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OAKLAND, Calif. - The Oakland Unified School District board is poised on Wednesday night to slash $9.1 million from its budget during the middle of the year to remain “fiscally solvent,” upon discovering that there were millions of dollars spent, but had not been budgeted.

The board members were originally going to cut $15 million, but ultimately decided they could live with a lesser amount after speaking to principals and other staff members who said their schools could simply not function with that amount, according to two school board members.

Of the revised amount, $4.2 million will come from 87 different school sites and $4.8 million will come from the central administration.

“After looking at the harm that would be caused to schools and central services,” district officials felt that they could get through the end of the year with cutting less, according to OUSD board president James Harris.

It’s unclear how much the board will have to cut in the following years. But it’s pretty certain they will occur, according to school board member, Shanthi Gonzales.

While these budget cuts may have come as a surprise early in November to the general public, Harris said these financial woes are not new for those paying attention.

“We are not just discovering this now,” he said. “Last year, we just kicked the problems down the road.”

Many people are pointing fingers at the former superintendent, Antwan Wilson, who left the district suddenly last year for a new job in Washington, D.C, without finishing his term. They say he hired many of his friends from Denver, and overspent on consultants and on unnecessary programs, allegations which are true.

OUSD's Dec. 13 school board agenda

But Harris and the board laid out a myriad of other reasons why OUSD is in financial trouble – a legacy the district has unfortunately held since 2003 when the district went into state receivership because of financial troubles back then. Rising pension costs, more special needs students, declining enrollment, raises given to teachers and the fact that the district has no Chief Financial Officer are among some of those other key reasons. All that, of course, coupled with OUSD’s cultural history of financial mismanagement.

Read how OUSD overspent in which areas

“Oakland has had severe problems of turnover in key positions, poor internal controls, a poor history of tracking expenses in a timely fashion and a lack of leadership,” Gonzales said.

Add Wilson into the mix, she said, who had never been a superintendent before and who was used to spending much more per student in Colorado, and “It was a horrible combination. Anything individually, and the district could have handled. But together? It’s a perfect storm.”

Harris and Gonzales outlined 12 reasons why Oakland Unified is in this position.

Under Wilson, the district created three new district departments, which hadn’t existed before: The Office of Equity, the Office of Early Childhood Education and the Office of Post Secondary Readiness. “These are all worthy departments,” Harris said. “But they’re costly and probably something that a deputy superintendent in the district could have handled.” Together, those three departments cost about $4 million a year. The position of Post Secondary Readiness is poised to be cut on Wednesday night.
OUSD does not have a Chief Financial Officer. “And that’s just killing us,” Harris said. The district recently hired a comptroller.
OUSD has not had a budget finance committee on the board level. “That was a huge mistake,” Gonzales said, who now sits on the newly formed committee, which meets every other week to drill down more deeply into what’s being spent.
OUSD does not practice “ledger-based” accounting where there are line items of revenues and expenditures. In fact, millions of dollars have been put into the books and supplies fund as a “holding spot,” Harris explained, until that money is then diverted to other areas, so it’s very confusing as to what is being spent. “Staff just revealed to us that they overloaded the money in the books and supplies category, and then they later distributed it to the appropriate categories,” Harris said. “This has been an accounting practice for a while.”
OUSD has kept the state-mandated 2 percent in its reserve budget, while many other school districts keep more for emergencies.
Prop. 30 funding, or Local Control Funding Formula, revenue decreased by $1.6 million.
There are systemic challenges, such as having an abundance of charter schools, which draws daily attendance money away from the district. If OUSD denies a charter school, advocates will get them approved by Alameda County or the state.
Pension costs are rising. OUSD’s retirement costs will triple in 10 years, and the money has to come from the district’s existing budget.
The district is mandated to take care of children with special needs, while charter schools are are not penalized any way if they do not. Almost 20 percent of OUSD's students have special needs, and last year alone, the district spent $11 million in transportation costs to get them to and from school. In addition, the numbers of students who have autism or ADHD continually increase, Gonzales said. Charter schools can, and often do, turn these students away.
OUSD has the second largest number of immigrant students in the state, behind Los Angeles. While the district receives money for these students, the money only comes in the following year, not the current one.
Staff recently received an across-the-board raise, increasing by $4.6 million, comprising about 65 percent of all new revenue from Prop. 30.
Enrollment has greatly declined in OUSD. In 2000 there were 50,000 students. Today, there are 36,000 students. But the number of central administrators has not decreased proportionately.

As for the now and the future, the current superintendent, Kyla Johnson-Trammel, has implemented new measures and tracking tools to help better manage the budget. To codify that, the board is also planning to adopt a “zero-based” budgeting program and insure that all budget recommendations are justified in alignment with the “board prioritization criteria.” Plus, the board resolution recommends that the district convene meetings with parents and students to encompass more “shared decision making.”

What also needs to change, according to Gonzales is a “cultural change.”

“Oakland needs to hold people accountable,” she said. “New muscles have to be used in our district.”