Fiscal advisor blocks Sacramento City Unified agreement with teachers union over concerns about district finances

A Sacramento County-appointed fiscal advisor has blocked a recently approved agreement between the Sacramento City Unified School District (SCUSD) and its teachers' union, saying the deal would not provide a sustainable solution to the district's ongoing financial crisis.

The Sacramento City Teachers Association (SCTA) is urging the district to appeal the decision, arguing the agreement would have provided nearly $100 million in financial relief and helped the district avoid insolvency.

The agreement between SCUSD and SCTA was approved by the district's board on July 30. On Friday, fiscal advisor Luz Cázares rescinded the board's action, according to the Sacramento County Office of Education (SCOE).

Cázares was appointed by the Sacramento County Superintendent of Schools to support the district as it works to address its financial challenges.

SCOE said the decision was made with the support of Superintendent David Gordon and Michael Fine, CEO of the state Fiscal Crisis and Management Assistance Team, after reviewing concerns about the district's financial outlook.

"The Fiscal Advisor's action is necessary to protect students, families, and employees," SCOE said in a news release. "The Board must now adopt immediate, specific, and viable solutions before the district runs out of cash."

SCUSD currently faces an estimated $221.8 million structural deficit.

The county said the decision to rescind the agreement was based on three factors: the agreement would move assets between accounts, using trust fund money would cost more over time, and the agreement would limit the district's ability to make future changes needed for financial recovery.

The teachers union, however, says the agreement was a critical step toward stabilizing the district.

According to SCTA, the deal would have unlocked $97.6 million in fiscal relief, including access to a reserve fund typically used for retiree health benefits. The union said the agreement would have saved the district $67 million in retiree health insurance costs over three years while preserving retiree benefits.

Union President Nikki Davis-Milevsky criticized Cázares' decision, arguing it undermines the authority of the elected school board.

"By overturning this agreement, Cázares undermines our democratically-elected board's authority to solve local issues, compromises our district's ability to avoid insolvency, and, in effect prolongs the need for her own paid oversight," Davis-Milevsky said.

The union is asking SCUSD to appeal the decision to California State Superintendent of Public Instruction Tony Thurmond.

Cázares and SCOE argue the agreement would only temporarily delay the district's financial problems and could make long-term recovery more difficult. The county said SCUSD must identify specific spending reductions and implement immediate solutions to address its deficit.

"The long-term financial recovery of the district will take time and require extraordinary fiscal discipline, not just short-term loans and redirected funds, all of which must be repaid," SCOE said. "The district is currently spending beyond its means and must identify the programs and services they are going to reduce or eliminate.

The union has also raised questions about Cázares' role as fiscal advisor, pointing to her previous work overseeing other financially troubled school districts and questioning her compensation. SCTA said SCUSD is paying 75% of Cázares' salary for the role but that her compensation has not been publicly disclosed.

The Sacramento City Unified School District has not announced whether it will appeal the fiscal advisor's decision.