Sacramento City Unified School District is running out of time and cash to keep the district funded past July, according to the latest report from an independent state agency that helps guide local districts in financial crisis.Board members were given the most dire warning to date on Thursday night, as the Fiscal Crisis and Assessment Management Team (FCMAT) warned of a "cash cliff" without any changes.
According to FCMAT CEO Michael Fine, the district's own financial forecast shows it will run out of cash by July. FCMAT confirmed the projection while examining what options remain for the 2026-27 fiscal year.Fine said the district may have enough short-term options to stay afloat through late January or February 2027. Those options include borrowing internally from district funds and receiving an advance on future property tax revenue from Sacramento County. Under that process, the county would provide estimated property tax revenue months early to help bridge the district through the first half of the fiscal year.
"We believe they have a couple of options to get them through the January to February timeline before they run out of cash," said Fine.
The bigger challenge, Fine told CBS News Sacramento, is timing.
Fine says if the school board seeks state assistance, they must make that request sooner rather than later because the California Legislature would need time to authorize additional state assistance, and waiting too long could leave the district without options before lawmakers reconvene.
If time passes and the board is unable to get its request on the legislative schedule, they risk running out of cash. "If they don't [make a decision] they're gambling with their ability to pay their employees," said Fine. If the board requests state assistance, the state can appoint an administrator and reduce the authority of the elected school board -- a process Fine said mirrors bankruptcy protections. Ultimately, the appointed administrator would hold the responsibilities of the superintendent and the board in one role.
FCMAT estimates Sacramento City Unified would likely need between $100 million and $130 million in emergency cash assistance.
Fine warned that even with state intervention, painful financial decisions are likely ahead.
"We often say things will get worse before they get better," Fine said. "If we think things are bad now, they're going to get worse before they get better."
This is not the first time FCMAT has intervened in Sacramento City Unified. The agency last reviewed the district in 2018, and Fine said many of the same issues remain unresolved.
"What they've been doing is kicking the can down the road year after year," he said.
During the pandemic, large amounts of federal and state relief funding temporarily stabilized the district. Like many school systems, Sacramento City Unified expanded staffing and services during that period. But Fine said those funds are now gone while spending levels remain high.
Fine said district leaders must now decide quickly whether to pursue state assistance. California law requires school boards to hear public testimony before formally requesting help from the state if the school board pursues this route.
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