SFUSD finance team warns of $22.3 million FY2021 gap, urges board direction to meet July 1 deadline

San Francisco Unified School District finance officials told the Board of Education on June 26 that the district faces a projected FY2021 deficit of approximately $22.3 million and larger multiyear shortfalls unless the board provides clear direction and staff negotiates additional savings.

Chief Financial Officer Megan Wallace said the district's operating budget is about $849.1 million for FY2021 and that a combination of stagnant Local Control Funding Formula (LCFF) payments, rising personnel and pension costs, and COVID-19 related local revenue losses drove the gap. "With these adjustments, you can see that the deficit projection for fiscal year 2021 is now 22.3," Wallace said during the presentation.

The presentation included updated multiyear projections that assume the governor's May revised budget and federal stimulus materialize. Staff highlighted about $45.3 million in one-time learning-loss funds included in the state's agreement but stressed those funds do not address the district's structural imbalance.

Nut graf: The finance team asked the board to indicate whether it supports a submission to the California Department of Education (CDE) on July 1 that reflects current assumptions and a plan to pursue negotiated labor concessions, equity-focused furloughs or other district-wide savings; without a budget the district risks state intervention.

In the details, staff said they had already built $16 million of central-office reductions and additional non-personnel savings into the book, and that transportation and arts library reductions account for several million more. Deputy Superintendent Myung Lee noted a technical correction on the distribution of learning-loss funds shown in the slides and clarified that the $45.3 million is one-time assistance.

Staff also disclosed an unbudgeted cost of just under $2 million tied to consolidated paraeducator positions; that amount was added back into the expenditures projections, increasing the FY2021 gap by roughly $2 million. "So it would be, say, 20,000,000 rather than 22,000,000" if those costs were excluded, Myung Lee said.

Board members asked for an explicit, public summary of cuts already reflected in the budget book and for a process to define a consistent baseline of services for schools. Commissioner Norton pressed staff to enumerate what savings are already baked into the proposals; staff pointed to exhibits in the budget book that show central reductions and school-by-school allocations.

The district plans to submit an interim budget by July 1 and to pursue a recertified budget in August after further clarity from the governor and negotiations with labor partners. Chief Wallace said staff will accompany any July submission with an action plan for closing the gap and will seek board guidance on equity considerations for any measures such as furlough days. "We have had discussions at staff levels about having an equity approach ... staff at higher levels of the income scale would be contributing a higher number of days," she said.

Ending: Staff asked the board for a green light on the overall approach so they can prepare the exhibits to submit by the statutory deadline; they said more precise allocations and any unit-by-unit decisions would be part of the August recertification process after bargaining and further analysis.