CA schools got a budget boost. Why Sacramento City Unified may still run out of cash
The revised California state budget could provide the Sacramento City Unified School District with more funding than state experts in school finance assumed last week, but it won’t be enough to solve the district’s budget crisis, a state analyst said.
Following the Fiscal Crisis and Management Assistance Team’s presentation during the May 7 school board meeting, SCUSD Board President Tara Jeane questioned FCMAT’s bleak budget outlook, saying the agency’s report did not factor in $51 million in additional state funding the district could potentially receive.
However, Michael Fine, chief executive officer of FCMAT, asserted Thursday afternoon the $51 million was considered in the agency’s verbal presentation, and that any additional funding from the May Revision on top of that amount would not meaningfully alter the agency’s analysis.
“Instead of running out of cash in mid-February, maybe they’ll run out of cash in mid-March,” Fine said.
Jeane did not immediately respond to The Sacramento Bee for comment.
During his May Revision presentation on Thursday morning, Gov. Gavin Newsom praised the state’s education spending, including the total TK-12 funding of $151.6 billion and a 4.31% “super COLA,” up from the 2.41% cost-of-living adjustment proposed in January. The increase would boost the Local Control Funding Formula, which is the main source of unrestricted state funding for districts such as Sacramento City Unified.
Proposition 98 provides a constitutional guarantee that determines the bulk of state funding for K-12 schools and community colleges. Compared with January, the May Revision raises the Prop. 98 guarantee by about $6.4 billion over three years.
But there is a major caveat: About $4.6 billion of that increase is required to go into the Prop. 98 rainy day fund, which functions like a savings account that schools can draw from during future downturns, meaning much of the guarantee is not immediately available for schools to spend. The allocation of additional spendable Prop. 98 funding will be determined through negotiations between the governor and Legislature in the coming weeks.
Because SCUSD’s immediate fiscal crisis centers on cash flow, that means the May Revision may delay the point at which the district runs out of money, but would not solve its underlying deficit, Fine said. In short, the update would affect when — not whether — the district runs out of money.
“After today, that calculation would update and add a little bit more, so it’d be a little higher than ($51 million), and as I shared the other night, that’s going to change the timing of when they run out of cash,” Fine said, pointing out that the district’s monthly payroll alone is estimated at $61 million.
“It’s a help, but it doesn’t solve the problem.”
