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FCMAT warns of growing number of fiscally stressed districts; Plumas and Franklin‑McKinley cited for urgent risk
Summary
The Fiscal Crisis and Management Assistance Team told the Assembly subcommittee that qualified and negative certifications have risen, naming several districts at risk of insolvency and highlighting enrollment declines, wildfire impacts and rising fixed costs as drivers.
Mike Fine, chief executive officer of the Fiscal Crisis and Management Assistance Team (FCMAT), told the Assembly Budget Subcommittee on Oct. 27, 2025, that California continues to see fiscal stress in a small but significant set of local education agencies.
Fine said one district — Franklin‑McKinley (Santa Clara County) — has deteriorated rapidly and could move from a qualified certification to a negative certification and face a cash shortfall within a year without corrective action. He described Plumas Unified as likely to require an emergency state appropriation in the coming months because of rapid, ongoing deterioration and outstanding borrowing that the district cannot repay. Fine also named Hayward, Oakland, San Francisco, Weed Union and Siskiyou among districts with fiscal concerns flagged in recent interim reports.
FCMAT attributed the growing list of qualified and negative certifications to several factors: continued enrollment declines driven largely by historically low birth rates (affecting revenue through ADA), rising fixed costs (insurance, utilities and other operating expenses), and disaster impacts such as wildfires that reduce enrollment and increase recovery costs. Fine said small rural districts are especially vulnerable because the loss of a few families or students can materially affect budgets and because some districts lack administrative capacity to manage complex grant and budgeting processes.
Fine emphasized that while statewide reserves and fund balances are higher than during the Great Recession, cash reserves for specific districts have been drawn down rapidly where deficits persist. He said the state’s fiscal oversight mechanisms and intervention tools are operating, but several districts face immediate cash or solvency risk.
Why it matters: District fiscal stress can threaten program continuity and in extreme cases trigger state receivership. The committee must weigh funding and oversight responses — including emergency appropriations, technical assistance, and statutory remedies — to prevent instructional disruption.
What’s next: FCMAT and the Department of Education will continue monitoring at first and second interim updates and working with at‑risk districts; the committee may consider statutory or budgetary actions for identified districts.
