SFUSD Board approves negative certification, adopts fiscal stabilization measures as budget gap persists

The San Francisco Board of Education voted unanimously to file a negative second‑interim fiscal certification for the districts 2024–25 budget and approved a set of stabilization steps intended to narrow a multi‑year shortfall.

Board members were presented updated multi‑year projections showing growing deficit spending through fiscal year 2026–27 without further reductions. Superintendent Dr. Matt Hsu and finance staff told the board that the district must rely on a mix of one‑time restricted funds, approved reductions and staffing changes to avoid depleting required reserves.

The auditor, Christy White of the districts external audit firm, delivered an unmodified opinion on the 06/30/2024 financial statements while flagging several findings including payroll control weaknesses, a payroll deposit fraud incident, some late cash deposits and exceptions in immunization documentation. White said federal compliance testing yielded a clean opinion but recommended strengthened year‑end close controls and additional internal audit capacity.

Why it matters: San Francisco Unified School District (SFUSD) is projecting persistent deficits unless the district implements the boards fiscal stabilization plan and follows through on additional steps to limit recurring costs. Board members said they will seek frequent progress reports and prioritized mitigating student‑facing impacts where possible.

Details and next steps - Staff presented the second interim report and the districts fiscal stabilization plan update. The district projected a large unrestricted general fund gap without further reductions and described three years of multi‑year projections used in the certification decision. - Leadership said some reductions will be phased and that staff will return with implementation plans and monitoring at future board meetings, including an update at third interim. - The board approved a parcel bond issuance and a refunding authorization to support facility projects, subject to market conditions and standard debt‑policy safeguards.

Votes at a glance (selected items from the meeting) - Audit report, FY ended 06/30/2024 — Approved (roll call recorded as 7 ayes). Motion: approve the audit report. Outcome: approved. - Second interim report, FY 2024–25 — Negative certification filed (roll call recorded as 7 ayes). Motion: approve second interim report. Outcome: approved. - Fiscal stabilization plan update — Approved (roll call recorded as 7 ayes). Motion: introduce/update plan to implement reductions and actions. Outcome: approved. - Authorization to issue and refund general obligation bonds (up to $160M) — Two separate resolutions approved (each roll call recorded as 7 ayes). Motions: authorize bond issuance and potential refunding by negotiated sale. Outcome: approved. - Superintendent & board short‑term evaluation metrics — Approved (roll call recorded as 7 ayes). Motion: adopt temporary metrics for superintendent evaluation. Outcome: approved.

What the board said Board President Jenny Kim and other members repeatedly emphasized the districts obligation to protect classroom programs while ensuring the district remains solvent. Several commissioners said they want clearer implementation timelines and promised follow‑up briefings to allow the board and public to track progress.

Financial context and notable figures - The auditor reported a positive consolidated net position but identified unrestricted liquidity pressures driven by long‑term liabilities. Audit highlights included a $657 million net position and an unrestricted general fund below typical reserves. - Staff reported ongoing use of one‑time restricted funds and carryover, and said unaddressed recurring costs would exhaust reserves by the 2026–27 projection without additional action.

What the district will do next Staff said they will return with implementation plans and monitoring reports (including a third interim report) and will continue to coordinate with the County Office of Education and the California Department of Education. The board also asked staff to come back with the operational details — timing, department responsibilities and equity implications — for the reductions listed in the stabilization plan.

Ending The boards vote formally begins the next phase of budget development and positions staff to implement the boards stabilization directions. The board scheduled additional progress reporting and signaled it will continue to prioritize minimizing student‑facing impacts where feasible.