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Keeping a close watch on the cash flow

Two words came up at tonight’s school board meeting that might sound uncomfortably familiar to those of you who watched OUSD’s financial house implode in 2002 and 2003: Cash flow.

As I listened to the discussion (and the tone of everyone’s voice), it became clear to me that school officials don’t just have to figure out a way to balance the budget in the face of multimillion-dollar cuts. They need to plan, right now, for the possibility that the state — if unable to resolve its mounting fiscal problems — does not make payments to school districts at some point in the coming months.

“We do need to take a very careful look at the cash flow,” interim superintendent Roberta Mayor said. “If the district runs out of cash, that’s a major, major problem.”

With monthly payouts averaging $38 million, however, it’s not like OUSD can survive on its squirreled-away savings for long.

For now, Mayor said, OUSD is putting a freeze on out-of-state travel; holding onto some of its special-purpose money with the hope that the state will allow districts to spend it however they want; and encouraging all employees to take a vacation during winter break, among other energy-saving measures.

Then there is the question of cuts — potentially $12 million next semester, and more for the next school year. Vernon Hal, Oakland’s new CFO, said he planned to break down the budget by department and type of planned expenditure so everyone can see exactly how money is being spent.

Seems pretty basic, doesn’t it? But when I talked to school board president David Kakishiba this week, he said board members don’t even know how much each department spends, and on what.

OK, you’ve reached the end of my ominous dispatch. I hope to come back with some better news in the near future.

Katy Murphy

Education reporter for the Oakland Tribune. Contact me at kmurphy@bayareanewsgroup.com.

  • Jim Mordecai

    If Jack O’Connell follows FCMAT recommendation and turns the remaining two management areas over to the Board, there will still be State control because the State take-over law requires a trustee that can veto any action of the Board regarding expenditure of money until Jack O’Connell dismisses the State Trustee. And, there is little chance the State Trustee will be dismissed prior to paying off the debt owed the State.

    Alexander Hamilton said something to the effect that who controls the purse strings controls the government. Maintaining state veto control of the budget is controlling the District’s purse strings and a not insignificant thing that should be ignored. A Tribune headline said something about the State’s leash on the Board is being released and local control is returning. But, a more accurate view might be that the choke collar has been replaced by a leash held by the State trustee.

    In reference to cash flow will the job of State Trustee pay more or less than the job of State Administrator? If the Trustee worked with more than one district emerging from State control perhaps Oakland could split the cost of its Trustee and reduce the cost of State control that is paid out of ADA of Oakland’s children.

    In order for the State to make its cash flow it can fall back on issuing I.O.U.s or State script. If Oakland has the same capacity it can issue script to its new Superintendent but not to its new Trustee because the State takes payment for its Trustee before State issued ADA revenue is sent to OUSD.

    Also, in reference to cash flow the search agencies for a new and permanent Oakland Superintendent are estimated to cost $40,000.

    Right now Oakland School children’s ADA is paying for a Board Interim Superintendent and State Administrator.

    The future is paying for both an Oakland Superintendent and State trustee.

    Yet, no matter if Jack O’Connell restores full power of management of the District to the Oakland School Board such a change means the charges against ADA likely remains the same although the responsibilities of a State Administrator and a State Trustee seem less.

    Jim Mordecai

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