California’s habit of papering over budget shortfalls instead of confronting them appears to be trickling down to some of the state’s largest school systems, with districts in Sacramento and Los Angeles now facing financial reckonings that mirror the state’s own fiscal sleight of hand.
Last week, the Sacramento County Office of Education rejected a revised labor agreement that Sacramento City Unified School District officials had argued would keep the district from sliding into insolvency. County Superintendent of Schools David Gordon didn’t mince words in explaining why the deal fell short.
“The long-term financial recovery of the district will take time and require extraordinary fiscal discipline, not just short-term loans and redirected funds, all of which must be repaid,” Gordon said in a statement. He added that the proposed agreement “would only temporarily delay SCUSD’s impending insolvency by a few weeks while also making it more difficult for the district to make a sustainable long-term fiscal recovery.”
The Sacramento district’s troubles are nothing new. For decades, it has hovered near financial collapse, repeatedly committing to spending — particularly through labor contracts — that outpaces what it actually brings in. And each time the district nears the edge, it produces a rescue plan that looks solid on paper but ultimately proves illusory. County officials and the state’s Fiscal Crisis and Management Assistance Team have again found the numbers don’t add up, prolonging a standoff that shows no sign of resolution. Estimates of the shortfall vary depending on who’s counting: the county places the structural deficit at $221.8 million, while the district insists it’s closer to $170.5 million.
If the state eventually intervenes with emergency loans, Sacramento City Unified would likely be forced to hand over control of daily operations to an outside administrator, sidelining its elected board and administrative leadership. That fate has befallen other urban districts in California before, and Sacramento appears to be edging closer to it.
A similar drama is unfolding roughly 400 miles south, where the state’s largest school system, Los Angeles Unified, is grappling with financial pressures that echo Sacramento’s — though the district has not yet reached the same level of crisis.
In July, the Los Angeles County Office of Education cautioned L.A. Unified that its current financial planning fails to show how the district intends to meet its obligations going forward. The district anticipates a $231 million funding gap next year, and continued imbalance between spending and revenue could trigger the appointment of a state-assigned financial advisor with authority to override district decisions.
Michael Fine, CEO of the Fiscal Crisis and Management Assistance Team, told the education news outlet EdSource that L.A. Unified has a pattern of approving labor agreements without a clear plan for funding them.
“It’s when the board says, ‘I’m going to approve these contracts, even though I don’t know how I’m going to pay the bill,’ that’s where the problem is,” Fine said. “It’s not with the negotiations themselves. It’s not with the deal that was made.”
The financial struggles in Sacramento and Los Angeles point to a broader pattern among large, urban school districts, where politics often plays an outsized role in budget decisions. Powerful teachers unions frequently back school board candidates, and once elected, those trustees can face pressure to approve costly contracts without fully accounting for how to pay for them over time.
To be fair, California’s schools are contending with real challenges beyond politics — declining student enrollment, which reduces attendance-based state funding, and the same inflationary pressures squeezing budgets everywhere. At the same time, school funding has grown substantially in recent years, now exceeding $25,000 per student when accounting for all funding sources. But as that funding has grown, so too has pressure to spend it, often outpacing the districts’ ability to sustain that spending long-term.
The result, in both Sacramento and Los Angeles, is the kind of structural deficit that has become disturbingly familiar at the state level — a gap between what’s coming in and what’s going out that gets patched over rather than solved, delaying a reckoning rather than preventing one.
That dynamic isn’t limited to school districts. In June, Gov. Gavin Newsom and state lawmakers balanced California’s $351 billion budget in part by withholding $3.9 billion in school funding that is otherwise required under the state constitution, with a promise to repay it down the line.
In other words, the state’s own fiscal shortcuts are adding strain to school systems already struggling to balance their books — a ripple effect that districts in Sacramento, Los Angeles and potentially elsewhere across California will likely be contending with for years to come.
Original source: CalMatters
