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FCMAT: Seven school districts on negative certification as enrollment declines, costs squeeze budgets
Summary
The state's Fiscal Crisis & Management Assistance Team reported seven districts with 'negative' certifications and several qualified; FCMAT cited declining enrollment, rising fixed costs, insurance and utilities, and wildfire impacts as drivers. Plumas Unified and Franklin‑McKinley were highlighted for urgent concerns.
The state's Fiscal Crisis & Management Assistance Team (FCMAT) reported to the Assembly Budget Subcommittee on Education Finance that seven local education agencies had 'negative' budget certifications at first interim, with additional districts showing qualified certifications.
Mike Fine, FCMAT chief executive officer, said the agency monitors three certification levels—positive, qualified and negative—and that several districts have deteriorated quickly. He named Franklin‑McKinley School District in Santa Clara County as "moving very quickly to the negative list" and Plumas Unified as a district that is deteriorating rapidly and likely to require an emergency appropriation. Fine also listed Hayward, Oakland, San Francisco, Weed Union, Siskiyou, and Eureka area districts as requiring ongoing attention.
Drivers and risk factors FCMAT stressed several structural pressures: - Declining enrollment driven in part by historically low birth rates and accelerated during the pandemic; smaller districts are less able to absorb losses. - Ongoing fixed‑cost pressures: when local costs (salary, health benefits, utilities, insurance) rise faster than statutory COLAs, districts feel a squeeze even when the state funds a COLA. - Rising liability and property insurance costs, and higher utility rates that disproportionately burden districts with multiple meters. - Wildfire impacts that reduce enrollment, increase temporary housing and service needs, and create extraordinary one‑time costs.
Fine told the committee that while overall reserves statewide are higher than during the Great Recession, some districts' cash reserves are being drawn down quickly. He said the state sees a higher number of qualified certifications at first interim than in prior years and emphasized that small and remote districts face particular risk.
Why it matters: deteriorating fiscal health can lead to state intervention, emergency loans and, rarely, receivership. The committee discussed potential policy responses including targeted emergency appropriation authority and supports for small or rural districts facing wildfire and economic shocks.
Provenance: This article draws on FCMAT's annual presentation and committee questions on the "state of school fiscal health" portion of the hearing.
