By admin 
The labor agreement between Sacramento City Unified School District and its teachers union that stirred weeks of conflict among local and state education officials was formally rescinded — but not before one of its most consequential provisions was set in motion, and that process has continued to move forward.
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The Sacramento Bee confirmed Tuesday that the district submitted a request to CalPERS for about $20.6 million from its retiree health trust to reimburse the district for 2025-26 retiree health benefit costs, and that disbursement has been finalized.
The development comes as uncertainty over the rescinded agreement has raised questions about the district’s ability to stay afloat while putting the Sacramento County Office of Education on notice that the state could assume some of its fiscal oversight authority if its decisions are deemed ineffective.
On the evening of July 30, the district board approved the agreement with its teachers union that would allow it to take money from the retiree health account instead from the general fund. Another part of the deal would extend the teachers’ current labor contract through 2030.
In the late afternoon of July 31, the county office announced that it had rescinded the district’s approval of the agreement. The district said it submitted the reimbursement request between those two events, on the morning of July 31, ahead of CalPERS’ deadline to request reimbursement for 2025-26 costs and before the county office’s rescission.
CalPERS spokesperson Amy Morgan said the disbursement has been finalized, though the check has not yet been sent.
“CalPERS was not notified of the Sacramento County Office of Education’s (SCOE) rescission of Sacramento City Unified School Dist. (SCUSD) authorization to use retiree health trust funds,” Morgan said in email. “CalPERS contracts with SCUSD, so they would need to remediate this matter with SCOE.”
Michael Fine, CEO of the state-funded Fiscal Crisis and Management Assistance Team, meanwhile, was skeptical that the reimbursement would ultimately go through, saying he expects CalPERS to recognize that the underlying agreement was rescinded and either halt the reimbursement or seek repayment if the money has already been transferred.
“The Trustee, obviously, if they send it to the district, are doing so under an agreement that’s been rescinded, and the Trustee will catch up to that,” Fine said, referring to CalPERS.
“They’ll ask for the money back, and everything will be fine.”
What happens to the rest of the agreement?
The agreement between the teachers and the district was projected to reduce the district’s general fund expenses by about $98 million, including nearly $68 million from using retiree health trust funds to cover costs over three fiscal years.
The plan that the board approved on July 30 showed about $22 million would be used to cover 2025-26 retiree health costs, followed by about $23 million in 2026-27 and another $23 million in 2027-28. What’s currently being carried out is the first phase of that plan tied to 2025-26 retiree health costs.
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The district’s retiree health funds are held through CalPERS’ California Employers’ Retiree Benefit Trust, or CERBT, which allows employers to seek reimbursement for eligible retiree medical costs using money they have contributed to the fund.
Whether the district intends to move forward with other provisions of the agreement remains unclear, as does whether those provisions could still be implemented after the county’s rescission.
Taylor Kayatta, vice president of the district’s board, said he wants the district to continue honoring the MOU as long as the teachers union does as well. Union leaders have also continued to defend the agreement as beneficial to the district, saying they want to see its provisions carried out.
“The teachers in the district believe that this agreement is in the best interests of our district, and we’re going to continue to pursue it,” said Nikki Milevsky, president of the Sacramento City Teachers Association.
When asked whether the union expects other parts of the agreement to move forward, including extending the contract through 2030, which the county office warned could limit the district’s ability to reduce costs, Milevsky said, “We expect the district to honor the agreement.”
Regarding whether the district believes it can continue implementing provisions of the agreement after the rescission, or whether it intends to pursue a new or similar agreement, Alexander Goldberg, a spokesperson for the district, said it is “still engaged in conversations with SCOE and CDE regarding the MOU and its status.”
What comes next for the district’s fiscal plan
On Monday, as State Superintendent Tony Thurmond noted efforts by Sacramento City Unified and the county office to work through the district’s fiscal issues, he signaled that the funds tied to the teachers’ union agreement may still be on the table from the state’s perspective.
“The district has an opportunity to secure $67 million toward that end as part of an MOU with the Sacramento City Teachers Association, but additional work must also be done to reduce the long-term deficit,” Thurmond wrote on X, referring to the roughly $68 million in retiree health trust fund savings projected under the agreement.
The district must identify about $150 million in cash solutions by June 2027 to avoid insolvency, according to the county office. The board’s scheduled Thursday meeting is set to include a fiscal sustainability plan update.
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This story was originally published August 18, 2026 at 4:42 PM.