Sacramento City Unified’s shaky finances worse after strike, county superintendent says

Pay raises and stipends negotiated with Sacramento City Unified unions to end a strike earlier this month, and financial penalties for the school closures have stretched the district’s finances thin, said county Superintendent Dave Gordon in a letter to Sacramento City Unified Superintendent Jorge Aguilar.

The district, which serves 45,078 students, has had a history of fiscal imbalance.

Gordon changed the district’s budget certification from qualified to negative, signaling that it could not meet its financial obligations in the next year. A qualified certification means that a district cannot meet its financial obligations over three years.

The Sacramento City Unified school board approved the newly negotiated contracts at its school board meeting Thursday. It agreed to an ongoing pay increase of 4%, retroactive to the beginning of this school year, for employees represented by either of its unions, as well as thousands of dollars in stipends. Substitute pay, increased by 25%, will be retroactive for the 2021-22 school year.

“Unfortunately, SCUSD is all too familiar with ‘negative’ certification based on decades of risky budgeting practice.  That is a cycle we are committed to breaking,” said SCUSD board President Christina Pritchett in a statement.  “The independent review by SCOE should serve as another reminder to us that we have to address our deficit spending in order to have ongoing resources to invest in our students as well.”

The labor agreements will add $16.1 million in ongoing costs to the district’s structural deficit, as well as about $44 million in one-time costs, according to the letter. The strike could also cost the district up to $47 million in state penalties for not being open the number of days required by the state. That number could be reduced if the unions and district agree to add days to the school year.

The district also has projected that student enrollment will decline by 2,000 students by the 2023-24 school year, further reducing school funds.

Gordon encouraged the district and unions to agree on new health care benefit plans that could save the district money and could be used for ongoing expenses.

The county Office of Education is responsible for fiscal oversight for school districts in the county. Because of Sacramento City Unified’s ongoing financial problems, Gordon said his office will continue an enhanced level of oversight that allows him to stay or rescind any action that would keep the district from meeting its fiscal obligations. His office also will help the district to develop its next budget and appoint a fiscal adviser to the district.

The agreements also allow for new salary negotiations for the 2022-23 school year.