State education officials are intervening to force San Francisco’s school system to clean up its financial mess: a chronic budget deficit that could make it insolvent.

Dan Walters

CalMatters

Opinion

Last week, two fiscal experts who had been working with San Francisco Unified School District’s administration were given authority to veto financial decisions by the district’s board or superintendent because they had failed to take promised budget-balancing steps.

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The action came after the state Department of Education sent a letter to the district warning, “If the SFUSD is unable to achieve the level of savings they are projecting in the 2024–25 fiscal year, the district risks having to make larger expenditure reductions in the 2025–26 fiscal year or face fiscal insolvency.”

‘Lack of Leadership’ in SF Unified

In April, the Fiscal Crisis and Management Assistance Team, or FCMAT, an agency that monitors the finances of California school districts and intervenes when necessary, issued a risk assessment that found a “lack of leadership, a lack of understanding of critical elements of school finance and poor monitoring of the district’s overall fiscal solvency.”

“I have seen worse, but in dramatically smaller districts where the dollar amount is less and the ability to quickly fix is easier by virtue of size,” Michael Fine, the head of the fiscal management team, told the school board.

Unfortunately, San Francisco Unified is not an isolated case. Although local, state and federal support for California’s public schools has increased dramatically in the last decade, a number of its school districts have experienced serious fiscal pain and several have gone through humiliating interventions.

In San Francisco, for example, schools have a $1.3 billion budget, spending an average of $27,000 on each of its 48,000 students.

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Falling Enrollments, Too Much Politics

Downward enrollment due to declining birth rates and relatively high truancy are often cited as factors, since state aid to schools is based on attendance, and that’s valid up to a point. But large urban districts such as SF Unified also tend to be afflicted by overpoliticization that undercuts their primary duties of educating children and balancing their budgets.

While smaller school systems are usually governed by civic-minded volunteer trustees, those in large cities are cauldrons of political conflict with school unions spending heavily to elect trustees who will reciprocate by approving more generous contracts and other union priorities, even if they are unaffordable.

Recently, for example, Los Angeles Unified’s board voted to make it more difficult for charter schools to operate after unions achieved a majority.

San Francisco’s school board became infamous for its forays into culture wars, such as proposing to strip schools of their names that were politically incorrect, including a school named for Dianne Feinstein, a U.S. senator and former San Francisco mayor.

That and other similarly disconcerting incidents finally led to the recall of three school board members, but SF Unified’s finances remained so tangled that the state was compelled to intervene.

The Dangers of Structural Deficits

Across the bay, Oakland Unified became mired in a perpetual financial crisis, and spent many years in receivership for its mismanagement. For years, Sacramento Unified, too, has flirted with insolvency by overspending its revenues.

At least SF Unified’s current board seems to be acknowledging its systemic problem.

As the district was being scolded for its fiscal mismanagement, board President Lainie Motamedi said, “While the structural deficit has been years in the making, this is the call to action to do the hard work to disrupt what isn’t working and build the school district that SF deserves. We expect our students to learn from their setbacks and improve their work, and the community should expect the same of us.”

Indeed it should.

About the Author

Dan Walters has been a journalist for nearly 60 years, spending all but a few of those years working for California newspapers. He began his professional career in 1960, at age 16, at the Humboldt Times. CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more columns by Dan Walters, go to calmatters.org/commentary.

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