Sacramento City Unified Superintendent Cancy McArn, center, listens as Mike Fine, CEO of the Fiscal Crisis and Management Assistance Team, reviews the district’s financial situation during a meeting at the Serna Center in May.
NATHANIEL LEVINE
nlevine@sacbee.com
The Sacramento City Unified School District sent a letter Wednesday formally asking the state superintendent to overturn the county Office of Education’s rescission and intervene in the district’s escalating fiscal crisis.
The development came less than a day after the board authorized the appeal, elevating the district’s deepening fiscal crisis to the state level.
“We recognize that our requests are uncommon and serious,” SCUSD Superintendent Cancy McArn wrote to California Superintendent of Public Instruction Tony Thurmond.
“However, restoring budget stability and retaining local control of our District’s budget is the most critical task that our Governing Board and District senior leaders face,” she continued.
In her letter to Thurmond, McArn formally appealed the rescission under Education Code Section 42127.9 and, in a separate request under Section 42127.6(k), asked Thurmond to find that the fiscal adviser and the Sacramento County Office of Education had been ineffective in helping the district resolve its financial crisis.
McArn argued that the rescission effectively changed the district’s broader fiscal plan. On Thursday, the district board separately approved a broader fiscal sustainability plan and an agreement with the teachers’ union. Although the fiscal adviser rescinded only the labor agreement, much of the plan’s projected relief depended on provisions in that deal, leaving the broader plan’s status uncertain.
McArn also argued the rescission imposed unnecessary cuts, ignored other proposed savings and could force unlawful operational changes.
“It is the intent of the Legislature that any change or changes adopted by the county superintendent of schools in a school district’s budget minimize, to the extent possible, any impact upon the educational program of the school district,” McArn wrote.
California Department of Education confirmed that Thurmond received the letter from the district.
“Superintendent Thurmond is actively engaged in conflict resolution with the parties and has requested that they appear in his office on Thursday while we review the requests and relevant statutory requirements,” said Julie Lautsch, a spokesperson for the department.
The district’s intervention request rests on its claim that the rescission reflects a broader failure of the county’s fiscal oversight. McArn rejected the fiscal adviser’s concerns that the agreement would draw down retiree-health funds, provide too little cash to prevent insolvency and limit future savings by extending the teachers contract through 2030.
The letter signaled a new approach in the district’s power struggle with the county office by seeking to have the state take a more direct role in overseeing the district’s finances. McArn asked Thurmond to potentially assume some of the county office’s fiscal oversight powers, appoint an independent fiscal and legal review team “that does not report to SCOE,” and require SCOE and the Fiscal Crisis and Management Assistance Team to provide the financial records behind their conclusions.
Criticizing both the fiscal adviser Luz Cázares and the county office for failing to help the district avoid state receivership, McArn noted fiscal adviser had exceeded her authority and was acting as though the district were already under receivership. Cázares’ rescission was “improper, inconsistent with their authority, and demonstrative of their ineffectiveness,” McArn wrote, while pointing to inconsistencies in the fiscal adviser’s estimates of how much the district needed to address, which shifted from $175 million to $150 million, then $135 million and, most recently, about $221 million.
Under state law, Thurmond must uphold or deny a district’s appeal within five days of receiving it.
Meanwhile, the California Department of Education has given conflicting positions on whether that process applies to the fiscal adviser’s rescission. The department initially told The Sacramento Bee on Tuesday that state law did not allow an appeal, then said several hours later that the dispute might be subject to appeal.
This story was originally published August 5, 2026 at 2:00 PM.
Related Stories from Sacramento Bee
The Sacramento Bee
Chaewon Chung is an education reporter for The Sacramento Bee. She has previously covered climate and environmental issues, focusing on energy and water. Before joining The Bee, she worked as a climate and environment reporter at the Winston-Salem Journal in North Carolina.