The latest insolvency comes as the district spend tens of millions of dollars on unauthorized, non-budgeted contracts.
SACRAMENTO, Calif. — The Sacramento City Unified School District (SCUSD) board approved a Fiscal Solvency Plan on Thursday, a move aimed at stabilizing the district’s finances and preventing a county or state takeover as it faces a $43 million deficit.
The vote comes after a warning from the Sacramento County Office of Education that flagged the district for potential financial instability because of projected negative fund balances. That triggered a requirement for SCUSD to submit a Fiscal Recovery Plan by Dec. 1. The district refined the document through multiple meetings earlier this month before adopting the final version late Thursday evening.
“There is always, we are at the cliff. We are at the cliff. But now we are about to fall over the cliff if we don’t act,” said trustee Taylor Kayatta.
The plan lays out immediate actions for the 2025-26 fiscal year, including a hiring freeze for non-classroom positions, limits on supply purchases for operational compliance, and a stop to non-essential employee travel. Overtime and new contracts will only be approved when required. The district said the goal is to restore financial control, eliminate inefficiencies and prioritize spending while minimizing the impact at school sites.
“It would be great if we didn’t have to cut any of this because I don’t think we are operating a district that isn’t doing great things,” Kayatta said. “But at the end of the day, we are in a position where we do need to make cuts.”
The Sacramento City Teachers Association said the district is taking steps in the right direction.
“We are really happy to hear the district has given a lot of thought to making cuts to our district as far away from the classroom and our services to students as possible,” said SCTA President Nikki Davis-Milevsky.
Davis-Milevsky said the district’s administration expanded significantly during the pandemic while enrollment declined.
“We think it’s cuts that have needed to happen for quite some time that need to refocus on to our classrooms,” she said.
The latest insolvency comes as the district spend tens of millions of dollars on unauthorized, non-budgeted contracts. Discussions around insolvency aren’t new; the district narrowly avoided a state takeover in 2019 after a shortfall of more than $20 million.
Under the new plan, the district aims to increase revenues by $40 million, cut supply expenditures by $12.5 million, reduce salary costs by $12.3 million and trim contract spending by $2.5 million this fiscal year. Additional reductions include freezing non-required travel, delaying curriculum purchases and cutting administrative costs.
Longer-term actions for the 2026-27 budget include reducing supply allocations, consolidating programs, streamlining personnel and addressing enrollment declines. The district plans to reduce administrative staff to fewer than 270 full-time equivalent positions.
“This work is just getting started,” trustee Tara Jeane said. “As we make this decision and as we consider implementation and as we consider our future steps. This is no way we made this decision and we are good. We have a lot of work to do.”
The district is submitting its Fiscal Solvency Plan to the Sacramento County Office of Education by Dec. 1. A First Interim Financial Report is expected on Dec. 18, outlining whether SCUSD can meet reserve requirement.
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