Sacramento City Unified School District Faces Deepening Budget Crisis

New figures show district's deficit has grown to over $54 million this fiscal year, raising risk of state takeover.

Jan. 30, 2026 at 1:15am

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The ongoing budget crisis at Sacramento City Unified School District has escalated, with new figures showing an even deeper deficit than previously reported. The district now faces a $54 million deficit this fiscal year, up from the $34 million projected in December, due to a series of accounting errors made in attempts to balance the budget. The deficit is expected to grow substantially in the next two fiscal years, reaching nearly $200 million by 2027-2028.

Why it matters

The increased deficit projections raise the risk that the district could face a takeover by the state, which would have significant implications for the local community and students. The budget crisis has already led to drastic cost-cutting measures, including layoffs, furloughs, and a freeze on non-custodial supplies, which could further impact the quality of education.

The details

The budget crisis stems from a series of accounting errors made by the district in its attempts to balance the budget last year. This includes a $20 million borrowing from a district trust for retiree health benefits that may not have been allowed, as well as a $32 million one-time adjustment that was wrongly removed from plans for the next two fiscal years. After rectifying these errors, the district's deficit has grown substantially.

  • The district revealed a $45 million deficit from the previous year in 2025.
  • In November 2025, the district's board approved a series of budget cuts to address the deficit.
  • On January 30, 2026, the district's interim budget chief Lisa Grant-Dawson delivered a presentation showing the deficit has grown to over $54 million this fiscal year.

The players

Sacramento City Unified School District

The public school district serving the city of Sacramento, California.

Lisa Grant-Dawson

The interim budget chief for Sacramento City Unified School District, who delivered the presentation revealing the deeper deficit.

Tara Jeane

The president of the Sacramento City Unified School District board.

Cindy Tao

The assistant superintendent of business services for Sacramento City Unified School District, who is under investigation following anonymous allegations of fiscal mismanagement.

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What they’re saying

“I don't know what harm it's going to cause inadvertently as we're trying not to go to state receivership — which is the ultimate harm. And I recognize that we are out of time.”

— Tara Jeane, Board President, Sacramento City Unified School District

What’s next

The Sacramento City Unified School District board approved a series of cost-cutting measures on Thursday, including layoffs, increased furlough days, and a freeze on buying non-custodial supplies. The district also plans to freeze many currently-open positions to save on salary. Additionally, the board reversed a decision to freeze per diem pay for 30 cafeteria workers who had not been paid in three months.

The takeaway

The deepening budget crisis at Sacramento City Unified School District raises serious concerns about the district's financial stability and the potential for a state takeover, which could have significant consequences for the local community and students. The district's attempts to balance the budget through accounting errors and drastic cost-cutting measures highlight the urgent need for comprehensive financial management and oversight to address the underlying issues.