Education

Sac City Unified at risk of government takeover. Here’s what might happen

Sacramento City Unified school board grapples with massive budget shortfall

Parents and school officials discuss the Sacramento City Unified School District’s budget shortfall at a meeting Thursday, Oct. 4, 2018. The district has until Monday, Oct. 8, 2018, to submit a revised budget to the county office of education.
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Parents and school officials discuss the Sacramento City Unified School District’s budget shortfall at a meeting Thursday, Oct. 4, 2018. The district has until Monday, Oct. 8, 2018, to submit a revised budget to the county office of education.

The possibility of a state government takeover looms over Sacramento City Unified School District following a despairing Dec. 12 financial report that warned of severe interventions if the district cannot solve its budget problems.

The California Department of Education has wrested control from insolvent districts via emergency loans just nine times since 1990. Only five of those school districts have paid off all their loans and regained full autonomy, according to department records.

Sacramento City Unified has announced that it will run out of funding by November 2019. If it is unable to reach fiscal solvency before that time, it may have to take on an emergency loan from the state to continue operations, which will also force a takeover by the Department of Education.

“We will do everything we can to make sure that will not happen,” Sacramento County Superintendent of Schools David W. Gordon said in an interview with The Bee, warning that a government takeover would be disastrous for Sacramento City Unified.

If the district were to require emergency funding, it would have to first be appropriated by the state Legislature, said Scott Roark, spokesman for the state Department of Education.

Upon the district’s receipt of a loan, Gordon would assume the powers and responsibilities of its governing board, Roark said.

The county superintendent would then appoint an administrator, with the concurrence of Department of Education officials, to act on his behalf, Roark said.

The administrator would be under no obligation to consult with the board or the district superintendent, Gordon said. His or her main priorities would be paying off the emergency loan and establishing managerial stability, he said.

“You would have to be running the district in a very, very conservative manner to make sure you can make the payments on the loan,” Gordon said.

With continued progress, he could begin to consider returning some authority to the district, Gordon said.

Among other requirements, Department of Education officials would have to approve recovery plans, the administrator would have to determine that the district can effectively adhere to those plans, and all necessary collective bargaining agreements would have to be agreed upon in accordance with the plans, Roark said.

The county superintendent could then replace the administrator with a trustee, Roark said. Under the trustee, the district’s board of education would regain its powers but remain subject to his or her supervision and restrictions, Roark said.

It often takes several years for districts to transition from administrator to trustee leadership, according to department records.

After at least three years, and as long as the the district’s financial systems are deemed functional and its compliance with recovery plans is probable, the trustee may be removed, Roark said. If the district still has emergency loan debt, the county superintendent may restrict the district’s actions until it is paid off, he said.

The district was placed under Gordon’s supervision shortly after its budget was rejected for the second time in October. Currently, Gordon may stay or rescind any action he finds inconsistent with balancing the budget, according to the budget disapproval letter he sent district leadership that month.

The Fiscal Crisis and Management Assistance Team, an organization that provides financial analysis to school districts, said in its report, “Failure to act quickly and decisively will result in imminent fiscal insolvency and loss of local control.”

FCMAT CEO Mike Fine warned at a Dec. 13 Board of Education meeting that government takeover is a worst-case scenario.

“You never want to go down that path. That is an ugly, horrible path that is not in the best interest of your kids,” Fine said. “That process, just so you know, of recovery, is almost a decade on average.”

Tim Douglas, a teacher at McClatchy High School, spoke out in favor of a government takeover at the board meeting.

“I pray to God that the state takes over this district and rebuilds it,” Douglas said. “For the past 20 years I have seen horrible mismanagement of this district. I have seen this board lurch from crisis to crisis.”

Ian Arnold, a representative of Service Employees International Union, said at the board meeting that he had been in favor of a government takeover six years ago under a different district superintendent and board, but he now believes current leadership can avoid that outcome.

“I think there are things that we can do to fix the current situation,” Arnold said. “I think we need to know exactly how we got here, we need to know exactly how we’re going to make sure it will never happen again, but to do that we’ve got to make it through the next year.”

Michelle Giacomini, a deputy executive officer at FCMAT, said in an interview with The Bee that the district will have to make hard decisions in the coming months, but it still has the time to avoid a takeover.

“There shouldn’t be a state takeover if the district makes the right decisions,” Giacomini said.

Below is a list of all nine districts that have been subject to takeovers since 1990, in chronological order, according to the Department of Education.

West Contra Costa Unified School District (formerly Richmond Unified) was lent a total of $28.5 million between 1990 and 1991. With interest, it paid $47.6 million and regained independence in 2012.

The Coachella Valley Unified School District was loaned a total of $7.3 million between 1992 and 1993. With interest, it paid $9.2 million and regained independence in 2001.

The Compton Unified School District was loaned a total of $19.9 million between 1993 and 1994. With interest, it paid $24.3 million and regained independence in 2003.

The Emery Unified School District was loaned a total of $1.3 million in 2001, although $2.3 million was authorized by the state. With interest, it paid $1.7 million and regained independence in 2011.

The West Fresno Elementary School District was loaned a total of $1.3 million in 2003, although $2 million was authorized by the state. With interest, it paid $1.4 million and regained independence in 2010.

The Oakland Unified School District was loaned a total of $100 million between 2003 and 2006. It remains under the supervision of an appointed trustee and still owes about $33 million. Its final scheduled payoff date is set for June 2026.

The Vallejo City Unified School District was loaned a total of $60 million between 2004 and 2007. It remains under the supervision of an appointed trustee and still owes about $20 million. Its final scheduled payoff date is set for August 2024.

The South Monterey County Joint Union High School District (formerly King City Joint Union High) was loaned a total of $13 million between 2009 and 2010. It remains under the supervision of an appointed trustee and still owes about $9 million. Its final scheduled payoff date is set for October 2028.

The Inglewood Unified School District was loaned a total of $29 million between 2012 and 2013, although $55 million was authorized by the state. It is still run by a state administrator and still owes about $24 million. Its final scheduled payoff date is set for November 2033.

Inglewood Unified’s current state administrator, Thelma Melendez de Santa Ana, who has been in her role with the district for a little over a year, said for her district, government intervention does not necessarily translate to negative impacts on students, depending on where priorities are made.

However, it does mean a lot of big changes and a lengthy, in-depth process, Melendez said. Inglewood has had to make very tough choices, she said.

“This is a community,” she said. “It affects everybody.”

The Los Angeles Times reported in April that Inglewood Unified has reduced contributions to administrators’ health care plans and told about 60 teachers they may face layoffs next year.

Vincent Matthews, superintendent of the San Francisco Unified School District, served as the state-appointed administrator of Oakland Unified between 2007 and 2010 and that of Inglewood Unified between 2016 and 2017.

Matthews said he saw deep cuts at both Oakland and Inglewood, including reductions in maintenance and janitorial services, shrinking office staffs and consolidation of roles.

“We tried to keep it as far from the classroom as possible,” Matthews said, but he added that the districts couldn’t keep that up forever.

Class sizes did expand, but Matthews said that academic results are an important metric to consider as well. Under the control of state administrators, Oakland’s academics improved, he said, while Inglewood’s hardly changed.

Matthews, who described himself as “a firm believer in local control,” said it would be in the best interest of Sacramento City Unified’s board to avoid a takeover.

“My hope is this is a wake up call,” he said.

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