San Francisco Unified School District’s deficit has grown so large that outside state monitors have just been given veto power over the district's spending, which is not a full state takeover, but seems to be setting the stage for school closures.

We’ve known for quite some time that the San Francisco Unified School District (SFUSD) has been running a rather gigantic deficit, a deficit that is now more than double what it was before the 2021 school board recall. Of course, school districts all over California are also running deficits right now. But the state of California feels that SFUSD’s financial problems are so severe that the district could run out of cash, and the Chronicle reports that the state has now appointed monitors who have veto power over the district’s spending.

“While the structural deficit has been years in the making, this is the call to action to do the hard work to disrupt what isn’t working and build the school district that S.F. deserves,” school board President Lainie Motamedi told the Chronicle. “We expect our students to learn from their setbacks and improve their work, and the community should expect the same of us.”

The state monitors were appointed in 2021 to give guidance to the district, but were not given explicit veto power. Now they have the ability to suspend the board or district’s financial decisions, or reverse these decisions outright.

This is not the same thing as a full state takeover of the district, but it’s certainly advanced oversight, and the state Department of Education says that SFUSD runs “high” risk of eventual insolvency. They’re insisting on a hiring freeze, which the district has agreed to, and $52 million in budget cuts, which have not yet been detailed or specified.

SF Superintendent Matt Wayne has argued SFUSD has too many teachers and staff, and effectively, too many schools. But teachers point out that the district spends lavishly on consultants, and wasted a ton of money on that payroll fiasco, so they feel district bloat is part of the problem.

Both arguments seem to some degree true. But the biggest issue is that SFUSD is facing declining enrollment, which means less funding from the state (a state which is now itself in a deficit, too). There is generally declining enrollment at schools across California, given factors like lower birth rates and out-of-state migration. But SFUSD has lost 10,000 students over a ten-year period, which stands out among large districts — and highlights the fact that SF's perennial childlessness situation is getting worse, or better, depending on your perspective.

And this whole financial disaster is likely to set up a debate over which SF schools need to close, a very divisive argument that’s likely to begin this fall.

Related: SFUSD Looks Likely to Cut 900 Jobs as District's Deficit Explodes to More Than $400 Million [SFNews]

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