Sacramento school district could face financial risk if more raises approved, report says

After agreeing to double-digit raises for teachers last month, the financial picture for the Sacramento City Unified School District appears solid. For now.

In a letter sent to district officials late last week, the head of the Sacramento County Office of Education wrote county officials had approved the school district’s budget for the current fiscal year and that it appeared the district would maintain its required minimum budget reserve through 2026.

However, county officials also warned the district serving 43,000 students will have limited reserves by the 2025-26 fiscal year and said further raises could strain the district’s finances.

Dave Gordon, the county superintendent of schools, wrote that Sacramento City Unified’s reserves are in danger of falling below a state-mandated minimum of $14.5 million if teachers and other staff are granted more raises.

Teachers in Sacramento City were given 10% raises last month, retroactive to last school year. District and teacher union officials said they are attempting to finalize a new contract for the 2023-24 and 2024-25 academic years by mid-November that could include more salary increases. District staff not represented by the teachers union have not yet received pay bumps for last year or the current year.

If those other employees are given raises similar to the increases given to teachers, “it appears that the district’s unrestricted reserve will fall below the minimum level required in 2025-26,” Gordon wrote. In an emailed statement, district officials said they have a “clear understanding that other dedicated represented and non-represented staff are equally deserving of similar raises” as the 10% bumps recently granted to teachers represented by the Sacramento City Teachers Association union.

If Sacramento City Unified appears unable to maintain its minimum budget reserve, the county office will “immediately make a determination that the district is at risk of insolvency and, among other things, direct the district to submit a proposal for addressing the fiscal conditions that resulted in the determination.”

District officials said they were pleased that their current year budget was approved by the county office and acknowledged the potential for unsettled finances in the future.

“SCOE did express concern about the impact that unsettled negotiations with labor partners will have on our budget in 2025-26 and beyond — a concern the district is mindful of as the process moves forward,” the district wrote in an emailed statement to The Sacramento Bee.

“As the negotiations process continues with other labor partners, the district is costing-out proposals and working to identify areas of potential long-term savings,” district officials wrote. “SCUSD knows too well the pain associated with making difficult budget choices including whether to keep valuable staff to support our students and we are committed to making every effort to avoid those decisions in the future.”

In addition to financial pressure from future salary increases, Sacramento City Unified is also facing revenue declines from declining enrollment.

What’s more, millions of dollars in one-time money the district received during the pandemic from the federal and state governments “will begin to expire this year and the district needs to identify ongoing funding to replace the one-time funding or plan to terminate the services and staff being funded,” Gordon wrote in his letter.

This story was originally published September 21, 2023 at 5:00 AM.