OUSD’s budget hole

You’ve probably read that the Oakland school district is projecting a $37 million deficit in next year’s roughly $250 million general purpose fund.

What you might not know is that new state funding cuts — those expected to go into place for 2010-11 — only account for $8 million of the school district’s budget problem. Declining enrollment and/or attendance? Another million.

About $26 $28 million of the district’s ongoing expenses have been covered with one-time funds or transferred from one pot to another (such as adult education), CFO Vernon Hal explained.

“We have to get our expenses in line,” Hal said.

Of course, as I noted back in January, the district plans to do some similar maneuvers to balance next year’s budget. About $11 million of the budget hole will be filled, once again, with one-time money.

“Part of it is kicking the can down the street,” Hal said.

Katy Murphy

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

  • Jim Mordecai

    I believe that the “budget whole” can be addressed but it will require the Oakland School Board to stop spending.

    Let me give you some examples from the portion of the School Board’s agenda on Wednesday called the General Consent Report. The Board rejecting three agenda expenditures would save close to $200,000 if the School Board would simply say no.

    Agenda item 1 (10-0619): $41,000 General Purpose contract with Lew Edwards Group to both advise and take a pre-ballot poll regarding the feasibility of a “District Parcel Tax Measure for the November 2010 ballot…” agenda item 10-0619. A coalition of business and labor had already taken a poll regarding the feasibility of Oakland taxpayers passing a District parcel tax and the poll said the measure could pass if all the major education stakeholders were on board and not in opposition. This $41,000 is duplicating the previous study and the Oakland Teachers Union is in opposition to the degree that its representative left the coalition. The union’s opposition is because it stands against using local parcel tax money to fund charter schools that drain resources from the District and the union feels charter schools should go directly to the voters if they want funding rather than tying themselves to the coattails of the public schools they are completing with forever shrinking education dollars.
    Example 1 is the first step toward the District spending over $200,000 for a new parcel tax. Measure N in 2008 cost the District at a minimum $213,000. The Lew Edwards Group $41,000 represents less cost than the $61,000 the Larry Tramutola charged the District in 2008. However, the District had to pay $152,000 out of general funding for Alameda County holding the election. The District lost the election despite Tramutola’s high price election engineering and his mistaken opinion that Measure N would win. Note that the District paid the cost of the election and the pre-ballot polling but that the charter schools did not put up front one dollar.

    However, if Measure N won, Alameda County would have collect $350,000 a year for the next 20 years for collecting the parcel tax from taxpayers of Oakland and writing a check to both the District and to the charter schools that under the Measure N were defined as high scoring. Defeating Measure N saved the taxpayers of Oakland millions that would have in 20 years gone to both charter schools and the treasury of Alameda County. That $350,000 is suppose to be a fee but it shouldn’t cost $350,000 just to collect taxpayers’ money, establish a spreadsheet of property owners on record and write a check to the District for money collected.

    Example 2: $75,000 general purpose funding to pay for contract with The Podesta Group to lobby Congress for funding for climate and school security.

    Example 3: $6,000 for a fisical audit of 2008-2009 Measure E expenditures that the Board agenda incorrectly classified as mandatory requirement of Measure G. The text of Measure G calls for a report by the Superintendent. The audit solely the Board’s initiative to contract a financial audit but the contract still does not take away the Measure G requirement for the Superintendent to file an annual report. And, the District Counsel and I disagree on whether Measure G money can be used to pay for an audit. I argue that when Measure G states parcel tax money will only be used for the purposes stated in the ballot measure and because paying for a financial audit is not a purpose mentioned in the ballot measure Measure G parcel tax money cannot be spent for the audit. The District Counsel claims the prohibition on spending Measure G money on applies to spending on Central Administration not to fees associated with Measure G.

    The Board deciding to spend Measure G money for a purpose not specified in the ballot language is a slippery slope that I believe the Board should not take, but stick to a strict interpretation how the Oakland taxpayer’s money should be spent.

    All three examples add up to $199,000 in District spending that would be a step toward closing the
    District’s spending whole. However, I fear this School Board just can’t say no to expenditures. And, will continue to approve any expenditure placed on its agenda.
    The OEA says that the money is there for a pay raise and its just a matter of priorities. These type examples show the School Board has not changed its priorities.

    Jim Mordecai

  • Arismom

    I like Jim’s go save the money attitude, but his calculations, while a great gesture, are but a drop in the bucket, or should I say pail,to the debt. How will OUSD cop, and from what I understand, next year will be worse!

    Its time to sweat. Perhaps selling off some structures? I dont know, but this is bad!!!

  • Chauncey

    Where can costs be cut? Perhaps in the benefits,consultants, and administrative offices-yet this is still not going to solve the problem of a spend as you will attitude.

    I heard some in oakland even want the state to forgive 89 million still owed! So what do you call that-welfare?

    Think outside the box attitude is required!

  • Chris

    Wow. Time to make a dollar out fifteen cents!

  • TheTruthHurts

    The truth is there are more good causes than there is money. Government can never seem to spend within their means and taxpayers with actual money to spend never seem to want to give governments more to spend. These days, this whole society has been spending beyond its means so why are we surprised.

    Listen, I’m sure there are more good programs and raises that are important. But, it is simply insane to keep asking people to pour in more money when we taxpayers don’t think you can manage what you have. Until the state resolves how it will tax so it can spend, we just rinse and repeat the same cycle.

  • Jim Mordecai

    I am not sure why I kept misspelling hole as whole in my posting about the District’s School Board’s difficulty in saying no to expenditures. But, it will take a whole new attitude toward expenditures coming before the Oakland School Board to start to close the District’s budget hole.

    Jim Mordecai

  • Jim Mordecai

    I agree with The Truthhurts statement that there will be always more good causes than there is money.

    It is along that line of thinking, that no good cause can go unfunded, I am concern with a new cause that is emerging from the Board’s safety subcommittee and it is called “Restorative Justice”.

    The $75,000 that is before the Board on Wednesday night for a contract for the Washington D.C. lobbyist group “The Podesta Group”, agenda item 10-0512 I believe is an effort to fund the idea of “Restorative Justice” with federal grants.

    My take is that the concept of R.J. is that the system leaves many kids behind and that funding is to compensate for having bad break of not having a stable upbringing or making bad decisions.

    My objection is, not that there shouldn’t be such programs, but I object to the lack of discussion of how a school district can sustain paying for programs that appear to be trying to correct society’s wrongs. There are programs that the Federal/State government has but they often require local contribution and funding of personnel. Down the line of winning a grant the local school board is faced with cutting basic programs to retain good programs and personnel.

    My criticism of this School Board is that it continues to spend without rigorous evaluation of each expenditure as to how the spending will make larger or smaller the District’s budget hole.

    Why it is true the Board can act like it is a Board trained entrepreneur and put up money it gets for textbooks and teachers to leverage that money to win grants that bring more money to the District spending on grant writers and D.C. lobbyist.

    This is a wishful thinking approach to closing the District’s budget hole with gambling initiatives and magical thinking that worked to a degree in the past but also failed as the state takeover and current District budget hole demonstrate.

    Jim Mordecai

  • Cranky Teacher

    If there was a time to kick a few of the cans down the road a bit, now might be that time — recession, new superintendent…

    Cut what you can without gutting core services.

    What I see coming is gutting core services to pay back a state that didn’t straighten financial house when it controlled the district for six+ houses.

  • Nancy

    M lot of drops in the bucket will eventally fill it up. OUSD needs to start somewhere. The excuse is that small cuts aren’t going to get the District to the $37 million needed. The act of not making ongoing cuts will continue to double the amount of cuts needed in the future. The District needs to stop sending over 20 staff to conferences, stop hiring unnecessary consultants, get rid of RBB- it takes too much staff to support it, merge small schools and thus reduce staff, reduce administrators and management in central office, stop paying so many employees over $100,000. Other District’s are forced to do this so why not Oakland.

  • pedro

    What districts don’t pay employees over $100,000? The reality is that outside Oakland, MOST administrators get that much, but not here! I agree that small cuts need to be made, but that is not the entire answer… Katy: what are the BIG expenditures that are affecting oakland but not so much other districts?

  • Katy Murphy

    To name one big expense particular to Oakland Unified: a $6 million payment to the state (each year for the foreseeable future) for its $100 million loan. That’s roughly what it would cost to offer a 3.5 percent raise to Oakland teachers, or a 2 percent raise to all OUSD employees.

  • Jim Mordecai


    I agree why shouldn’t Oakland make the same priority cuts as other districts are being forced to make. And, the Oakland School Board needs to immediately stop approving expenditures that don’t make sense during this time of cuts in the basic state funding the District receives.

    During the state take-over the state administrators did make some changes to the District’s budgeting system but its record on putting the District back in financial order was spotty as State administrators were more concerned about putting their experimental concepts of reform into place than making the District’s budgeting systems reliable.

    In fact, the State grew the District’s debt, in part, because its priority was reforms such as RBB. The State Controller audits contained double fines because once reported they often were not addressed. The FIGMAT reports near the end of the State take-over criticized the State for not keeping a focus on returning the District to financial solvency as the priority and laxity in implementing the FIGMAT finance reforms.

    District core services are going to be cut into because the financial crisis is chiefly the State cutting funding to all school districts. But, I believe the degree of cut into core services is related to the degree the Board stops approving contracts that are not a priority or a necessity.

    Although I am sure there is marginally at least an impact in the District having to budget $5 million to pay down the debt every year for 20 years. But, in a budget nearly $500 million the payout is around 1% per year.

    However, as the student population shrinks, and the District’s income becomes less, that $5 million yearly debt service is being paid by fewer and fewer students. Charter schools’ growth contribute to fewer OUSD students and result in less and less ADA revenue paying the $5 million debt service. Over time declining enrollment will cause the same $5 million to become a growing percentage of the OUSD budget. Passage of a parcel tax, with a portion benefiting charter schools, might well increase the percentage of charter schools growing the negative impact that $5 million has as a percentage of the OUSD budget.

    I think it is irresponsible of the Oakland School Board to ignore the long range effect of charter school growth on growing the negative impact of the yearly $5 million debt service.
    The School Board on Wednesday night is most likely to pass on financing a parcel tax feasibility survey. I question the Board passing on expending $41,000 of general funding for the pre-ballot survey. $41,000 should be spent directly on OUSD children’s education. And, I question the wisdom of the School Board passing such an expenditure when a new parcel tax with local funding for charter schools will likely contributing to the negatively to balancing future OUSD budgets.

    Jim Mordecai

  • Nancy


    Hopefully someone will take your advice. You are definately on the right track about consulting costs. I would also look at travel and conference costs and modification of RBB since it creates a need for additional fiscal and HR staff to manage it. During tough times, it needs to be modified. There is also too many school sites and salaries at or near $100,000. There are more administrative and management staff then there needs to be. There is a budget crisis but bandaids have been used to cover the problems instead of fix them.