Santa Rosa board faces public outcry over Steel Lane closure as auditors and FICMAT warn of cash shortfall

Santa Rosa — The Santa Rosa Board of Education on Jan. 28 confronted a tense public‑comment period over the proposed closure of Steel Lane Elementary as outside auditors and the state’s Fiscal Crisis and Management Assistance Team (FICMAT) warned the district faces a structural budget shortfall and a risk of running out of cash.

The board was briefed on a fiscal stabilization plan intended to eliminate what district leaders described as an approximately $15 million structural deficit and restore emergency reserves. At the same meeting, the district’s independent auditor reported the general fund’s unassigned balance fell below the state’s recommended 3% reserve and found the district’s classroom‑salary spending at 52.28% of total expenses — below the 55% threshold used by the state for that measure.

Why it matters: A budget gap of this size and the audit findings put the district at heightened risk of a cash shortfall that, if not addressed, could trigger an emergency state advance or other interventions. Even before any formal action, dozens of Steel Lane parents, teachers and students packed the boardroom and urged trustees to keep the school open, saying its programs, bilingual supports and special‑education services would be disrupted.

“This is not about teachers,” said the San Rosa Teachers Association representative during public comment. “Santa Rosa City Schools is failing because of leadership, not teachers.” The union representative’s remarks echoed scores of speakers who described Steel Lane as a close‑knit school community serving many English learners and students on individualized education programs.

Superintendent August told the board the district must take difficult steps to align ongoing spending with ongoing revenue. “We will be presented with … budget solutions proposed to eliminate our approximately $15 million structural deficit and replenish our emergency reserves,” Aug­ust said. “We are here tonight to discuss the harsh fiscal reality we must face.”

FICMAT’s assessment

FICMAT, the state’s fiscal oversight team, delivered a separate briefing that classified Santa Rosa City Schools as at “high risk” on multiple fiscal indicators. Michael Fine, FICMAT’s chief executive, said the most urgent vulnerability is cash flow.

“Running out of cash is the state’s definition of an insolvent school district,” Fine said. “If you have insufficient cash on hand to meet payroll, that triggers state intervention.” He urged the board and superintendent to implement the district’s stabilization steps with speed and fidelity and to coordinate closely with the Sonoma County Office of Education.

Audit findings and board action

Shafran & Associates presented the 2024‑25 independent audit, which delivered an unmodified opinion on the financial statements but flagged two state‑compliance items: the district’s unassigned general‑fund balance was below the 3% benchmark, and classroom‑salary spending was below the 55% threshold. The board accepted the audit during the meeting.

Public reaction: Steel Lane speakers

The meeting’s longest public‑comment period was dominated by calls to preserve Steel Lane Elementary. Students spoke in one‑minute slots — several in Spanish with translation — imploring trustees to keep their teachers and programs. Parents and former teachers described the school as “a safe place” and “a hub of bilingual and special‑education services.”

“Steel Lane has many programs other schools may not have,” said parent Romina Cortez. “If this school closes it will hurt most of our future.”

What the board is doing next

Trustees directed staff to finalize multi‑year budget updates and plan materials for a Feb. 11 action meeting. The board also adopted a state‑mandated mental‑health policy (BP 5141.5) required under Senate Bill 153, a separate action carried unanimously.

District officials emphasized they will not assume speculative state revenues when making local decisions. Staff and FICMAT told trustees the district must reconcile position control, tighten budget documentation, maximize allowed restricted‑fund uses and identify ongoing savings that cover recurring costs.

“The choice before us today is whether we will take these hard actions locally or ask the state to step in,” FICMAT’s Robbie Montalbano said. “The more quickly and clearly the board and staff act, the more influence you keep over day‑to‑day operations.”

What’s next: The board plans a Feb. 11 meeting to vote on a package of ongoing and one‑time reductions and on second‑interim budget certification. Trustees and staff said they will continue conversations with labor partners, county officials and community mental‑health providers about ways to preserve critical services while balancing the budget.