Budget decisions loom for Oakland Unified, which faces a $40 million shortfall in coming year (2024)

Facing a major budget deficit and pressure from the county, Oakland Unified School District leaders will have tough budget decisions to make in January that could result in layoffs at the district’s central office, and reduced school-site budgets.

A decline in enrollment and lower attendance rates this year have contributed to a deficit anticipated to be between $40 and $50 million for the 2022-2023 school year, or roughly 6% of the district’s nearly $700 million budget. An influx of one-time COVID relief funding masked much of the shortfall over the past year and a half, but that money will soon run out.

Oakland Unified has lost 1,500 students since the start of the pandemic, a trend mirrored in school districts across California. That decline translates to a loss of $21 million in state funding for OUSD. School districts in California are funded based on their average daily attendance (ADA), which is generally lower than their enrollment numbers. Because of the COVID-19 pandemic, California this year allowed districts with declining enrollment to use their ADA number from the 2019-2020 school year, which for OUSD was 33,911. But for the 2022-2023 budget year and beyond, districts will have to use their current numbers. In OUSD, that’s projected to be 30,551, about a 10% drop.

During a budget presentation at Wednesday night’s school board meeting, OUSD’s Chief Business Officer Lisa Grant-Dawson painted a picture of the district’s financial situation and where budget cuts could come from. She named the district’s central office, which encompasses OUSD’s legal, labor, information technology, finance, human resources, and central academic departments, as one place where there will be reductions. While many community members, teachers, and school leaders are opposed to cuts at individual school sites, those are likely as well. There aren’t enough resources at the central office for that division to absorb all of the budget reductions, Grant-Dawson said.

The school board will need to decide what to cut by January, because of a timeline imposed by Alameda County’s Office of Education. District staff will present the school board with options at a meeting on Jan. 12, and the board will vote two weeks later on Jan. 26. The district must submit the budget adjustments to the county on Jan. 31.

Last month, county Superintendent L.K. Monroe sent a letter to OUSD officials declaring that while she approved of the district’s 2021-2022 budget, she was concerned about future years and would be implementing additional oversight measures, including closely examining the school district’s finances and internal controls and assigning the Fiscal Crisis and Management Assistance Team (FCMAT), an independent agency that helps school districts resolve financial issues, to review the district’s teacher-hiring practices.

On Thursday, several education advocates, parents, and elected officials gathered in front of OUSD’s district office at 1000 Broadway to protest what they view as a hostile takeover of Oakland’s public schools by Alameda County and the state. The speakers, including District 5 Director Mike Hutchinson, Oakland Education Association President Keith Brown, and state Assemblymember Mia Bonta, drew comparisons between OUSD’s current circ*mstances and 2003, when the district went into state receivership, was assigned an administrator, and loaned $100 million that the district is still paying back today.

“The state has had a role in dismantling our system. It’s been decades of the creation of schools that we haven’t supported at the level that we should have. It’s been decades of introducing schools that haven’t been fully accountable to all of the children of Oakland,” said Bonta, who was elected to her seat in August and previously served as CEO of Oakland Promise, a nonprofit launched in 2016 to support college readiness. “It’s been decades of having to withstand the impacts of a state receivership that has been devastating for the school district. I’m committed to working at the state level to get relief from this loan that was put on the school district by the state.”

The school board unanimously voted to appeal Monroe’s decision to state Superintendent Tony Thurmond, but the appeal was denied. As a last resort, Monroe also warned that she could withhold board members’ and the superintendent’s salaries if they don’t meet the Jan. 31 deadline.

“I’m asking everyone to join us in making two demands,” Hutchinson said at the rally. “First, we need to demand that Monroe rescind her ‘lack of going concern’ determination for us in OUSD. And along with that, we need her to rescind her decision to impose FCMAT over us. We also need Tony Thurmond to grant our appeal. We cannot let any of our elected officials off the hook.”

Superintendent Kyla Johnson-Trammell, going into her fifth year as superintendent, made it clear Wednesday night and in previous meetings that district leaders will have to make difficult decisions about where to invest the most resources, and where to cut back. She also acknowledged that the quick turnaround between now and the end of January means there can’t be as much engagement with the community over the budget cuts.

“I do appreciate the emotional and heartfelt dilemma, because anytime we have to make a reduction, no matter where it is, it is going to impact schools,” she said.

District leaders and the board emphasized Wednesday that one area they will not compromise on is raises across OUSD, including for teachers, office staff, custodians, cafeteria workers, paraeducators, and more.

“We know we have no choice but to improve compensation. It’s extremely expensive to live in the Bay Area, so we need to compensate everyone,” Johnson-Trammell said. “It is going to take a considerable amount of ongoing resources to do that.”

School consolidations have been put forward by two board members as a possible source of savings. Two months ago, the school board voted not to continue with a third round of closures that had been postponed since spring 2020, instead choosing to make cuts to maintenance and school-site budgets and eliminating job vacancies. But on Wednesday evening, District 6 Director Shanthi Gonzales and District 4 Director Gary Yee introduced a resolution directing the superintendent and her staff to present the board with a plan to consolidate schools that would result in $8 million in savings, beginning in the 2022-2023 school year.

“If we can reduce the number of sites we operate, we can better staff our remaining sites. I’m not going to pretend that doesn’t have consequences,” Board President Gonzales said when introducing the proposal. “But I believe it’s a very necessary step. It’s also a step that the county and the state have now been clear that they expect us to take.”

During a board meeting in May, district staff presented the results of the first two rounds of school closures, mergers, and expansions that began in 2019. The analysis showed that the district has seen little cost savings so far, and modest enrollment boosts at the schools that were expanded or merged. Opponents of school consolidation point to those results as evidence that closures leave school communities devastated while reaping few benefits for the school district. District leaders, however, have said that the pandemic impacted those metrics and that it’s too soon to draw conclusions.

Because Gonzales’ and Yee’s resolution was only being introduced on Wednesday, there was no board discussion. The proposal could come back for discussion and a vote in January.