Budget FAQs - Budget Development for 2024-25

SFUSD has experienced a structural deficit for years, which is when expenditures exceed revenue. 

Along with decreased student enrollment, which deepens the deficit due to revenue loss, rising costs associated with staffing and expanded services, among other expenses, are contributing factors.

That amount represents the cumulative deficit that would have developed by 2026-27 if no action is taken to balance the budget over the next 3 years. 

However, the Board of Education approved a Budget Balancing Plan when it approved the 1st Interim Financial Report on Dec. 12, 2023 to commit to appropriate expenditure reductions and other solutions to maintain fiscal solvency. SFUSD continues to address ongoing fiscal challenges and is working on a budget plan that would eliminate deficit spending by 2025-26.

Over the years, SFUSD has aimed to soften the impact on schools when addressing the budget, including making reductions to central administration and exploring additional funding sources. 

In response to SFUSD’s structural deficit, in December 2023 the Board of Education adopted a Budget Balancing Solution Plan with the 2023-24 First Interim Report that included unrestricted general fund one-time reductions, $103.1 million of ongoing reductions for 2024-25, and an additional $88.8 million of ongoing reductions for 2025-26. In addition, the district is engaged in a Resource Alignment Initiative which has outlined five specific focus areas to bring the district to fiscal stability: 1) Create a New Staffing Model, 2) Restructure Central Office, 3)  Explore Generating Revenue from District Properties,4) Invest in Priority District-wide Programs, and 5) Create a New Portfolio of Schools.

SFUSD has been and will continue to engage in the following corrective actions:

• Stabilized its payroll issues system and is transitioning to a new Enterprise Resource Planning system to significantly improve business services, human resources, and operations.
• Eliminated a significant number of vacant positions and will continue to do so.
• Centralized staffing for the first time in recent memory to obtain better control over positions and spending.
• Continue to monitor its processes for staffing and hiring to ensure that any new positions filled are critical.
• Actively addressing operational challenges identified by a recent Financial Crisis Management and Assistance Team (FCMAT) audit.

On May 3, 2024, because SFUSD is still in the process of implementing its plan to resolve deficit spending, SFUSD received notice from the California Department of Education (CDE) that it revised the certification of SFUSD’s March 2024 budget report from “Qualified” to “Negative.” According to the CDE, “While additional steps are needed to improve SFUSD’s financial systems, we acknowledge progress is being made that will lead to improved decision-making and the long-term fiscal sustainability of the SFUSD.” In 2022, CDE appointed two state fiscal experts to support the district in fiscal stabilization. With this updated certification, the fiscal experts move to fiscal advisor status and can directly engage in any district operation deemed counter to fiscal stability.

The Board of Education approved a resolution in June 2023 that commits to take action to ensure the district meets the state minimum reserve for economic uncertainty and eliminates the school district’s unrestricted general fund structural deficit in 2023-24, 2024-25, and 2025-26.

District staff and state fiscal advisors are working together to continue implementing budget-balancing solutions and reporting on the district’s actions. The immediate next steps are to submit a third Interim Budget Report by June 11, 2024, respond to requests from the CDE by June 30, 2024  and submit a Board-approved budget to the state by July 1, 2024.