Summary of SFUSD Second Interim Report
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Dear Parents for Public Schools of San Francisco
The San Francisco Unified School District's (SFUSD) March 11, 2025, Second Interim Financial Report and Multi-Year Projections present critical information of the district's financial health, revealing a severe and worsening financial crisis.
Key highlights include:
Negative Financial Certification: The most significant revelation is the negative certification from the California Department of Education. This means SFUSD is projected to be unable to meet its financial obligations for the remainder of the fiscal year. This is a concerning development, especially considering the negative certification received in the previous (December 2024) interim report. The persistence of this negative outlook underscores the severity and urgency of the situation. This contrasts sharply with the San Francisco County Office of Education (SFCOE), which received a positive certification in both interim reports.
Persistent Budgetary Shortfalls: While the second interim budget shows a slight decrease compared to the first, primarily due to savings from vacant positions and reallocation of some expenditures to restricted resources, this does little to alleviate the fundamental and substantial budget deficit. SFUSD remains in a deficit spending situation. The minimal reduction in the budget does not address the structural financial problems facing the District.
Deteriorating Multi-Year Projections: The multi-year projections, without any implemented budget cuts, paint a stark picture of a rapidly worsening financial crisis. The projected deficits grow substantially in subsequent years. This unsustainable trajectory underscores the urgent need for immediate and significant budget adjustments.
Fiscal Stabilization Plan: A Necessary but Insufficient Solution: The report reinforces the crucial role of the Fiscal Stabilization Plan, initially introduced in June 2024, which targets $113 million in budget reductions. This plan is essential for addressing the crisis, but its implementation and effectiveness will determine the District's ability to navigate the difficult financial situation.
Rainy Day Fund Partially Restored: Although the Rainy Day Reserve has been partially restored to its original $40 million, this measure offers only temporary relief and does not address the core issue of the ongoing deficit. The replenishment of the reserve provides a limited financial cushion but does not resolve the underlying structural problems driving the district's financial instability.
Restricted General Fund Deficit Spending: The report details continued deficit spending within the Restricted General Fund, primarily due to the utilization of one-time funding sources. The reliance on short-term funding sources highlights the need for a sustainable, long-term financial strategy.
Contrasting Financial Health of SFCOE: The report highlights the significantly different financial health of the San Francisco County Office of Education (SFCOE), which is projected to maintain a balanced budget through 2026-27. This contrast underscores the unique and severe challenges faced by SFUSD, emphasizing the need for focused attention and innovative solutions. The County even anticipates a modest budget increase in future years.
In essence, this report confirms a serious and rapidly worsening financial crisis within SFUSD.
The negative certification, persistent deficit spending, and the projections of a dramatically increasing deficit all point to the critical need for immediate and decisive action to fully implement an effective and intuitive Fiscal Stabilization Plan and address the structural issues contributing to the district's financial instability.
The contrasting financial health of SFCOE underscores the gravity of SFUSD's fiscal and operational structural situation and highlights the need for a more comprehensive and effective response.