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State warns SF schools: We’re not going to bail you out of budget armageddon

A person sits at a piano in a sunlit, dilapidated classroom with a view of urban homes outside.
State officials warned at a special meeting board meeting Tuesday that the San Francisco Unified School District is running out of time to get its finances in order. | Source: AI illustration by Clark Miller for The Standard

State education officials warned the leaders of the San Francisco Unified School District Tuesday to “do everything you can” to solve the deepening financial crisis surrounding local public schools.

The stern words from the Fiscal Crisis and Management Assistant Team, a state watchdog, came during a special board meeting called after a scathing risk analysis report and an audit of SFUSD’s financial management. The documents painted a dire image of the district’s “tremendous fiscal challenges” and concluded that it may run out of money in about a year if it fails to turn things around.

The California Department of Education late last week issued a serious warning to the district, downgrading its financial situation to “negative” and urging the local leadership to identify tens of millions of dollars in spending cuts over the next few years. The state has been monitoring the SFUSD’s financial troubles for several years, but those concerns deepened last week. 

“So your solutions are yours,” said Mike Fine, the CEO of the state fiscal crisis team. “The state’s not going to be bailing you out of anything. OK?”

Fine also urged district leadership “to put your arms around this and acknowledge that there’s a problem.”

A meeting room with people seated at a desk facing a large screen displaying a presentation.
State officials warn San Francisco's school district about the ongoing budget crisis. | Source: Han Li/The Standard

Officials have now handed fiscal appointees veto power over the district’s spending in light of its failure to hire “a qualified business official for several years,” which the audit said has led to “a lack of leadership, a lack of understanding of critical elements of school finance, and poor monitoring of the district’s overall fiscal solvency.” 

In a May 3 letter to the district, state officials outlined concerns about the district’s previous commitments to make staffing cuts and reduce costs. 

“Without budget adjustments to bring expenditures in line with revenues, the SFUSD will be unable to meet its financial obligations,” it warned.

School board chair Lainie Motamedi called the state report “a wake-up call.”

“Right now, we’re in a position where we could at least see the dots that need to connect,” she said. “It may feel worse, but having the conversation is the first step to the repair.”

Motamedi announced that she’s creating a subcommittee to focus on the fiscal and operational health of the district and advise the board on how to meet the state’s requirements.

Superintendent Matt Wayne said in a statement that the district is “committed to accelerating our efforts to address the remaining concerns to ensure that San Francisco public schools are places where students can learn, grow, and thrive.”

Schools across California have struggled to pay their bills in the wake of shrinking birth rates and declining enrollment, which has meant that schools are receiving less money from the state. San Francisco’s public school district has lost more than 10,000 students over the last decade. 

The issue is expected to be highly politicized in this election year, as multiple incumbent school board members are not seeking reelection.

Laurance Lee, a school board candidate, blasted the current district leadership at Tuesday’s meeting.

“The commissioners should be on the board at every single meeting to get this stuff in order,” Lee said. “Why was it not addressed last year?”

The financial crisis has been brewing for some time. The state cited multiple reasons for the current crisis, including payroll mismanagement and the SFUSD’s failure to provide accurate financial data in a timely manner. 

The district will have to institute a hiring freeze and close schools to solve the deficit, according to the audit. The report also made a long list of other recommendations, such as strengthening the oversight of credit card usage.

Supryia Ray, another parent candidate for the school board, expressed outrage that the audit said only one or two staffers in the district could generate the budget and financial reports, which she said illustrated the incompetence of the current administration.

“It is embarrassing and shameful,” Ray said. “We still have a long way to go. We have so much work to do.”

The first subcommittee meeting to further discuss the budget crisis is scheduled for May 15.

Han Li can be reached at