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California Superintendent of Public Instruction Tony Thurmond on Tuesday criticized the county fiscal adviser’s decision to rescind Sacramento City Unified’s agreement with its teachers union, adding that similar future actions that undermine the district’s financial stability could trigger greater state oversight of the county office.
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In an interview with The Sacramento Bee, Thurmond called the Sacramento County Office of Education’s decision to block the district from accessing roughly $68 million through an agreement with its teachers’ union “illogical” and “questionable behavior,” arguing the money would have improved the district’s cash flow without having to be paid back like a state loan.
“It seems quite illogical that the county would push the district to accept a state loan when the district itself is trying to reduce its overhead,” Thurmond said, stressing that county actions similar to what happened with the teachers agreement could “trigger a need to have more oversight of the county operations and how it’s working with Sac City.”
The interview followed Thurmond’s warning Monday that the state could take over county fiscal oversight if SCOE worsens the district’s financial problems, even as he rejected the district’s appeal to restore the teachers agreement aimed at addressing its nearly $222 million structural deficit.
“At the end of the day, this is about the numbers, and I will not support a district that cannot balance its budget. No one’s going to be granted that ability. You have to be able to provide for your costs, and if that means making cuts, then they have to make those cuts,” Thurmond said.
“The district has already shown that they’ve made those cuts, and they’re prepared to make more.”
Dispute over repaying the retiree-health funds
On July 30, the district board approved a new labor agreement with the Sacramento City Teachers Association that extended the teachers contract through June 2030 while allowing the district to use retiree-health trust funds instead of general fund dollars to cover retiree health benefits.
That approval was quickly blocked by the county office, which argued that the move would merely delay when the district runs out of cash rather than address its underlying structural deficit. It warned that extending the teachers contract through 2030 could limit the district’s ability to negotiate future labor concessions needed to restore solvency.
The state superintendent focused on the cash relief the roughly $68 million would provide, describing the money the district could draw from the deal as “at this point a grant” and echoing the district’s position that there was no requirement or timeline to repay it.
Thurmond said the county office’s concerns about how the money would be repaid was “missing the mark” by focusing on repayment terms for funds the district was not required to repay.
Sacramento County Superintendent David Gordon disagreed, saying the district would eventually need to replace the money to keep paying retiree health benefits.
“The feeling that things are potentially free is part of the problem here,” Gordon told The Bee.
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Gordon explained that because the retiree-health trust is money the district has been setting aside to pay for retiree health benefits over time, if the district takes money out of that savings now, it can relieve pressure on the general fund today, but the underlying retiree-health costs don’t disappear.
Gordon defended the county office’s work to keep the district solvent and rejected the suggestion that it had been ineffective, saying SCOE had been working “hand in hand” with the state-funded Fiscal Crisis and Management Assistance Team.
The county office remains willing to work with the district on solutions that were “workable to solve the problem, rather than risk making the problem even worse,” he continued.
Why the state rejected the appeal
Thurmond’s two letters Monday to Gordon and Sac City Superintendent Cancy McArn addressed separate requests from Sacramento City Unified — one asking the state to intervene and assume the county office’s oversight authority, and the other appealing the rescission of the teachers agreement.
Thurmond offered only a brief explanation for rejecting the appeal, leaving the decision somewhat at odds with the state’s separate finding that the teachers agreement would have improved the district’s financial position.
“I can say that the appeal did not reach all the conditions needed to be upheld,” Thurmond said Tuesday.
Though the district’s attempt to reverse the rescission failed, Sacramento City Unified largely focused on the state’s acknowledgment that the teachers agreement would have improved its financial position.
“These findings are important because they confirm that the MOU was intended to be part of the solution to the District’s fiscal challenges,” said McArn in a statement released Tuesday.
“We respect the State’s appeal decision, while also welcoming its clear assessment that the agreement itself provided meaningful fiscal benefits.”
Teachers association’s president Nikki Milevsky said Thurmond’s findings should lead to approval of the labor agreement without taking fiscal control away from the district, adding that Gordon and the county office were “subject to removal” from fiscal oversight.
According to Thurmond, the district and the county office are expected to meet again Monday, with his office helping facilitate further discussions over the fiscal situation.
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