When Superintendent Maria Su took over management of the San Francisco Unified School District in fall 2024, it was in serious financial trouble, facing insolvency and the threat of a state takeover. This week, at the board’s last meeting of the school year, Su’s staff delivered a balanced budget.

But it almost didn’t pass. School board members voted 4-3 to approve the $1.36 billion budget for 2026-27, and an associated accountability plan passed 5-2. Some commissioners who doubted the budget had to weigh their misgivings against what the failure to pass it would cost the district.

By law, a district that fails to adopt its Local Control and Accountability Plan by July 1 faces a financial penalty, and a budget cannot be adopted without it. The size of that penalty was spelled out the day before the vote in an email to Su, obtained by The Standard, from Tami Pierson, director of the California Department of Education’s School Fiscal Services Division.

SFUSD would have faced a penalty equal to 20% of its main state funding allocation for the year — an estimated $62.9 million — growing by roughly $3.1 million for each additional business day. Pierson warned that a prolonged failure could trigger state intervention. Su forwarded the email to district staffers roughly two hours before Tuesday’s meeting.

At the meeting, Su reminded the board that over her year and a half at the helm, SFUSD has cut $114 million in annual spending to climb out of its hole. She said the district is focused on “the long run.”

“We have to make sure that we are not just constantly changing the rules, changing the programs, changing staff within classrooms year to year,” Su said. “It takes time to demonstrate impact and outcomes.” Failure to adopt the budget, she added, could return the district to the state oversight “we’ve worked so hard to get out of.”

For some commissioners, who were pressing for a clearer strategy, the spectre of a financial penalty made the choice stark. Commissioner Parag Gupta was upset with “the idea that we must approve something as long as it is technically compliant, backs against the wall, even if there is no evidence that this will move the needle.” He ultimately voted no. 

But not everyone saw it that way. “I feel like we are in ‘if you give a mouse a cookie’ territory,” said Commissioner Alida Fisher, who voted yes. “We are always going to push for more, and that’s our job as commissioners. But I think we need to do it in a way that honors the work of staff.”

The SFUSD budget, like that of any school district, is overwhelmingly a payroll document — more than 80% of its $1.36 billion goes to salaries and benefits, with the remainder split among outside contractors, books and supplies, and building costs. Most of the 5% spending increase from last year traces directly to the labor settlement that ended February’s teachers strike, which raised salaries by $31 million and benefits by $27 million. The biggest single jump is healthcare, with costs up nearly 50% — a bill the district plans to cover mostly with funds from a local parcel tax. It also set aside $12.2 million as a hedge against potential federal funding cuts.

A year ago, SFUSD was on track to spend about $133 million more than it took in — the kind of gap that kept the state watching over the district’s finances. The new budget nearly closes that gap, reducing it to about $1 million. Some of that came from cuts: $114 million over the past year and a half, including about 375 jobs and a 15% reduction in spending at the central office. But the rest was mostly bookkeeping. Last year’s gap looked bigger than it really was, inflated by a one-time $111 million move into the district’s reserves.

The district says it no longer needs a state-required stabilization plan and expects to pass its next financial check at the end of the year in good standing. But the district’s projections show it sliding back into a deficit of about $26 million by 2028-29, as one-time grants run out and a local parcel tax comes up for renewal.

What the budget doesn’t do is also notable. At the depth of the budget crisis in December, the district floated a far harsher plan: laying off 45 of its 99 school-site social workers, along with dozens of teachers, counselors, and security guards; eliminating school bus routes; and consolidating school sites, an idea that revived the closure fight that ended the previous superintendent’s tenure. Most of those cuts didn’t make it to the final budget. Busing, rather than being cut, was renewed. The district extended its contract with Zum, which has electrified its bus fleet, for five years, with the coming year’s cost capped at $47.25 million, up from about $39 million this year.

The district set aside $12.5 million for “student support strategies,” with no specific program attached, saying the money is flexible until plans firm up. For several commissioners, that was the budget in miniature: The financial turnaround is real, but the connection between dollars and outcomes remains unclear.

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The sharpest exchange at Tuesday’s meeting came over chronic absenteeism, which Su had chosen as one of her own accountability metrics. Before the pandemic, about 12% of SFUSD students were chronically absent, meaning they missed at least 10% of the school year. That figure roughly doubled during COVID, peaking near 30%, and while the district clawed it back partway, progress has stalled. The district has said absences cost it more than $60 million in state funding a year.

The plan to reverse the trend is supported by a $400,000 grant from the Spencer Foundation (opens in new tab). Commissioner Jaime Huling, who voted no on the budget, was frustrated that there was not a more concerted effort to use the district’s general fund for this initiative, given that the work would pay for itself. Su said that, with limited resources, she had chosen to prioritize literacy and math outcomes, along with staffing every classroom.

The budget process is meant to be a collaboration between the school board and the superintendent and staff. The board sets measurable goals for student learning, and the superintendent is charged with building a budget, presented to the board at two hearings, that funds strategies capable of meeting those goals.

At the first reading June 9, some commissioners pressed district staff for details of how the budget connects to a strategy for the reading and math proficiency goals set in 2022. In the two weeks since, staffers produced a new document — a “crosswalk” meant to map the budget’s alignment with district goals.

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Commissioner Alida Fisher lauded the budget, saying the district’s strategy could be seen clearly in the new social studies curriculum and the job and spending cuts, which she referred to as “strategic abandonment.” While she would like to see more equity focus in the budget documents, she said the budget was an impressive achievement considering where the district was at this time last year, and would have no problem voting yes.

Matt Alexander, on the other hand, said he was unsure whether he would vote yes or no on the budget. “As several of my colleagues have mentioned, the board has been asking for a strategic budget for a long time,” he said, before ultimately voting no.

Commissioner Lisa Weissman-Ward, who voted yes, said she would have liked to see more on why certain items were being funded. “Where are the data points? What are the sources that tell us this is why we should be adopting this strategy?”

Commissioner Supryia Ray shared similar concerns, though she considered voting yes on the budget a no-brainer because of how effective it would be in stabilizing the district’s finances.

“I personally feel it would be very damaging to the school district [to vote no],” said Ray. “I will vote yes while continuing to push for more specific work.”

Board President Phil Kim said he found himself between a rock and a hard place, and was upset that district staff did not make more of an effort to explain their budget decisions at the first reading of the budget. Kim voted yes, despite saying he would “like to vote no.”

“It’s not until there’s this threat of something not passing that we then start to see documents that start to align,” Kim said. “It’s very frustrating.”