The Sacramento district, with an enrollment of about 37,000 students, has spent the past year under county oversight after certifying it couldn\u2019t balance its budget<\/a>.<\/p>\n A county-assigned fiscal adviser can now overturn board decisions they deem financially irresponsible. In August, the state\u2019s school finance watchdog warned<\/a> the district could run out of cash by spring 2027.\u00a0<\/p>\n If the district reaches a point where it cannot make payroll, the only option left is to ask the state for emergency funds, and that money comes with conditions. Sac City leaders say that\u2019s the last thing they want.<\/p>\n Sac City\u2019s board has been unanimous and public about where it stands. At a special meeting July 30<\/a>, as trustees approved a $158 million package of cuts and savings, they took turns rejecting receivership from the dais.<\/p>\n \u201cState receivership serves no one\u2019s interest,\u201d said trustee Michael Benjamin. \u201cI refuse to accept state receivership,\u201d added trustee April Ybarra.<\/p>\n Trustee Chinua Rhodes said the south side of the city would bear the worst of a receivership. The district\u2019s own finance staff, he said, know the community and are keeping money under local control. The outsiders overseeing the district, the Sacramento County Office of Education<\/a> (SCOE), the state\u2019s Fiscal Crisis and Management Assistance Team<\/a> (FCMAT) and the county\u2019s fiscal adviser, do not. \u201cSCOE, do they understand it? No. Does FCMAT understand it? No. Does a fiscal adviser understand it? No,\u201d he said. \u201cAnd so that\u2019s why local control is so important.\u201d<\/p>\n Taylor Kayatta, who has served on the Sac City school board since 2022, has seen it play out before. Before he was elected, he was an auditor with the state controller’s office, and in 2014 he audited Inglewood Unified, which was two years into receivership at the time.<\/p>\n “It proved to me that this is the worst thing that could happen to any school district,” Kayatta said. “It was almost like a doom cycle, where they make cuts to balance their budget, and then families leave because then the services are going away, and then they make more cuts.” For the employees, students and parents in Sac City, the question is what it could mean for them.<\/p>\n Does the state take over school districts?<\/p>\n The term following around Sac City Unified as it fears for its financial future is \u201cstate takeover\u201d but experts who follow school budgets say that’s incorrect.<\/p>\n “There is no state takeover process,” said Michael Fine, who led the Fiscal Crisis and Management Assistance Team for 11 years. “The local board, the local governing board, must ask for the assistance.”<\/p>\n FCMAT is the state agency that sizes up financially-strapped school districts. Fine compared state receivership to bankruptcy. A creditor can’t force a city into Chapter 9; the city has to file. California’s school receivership laws, written after Richmond Unified ran out of money in the early \u201890s, work the same way. The board has to vote.<\/p>\n “I can stand on the sidelines and I can tell them you’re about to run out of cash, you’ve got all these problems, there aren’t any other solutions,” Fine said. “But ultimately, they have to vote to do so.”<\/p>\n What triggers state receivership?<\/p>\n A district can run a budget deficit for years without triggering anything. Receivership starts when\u00a0 a district can’t make payroll.<\/p>\n “Insolvency means they have run out of cash to meet their payroll obligations to their employees,” Fine said. That includes the paychecks, the retirement contributions and the payroll taxes owed on them.<\/p>\n No one\u2019s pay gets suspended when that happens. The purpose of the emergency money from the state is to keep paychecks going so schools stay open. What the district loses is the ability to decide how to fix the problem, precisely what Sac City is trying to avoid.<\/p>\n Before a district gets there, there’s a ladder of budget standing<\/a>s. Districts have to show they can balance their budget for the current year and the two after it. If they can’t, they certify the budget as “qualified” or “negative,” and the county office of education gets involved.<\/p>\n “They don’t really have the ability to get involved and actually tell us, \u2018No\u2019 until we self-certify our budget to be negative,” Kayatta said. After that, the county can assign a fiscal adviser with the power to stay or rescind budget-related board actions. Sac City has one now.<\/p>\n Kayatta said the district’s slide started a year ago<\/a>, when unaudited actuals showed the special education department had spent millions more than the budget office had allotted it and the board hadn’t been told. It had to approve the spending after the fact, and the district\u2019s certification went negative.<\/p>\n If the warnings don’t work and the cash runs out, the board votes to request what the law calls an emergency apportionment. The Legislature has to pass a bill. The governor has to sign it. Only then does the money move.<\/p>\n Who\u2019s in charge?<\/p>\n That depends on how much money the district needs.<\/p>\n California school districts are required to keep an emergency fund, which the law calls a \u201creserve for economic uncertainties.\u201d For a district Sac City’s size, it’s 2% of spending. When a district asks the state for help, the law compares the size of the ask with the size of that emergency fund.<\/p>\n If the district needs more than double what it was supposed to have saved, the law treats the hole as too big to leave the board in charge. The board can still meet and talk, but it can’t vote. The superintendent is out. A county-appointed administrator makes every decision the board and superintendent used to make.<\/p>\n If the district needs less than that, the board stays in charge and a county-appointed trustee looks over its shoulder, with the power to undo anything the trustee thinks is financially reckless.<\/p>\n For Sac City, the district\u2019s savings aren\u2019t anywhere close to what it needs. Its emergency fund is supposed to be somewhere between $14 million and $19 million, depending on how it’s measured. Double that is $40 million at most. In August, FCMAT estimated the district would be $81 million short of cash by June 2027, and Fine said the state usually sends enough to carry a district for two or three years. Sac City would need four to six times its emergency fund, not two.<\/p>\n It means that the Sacramento County Office of Education, whose fiscal adviser has already overturned several<\/a> of the Sac City board’s decisions, would be running the district. The board would be stripped of its authority.<\/p>\n In Plumas, the elected school board still exists. Its members sometimes sit in the audience during meetings.<\/p>\n “Our elected school board kind of goes on a timeout,” Banning said. “They’re not sitting at the dais during school board meetings. It’s just the county administrator who makes those decisions.”<\/p>\n David Goldberg, president of the California Teachers Association (CTA), said that’s the part his members feel first. “A lot of decisions that were democratically made by elected school boards are now ceded to an unelected person or entity,” he said. “Maybe another step removed from parents and educators and students.”<\/p>\n Until 2018, the state superintendent appointed and oversaw those administrators. A budget bill that year<\/a> handed the job to county superintendents, which is why the districts that went in earlier had state administrators and Plumas has a county one.<\/p>\n Cost of receivership<\/p>\n Receivership funding is frequently called a loan. Fine calls it that, too, and then corrects himself. Kayatta put it more bluntly. “It’s not actually a loan,” he said. “It’s actually an advance on your own future revenue.”<\/p>\n Whatever the name, the district pays interest on the money. Plumas is paying 6.41%, according to the California Department of Education<\/a>, on $8.5 million drawn so far out of $20 million authorized. The first payment comes due in November 2027. The last is scheduled for November 2055.<\/p>\n The term is set by what a district can afford each year. The cap was 20 years. A bill Gov. Gavin Newsom signed in September, Senate Bill 577<\/a>, raised it to 30.<\/p>\n The totals add up. West Contra Costa borrowed $28.5 million starting in 1990 and repaid $47.7 million by 2012. Oakland borrowed $100 million and repaid $119.7 million, finishing in June 2025. Vallejo borrowed $60 million and repaid $69.2 million.<\/p>\n Goldberg, the CTA president, said that’s money that comes out of classrooms for a generation. “You have students today who are paying interest on loans from over a decade ago,” he said of Inglewood. “They’re losing out on what services they should be getting because of decisions many, many years ago.”<\/p>\n What happened in the other districts?<\/p>\n Ten districts in California have entered receivership since the early 90s. Four were small and out within about a decade. Three were large and took more than 20 years. Three are in or just leaving the system now. A few things show up in nearly every one of them. The smaller districts moved faster through the receivership process. The patterns below come mostly from the districts that stayed in longest.<\/p>\n It usually takes more than one administrator. Compton, the first district to go in after the current law passed, went through four state administrators in three years before the fifth, Randolph Ward, arrived in 1996. The Los Angeles Times reported<\/a> campus conditions had gotten worse under state control, and the ACLU was preparing to sue the state over the quality of education. Ward got Compton out in 2001, the first district to repay its loan. Two years later, the state sent him to Oakland<\/a>.<\/p>\n Inglewood went through four administrators in its first six years. “There was no progress in the first six years,” Fine said. “Zero progress.”<\/p>\n The receivership process is built to replace people who mismanaged a district with experts who will fix it. Those experts are also people, and the state has had to replace them too.<\/p>\n Schools close. In Oakland, Ward closed 14 schools<\/a> in three years and broke others into smaller schools sharing a campus. The number of charter schools in the district nearly doubled while he was there. In Vallejo<\/a>, the state administrator closed two elementary schools, a middle school and a high school in his first three years. In Inglewood, the county administrator closed Worthington Elementary in 2023, then Highland Elementary and Crozier Middle in 2025, and shut Inglewood High temporarily for renovation.<\/p>\n Goldberg said closures are where the short-term logic of receivership breaks down. “They lead with school closures. And then we look at the studies around school closures, that they often lead to more financial problems for districts because parents then leave the district,” he said. “Sometimes it can be kind of like short-term fiscal gains, which really have a middle- and long-term disastrous impact.”<\/p>\n Enrollment falls, and keeps falling. “A lot of families don’t want to be associated with what they perceive as a failed school district, so you lose kids when, in fact, you’re at a point in time where you need more kids,” Fine said. Enrollment in Oakland\u2019s district-run schools, not counting the charters that opened during the same period, dropped by a third. Vallejo’s fell by nearly half.<\/p>\n Kayatta watched it happen in Inglewood. Charter schools, he said, came in “almost like this is an opportunity to claim these children.” The district has closed school after school since. “People stop feeling like they’re a part of the school community because their voice isn’t necessarily even heard.”<\/p>\n Getting out doesn’t mean getting better. Oakland and Vallejo both left receivership in the summer of 2025. Within months of leaving, Oakland was trying to cut $100 million from its budget to avoid going back in. Vallejo closed three more elementary schools and cut 120 positions in the months after regaining control.\u00a0<\/p>\n It was never the teachers. On this, Fine and the union president agreed. “A district that has to go into receivership is a result of governance that’s failed and key leadership that’s failed,” Fine said. “It’s not a result of a teacher in the classroom failing.”<\/p>\n Banning said the same about Plumas. “We did have some folks in top-level positions that should never have been hired into those positions,” she said. “They lacked the education background, the experience and the know-how.”<\/p>\n What changes when a district enters receivership?<\/p>\n Fine’s answer is that it depends on the district.<\/p>\n “If we look at history, a district that goes into receivership, things get worse in the first one or two years before they start to get better,” he said.<\/p>\n![\"SCUSD\"](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/10\/090718scusd-p.jpg\")
The Sacramento City Unified School District’s main officeBob Moffitt \/ Capital Public Radio<\/p>\n![\"SCUSD\"](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/10\/050826_scusd_r.jpg\")
<\/p>\n
California’s constitution doesn’t let a school district borrow without voter approval, and doesn’t let the state lend. So the money is structured as an advance on the district’s own future state funding. “We figure out what the state’s going to owe a given school district over the next 10 years or 20 years, and we advance that all at once,” Fine said.<\/p>\n