San Francisco School Board Meets Over Audit Exposing Dire Financial Situation

The San Francisco Unified School District (SFUSD) held a special meeting on Tuesday night to go over a recent state audit report on the dire situation of the district’s finances, and what the district could possibly do to avoid a massive deficit next year.

For years, the SFUSD’s future has been unstable at best. Thousands of students have left as the city’s population has dwindled. In 2015, the SFUSD boasted 53,000 students. This year it is around 49,500, with enrollment in 2032 projected to be at about 44,000. Not helping matters has been the rise of teacher pay and pension costs, which shot up dramatically in October after a near strike by teachers. Unexpected costs also struck the SFUSD too, as $34 million was spent on a payroll system that didn’t work, and millions more spent on abuse claims.

This all caused the SFUSD’s deficit to grow dramatically from $169 million in 2020 to a projected $421 million deficit in 2025. The SFUSD slashed 927 vacant positions in an attempt to lessen the deficit amount by $103 million, but those cuts are being challenged. The city, usually having the money to fix department finances, also can’t help because of their own $780 million budget deficit. At a district planning summit in March, the SFUSD, trying to prevent a takeover of the district, said that multiple school closures would be likely by 2025.

However, things reached a crisis point earlier this week when the California Department of Education announced that they would be sending fiscal advisors to look over some financial decisions by the district, essentially taking control of district spending. The state Superintendent also noted that the District may not be able to meet all financial obligations this year and had until June 30th to submit a corrective action plan.

Needing to quickly confront the $421 million deficit issue, the SFUSD held a special meeting on Tuesday to go over a state audit of their finances. SFUSD Superintendent Matt Wayne started off the meeting by highlighting the California DOE report and went over what state advisors said that the district should do next to avoid running out of funds next year.

“It exemplifies what you’re saying is both the progress that we’ve made, but how far we need to go,” said Wayne on Tuesday. “The district is committed to accelerating our efforts to address the remaining concerns to ensure that San Francisco public schools are places where students can learn, grow, and thrive.”

However, state officials and watchdog groups were adamant that the state would not be bailing them out, and that the SFUSD would have to do everything they could to solve the deficit.

“So your solutions are yours,” explained Fiscal Crisis & Management Assistant Team (FCMAT) CEO Mike Fine on Tuesday. “The state’s not going to be bailing you out of anything. Okay? You need to put your arms around this and acknowledge that there’s a problem.”

Dire situation for the SFUSD

Following this, angry parents of students proceeded to grill the SFUSD board. Many were concerned about what would happen to special education, if class sizes would grow, and what exactly the board had in mind to solve the crisis outside of budget cuts, school closures, hiring freezes and a proposed $790 million dollar bond that voters may decide on in November. Many parents were also vocally distressed about a state auditor saying that the district barely has enough funds to meet the minimum financial reserve levels. San Francisco School Board President Lainie Motamedi attempted to quell concerns by answering the parents at the meeting.

“There is a lot of work to be done and the audit was a necessary preliminary step,” said Motamedi. “Right now we’re in a position where we can at least see the dots that need to connect. That is the first step in the repair. I am grateful to the state’s support and assistance as we work to do right by our kids, by our educators, and make sure our schools are functioning the way they should.”

“The state report is a wakeup call. Right now we’re in a position where we could at least see the dots that need to connect. It may feel worse, but having the conversation is the first step to the repair.”

While the next meeting on the budget crisis is scheduled for May 15th, educational financial experts have said that the SFUSD needs something short of a miracle to not enter financial distress next year.

“Everyone is bracing for what’s coming soon,” Belle Green, an accountant and advisor to many school districts in Great Lakes states, told the Globe Wednesday. “Everyone knows that a bunch of schools will be closed as a result of this. Everyone knows that budgets are going to be slashed. No one is talking layoffs, especially after those strikes last year, but those might be coming too through budget cuts. And then there is that bond, which only goes to repairing older buildings.”

“They keep saying that they will have a balanced budget by 2026. Every passing day that becomes more and more farfetched. The SFUSD needs to make those hard decisions now. Students are down drastically yet they have the same number of schools open. Private school popularity is at an all-time high. They need to seriously readjust. And look where their stubbornness has gotten them. $421 million in the hole. They waited until this was too big a problem. And that’s why the solutions are not going to be pretty. The state was pretty clear about that.”

A School Board sub-committee hearing on the budget crisis is due to be held  on May 15th.