California school district on brink of collapse as plan to save it is slapped down — impacting thousands of kids

One of California’s largest school districts is scrambling to avoid a state takeover after county education officials rejected its financial rescue plan, leaving the future of thousands of students, families and staff hanging in the balance.

The Sacramento City Unified School District Board is set to hold a special meeting Tuesday evening to decide whether to appeal the rejection of its $158 million solvency plan to California’s state superintendent of public instruction, KCRA reported.

The emergency meeting comes just days after the Sacramento County Office of Education rescinded the district’s board action approving the plan, arguing it failed to provide a sustainable path out of the district’s financial crisis.

Last week, the school board unanimously signed off on the sweeping proposal, which paired a districtwide hiring freeze and spending reductions with a new labor agreement reached with the Sacramento City Teachers Association through June 2030.

District officials argued the agreement would free up roughly $97 million by drawing on retiree health benefit funds, Medi-Cal reimbursements and money budgeted for vacant positions, helping close a massive budget gap while allowing the district to retain local control.

But county financial officials rejected the proposal the following day, concluding it relied on funding sources that would create bigger financial problems down the road.

The plan shifted money between existing accounts rather than generating new revenue, would increase long-term costs by tapping retiree health trust assets and would reduce the district’s financial flexibility in future years, according to the Sacramento County Office of Education.

The county’s decision has intensified concerns that Sacramento City Unified could ultimately fall into state receivership if leaders cannot produce an acceptable recovery plan.

Teachers union leaders blasted the county’s decision, accusing state-appointed financial advisers of failing to help the district after months of oversight.

“It is very frustrating. These experts have been here helping our district for about eight months, and they have not come up with real solutions and they have not made good proposals and they have not given clear information about where our district really stands financially,’ Sacramento City Teachers Association President Nikki Davis-Milevsky said.

“And they really seem, for some unknown reason, motivated to see our district fail. And we will not let that happen.”

County Superintendent of Schools Dave Gordon defended the rejection, arguing the proposal depended on borrowing from funds already earmarked for other obligations rather than creating genuine savings.

“Many of the funds that they were proposing to put forward to solve the deficit were not new moneys. They were borrowed,” Gordon said.

“They were moneys borrowed from existing funding sources which were meant to fund other things such as the retiree health benefits that they offer.

“All of those things were not new money. They would have to be repaid, not just in their base amounts, but in the lost interest.”

Tuesday’s special meeting will focus solely on whether the board should formally challenge the county’s decision by appealing to the state superintendent.

The outcome could determine whether Sacramento City Unified — which serves tens of thousands of students in California’s capital region — can maintain local control over its finances or moves one step closer to state intervention as officials race to stabilize the district’s deteriorating fiscal outlook.

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