January 2017
Bailed-out Oakland schools are back in financial trouble
Well before the state had to bail out the Oakland Unified School District in 2003, fiscal experts warned school officials that their overspending was going to land them in big trouble. That didn’t stop the district from running up a $37 million deficit, resulting in a state takeover and record bailout that Oakland Unified is still repaying.
Nearly 14 years later, district officials are once again spending more than they have and acknowledge that urgent action is needed to stave off another fiscal crisis.
As he heads out the door for his new job at the head of the Washington, D.C., schools, Superintendent Antwan Wilson is expected to lay out a dire financial forecast this month showing Oakland’s school spending exceeding its revenue by $30 million next year.
Wilson insists that the situation is different from last decade, when California loaned the district $100 million and removed local control for six years. Back then, the school board was blindsided by an accounting error that hid the true size of Oakland’s deficit, Wilson said in an interview.
This time, there’s a clear picture of a bloated spending plan that well exceeds anticipated incoming cash.
“This is all in front of us,” Wilson said. “This is all preventable.”
Since the state takeover, district accounting systems have been tightened and oversight from the Alameda County Office of Education is more thorough. And a trustee appointed by the California Department of Education continues to monitor district finances — oversight required until the $100 million bailout loan is paid off, which should be in 2026.
Still, there are striking similarities between the current situation and what was happening in the early 2000s.
Back then, the district was eating into its reserve fund to cover special education programs and cafeteria costs, outside auditors found. A large raise for teachers was requiring creative accounting, and declining enrollment was a big worry.
Now: The district has eaten into its reserve fund, in part to cover special education and cafeteria cost overruns. The school board has agreed to a 14 percent raise for teachers over three years, although it’s contingent on increases in state funding.
And enrollment declined this year to 36,668 students — 850 fewer than Wilson expected. That will soon cost the district about $10 million annually in state funding, a total that will worsen if enrollment drops further.
Even without the enrollment hit, the district is operating with a $500,000 structural deficit, meaning it’s spending that much more than it’s taking in.
As in the early 2000s, the superintendent and school board have pushed policies and programs to improve schools while boosting worker pay — good intentions lacking sufficient funds.
http://www.sfchronicle.com/bayarea/article/Bailed-out-Oakland-schools-are-back-in-financial-10830011.php
