Part of the Bay Area News Group

A cautionary tale: San Diego, on brink of insolvency, looks at Oakland school takeover

By Katy Murphy
Tuesday, October 18th, 2011 at 11:42 am in budget, local control.

Former OUSD State Administrator Randolph Ward in 2006

Keegan Kyle, a reporter at Voice of San Diego, offers his readers a look at what’s happened in Oakland’s public schools since the 2003 state takeover. It’s interesting to note that Randy Ward, OUSD’s first state-appointed administrator (pictured above, in 2006), is the superintendent of the San Diego County Office of Education, which oversees the finances of local districts.

What would you add to this history of OUSD’s state takeover?

P.S. I posted the story on my Facebook page last night, so you’re welcome to comment there, too. I’m trying to get (less anonymous) discussions going there, too, and might start a Facebook group pretty soon.

You can find me at Facebook.com/katyEmurphy. (Don’t forget the middle initial!)

[You can leave a response, or trackback from your own site.]

  • Trish Gorham

    One widely misunderstood aspect of the state takeover, repeated in the article, was that the 24% raise to teachers was a main cause of the deficit.

    That raise was based on a large increase of state funding to all school districts the year that contract was negotiated. The new state moneys covered ALL but 1.5% of the raise.

    And the article did not emphasize enough that the state takeover put us in worse financial shape than we were before.

  • Patricia Jensen

    Thanks, Trish, for reminding us of those facts. There is so much that could be said about the state takeover and the political maneuverings that led to the takeover and continued long afterwards. Supt. Chaconas was supposedly ousted because the budget was not balanced and the Oakland school district was in deficit. Although the state took over our district and its finances, the district continued with an unbalanced budget and deficit for several years. The State Administrator, Randolph Ward, actually increased our district’s debt.

    Q: Why wasn’t the Oakland school district required to have a balanced budget when it was overseen by the state?
    A: Probably because the entire takeover wasn’t really about a balanced budget.

  • Catherine

    I think Trish is correct in that State takeovers are very, very expensive propositions. One of the things that I learned is that if we had made the hard decisions that we are making now about the number of schools serving the number of students in our district then we could have headed off the takeover. The state can only take over a district for financial insolvency.

    One of the things I think would be important to know about school officials at the district level who make financial decisions is how they handle their own personal finances. I have known many school principals who mishandle their personal finances and spend, spend, spend school resources so that at the end of the year there is no money left of end of the year expenses. The lack of planning in personal finance appears in other access to money.

    If you are in a position of authority over money that affects the outcome of others your own ability and means of using personal spending and credit obligations to achieve goals. We also see this in many of our consultants, district managers and area supervisors. I know this is the case in San Diego district as well as my nieces and nephews attend San Diego schools.

  • Jim Mordecai

    The key issue in the Oakland School District State take-over was the capacity of the Oakland District to borrow. The County Superintendent ruled that Oakland could not use Bond money for State construction to meet payroll.

    Randy Ward is the County Superintendent of San Diego County and irronically possibly in a position to create an Oakland style state take-over all over again by limiting the opportunity for San Diego to borrow to make payroll.

    Jim Mordecai

  • livegreen

    Jim, I’m not sure what you’re saying. Are you advocating for the ability of the Superintendent to use Facilities Bond money to meet payroll? Or another bond? Please clarify and be more specific because not all “Bond money” is the same.

  • Jim Mordecai

    Livegreen:

    Because the County Superintendent did not allow the then Superintendent to use borrowing from construction bond money the Board felt there was no choice but to get a loan from the State and agree to be advisory to a State appointed administrator.

    I believe that since the return of the school board to most of its power, it has been practicing using school construction money to make payroll as has many other districts in the state. And, if the County superintendent would halt that practice, I believe the District would be hard pressed to make payroll.

    Districts do not get money from the state when they need it. The state makes payments based on enrollment throughout the year. Recent years the state has delayed payments into the next fiscal year and further necessitated districts borrowing to make payroll and other timely bills.

    Jim Mordecai

  • livegreen

    These are quite some allegations. I sure hope you’re wrong Jim. School construction bond money is meant for just & ONLY that. I think you’re wrong both for this reason and on the principal that the State Auditor installed at OUSD HQ would probably object to it (at least I would hope they would).

    If you’re right, this is a disaster waiting to happen to schools scheduled for construction that haven’t received funding yet. If you’re wrong, then you should be checking your facts before putting them out there.

  • Katy Murphy

    If I’m remembering this correctly, the district has borrowed from (and paid back) the facilities fund as a way to cope with cash flow problems caused mainly by the state’s habit of deferring large payments owed to school districts. The district has not permanently appropriated the funds for non-facilities expenses.

  • Jim Mordecai

    Katy:

    I did not mean that the District borrowed the money permanently from its set aside of Construction bond money. Nor did I mean that the Board prior to the state take-over was trying to use construction bond money and not pay it back with future attendance earnings.

    I did mean that the borrowing was to deal with the cash flow problem districts have when they don’t have sufficient cash to cover payroll but have attendance that would support borrowing until the state pays up.

    This borrowing is necessary even when the state isn’t delaying payment because payroll and other bills are often due before the state makes entitlement payments that are not given as a lump sum at the beginning of the year but delivered in so many payments per year.

    I don’t know how many times a year the state is scheduled to pay a district. I suspect that the delayed payment(s) are usually after the Governors May revise in recent years.

    The state crisis has just compounded a continuing problem that all districts have to face. The two or three percent required reserve may be able to be touched for cash flow payments but I am only guessing in that regard.

    Jim Mordecai

  • Katy Murphy

    Jim: I didn’t think you were suggesting that. I was just clarifying the point to Livegreen.

  • Jim Mordecai

    Katy:

    Thank you for clarifying.

    It would greatly increase the cost to the state; but, if the state by statue, or better yet by constitutional law, was required to deliver payment for the school year in a lump sum at the school year start, the need to borrow would be less and add stability in school district’s finances.

    I am not clear that Federal money could be required delivery in the same fashion.

    Jim Mordecai

  • Jim Mordecai

    Livegreen:

    If you look at the video of the most recent Finance and Human Resources Committee meeting, you will hear the administration explaining how the $60 million borrowed from school construction funding last school year will be repaid this school year.

    According to Budget Department administrator Mr. Coleman the District does temporary borrowing. It has borrowed from construction fund and is currently speaking to the County about borrow temporary funding to have flexibility to make payments across each month. According to Mr. Hal temporary borrowed money is schedule to be repaid with $50 million scheduled in December and $10 million in April. In December property tax collected in November is distributed.

    What I am trying to understand is the reference by Mr. Coleman to property taxes includes Measure G’s approximately $20 million and then is the District borrowing in part against Measure G to repaid school construction money borrowed last year. Enough to make my head swim because decentralized expenditures of Measure G money is being spent at the school sites.

    Borrowing against existing money doesn’t cause interest to be charged. Borrowing from the county, or privately, will. But without internal borrowing we are singing 16 tons and another day older and deeper in debt.

    As for the State auditor, I don’t think borrowing usually comes to the auditor’s attention unless short term borrowing isn’t repaid.

    Jim Mordecai

  • Jake

    Hi Katy,
    Any chance of the Tribune adopting fb, google, or another universal sign-in for comments, the way the San Jose paper does?
    Anyone we can contact to encourage that?

  • livegreen

    No thanks to Facebook. I like the existing system, thank you.
    Thanks for the clarification Jim. I think the word “use” of the bond money was mentioned and that through me off. Because borrow can be different things to different people (short vs. long term) it really helps knowing this is short-term borrowing for temporary cash flow caused by the state.

  • livegreen

    Oh, & also I agree, it shows how a dysfunctional state esp. in regards to finances can cause heap loads of problems for effective governance. The State’s GOT to get ahold of their finances instead of these short-term political compromises that are killing the schools.

    Neither big businesses nor the state unions are doing Schools any favors. I just wish the OEA & other teachers unions would realize the State Unions are ready to sell the entire school system into the Pacific Ocean, while simultaneously making a hypocritical argument that Teachers Unions shouldn’t complain because that would hurt State Employees.

    Wish they cared 1/2 as much about the schools as they do about State Govt. Same with Big Business.

  • Katy Murphy

    We do on news stories. Blogs are different. But that’s why I’m exploring the possibility of creating a FB discussion group.