Sacramento City Unified School District (SCUSD), California's thirteenth largest school district, faces a looming deficit and must make significant budget adjustments to avoid state intervention. This case study explores how the district reached this point, how its finances compare with other districts in Sacramento County, and what the implications are for students, particularly those with the greatest needs. It finds that: (1) Many of SCUSD's troubles can be linked to broader issues affecting districts across the state, including declining enrollment, increasing special education costs, and increasing pension payments; (2) The district's instability, past budgeting practices, and tense labor-management relations have created a rocky foundation upon which the district must address its current budget situation; and (3) As compared with neighboring districts, SCUSD spends far more on health care and a smaller share of its budget on salaries for pupil support personnel, teachers, classified instructional staff, and office staff. Many stakeholders agree that the greatest fiscal challenge in SCUSD is the high cost of health care. These challenges are making it harder to retain talented staff and teachers, limiting opportunities for the highest-need students, widening inequities, and reducing public commitment to public education. This study of SCUSD offers considerations for policymakers and lessons that may apply to other districts facing a similarly troubling combination of statewide cost pressures, tense labor-management relations, and high health care costs.