![\"The](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/10\/SAC_0009_260502_JV_SDUSD.JPG\" "\\"The")
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The Sacramento City Unified School District sign outside of the Serna Center on Thursday, Feb. 5, 2026.<\/p>\n
JOS\u00c9 LUIS VILLEGAS<\/p>\n
jvillegas@sacbee.com<\/p>\n
Sacramento City Unified School District\u2019s superintendent on Thursday called the county office-appointed fiscal adviser\u2019s concerns about the district\u2019s new budget plan \u201cunfounded,\u201d days after the adviser said she would only reinstate a teachers\u2019 agreement if the district showed it could stay solvent.<\/p>\n
The latest exchange puts two questions at the center of Sacramento City Unified\u2019s fiscal crisis \u2014 whether its budget plan is realistic, and whether the rescinded teachers\u2019 agreement can be reinstated as the district confronts a roughly $222 million structural deficit.<\/p>\n
\u201cYour \u2018grave concerns\u2019 are unfounded,\u201d Cancy McArn, SCUSD\u2019s superintendent, wrote in a letter sent Thursday to fiscal adviser Luz C\u00e1zares that was reviewed by The Sacramento Bee.<\/p>\n
At its Sept. 17 meeting, the board approved a revised 2026-27 budget<\/a>, and the district presented an updated multi-year projection that assumes about $31 million in student-support grant funding received this year will continue as ongoing revenue, along with about $23 million in Proposition 98 settle-up funds in each of the 2027-28 and 2028-29 school years.<\/p>\n In Thursday\u2019s letter, McArn reiterated the district\u2019s position that the grant assumption was supported by five years of funding trends, while the district\u2019s projections counted only one-third of the anticipated Prop. 98 settle-up funding.<\/p>\n McArn disputed C\u00e1zares\u2019 warning on Sept. 23<\/a> that the district\u2019s cash flow and ability to make payroll could be significantly affected if its \u201chighly questionable\u201d funding assumptions did not come through, saying the 2027-28 funding projections would not affect its ability to make payroll in the current fiscal year.<\/p>\n The disagreement over the revenue assumptions comes as analysts from the California Legislative Analyst\u2019s Office and the state-funded Fiscal Crisis and Management Assistance Team have questioned them<\/a>, while SCUSD\u2019s chief business officer has acknowledged the projection carries risks.<\/p>\n \u201cYour observations, questions, and reminders appear to be a further effort to delay any actual reconsideration of your rescission of the MOU,\u201d McArn said, adding that the fiscal adviser\u2019s July decision to rescind the teachers\u2019 agreement worsens the district\u2019s financial position.<\/p>\n SCUSD views the agreement as a bridge to longer-term solutions, projecting it would provide $97.6 million in relief over three years and help meet its near-term cash needs.<\/p>\n McArn said C\u00e1zares set three conditions for reconsidering her decision to rescind the memorandum of understanding: adopting ongoing measures to address the structural deficit, using one-time measures to restore the ending fund balance and projecting positive cash flow through this year and next.<\/p>\n \u201cWe understand that you are closely examining the information that we have provided to you,\u201d McArn continued. \u201cWhen you do, we believe you will see that we have a viable plan that meets the three criteria you laid out on September 1, 2026.\u201d<\/p>\n Xanthi Soriano, a spokesperson for the Sacramento County Office of Education, said the office had received the letter and was reviewing it.<\/p>\n District addresses adviser\u2019s other fiscal concerns<\/p>\n McArn\u2019s letter also addressed C\u00e1zares\u2019 concerns about special education spending and her questions about a planned $9 million transfer omitted from the district\u2019s unaudited year-end report.<\/p>\n C\u00e1zares had questioned the district\u2019s slower projected growth in special-education spending, calling the 2.4% increase \u201csignificantly out of line with recent increases\u201d compared with 11.1% increase last year and 13.7% the year before.<\/p>\n \u201cWe are confident that stronger internal oversight and newly implemented safeguards will enable us to keep special education expenditures more closely aligned with the approved budget than in prior years,\u201d McArn wrote.<\/p>\n As for a planned $9 million transfer, McArn reiterated the chief business officer thought it had already been completed, then initiated it after learning it was still pending.<\/p>\n \u201cThe matter will be completed in October in accordance with the law,\u201d the district superintendent added.<\/p>\n McArn rebutted the fiscal adviser\u2019s description of the district\u2019s $20.6 million reimbursement<\/a> entry as an \u201cegregious error\u201d for showing the funds as received July 1, even though they arrived in August. The reimbursement was part of the rescinded MOU\u2019s plan to use about $68 million from the district\u2019s CalPERS-administered retiree health trust to cover retiree health costs over three years.<\/p>\n McArn explained SCUSD counted the money in its 2025-26 finances because it reimbursed retiree health costs from that year, noting that CalPERS also treated the payment as made by June 30.<\/p>\n \u201cIt is not an \u2018egregious error.\u2019 It is recorded in two previous months. It does not affect the calculation at all,\u201d McArn said.<\/p>\n \u201cAs stated repeatedly, the District has a plan to make further and deeper cuts than we previously made,\u201d McArn continued. \u201cWe are committed to and will continue to do the hard work to make these cuts and identify further cuts.\u201d<\/p>\n Jasjit Singh, a SCUSD trustee, credited the Sacramento City Teachers Association and other labor groups with helping secure cash-flow relief amid the district\u2019s fiscal crisis and laying the groundwork for long-term savings on health benefits.<\/p>\n \u201cThat is the kind of collaboration our district needs right now, and we have consistently extended that same opportunity to SCOE and the fiscal advisor,\u201d Singh said.<\/p>\n \u201cWe will work with anyone ready to strengthen these solutions and keep our focus where it belongs \u2014 on students, staff and the long-term stability of our schools.\u201d<\/p>\n In August, former SCOE Superintendent David Gordon sent state Superintendent Tony Thurmond a detailed account<\/a> of the county office\u2019s support for the district amid its fiscal distress, including regular meetings with district leaders, budget reviews, cash-flow monitoring and help developing fiscal recovery plans over the past year.<\/p>\n \u201cThe issue is not simply whether the district can get through the next few months, but whether it can remain financially viable in the years ahead,\u201d Gordon wrote then.<\/p>\n The terms of collaboration<\/p>\n As tensions between the district and county office continue to mount, McArn declined SCOE\u2019s invitation for the district\u2019s CBO and other finance staff to join weekly meetings to work on budget solutions.<\/p>\n \u201cOur staff should be focused on running our schools, and all of us should be focused on solutions that move Sacramento City Unified forward.\u201d<\/p>\n This story was originally published October 1, 2026 at 11:53 AM.<\/p>\n Related Stories from Sacramento Bee<\/p>\n
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