Sac City budget deficit hits $171M. Why do its finances look worse every month?
Sacramento City Unified School District said in September it faced a $43 million deficit by summer, but as of this week that estimate had risen to $108 million despite months of efforts to reduce spending.
The new figure came as the district was set to review its second interim budget Thursday night.
Earlier this month, the budget services department projected that the district’s fiscal solvency plan for this year, which identified about $63 million in savings, put it halfway toward its goal of addressing the deficit, which stood at $135 million at the time. But new estimates show that the deficit projection should have been closer to $171 million, meaning the district is still $108 million short.
Despite district financial officers projecting the district would remain cash solvent through the end of the school year — avoiding a state takeover in that period — officials said significant spending reductions were still needed. The latest multi-year projections showed SCUSD facing a $390 million deficit by the end of the 2027-28 school year, compared to a total budget of about $800 million.
How did that number get four times larger? Interim Chief Business Officer Lisa Grant-Dawson said the increase reflected a more accurate accounting, not a sudden spike in costs.
“It’s because you had a $100 million deficit for years, and we’ve not addressed it long term — that’s the real answer,” Grant-Dawson said in an interview Tuesday.
Part of the discrepancy stemmed from the financial department’s correction of errors in the first interim budget, including double-counted savings and items that were never implemented.
In November, it was not clear to the board or the public that projected savings in the draft fiscal solvency plan had already been included in the first interim budget, particularly because the plan had not yet been approved.
When Grant-Dawson joined the district in January, she raised concerns about whether several proposals would deliver projected savings or could be implemented as written.
“You do have several items on here that will not yield either what is projected or you are not going to be able to operationalize it to the degree that it states,” Grant-Dawson said at a meeting in January.
The second interim budget removed those assumed savings, adding tens of millions of dollars back into the deficit.
Another area of increased spending was contracts, despite the district’s goal to limit third-party services. SCUSD projected it would spend about $25 million more than initially expected, driven largely by higher costs for special education services.
This story was originally published March 19, 2026 at 5:00 AM.
