SFUSD board approves unaudited financials and audit extension amid Empower reconciliation

The San Francisco Board of Education on Oct. 25 approved the district's unaudited actual financial report for the fiscal year ending June 30, 2022, and granted a requested extension for the annual audit to permit reconciliation of payroll and other data tied to Empower SF.

Chief Financial Officer Megan Wallace told the board the unaudited actuals showed an improved ending fund balance compared with interim projections — an increase the presentation quantified at roughly $56.3 million — largely attributable to timing differences on restricted revenues and expenditure savings from vacancies and delayed program implementation. Wallace cautioned that a substantial portion of the reported improvement is restricted (program-specific) funding and that the district relied on accruals and estimates while reconciling payroll data.

Wallace said some federal reimbursements (including FEMA) were delayed and did not post in FY21'2, and a new GASB accounting requirement reduced certain local revenue timing assumptions by about $7.5 million. On the expenditure side, savings reflected vacancies and slow implementation of some programs; however, those savings often represent services not delivered to students. She also highlighted a roughly $25 million reduction in the unrestricted fund contribution to special education, driven by restricted funding shifts and vacancies.

Board members pressed staff on whether savings resulted from unfilled positions and how that changed services at schools. Staff said the savings were often a function of vacancies that also meant students did not receive some services; they warned that the district must plan to eliminate an ongoing deficit through staffing and resource alignment.

Because the district could not fully post payroll data into its financial system before closing the books, the district asked for an extension to complete the audited actuals; staff said they had coordinated with the California Department of Education and fiscal experts and that the delay was allowable under the rules given the special circumstances. The board approved both the unaudited actuals and the audit extension by roll call vote.

Board members asked for a fuller explanation and monitoring of how payroll problems and staffing shortages affected program delivery; staff said further detail would be provided with the first interim report in December.