As it grapples with how to deal with its ongoing budget difficulties, one of the state’s more financially troubled districts Wednesday considered a plan that could result in hundreds of staff, including many teachers, being laid off.
Oakland Unified, which is still digging its way out of state receivership imposed on it 15 years ago, is facing continued financial challenges. This is despite getting a major infusion of state funds in recent years intended to help educate low income and other high needs children through the Local Control Funding Formula. The district has also lost a significant number of students to charter schools and has been criticized for budget mismanagement by independent and county officials.
As a result, the district anticipates deficits of $20.3 million in 2019-20 and $59 million in 2020-21 if it doesn’t make $30 million in ongoing cuts a year from now.
In the next few months, Oakland Unified officials will meet with employee unions to identify up to 340 positions that could be eliminated in 2019-20 to balance the district’s budget.
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The Oakland school board on Wednesday unanimously agreed to revise the district’s three-year budget to reflect these possible upcoming cuts after the Alameda County Office of Education rejected the budget adopted by the board in June. That budget showed nearly $30 million in budget reductions in in books and supplies in 2019-20 and 2020-21, resulting in negative balances of $10 million in those categories for two years in a row.
The county nixed that plan, saying it was not acceptable because it did not comply with the district’s Local Control and Accountability Plan, which requires Oakland Unified to provide adequate books and materials to students and teachers. To remedy the problem, the district decided to spread the $30 million per year over two years across salaries, benefits, supplies and contracts, based on a separate “commitment to fiscal solvency” resolution the board unanimously approved Wednesday.
It says the district projects it will have negative fund balances of $20.3 million and $59 million respectively each of those two years, so it should consider eliminating at least 234 certificated positions which include teachers and principals and 104 classified, management and confidential positions beginning in 2019-20 to save about $26.4 million. The job cuts must be identified by Feb. 28, along with $400,000 in cuts to books and supplies and $3.5 million in cuts to services and operating expenses. The resolution also requires the board to increase the district’s reserve from the minimum 2 percent to 3 percent “given the district’s history of budget and fiscal miscalculations,” to address “unforeseen budgetary increases.”
Superintendent Kyla Johnson-Trammell said during the meeting that the county required more detail from the district because of its past failure to implement needed cuts.
“This is truly the county and the state leaning in more, saying, ‘We expect you to make these reductions as a district that you haven’t in the past,’” she said. “In the past, just saying, ‘We’re going to make the reductions’ would have been good enough. Now, the county is saying, ‘You need to be more prescriptive over where you may make these reductions, so we as a county have more comfort that you are going to make these reductions.’”
The resolution is tentative because the board has not yet identified the specific cuts it will implement to eliminate its deficit, said Marcus Battle, the district’s recently-hired chief business official. It intends to work with unions to identify possible alternatives to layoffs by Jan. 31, according to the resolution. The cuts suggested in the resolution were an example of what the district needs to do if it doesn’t identify other expense reductions or new revenue sources, he said. Battle also noted that the county required the district to identify its cuts by February, in time for layoff notices to be mailed out in March.
Although no union representatives addressed the resolution or revised budget, one teacher noted later in the meeting that the union is at impasse and there is talk of a strike. Although school starts Monday, the district is still trying to fill 29 teacher vacancies, including 19 in special education, Johnson-Trammell said.
Oakland has a history of miscalculating its budget and spending money without proper internal controls, which has been documented in several independent reports by the Fiscal Crisis and Management Assistance organization, or FCMAT, as well as the Alameda County Civil Grand Jury. It is currently paying back a $100 million state loan due to past fiscal distress and is working to address the issues raised by FCMAT and the grand jury.
Johnson-Trammel said this will include “learning from the past,” and changing district culture so that policy changes are implemented effectively.
“We’ve created new policies in the past,” she said. “But sometimes they aren’t always implemented. We need to focus on training.”
The Wednesday board action was required after the county rejected the district’s budget for the 2019-20 school year. “Previously, we did not have to state the details,” Battle said. “We just said the reductions could come from salary, benefits, books, supplies, other line items of expense. But the county requested more specificity.”
Board member Shanthi Gonzales expressed concerns that the resolution “does definitely signal that we expect to be reducing staffing next year.”
She also asked how the majority of reductions ended up in books and supplies, which she had not seen in the budget when the board adopted it in June. Battle struggled to explain this, saying the district’s computer system should have flagged large negative balances in that expense category as an “error.”
“This particular error should have been caught, to be honest with you,” he said, adding that the district’s finance department is being restructured, but currently lacks proper checks and balances to catch such problems.
Gonzalez asked that future budget presentations show three-year trends so board members can see the shifts they are approving.
“Yes,” Battle said. “We are going to get the type of information you want to see early so you can see the trends.”
Two district residents said the budget process lacks transparency.
Mohammed Mordecai, a citizen watchdog who routinely comments on agenda items, said the resolution passed by the board on Wednesday night gives the appearance of a commitment, but was “written in such a way that there is no commitment.”
Mike Hutchinson, who graduated from Oakland public schools and ran unsuccessfully for the school board two years ago, said it was premature for the district to focus on staff cuts.
“It seems all these cuts are going to fall right on the backs of our employees, when we don’t have the minimum staff to run the district,” he said, adding that he believed contracts with outside consultants should be cut. “The problem was, when you voted on the last budget, there were no budget breakdowns at all…We have to do business a different way, otherwise this is going to keep happening.”
Board President Aimee Eng said the board has created a special committee to identify budget reductions that will begin meeting later this month.
The board also learned that the governor’s final budget will force Oakland Unified to cut another $2.2 million from its 2018-19 budget, due to lower-than-anticipated one-time funds. Although the governor’s budget increased the cost of living adjustment for school districts from 3 percent to 3.71 percent, it reduced one-time funding from $344 per student to $184 per student, resulting in a net loss of $2.2 million for the district, said Ofelia Roxas, the district’s newly-hired chief financial officer. This change will be reflected in the board’s September budget presentation.
Several board members called the budget picture “sobering,” but a few pointed out that the district is also exploring options for selling or leasing surplus property, which could help ease its fiscal stress.
“We’re sitting on the most sought-after asset in Oakland, which is land,” said board member Roseann Torres.
Editor’s Note: This is part of a continuing series on how the West Contra Costa and Oakland Unified school districts are responding to California’s new accountability system.
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