Fiscal Sustainability Plan

While SCUSD successfully returned to a positive budget certification in March 2025 and our 2025-26 adopted budget was approved by the Sacramento County Office of Education (SCOE), it was balanced on a very thin margin.

In September 2025, the District learned that expenses from the prior fiscal year had exceeded expectations by $43.3 million dollars. This created an unanticipated budget deficit for the current school year.

In response, SCUSD created a Fiscal Solvency Plan to identify additional sources of revenue and cost-saving measures that will reduce the deficit and improve cash flow to keep the District solvent.

On November 20, 2025, the SCUSD Board of Education approved a Fiscal Solvency Plan (FSP), which included a series of urgent actions designed to increase revenue and lower costs in the current budget year and beyond. The FSP is an evolving document that our staff and Board continue to update and change as District staff put the plan into action. To date, the District has identified $82.1 million in actionable savings with more revenues expected.

As of April 16, 2026, the budget deficit stands at $170.5 million, a figure that has been revised up to properly account for savings that had been factored in without being fully realized. Despite the deficit, the District maintained a positive cash flow that prevented us from running out of money in the 2025-26 budget year.

On November 20, 2025, the SCUSD Board of Education approved a Fiscal Solvency Plan (FSP), which included a series of urgent actions designed to increase revenue and lower costs in the current budget year and beyond. The FSP is an evolving document that our staff and Board continue to update and change as District staff put the plan into action. To date, the District has identified $96.6 million in actionable savings with more revenues expected.

As of May 21, 2026, the budget deficit stands at $170.5 million, a figure that has been revised up to properly account for savings that had been factored in without being fully realized. Despite the deficit, the District has positive cash flow and confidence that our plan will prevent us from running out of money in the 2025-26 budget year.

It is our intention to ensure that the measures taken will have minimal impact on classrooms and students.

As of the most recent budget update on February 5, 2026, SCUSD is confident we have a plan in place to avoid running out of money before the end of the fiscal year. While that is encouraging, it does not mean the district is safe from the possibility of being placed into state receivership. Continued development and implementation of our fiscal solvency plan will be critical.

For now, the District is working with FCMAT to identify areas for improvement and increased efficiency. The District has also been assigned a fiscal advisor by Sacramento County Office of Education (SCOE). The intent of these partnerships is to help Sacramento City Unified improve our financial position and retain decision-making control over finances and programs.

Yes. It is our goal to emerge from this budget challenge with a sustainable plan for achieving long-term positive budget certification.

The General Fund is the primary operating fund for a school district. It covers the day-to-day costs of running schools and district operations, including:

1. Instructional Costs
   • Teacher salaries and benefits
   • Classroom supplies and instructional materials
   • Professional development for educators
2. Support Services
   • Counseling, health services, and special education support
   • Library and media services
   • Transportation for students
3. Administrative and Operational Costs
   • School site and district office staff salaries
   • Utilities (electricity, water, internet)
   • Maintenance and custodial services
4. Other Required Costs
   • Contributions to employee retirement systems (STRS/PERS)
   • Insurance and legal obligations
   • Reserve for economic uncertainties (required by law)

An unauthorized contract refers to a situation in which a vendor provides services before an agreement that has been approved by the District’s budget services team. While it is always best practice to ensure we have fully authorized contracts, there are some instances, particularly with regard to special services for students in which staff make sure the services are provided before all budgetary processes have been completed.

The District is committed to restoring fiscal stability while maintaining high-quality educational services. To achieve this, we will implement a series of targeted cost-reduction measures, including:

• Staffing: Adjust staffing to match enrollment, freeze non-essential hiring, and review vacancies before filling.
• Programs & Services: Evaluate underutilized programs for consolidation or elimination; prioritize core academics and reduce non-mandated activities.
• Operations: Cut discretionary spending (travel, conferences, supplies) and implement energy-saving measures.
• Contracts & Vendors: Renegotiate for better pricing and consider shared services or cooperative purchasing.
• One-Time Funds: Use one-time funds only for one-time expenses to avoid structural deficits.

The District continues to hire the staff we need to directly serve students. At this time there is a hiring freeze for all non-classroom positions. Additionally, the District is exploring staff consolidation options as part of its right-sizing plan.

When future updates regarding the budget deficit will be made, they will be posted on the agenda, which you can find online the Friday before a regularly scheduled Board Meeting.

For past updates, please watch the following presentations:

• September 18, 2025: Item 12.1: Approve 2024-25 Year End Unaudited Actuals Financial Report & 2025-26 Budget Update
• September 18, 2025: Item 12.2: Budget Right-Sizing Update
• October 6, 2025: Item: 10.3: Overview of Unauthorized Contracts Process and Approval of Unauthorized Vendor Payments
• November 6, 2025: 12.1 Review Draft Fiscal Solvency Plan and 2026-27 Budget Development Reduction Thresholds
• December 18, 2025: 11.1 FCMAT Fiscal Health Risk Analysis Report
• December 18, 2025: 11.2 2025-26 First Interim Financial Report 
• January 15, 2026: 10.1 Fiscal Solvency Plan Update
• January 29, 2026: 6.1 Adopt Revised Fiscal Solvency Plan and 2026-27 Budget Development Reduction Thresholds 
• February 5, 2026: 11.1 Fiscal Solvency Plan Update
• February 19, 2026: 12.3 Fiscal Solvency Plan Update
• March 5, 2026: 12.2 Fiscal Solvency Plan Update
• March 19, 2026: 11.1 2025-26 Second Interim Financial Report
• April 16, 2026: 11.1 Fiscal Solvency Plan Update
• May 21, 2026: 12.2 Fiscal Solvency Plan Update