By admin 
The Sacramento County Office of Education Superintendent David Gordon wrote letters to the state and Sacramento City Unified superintendents Thursday, calling on the district to return money withdrawn from its retiree health trust and revise its agreement with the teachers union.
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The letters came weeks after State Superintendent Tony Thurmond warned he could assume the county office’s fiscal oversight authority over Sac City Unified if he deemed its actions ineffective, and less than a day after the California Public Employees Retirement System said it would not ask the district to return the disbursed $20.6 million.
“SCOE remains committed to helping SCUSD develop a viable alternative,” Gordon wrote in his letter to the district Superintendent Cancy McArn, adding that such a plan should generate immediate cash and recurring savings without jeopardizing the district’s long-term financial stability. The plan should address the fiscal crisis rather than merely delaying it, he said.
“To that end, we encourage SCUSD to amend the MOU to take out the SCTA contract extension and ‘Me Too’ provisions and only retain items that will result in savings.”
In September, the district board approved a three-year contract with the Sacramento City Teachers Association despite warnings from its then-chief business officer that it would need to make corresponding spending reductions or risk worsening its financial condition. The contract also underwent a fiscal review by the county office, which district officials said did not object to the agreement at the time.
Although projected to provide $97.6 million in fiscal relief over three years, the rescinded teachers union agreement would have extended the district’s existing contract with the teachers through June 2030, barred reductions in educator compensation during that time and guaranteed the union any salary or benefit improvements granted to other district labor groups under a “Me Too” provision.
The agreement was “inconsistent with the district’s ability to meet its ongoing fiscal obligations and undermined the district’s fiscal recovery by limiting its ability to negotiate and implement solutions as needed in the future to restore solvency,” Gordon noted in his letter to McArn.
District officials, however, pushed back against the letters Thursday, arguing that extending the contract would not prevent further negotiations with the union.
“There’s actually nothing in the MOU that anyone has quantified as a cost to us,” Jasjit Singh, a district trustee who has represented Sac City Unified in recent meetings with county and state officials, said during a news conference Thursday after the county office’s letters were released.
“MOU in its entirety, collectively in its entirety, does provide savings.”
McArn agreed, asserting that closing the contract would not prevent the district and teachers association from negotiating further.
“Open contract doesn’t mean that it’s automatic that we get anything, because when the contract was last open and the district tried to get concessions, we got a strike,” McArn said.
In 2022, when the teachers contract was last open, teachers and classified employees staged an eight-day strike before their unions reached tentative agreements in early April and employees returned to work the following day.
Singh also pointed to the MOU’s healthcare provision as a potential source of savings beyond its immediate cash relief, saying that if the district manages to lower its healthcare costs, the resulting savings would remain in its general fund.
McArn and Singh’s comments echoed the district’s argument in its appeal to Thurmond earlier this month that the agreement would provide urgently needed cash and preserve labor stability while giving officials time to identify and implement longer-term solutions.
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Nikki Milevsky, president of the Sacramento City Teachers Association, slammed Gordon’s letter, saying it demonstrated “the complete ineffectiveness” of the county office in helping the district address its fiscal crisis.
“While he says he wants to support SCUSD his actions appear driven to guarantee the district goes into receivership,” Milevsky said.
County seeks return of retiree health funds
In Thursday’s letters, Gordon also said he expects the district to return the $20.6 million transferred from its retiree health trust, which is administered by CalPERS. The district had requested the money from its account in the California Employers’ Retiree Benefit Trust, or CERBT, as reimbursement for retiree health expenses incurred during the 2025-26 fiscal year.
“As the MOU has been rescinded, we expect that SCUSD will cancel that request and return the funds to the Health Benefit Trust,” Gordon wrote.
Gordon said the county office is not against the district relying on “available financial tools” to meet its immediate cash needs, but maintained that doing so would only buy time unless the district also reduces its ongoing budget deficit.
“The issue is not simply whether the district can get through the next few months, but whether it can remain financially viable in the years ahead,” Gordon wrote.
On Tuesday, CalPERS confirmed that it was not asking the district to return the money because the district had followed the proper disbursement process. Michael Fine, CEO of the state’s Fiscal Crisis and Management Assistance Team, criticized CalPERS’ position and said the rescinded agreement was “not a solution” to the district’s structural deficit, while district officials welcomed the agency’s confirmation.
McArn rejected Gordon’s call to return the money, noting the district’s intention to seek additional reimbursements from the trust during the current fiscal year. The district superintendent, however, added the agreement remained “in limbo” as the district awaited resolution of the dispute.
“I’m not sure under what request they’re asking us to return money when that helps us toward our goal of being solvent and stable,” Singh said.
“That letter means nothing to me,” Singh continued.
Clash over fiscal support
McArn expressed dissatisfaction with the county office’s support, saying the meetings felt like “prepping for a test or a quiz every time,” with district officials repeatedly responding to requests for information rather than receiving clear guidance or collaborative help refining their plan.
In his letter to Thurmond and McArn, however, Gordon disputed the state superintendent’s assessment that SCOE had been ineffective in helping SCUSD manage its financial issues.. Gordon provided a detailed account of that support, which included holding regular meetings with district leaders, helping officials review budgets, monitoring cash flow and developing fiscal recovery plans over the past year.
“We have been diligently serving in this capacity helping SCUSD for several years,” Gordon said, citing the county office’s collaboration with FCMAT and reiterating its commitment to helping the district stabilize its finances and remain under local control.
Meanwhile, Sac City Unified’s fiscal crisis awaits another potential turn as Friday’s deadline to submit legislation approaches, with the statewide California County Superintendents association seeking lawmakers’ support for a proposal to limit the state superintendent’s fiscal oversight authority.
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