San Francisco District board approves layoffs and third interim budget amid $10.4M shortfall

The San Francisco District governing board on May 7 adopted its 2025–26 third interim financial report and approved a set of layoff and certification resolutions after staff described a multi‑year budget shortfall and urged cost reductions to avoid state intervention.

The Chief Business Official presented the third interim report, covering July 2025 through April 30, 2026, saying the district estimates general fund revenue at about $90.6 million, with LCFF as the primary source. "We estimate our general fund revenue at third and around, $90,600,000," the official said, and reported an estimated shortfall of roughly $10.4 million, of which about $9.5 million would be covered by restricted carryover funds, leaving a gap that staff said must be addressed through a $4.8 million reduction plan and other measures.

The report listed key assumptions used in multi‑year projections, including COLA estimates (2.3% for 25–26, 2.87% for 26–27 and 3.06% for 27–28) and noted receipt of a restricted $2.27 million literacy coach and reading specialist grant. Staff advised the board the proposed layoff-related resolutions account for roughly $2.4 million in reductions — described as about half of the district’s $4.8 million plan — and gave a timeline for restoring a positive budget certification if the reductions and anticipated one‑time state funds are realized.

A district staff advisor described the consequences of failing to meet fiscal obligations, explaining that state receivership would place an appointed administrator in charge of major fiscal decisions. "The state would assign this, an actual, person to take over as the state appointed administrator, and that person has the ultimate authority of putting feedback out on all decisions from the board," the advisor said, urging trustees to endorse recommended realignments to preserve local authority.

Trustees pressed staff on how the governor’s May revise could affect the situation. Staff said a proposed one‑time discretionary block grant could provide an estimated $1.9 million to this district if the state’s proposal is enacted, but emphasized that one‑time funding should not be used for ongoing costs and that any additional funds would be used to strengthen reserves. The Chief Business Official also noted enrollment declines and rising special education costs as drivers of the fiscal pressure.

After discussion, the board voted on a slate of actions. The meeting minutes and roll‑call record indicate the board approved the agenda earlier, recessed to closed session, returned and announced a closed‑session action (a 4‑0 vote to reject a claim in litigation), and in open session approved the following items: resolution 2526‑0046 (staff certification of positions), resolution 2526‑0047 (layoff of classified/confidential staff), the certificated impacts agreement, and the third interim financial report. Where recorded, key motions were made and seconded and the board recorded votes that carried the measures; the third interim report and several resolutions passed on recorded 4‑0 tallies.

Board members and staff framed the actions as difficult but necessary steps to restore a healthy reserve level and avoid state takeover. Trustees thanked the business office and cabinet for their work and emphasized planning to bring employees back where possible if revenues improve. The meeting adjourned at 7:18 p.m.

The board’s actions are procedural and budgetary; details such as exact personnel affected by the layoff resolution were set in the motions and supporting documents before the board and are recorded in the district’s official minutes. The district also noted that some federal funding and child nutrition changes remain uncertain and could affect future budgets.