Fiscal Solvency Plan

As the Sacramento City Unified School District works to eliminate a budget deficit in the 2025-26 fiscal year and avoid state receivership, we have created this web page to ensure transparency and accountability around the process.

Here, you will find answers to Frequently Asked Questions and access to the latest information about the District’s plan to remain fiscally solvent and maintain local control of our schools.
It is our every intention to accomplish this goal with minimal impact on schools and student services.

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 $43.8 million in actionable savings with more revenues expected.

As of February 5, 2026, the budget deficit stands at $113.2 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.

Fiscal Solvency Plan Update

Presented at the February 19, 2026 Board of Education Meeting

Resolution 3564 & 3560 Presentations

The following were presented at the February 19, 2026 Board of Education Meeting:

Resolution No. 3564: Resolution to Eliminate Certificated Employees Due to a Reduction of Particular Kinds of Service
Resolution No. 3560: Notice of Layoff: Preschool Employees- Reduction in Force Due to Lack of Funds and/or of Work

Frequently Asked Questions

How did we get here?

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.

How big is the deficit and why does it keep changing?

After the original $43.3 million deficit was revealed, the District’s 2025-26 1st interim budget report (December, 2025) showed the deficit had grown to approximately $51.6 million. Included in the calculation were several cost-savings assumptions from the fiscal solvency plan that had not yet been actualized. To ensure a true and accurate reflection of the District’s current financial position, those assumptions were removed and the 1st interim report was updated to reveal a $113.2 million deficit.

How much is the District saving through the Fiscal Solvency Plan?

Will spending cuts impact classroom instruction?

Will the District be facing a state takeover?

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.

If the District addresses this deficit, will the district be back on track for a positive certification over the next few years?

What type of expenditures are covered in the General Fund?

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:

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

I’ve been hearing about unauthorized contracts, what are those?

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.

What steps will the district be taking to cut spending?

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.

What types of employees may be impacted by these cuts?

Where can I learn more about the information presented to the Board of Education regarding the budget deficit?

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: