Oakland Unified may need $2 million more in budget cuts to give other employees same raise as teachers

Teachers in Oakland Unified were on strike for seven days seeking higher pay and other concessions from the district.

Photo: Andrew Reed/EdSource

The Oakland Unified School District may need to make $2 million in additional budget cuts or raise more money if it wants to give all district employees the same raise won by teachers after a seven-day strike.

That’s the conclusion of the Alameda County Office of Education after reviewing the district’s budget and its tentative agreement with the teachers, which is estimated to cost $36 million over three years. The school board is expected to vote on the teachers’ agreement at Wednesday night’s meeting.

The county office has determined that the district can’t afford to give the same raises to the rest of the staff it is giving teachers, as is customary, without cutting about $2 million more from next year’s budget or raising additional revenues. The additional cuts would be on top of the $20.2 million the board agreed in March to cut in 2019-20 to help balance its budget and pay for the teachers’ raises.

As part of the March cuts the district expects to lay off about 148 employees on June 30. The district is continuing to seek additional outside funding to help restore the cuts it has made for next year.

The district’s budget includes projections for raises for staff in addition to teachers. Since the district is still in negotiations with most of its other unions, it has not yet disclosed the anticipated costs for those agreements which will cover hundreds of staffers, including administrators and clerical workers.

However, an analysis of the district’s budget released Wednesday by the Fiscal Crisis Management and Assistance Team, or FCMAT, a public agency that advises districts in fiscal distress, shows that the district has reached a tentative agreement with its SEIU union that gives “me too” raises including a one-time bonus this year and 5 percent over the next two years, but does not include the additional 6 percent promised to teachers in 2021-22. FCMAT estimates that giving similar raises to all employees next year would bring the district’s deficit to $686,464 in 2019-20, which could adversely impact its ability to meet its minimum reserve levels. The district has not yet submitted its projected costs for the SEIU agreement to the county.

According to the county, the additional $2 million in cuts are necessary because district officials overestimated their future enrollment numbers in their budget calculations and failed to include the vacation costs Oakland Unified will have to pay employees who are being laid off on June 30. The district has $6.6 million less than it needs, which drops its reserve below the required level of 2 percent of its budget, according to a letter from the Alameda County Office of Education to the Oakland school board president.

“ACOE believes OUSD’s fiscal position is uncertain and that additional revenue enhancements and/or expenditure reductions will be required in future years,” wrote L. Karen Monroe, Alameda County Superintendent of Schools, in a letter analyzing the district’s three-year budget projections, which included “me too” raises for all employees. In a separate letter reviewing the teachers’ agreement, Monroe said the contract “does not ‘endanger the well-being of the school district,’” but that if the board approves it, additional cuts or revenues “may be required for additional employee compensation and other costs.”

Despite these warnings, the district’s staff report to the board says that the agreement “is within the district’s financial ability to cover” and claims that it “has been approved by the Alameda County Office of Education.” However, Michelle Smith McDonald, spokeswoman for the county office of education, said “it is inaccurate to say that the county ‘approved it.’ The language in the letter speaks for itself.”

The district’s report, which is expected to go before the full board Wednesday, is available on the district’s website, along with the county letter regarding the agreement.

The district did not include the county letter on its three-year budget in the board’s agenda report for the Wednesday meeting even though it comments on the district’s inability to give the same raises to all employees.

Because fiscal problems required the district to get a $100 million state loan in 2003, Oakland Unified has been under the review of a state appointed trustee. Chris Learned, the current trustee who oversees the district’s budget, said the district has money to cover the teachers’ agreement, but said raises for other employees “may require the need for additional cuts or revenue enhancements.” He also said he recommends that the board continue its practice of maintaining a 3 percent budget reserve, which could require additional cuts.

Keith Brown, president of the teachers’ union, said Tuesday that each union negotiates separately and that most other district unions are still in negotiations. However, he said it is “a customary practice” for each bargaining unit to get the same salary increase as teachers in terms of percentages.

“During our negotiations, our bargaining team did some costing out of how much it would cost the district to give the other unions comparable packages in salary increases and our bargain team was confident that the district had enough money to provide similar packages for the other unions,” he said.

In response to questions from EdSource about the county’s letters, district spokeswoman Valerie Goode said the board “already has, and is considering” the budget letter from the county, which was sent directly to all board members on April 15.

She did not specifically address the budget concerns outlined in the county’s letter and did not explain why the district did not include the budget letter in its public agenda packet.

“Oakland Unified School District is focused on ensuring that all finances are in order,” Goode said. “We believe that the numbers in our second interim (budget) report are correct, that it’s all about the timing of revenues and liabilities. Based on the work of our staff, we believe that our reserve will remain above 2 percent.”

Angelica Jongco, an attorney for Public Advocates who is also a district resident, said the district should have included the county’s letter in its agenda report to help the public better understand the district’s financial outlook.

“This letter from the county raises specific concerns about the district’s finances that could lead to further budget cuts,” she said. “It’s the type of information that would be helpful for community members to understand. Hopefully, its omission in the board packet was an oversight.”

The district’s tentative agreement with the teachers’ union, reached on March 1, calls for a one-time 3 percent bonus to teachers, nurses, psychologists, counselors, speech therapists and resource specialists, along with an 11 percent pay increase to be paid out as follows: 3 percent retroactive to Jan. 1; 2 percent on Jan. 1, 2020; 3.5 percent on Jan. 1, 2021 and 2.5 percent on June 30, 2021, which would go into effect in the 2021-22 fiscal year. The agreement also calls for decreased caseloads for some employees, as well as class-size reductions.

Editor’s Note: As a special project, EdSource is tracking developments this year in the Oakland Unified and West Contra Costa Unified School Districts as a way to illustrate some of the most urgent challenges facing many urban districts in California. West Contra Costa Unified includes Richmond, El Cerrito and several other East Bay communities.