• A new audit report stated “significant uncertainty” when it comes to Sacramento City Unified’s financial future.
• The district is facing a $170 million budget deficit and is on track to run out of cash by July. So far, district staff say they have identified about $82 million in savings.
• The most recent findings echo diagnoses from other experts, who say Sacramento City Unified has been in trouble for years.
• Between 2022-23 and the current school year, the district’s annual income increased by a little less than a million dollars. In that same window of time, spending ballooned by $168 million. 

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Yet another expert has issued warning about the financial situation in Sacramento City Unified School District.

In a report released this week, Auditors with Crowe LLP, an accounting and consulting firm, said unsustainable expenses, declining enrollment and leadership turnover have created “substantial doubt” that the district will be able to pay its bills and stay afloat in the near future.

The consultants outlined their concerns in a report released this week, and members of the audit team presented at the school board’s meeting Thursday evening.

Sacramento City Unified is staring down a $170 million budget gap. So far, staff have identified about $82 million in savings.

Same story for Sac City

The most recent audit of Sacramento City Unified matches what many have said: The district had a problem years ago that was not corrected.

Leaders were preparing to take on the challenge of righting the fiscal ship around 2019. But when the pandemic hit and temporary relief grants poured in, the district had enough money to put pause on any real system reforms.

Now, that one-time money is gone, and the problems are unavoidable.

Board members approved a recovery plan just before the end of 2025. However, many of the fixes have been either slow to manifest or scratched from the list.

“Despite efforts to address the District’s financial challenges,” the auditors wrote in their report, “significant uncertainty remains.”

Districtwide finger pointing

Among the reasons for the district’s predicament, the consultants said, are expenses that greatly eclipse funding, as well as instability in the administration.

Interim Chief Business Officer Lisa Grant-Dawson has been with Sacramento City Unified since January. Her six-month contract follows the previous budget official’s departure in November and comes as the district continues to search for a permanent replacement.

During her stint so far, Grant-Dawson has run into frustration from board members, who say they are tired of feeling like the last to know.

“This audit report confirms what we already know,” said board member Taylor Kayatta. 

“But what is most concerning to me is not these findings,” he continued. “It’s that we missed the opportunity for the board to be brought in on these issues sooner.”

Ongoing recovery efforts

One of the district’s most pressing challenges is to reverse years of spending outside its means.

Between 2022-23 and the current school year, the district’s annual income increased by a little less than a million dollars. In that same window of time, spending ballooned by $168 million. 

Staff are continuing to develop and implement a stabilization plan. In her own presentation to the board Thursday, Grant-Dawson outlined their latest efforts, including an ongoing hiring freeze and hundreds of preliminary layoff notices.

Grant-Dawson also noted that the district is currently expected to run out of cash by July.

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.