u/Avesa

This was a spicy one.

tl;dr = State agency of educational finance experts (FCMAT) tells the Board that insolvency in inevitable so they need to start the process of asking the State for help, because the process takes time. They basically need to start now because of the legislative calendar in order to have the loan available to meet payroll by the projected cash deficit in ~February 2027. Board disagrees with experts (!!) and literally states that they are going to wait to make the decision as late as possible, even though that risks bankruptcy and being unable to make payroll for employees. Better summaries than mine here: Abridged article titled "Sacramento school board rebuffs warnings, declines to ask state for budget help" and Sac Bee article titled "Sacramento school board resists state agency’s urging to surrender to insolvency" The meeting further went off the rails at the end, when the Board showed their complete ignorance about how the layoffs they directed are actually working.

SCTA talks about how multiple teachers are being laid off, despite the Board directing that cuts are supposed to be made away from the classroom. Specifically VAPA (most of the middle school music program), Early Learning and Care, and CTE (4 classes). Alleges that the Board doesn’t understand how all the pieces of the district fit together.

SEUI talks about many specific job types that are being eliminated under the proposed reorganization and the negative impacts this will have on student services and overall district function.

UPE talks about how laying off administrators will negatively impact students, this long-standing uncertainty has caused disruption, and highlights the inequity between labor partners.

FCMAT presentation — analysts/presenters state that they are here to talk about cash flow not the budget, because too much time has passed on the budget issue such that cash flow is at a critical point (negative for next year) such that they’ll be unable to process payroll.

What they are presenting tonight is the best case projection
Reminded the Board that they have a long history of deficit spending, so there is no cash buffer and reserves are essentially eliminated.
Reminded the Board that insolvency means having insufficient cash and exhausting all borrowing opportunities to meet payroll obligations. Essentially bankruptcy, if they were a business.
Projected deficit of $412M in 2027-2028 on current trend.
No allowance in projections made for separation costs (i.e., paid out vacation leave balances), but savings from staffing reductions are included. However, separation costs are likely to be significant because many people have high vacation balances that will need to be paid out.
Likely to run out of cash at the end of January 2027.
Next steps: If SCUSD can’t make payroll, it can’t borrow like a business because of the constitutional debt limit. Board doesn’t have a lot of choices, that’s why the receivership statutes exist.
- Need to get the legislation for receivership voted on by the CA Legislature when it’s in session. It’s already pretty late for that, so you need to do it soon.
- Scenario 1: Summer Trailer Bill to have funds available Fall 2026. This is the only option to have loan in place to prevent insolvency in January 2027 with current projections.
- Scenario 2: December Urgency Legislation to have funds available early April 2027. Funds will not be in place to fund payroll if insolvency occurs in January 2027 = bankruptcy
Board needs to make the decision whether to ask the state for help or not. Board legally needs to engage the community and take testimony before doing so, and this takes time. So you need to start doing this now, if you’re going to do it in time.
FCMAT is telling the Board that time is of the essence because of the legislative window; the CA Legislature has been briefed on this situation and is ready.
Bottom line, SCUSD is running the risk of not having the cash to make payroll at the end of January 2027 if they fail to get the state receivership loan in place in time (they spend $60M/month on payroll).

Member Kayatta says that they want to make the decision as late as possible; Member Singh said something similar earlier. Member Kayatta wants to see if bond borrowing is an option, even though the FCMAT presenter clearly said that is not advised.

Student Board Member Kemper asks about what the consequences of receiverships are. FCMAT presenter states that the statue provides that labor agreements need to be honored under state receivership, but these protections are not kept in bankruptcy court. Board members stay in their seats, but they have no authority/power. The Superintendent is dismissed the day the Administrator is appointed to the District.

President Jeane says that the Board does not want to accept receivership and there’s maybe things that aren’t accounted for. Similar to what Kayatta said, they aren’t “giving up” and are asking for “a plan” based on their local leadership. FCMAT presenter says “that would be great” but you’re running out of time.

Board is essentially delusional and denying math, and their hubris is risking the ability of the district to meet payroll for thousands of employees. This is not a hypothetical situation.

Staff presentations on district office restructuring and layoffs. Following this, public comments were made: Budget Services employees spoke about the proposed 60% staffing reductions, Culture & Climate employee spoke about the proposed reduction to one employee, Safe Schools employee. Member Ybarra didn’t realize this wasn’t even an action item on the agenda. Board Member Rhodes wondered who directed these deep cuts (!!). Staff responded that they made the choices based on what is legally mandated and operationally necessary. Ybarra wonders why there are so many administrative assistants in Business Services; CBO responds that it has been much reduced and they do a large amount of support work. Information item only, no vote.

Staff presentation on certificated employee (i.e., teacher) layoffs. No public comments. I thought I heard President Jeane say they are voting on 22 people to be issued final layoff notices. Member Singh says this feels like a waste of time to feel like they “have no clarity” and not having good enough justifications and nothing to compare to. Motion passes anyway.

Staff presentation on preschool employee layoffs. No public comment. Motion passes.

Staff presentation on classified employee layoffs. TK aides give public comments about their planned layoffs and the legal consequences associated with these legally mandated positions (ex: financial penalties, etc. as has been raised before). Member Rhodes asked why these positions are being eliminated if they are legally mandated. Staff responds they are aware, they fully intend to comply with the state mandates. Member Kayatta states (out of nowhere) that he wants to fire Superintendent of Technology Services and Superintendent of Community Engagement and Communication, and wants a new org chart and resolution to reflect these individuals (I’m sure it’s a complete coincidence that the Superintendent of Technology Services is Steve Bruno’s boss). Motion passes.

Same as the last 4/16 meeting, the Board chose to move the Fiscal Solvency Plan update to the very end of the agenda instead of where it was originally scheduled. Most people had gone home by the time this came up, since it was about 11:30pm. As I’ve said in my other posts, there are many other very important topics discussed at the school board meetings, but I’m only summarizing the budget-related information here. Please add your observations in the comments if you think I missed anything important.

SCUSD Board hired Interim Superintendent Cancy McArn as Superintendent — with a base salary of $365,000 and 22-40 days of vacation per year, among other benefits. Aridged article on the topic here.

Visual & Performing Arts Presentation by the SCUSD VAPA Coordinator was moved up to the beginning of the meeting. Kudos to the Board for doing this, because a lot of students had come to the meeting to give public comments on this topic, and this was originally scheduled much later in the evening. CLARA Executive Director spoke in support of VAPA education, and parents spoke about how Prop 28 funding is separate from the overall budget and cutting those positions doesn’t fix the budget deficit. The Board discussion and Q&A with the staff following the public comments seemed to indicate that the VAPA layoffs occurring are an unintended/indirect cascading consequence of the budget cuts directed at the district office because of how some VAPA teacher positions are funded and how seniority rights work when layoffs occur more broadly. Board Member Singh actually seems to directly acknowledge and take accountability for this, which was refreshing, in my opinion.

SCTA states that the fiscal recovery plan is inadequate, and points out that the presentation wasn’t uploaded publicly until a couple hours before the meeting tonight.

SEUI states that none of the plans come close to fixing the deficit.

UPE is concerned that the Board has publicly admonished principals and administrators for allegedly failing to do their jobs and for a lack of transparency. But the Board has, for a second time in a row, hired a Superintendent via a secret hiring process with no transparency or public hiring process, or even a public search for candidates.

Fiscal Solvency Plan & Restructuring Update — presentation delivered by the Cabinet Members.

Highlighted four structural drivers of the crisis: 1) enrollment decline, 2) compensation (ex: labor contracts), 3) special education (currently the fastest-moving driver), and 4) no plan for reversing structural deficit spending.
Ways to correct the revenue trajectory: 1) targeted approach for improving attendance, 2) enrollment retention, 3) strategic facilities consolidation
Presented 2031-2033 as a realistic recovery timeline (i.e., earliest date we can no longer be in a structural deficit). We’re not going to see savings until 2028-2029 at the earliest.
Four structural decisions in the next 12 months: 1) commission Special Education audit before 26-27 budget is adopted, 2) fill permanent CBO position, 3), begin community engagement on facilities maximization, 4) ensure monthly fiscal solvency plan is structured for accountability (not compliance).
Suggestions for extending the fiscal runway (i.e., staving of state receivership for as long as possible): attendance recovery initiative, focus on high-impact actions, monetize surplus and underutilized property quickly, maximize inter-fund borrowing to manage cash flow, maximize one-time revenue enhancements, shift eligible general purpose expenses to categorical resources, explore OPEB and Medical billing optimization with labor partners, reevaluate in-house counsel to reduce legal costs.
Developed 5 scenarios for restructuring, from “status quo” to “unable to meet legal requirements.” Final recommended scenario for restructuring presented = Scenario E prioritizes legally mandated, operationally necessary, and core educational programming, preserves critical services to students, schools, families, and staff. Honors the Board’s directive of Administrator count of less than 270, preserves the critical oversight and legally mandated roles. Reduction of 136 full-time employees and $24M.
Full plan will be presented publicly to Board for vote on May 7. The Cabinet acknowledges that behind each data point on the screen is a person, and these are very hard decisions.

At this point, no Board meeting would be complete without Kayatta complaining about the staff and making sure to get a dig at the former CBO and the recent news article where she alleges that the Board prioritized the generous teacher’s contract over fiscal solvency, despite them being in full possession of the facts.

Next Board Meeting is on May 7th where we can expect to see the finalized restructuring plan and staff/teachers should know by then who is actually getting laid off or not.

What parents should know about a possible state takeover of Sacramento schools

Recap of 5/7 SCUSD Board Meeting - State advises that insolvency is unavoidable