SFUSD presents bleak three-year budget outlook, warns of deep multi-year deficits

SAN FRANCISCO — The San Francisco Unified School District warned the school board on Thursday that a temporary infusion of state stabilization funds is masking a much larger structural shortfall that may require rapid, painful decisions.

Budget staff told trustees that the districtprojects it will end 2009-10 with roughly $31.8 million in reserves if one-time state fiscal stabilization money is included, but that without that infusion the district would face a $6.6 million deficit this year and larger gaps in subsequent years. The three-year projection presented to the board shows a potential $17 million shortfall in 2010-11 and a $67.6 million gap in 2011-12; staff said a total shortfall of about $83 million would be required to meet the districtdesignation to maintain a minimum reserve.

"This picture rapidly starts to look a lot worse," the budget presenter said, adding that the district could face a qualified or negative certification from the state if the projection holds. A negative certification, staff warned, could lead to the state appointing an overseer and effectively taking responsibility for district finances.

Why it matters: The district relies largely on its revenue limit (tied to average daily attendance) and one-time federal and state stabilization money. The presentation said revenue-limit receipts for 2009-10 are estimated at about $241.5 million and that the district expects about $24 million in state fiscal stabilization aid; without that help, the fund balance and the rainy-day reserve (projected to fall from about $24.5 million to $6 million in a later year) would be quickly depleted.

What trustees heard: The presentation broke down revenue sources, the composition of expenditures (roughly 77 percent salaries and benefits), and a range of assumptions about state actions affecting categorical funding and the federal stimulus. Budget staff asked board members to consider a range of actions, including internal cuts, use of categorical flexibility, and aggressive advocacy for state-level changes.

Several trustees and public speakers urged clear communication to the public and immediate parent and community engagement. Ruth Grabowski of the Parent Advisory Council said parents must be informed and mobilized: "We have never gotten involved in the budget process before, but we think it's really urgent that parents do that," she said.

District response and next steps: Superintendent Garcia and budget staff said they are preparing a package of proposals and will continue to brief committees and the full board. Staff identified potential savings and warned that, after immediate internal cuts, the district may have to consider harder choices such as program reductions, layoffs and adjustments to class-size goals if statewide funding deteriorates.

The board scheduled continued budget work in committee and encouraged district staff to provide clear, accessible materials explaining what different dollar amounts mean at the classroom level so parents can advocate effectively.

Sources: Presentation and Q&A at the San Francisco Unified School District board meeting; statements from the budget presenter and Superintendent Garcia.