For more than 30 years, San Francisco has guaranteed that a slice of its city budget would be dedicated to kids every year, walled off from the rest of the coffers.
But lawmakers, led by a supervisor who once ran a youth services nonprofit, are calling for more oversight of those funds. Some of the money flows directly to the San Francisco Unified School District, and some to city agencies like the Department of Children, Youth, and Their Families (DCYF) and Department of Early Childhood, which provide children’s services such as preschool.
All told, it’s about 4 percent of the city budget – more than $1.3 billion for the next two-year cycle.
“San Francisco spends a lot of money on kids in the district, and we want to make sure it’s spent responsibly and appropriately,” said Sup. Myrna Melgar, whose staff has penned a city charter amendment to put to voters in November.
The proposal calls for the school district and city agencies to work together on five-year plans with long-term goals – academic performance, childhood wellness, and more – and avoid unnecessary spending. All city money for children’s services within the school district and city departments alike would have to align with the plan.
It would “make sure we’re not double-dipping and double-counting, and that funding actually reaches children,” Melgar added in a hearing Thursday morning.
Under particular scrutiny is a pot of SF taxpayer money that SFUSD receives every year, called the Public Education Enrichment Fund (PEEF). Half must be spent on sports, libraries, arts, and music programs; the other half must be spent on “other general uses.”
The money, which SF voters first approved in 2004, totals $188 million in the new two-year city budget.
About the “general use” half of the PEEF money, “there’s not a lot of transparency,” said Melgar’s chief of staff Jennifer Low, who has worked on the charter amendment. “It’s essentially like a slush fund for the district.”
The proposal, which is still a draft and needs the board’s approval, demands better accounting of PEEF money from SFUSD. If the city’s economic analysts find it wanting, they could recommend that the mayor and supervisors hold onto the funds.
‘You struggle’
The call for more accountability around the SFUSD budget comes at a sensitive moment. The district said late last year it faced a $400 million long-term deficit. It managed to close this year’s deficit but has pledged at least $126 million more in cuts through the 2026-2027 school year.
The district is under the microscope of state regulators who can take control of the district if it doesn’t get its financial house in order.
At a May 7 school board meeting, the state’s watchdogs detailed SFUSD’s lack of insight into basic information, such as who’s on the payroll. “You spend almost 90 percent of your budget on people,” said Michael Fine, CEO of the California Department of Education’s Fiscal Crisis and Management Assistance Team. “But you struggle to know who you have, where they are, if the job’s vacant or not, and if they’re still getting paid.”
“I told the superintendent [Matt Wayne] that there are compliance requirements from the state; it’s ok to have compliance requirements from the city as well,” Melgar told The Frisc in a phone interview.
SFUSD spokesperson Laura Dudnick responded to several questions with an emailed statement that said in part, “We are committed to continuing to work in collaboration with city partners and elected officials to ensure the City can improve systems, clarify timelines and procedures, and increase budgetary accountability” for the funding San Francisco provides.
The statement also noted that SFUSD has “existing accounting protocols” to assess PEEF’s impacts and pointed to reports posted online. Low called those reports “a good foundation” but likely not detailed enough for a formal accounting review.
In Thursday’s hearing, Melgar thanked Board of Education president Lainie Motamedi and commissioner Jenny Lam for their input. Motamedi declined to comment for this story, and Lam did not respond to a request.
A tough few years
Parent anger over a slow return to school during the pandemic led to a bruising Board of Education recall in 2022. Since then, the district has grappled with a payroll system meltdown, a budget crisis, and looming school closures due to declining enrollment. It has also focused academic reforms on elementary school literacy, middle school math, and high schoolers’ readiness for college and careers.
The district is at a crucial juncture. Would politicians use the plan’s oversight to exert more influence over school programs and policies? Melgar says no, noting the proposal gives the district and city agencies for that matter a two-year lead time to align spending with the five-year plan.
There’s not a lot of transparency. It’s essentially like a slush fund for the district.
Jennifer low, chief of staff to Sup. Myrna Melgar
Any anomalies would first be flagged by the city controller and legislative analyst’s office, which have some independence from the elected officials they serve. The first year the mayor and supervisors could withhold SFUSD funds is 2029. (The proposal might also form a seven-member oversight council, but it depends on the fate of other ballot measures in November, which aim to restrict city commissions.)
“In every major urban setting there’s tension between the district and city administration, but San Francisco is uniquely challenging because it makes such significant investments,” says Alex Briscoe, principal of the California Children’s Trust, a nonprofit education policy group.
Briscoe, an SF resident with kids in the public schools, doesn’t know the specifics of the new proposal, but notes there’s an “historic lack of coordination” between SFUSD and City Hall: “We’ve not gotten the bang for our relatively significant buck.”
Under the new plan, DCYF would play a major role. It already produces a five-year plan for spending city money that goes to agencies, not the school district. And according to the plan’s backers, it also has some tools to measure program outcomes.
Better coordination could reduce overlap. For example, is one department’s afterschool program duplicating the effort of another in a particular neighborhood?
As director of Alameda County health services, Briscoe worked with other county departments to boost mental health services in schools. He notes that, as part of a big push for children’s behavioral health, California has changed insurance rules for these services and created a “massive revenue opportunity” for schools. But there’s a lot of work to do across agencies to make it happen.
Other pots of money
The proposed amendment singles out PEEF, but SF funnels property tax revenue into schools in other ways. In 2022, voters approved the Student Success Fund, which started out modestly ($11 million in 2023) but is expected to grow to $60 million a year by 2027.
The funds must be spent to promote academic performance and social-emotional wellness in specific ways: extra counselors for schools experiencing violence, for example, or tutors and afterschool workers.
Only in its second year, the fund already needs fixing – at least in the technical language of the bill. The fix is necessary, says Low, to clarify that the fund, which is administered by DCYF, cannot become a reason to take other dollars away. That’s what happened in this year’s budget maneuvers, Sup. Hillary Ronen said in Thursday’s hearing. (Ronen and school board commissioner Matt Alexander were the main proponents of the fund in 2022.)
Because of vague language, the $35 million in the Student Success Fund was counted toward DCYF’s mandatory Children’s Fund “baseline” spending – a wonky detail that allowed City Hall budget officials to cut the department’s budget. Some but not all of that money was restored after an outcry from youth-focused nonprofits.
The amendment adds that Student Success Fund money “cannot replace, supplant, count as, or substitute for other City funding” for SFUSD or other youth programs. It’s meant to “provide clarity to the controller about the voters’ intent,” said Ronen.
Ronen initially wanted a separate ballot measure with the new language, but she has merged it with the Melgar proposal. In other words, in one fell swoop voters will decide whether to add more oversight to SFUSD spending – and a threat of withholding funds from one bucket – all while protecting tens of millions of dollars in another bucket.
The November ballot will be a whopper, with a highwire presidential election, the SF mayor’s race, several supervisor races, state seats and measures, and potentially more than a dozen local propositions.
If the supervisors agree to add the Melgar-Ronen amendment, it will be a full slate for SF schools too. Four Board of Education seats are up for grabs, and a $790 million bond to repair and upgrade schools is up for a vote. It would be the first major infusion to improve SFUSD infrastructure since 2016.
Such appeals to San Francisco voters used to be slam dunks, but backers of this school bond have been nervous, even scaling back its size to lessen the risk at the polls.
San Francisco has a lot of studying to do.