Sacramento City School District At Insolvency Tipping Point – Again

A case of annual Déjà vu: The Sacramento City Unified School District, which has teetered on the cliff of insolvency for many years, announced it would cut 60 administrative positions as the district deals with a looming financial crisis, the Globe reported November 2025:

This is the same school district which renamed several schools in 2023, including Sutter Middle School and Kit Carson International Academy, costing $550,000. Yet more than half of SCUSD students do not meet basic state English standards, and nearly three quarters fail to meet basic state math standards.

“The district was already facing fiscal woes when a September report showed that the district spent $43 million more than expected last year due to a “flood” of costs that popped up later in the year,” the Sacramento Bee reported. “Officials estimate that the district could end up $88 million in the red by the 2027-28 school year if they do not come up with a strict plan.”

The school district got into $43 million worth of trouble with “unbudgeted spending.” A September report included unauthorized contracts and spending on special education. “During the 2024-25 school year, unauthorized contracts across Sacramento City Unified totaled $62 million worth of spending. The special education department represented 98% of those purchases,” Abridged reported in October. They reported that special education department heavily uses outside contractors because of staffing shortages. But $43 million worth?

The Sacramento County Office of Education told the SCUSD that to become solvent, it needs to cut $50 million in spending for the 2026-27 school year – or risk state intervention and takeover.

That was last year. Here we are 10 months later and the same Sacramento City Unified school district is nearly insolvent once again… yet trustees tried to pass a plan more than tripling their own pay.

Sacramento City Unified School District (SCUSD) is in a severe fiscal crisis, and trustees recently floated a large increase in their own stipends before withdrawing it after public backlash, Hoodline.com reported.

The school district now faces a reported structural deficit of about $222 million – quite a jump from the $43 million in 2025. County executives say the district needs approximately $150 million in cuts and cash solutions by June 2027 or it risks running out of money and entering state receivership, which largely amounts to a state loan and loss of local board control.

Personnel/labor costs consume an unusually high share of the budget: around 94% versus the statewide average of 85 – 86%, which is still very high. The National Center for Education Statistics reports that in U.S. public K-12 education, labor costs (salaries + employee benefits for teachers and other staff) typically account for about 77–80% of current (operating) expenditures.

Declining Sacramento City Unified enrollment and special-education costs that have more than doubled, coupled with labor agreements that added spending without matching ongoing revenue, have all contributed. Successive budget updates through 2025 – 26 showed the hole widening after COVID-era one-time funds expired. Obviously adjustments were not made when the COVID funds expired. 

That is the very definition of gross incompetence and mismanagement. Is anyone in Sacramento City Unified management capable of making the necessary cuts?

As for the trustee pay increase proposal, the school district trustees in the broke school district proposed more than tripling their pay, once they settle their budget woes, Abridged reported in August.

A new 2025 state law, Assembly Bill 1390 authored by Assemblyman José Luis Solache (D-Paramount), a three term Lynwood Unified School District Board member, raised the long-frozen cap on school-board compensation.

Sacramento City Unified School District trustees currently receive about $827 per month. Trustee Taylor Kayatta proposed raising that to $3,000 per month. 

The increase was written to take effect only after the district received a positive or qualified budget certification, or if it entered receivership.

It also contemplated limited back pay.

You can’t make this up. Sacramento City Unified School District has been perpetually teetering on the precipice of insolvency for years, and the board is considering giving themselves raises, even if the district goes into receivership. 

The item appeared on a board agenda in late August, early September 2026.

After community criticism that the timing of the gigantic raise was tone-deaf given the $222 million deficit and looming takeover threat, Trustee Kayatta pulled the proposal, the Bee reported. Board President Tara Jeane removed it from the policy update. Kayatta said he had “made the wrong call” in bringing it forward then.

Note that if the district actually entered receivership, board members typically lose stipends and decision-making authority anyway. While some argue that the pay increase for board members was small relative to the overall deficit, the optics and insensitivity of raising board compensation while the district is cutting programs, freezing hiring, and warning of insolvency, are horrid, as well as evidence of some very poor judgment. 

The fight escalated when Sacramento County Superintendent Dave Gordon and his fiscal advisor, Luz Cázares, discontinued the new labor contract with teachers in July.

So, Sacramento City district leaders turned to State Superintendent of Public Instruction Tony Thurmond to intervene, and negate Sacramento County Superintendent Dave Gordon’s decision.

“Thurmond ultimately chose not to overturn the county-level decision. But in a letter to Gordon, the state superintendent threatened to intervene going forward, over the county office’s authority.

His warning alarmed county superintendents across California, said Kindra Britt, spokesperson for California County Superintendents,” Abridged reported.

The union contract at the heart of the conflict, as it is every year. The tail is wagging the dog right into insolvency.

The district continues to work on solvency plans, including a July 2026 package of cuts and a teachers-union agreement that county officials later challenged as insufficient or counterproductive for long-term recovery.

As Abridged correctly reported, “Sacramento City Unified is in arguably one of the worst fiscal positions of California’s more than 1,000 school districts.”

The Globe has been reporting this for years. Not only did we report “Sacramento City Unified Financial Crisis Is No Surprise,” in 2019, we also noted that “Sacramento City Unified is one of the lowest-ranked among 944 school districts.”

In “Sacramento City School District At Tipping Point: Insolvency Next Year,” also in 2019, the Board had serious judgment issues then as “Employee salary and benefits represented most of the district’s budget.”

As with Governor Gavin Newsom’s state budget, Sacramento City Unified’s problem is a structural deficit – ongoing spending growing faster than ongoing revenue – that has also become a cash-flow crisis. 

The board approved a fiscal solvency plan in November that included a reduction of the number of full – time administrators from 328 to 270 by the 2026-27 school year, saving the district about $14 million, we reported in November.

270 is how many administrators the district had prior to the COVID-19 pandemic, according to a district spokesperson. So, during the pandemic, the already-fiscally mismanaged school district added 58 additional administrators – to do exactly what?

The administrative bloat in California’s public education system is blatant, and didn’t just start.

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.

Again, in March 2019, California Globe reported:

The Sacramento City Unified School District is teetering on insolvency. Even with these financial warning signs, after the Sacramento City School District ended the 2017-18 fiscal year with an $11 million deficit and just days after Superintendent Jorge Aguilar submitted the 2018-19 budget projecting another $22 million deficit (which was rejected by the county), Aguilar and seven other administrators spent more than $35,000 to attend a six-day conference at the Harvard Business School, the SCTA reported.

The Sacramento City Unified School District is projected to run out of cash by November 2019 unless steep cuts are made, the Bond Buyer reported. “Sacramento City “entered into a collective bargaining agreement in December 2017 that they could not afford. The Fiscal Crisis & Management Assistance Team report released in December concluded that SCUSD needed to make $35 million in cuts by the time it adopted its 2019-20 budget or it would only have three to four months of cash remaining for day-to-day operations.

At a May 2019 Board of Education meeting, Sacramento City Board members discussed on camera “91 cents of every dollar is spent on salary and benefits,” with only 9 cents going to programs. The Board acknowledged that David Gordon, Superintendent of the Sacramento County Office of Education, warned the District for 14 years that their practices were unsustainable.

To quote the great singer-songwriter Don McClean:

They would not listen

They’re not listening still…

Perhaps they never will…