Already under financial duress, the Sacramento City Unified School District revealed more unsettling news during a special board meeting that the deficit they previously calculated is actually greater than what they expected.

The school district’s new interim chief business officer Lisa Grant-Dawson, who started this month, revealed to the board  on Thursday, Jan. 29 that the district miscalculated savings from employee health benefits for this fiscal year, which would have saved the district $32 million.

By using this one time adjustment, employee health benefits would cost the district about $108 million instead of $140 million. Dawson said that was an error.

Staff miscalculated by using the $108 million figure for two years instead of the $140 million, which made $32 million in savings unaccounted for. The district is working to accurately reflect it or else the future deficit will be understated, according to Dawson’s presentation.

Dawson also revealed the district no longer is pursuing $20 million in Other Post-Employment Benefits disbursements, saying it may not be legally allowed. This has added to the district’s miscalculations as the money has been counted as saved for the next two years.

The district also will have to make additional cuts to make up for the $20 million this year to avoid insolvency before the previously projected summer.

This comes due to a $43 million budget shortfall this school year and a projected $80 million deficit by the 2027-2028 school year.

A couple months ago the Sacramento County Office of Education required the school board to submit a fiscal solvency plan to prevent further county or state intervention.

In the fiscal solvency plan, around 50 administration positions are slated to be cut by the end of March to reduce the number of full-time-equivalent administrators from 328 to 270 by the 2026-27 school year. This will save the district approximately $14.7 million.

It is currently unknown what specific administration positions will be cut such as those on school campuses or in the central office.

In addition, the district will cut all departments by 20%, plus enrollment reductions. 

The district attributed the deficit due to unforeseen year-end payments for salaries, books and supplies, contracts, special education and maintenance. As a result, the district will be at risk of intervention by the Sacramento County Office of Education and could lose budget authority and face possible program reductions

Sacramento County Office of Education superintendent Dave Gordon said the district will need more savings to avoid getting a loan from the state. Gordon said two fiscal advisors from the county office have been hired to help the school district with its budgeting. 

Gordon also revealed, as the second line of defense, they have implemented the “stay and rescind authority” which means Sacramento City Unified is not allowed to spend money in one area without cutting it in another area.

“What happens if they do run out of cash, they can’t make enough cuts to stay solvent, and they literally run out of cash, and they can’t make payroll, right,” Gordon said. “What happens then is that they must apply for a state loan, an emergency state loan from the legislature to be able to continue to operate the schools.”

He said the district will have to find a legislator to sponsor the bill if it’s needed, to provide them with an emergency appropriation; however, Gordon emphasized it’s not a gift but a loan.

“Once you fall into insolvency and receivership, your situation automatically gets worse because now you have a debt on top of your original shortfall and you have to pay that loan back with interest,” Gordon said.

He added if the district gets the loan as well, their school board’s authority will be dissolved and the superintendent, Lisa Allen, would also be removed. After this, the district is then run by a county administrator or trustee.

“The person who runs the district, in lieu of there being a superintendent, would be by me, the county superintendent, with the consent of both the State Superintendent and the president of the State Board of Education, they must affirm my appointment to that position,” Gordon said in reference to if the district receives the loan.

In the years the loan is in place, Gordon said the district will need to be strict about its spending to pay off the loan and implement local governance again. 

“You could pay back very quickly or very, very slowly, and the slower you pay back, the more you stay under some level of receivership,” he said.

Some other cuts the district is making to immediately address issues include: 

Eliminating use of “blanket” purchase orders. 

Reduce department supply budgets by 30% except for custodial

Delay purchase of adopted math curriculum until after July 1, 2027

Delay purchase of chromebook refresh until after July 1, 2026

Discontinue USPS/hard copy information and replace with electronic delivery

Relocate classes from McClaskey Adult Center to Charles A. Jones Career and Education Center

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