The Abridged version:
- Sacramento City Unified School District has faced financial uncertainty for nearly the entire school year, but leaders received their most drastic warning yet last week. Advisers with a statewide crisis team recommended the board consider asking the state to take over the district as early as summer.
- So far, trustees have rejected that advice, saying they are not ready to go down a path many agree is a worst-case scenario.
- State receivership occurs when a district runs out of money and options and requests an emergency loan from the Legislature. The process can often take years and come with heavy budget cuts and new debt.
Sacramento City Unified School District officials received a bleak review of their finances last week, including recommendations they consider turning to the state for assistance.
So far, leaders have rejected the advice.
“I don’t think we have gotten to the point where it is necessary,” Trustee Taylor Kayatta said during last Thursday’s school board meeting.
At the meeting, advisers from the Fiscal Crisis and Management Assistance Team, a state-funded organization of school finance experts, presented their review of Sacramento City Unified’s situation. Their projections showed the district running out of cash and options by the start of 2027.
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Michael Fine, the organization’s CEO, urged the board to consider state aid sooner than later.
The ongoing crisis “invokes a range of emotions among parents, students, employees and the community — most notably, grief,” Fine’s presentation stated. “We must all lead with this in mind.”
Jump to:
How many districts have gone through this?
Whom can parents contact during receivership?
Why is receivership seen as worst-case scenario?
What are the impacts to students and families?
What’s the likelihood of a state “takeover” soon?
What happens if the district runs out of cash?
Could the governor help in the state budget?
What is a state ‘takeover’?
When a school district in California runs out of money and generally has exhausted all other alternatives, trustees can ask the state for an emergency loan.
The funds need the Legislature’s approval and governor’s signature. Once approved, a county-appointed administrator will take charge of the district. This external, de facto leader remains in place as long as it takes the district to pay back the emergency money, with interest.
This scenario is known as going into state receivership or commonly referred to as a “state takeover.”
How many districts have gone through this?
Out of about 1,000 school districts in California, 10 have had to take out emergency loans since 1990. The most recent was Plumas Unified School District, which went into receivership last year.
The process isn’t usually a short one — the average length of receivership is roughly 14 years, or as long as a student’s entire TK-12 experience.
Whom can parents contact during receivership?
When the outside administrator arrives, elected school board members become advisers without authority. Superintendent Cancy McArn, who just earned her official position at the end of April, would lose her job.
Parents with concerns can still contact the trustee who represents their area. But these officials no longer have decision-making power.
Why is receivership seen as worst-case scenario?
Board members and their critics alike have referred to the situation as the worst outcome, particularly because of the loss of local control.
Kayatta, a trustee since 2022, said that in a previous role with the state controller’s office, he worked directly with a district under receivership. There, he witnessed firsthand a break in communication between the district and families.
“It is actively terrible for the community when the state takes over,” Kayatta said in an interview with Abridged last month. “It is a Band-Aid, it’s declining enrollment, it’s a lack of community involvement in the decisions. People stop feeling like they have a connection to their schools.”
What are the impacts to students and families?
Receivership often means deep budget cuts, with more of a hammer than chisel approach, experts say.
“When the state provides an emergency loan to a district that is fiscally insolvent, the priority is repaying that loan,” said Jason Willis, professor at the University of the Pacific in Stockton and an expert in education finance.
Plumas Unified, in its first school year under receivership, is contending with impending layoffs of teachers and librarians, plus proposed cuts to school bus transportation, The Plumas Sun reported.
Oakland Unified School District spent 22 years in receivership. Since coming out on the other side, the district has continued to face fiscal instability.
What’s the likelihood of a state ‘takeover’ soon?
The school board was adamant Thursday that it is not ready to go down the path of state receivership.
“I am not in favor of doing it unless it is the absolute last step,” Kayatta said at the meeting. “I understand there are timing concerns with getting legislation through if we need to. But I think we need to wait to make the decision as late as possible.”
Other trustees, including board President Tara Jeane, echoed his sentiments from the dais. Kayatta reiterated his position on social media over the weekend.
Why is this coming up now?
Fine, leader of the statewide crisis team, had advised exploring the option now, months ahead of possible insolvency, given the Legislature’s calendar.
Lawmakers are in session through Aug. 31 and are scheduled to return, post-election, around early December.
Fine’s team estimated the district will be out of cash and alternatives around January 2027. Given the time needed to pass legislation and release emergency funds, Sacramento City Unified could experience weeks or months of no cash in the bank, according to Fine.
What happens if the district runs out of cash?
If the district does hit insolvency before it can secure emergency funds, about 5,000 employees risk going unpaid, Fine said. It’s unclear how that would affect school operations in the district.
Steve Bruno, a database administrator at Sacramento City Unified, urged the board to turn to the state, for the sake of their employees.
“Before I came to this district, I worked for another private employer. He missed payroll a few times. … It was absolutely devastating each and every time it happened,” Bruno, also a board member at Center Joint Unified School District, said Thursday.
Could the governor help in the state budget?
Across the state, school board members, administrators, union leaders and teachers are united in anticipating Gov. Gavin Newsom’s revised state budget plan later this week.
In his original January proposal, Newsom withheld about $5.6 billion in education funding, deferring the amount from this to next year. The coalition of school leaders and advocates are pushing for the governor and Legislature to put that sum back in the 2026-27 budget.
Details of the revised blueprint, which must come out by May 15, are still unknown. However, Fine said in an interview he expects the latest version to still set aside roughly $5.6 billion, as Newsom hedges his bets amid economic instability.
If the governor did put that money back in the budget, that would mean roughly $29.2 million more for Sacramento City Unified — not enough to bail it out completely, Fine said.
“It’s not going to save the day,” he said. “It’s going to change what month they run out of cash. It’s not going to solve the problem.”
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.