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OUSD’s bumpy road to fiscal solvency hits an unexpected dip

By Katy Murphy
Thursday, May 24th, 2012 at 2:59 pm in Uncategorized.

In March, Superintendent Tony Smith and Deputy Superintendent Vernon Hal announced that the Oakland schools would be structural deficit-free for the first time in at least a decade, a major milestone for a district that’s often defined by its fiscal failings.

Then (and I don’t know exactly when), they discovered it: A coding error in the special education budget. As I understand it, a stream of one-time funds expired, but money kept flowing to the program afterward, from the district’s general fund. It took awhile for OUSD’s financial services team to catch on, apparently, because someone from special ed had erroneously indicated that the source of those continued funds was state revenue growth — which didn’t exist — rather than the OUSD general fund.

The upshot: OUSD is discovering, in late May, that it has $8 million less than it thought. The coding error was about $5.7 million. Add to that $2.2 million in increased transportation costs projected since the last interim financial report and a few smaller ticket items.

You can find the news story about it here. I should note that I still probably have a lot of the same questions you do.

This doesn’t look to be a short-term emergency, as it stands right now — at least, in the practical, paying-the-bills sense. As long as the district keeps receiving formerly special-purpose funds, like adult education money, to fill the holes in its general fund, it will still have a surplus. What it does mean, however, is more cuts down the line.

The board’s — and Hal’s — reactions to this are interesting to watch. (Smith wasn’t at the meeting; Jody London said he was out of town on district business.) You can catch it here. If that link doesn’t work, go here and click on the video tab next to item #12-1346.

A piece of irony I noted in the story: The district had cut an accounting position from the special education department (and maybe others), leaving it to one person to manage a $75 million budget. Financial services is recommending one of those positions — even an accounting clerk — be reinstated, saying it’s too much for one person to handle.

Third Interim Financial Report – Fiscal Year 2011-2012

 

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  • Oakland Teacher

    Just wondering how many/whose heads will roll over this?

  • makeitgoaway

    I will answer that. No one’s head will roll, as their is no accountability. they’re already blaming everyone but the CFO. At least at JP Morgan somebody had to resign.

  • Observer

    Is anyone even remotely surprised?

  • it’s all about the kids

    I work in OUSD as an administrator and I can confidently say that the budget department is poorly managed. I have had negative experiences with this department around communication issues, errors, and follow up. And when I complained about communication issues, I was lightly reprimanded by my supervisor. She appeared to be good friends with the head of the department and this was unprofessional not to mention uncomfortable.

    I do think our school district needs caring schools. But can someone please tell me what is going on with management in OUSD? Nepotism is on the rise, and communication and transparency are on the decline.

  • J.R.

    Surprise, surprise!!!!

  • Jim Mordecai

    It’s All About The Kids:

    I thought it was important to note that when Assistant Superintendent Hal was speaking about the budget error that took place in the Special Education Department, he mentioned that he had requested leadership from the Department to be in attendance to explain to the Board the context of the error but he noted that no one from the Special Education Department was in attendance. It was plain he wasn’t happy on having to face the Board’s questions all by himself.

    Can’t wait for the next Board meeting to see if Special Education department management is able to face the Board and public and testify about this multi-million dollar budgeting error.

    It was also interesting that Tony Smith was not in town to face the budget questions. He of course is not on vacation because his vacation days he doesn’t take will under his contract with the Board be paid as salary, I believe.

    Jim Mordecai

  • Mr. Fantastic

    I do believe that the Director Ms. Casanares has been canned. I wonder if this is why though? She was certainly part of the problem. Lack of oversight, rudeness, egotistical, nepotistic…that’s her! Ddecent Principal, failed NExo, failed SPED director…the saga continues.

  • Catherine

    I am incredibly disappointed and embarrassed for our school district, again.

    The lack of fiscal responsibility and the deficit is the only thing that will legally allow for the state to come back in – and here we go again.

    If they come back in, the deficit will be far, far greater than it is now – and we will have no one else to blame but ourselves.

  • Jesse James

    Isn’t this what happened last time? Way to go Tony! We lost local control because of inept “financial expertise.” unbelievable! I hope this gets resolved by getting rid of many of the ineffective and disorganized downtown curriculum leaders, principals on special assignment, the idea of having TWO assigned principals at Grass Valley and Burckhalter, having Task Force Offices and officers actually do something at the site level or be closed.

    Isn’t it ironic that this comes out just as OEA and OUSD to negotiate a long overdue contract?

  • Jesse James

    Last time the Program for Exceptional Children was fired and lamed for the budget issues. Sharon Casaneres, with whom I have worked for 18 years, is a come up from the ranks leader. She is tough and exacting, precisely what was needed at a time of rebuilding.

    The PEC department was decimated when it was blamed for the budget issues of Chaconas. However, who approved the budgets? District, county and state officials! Don’t blame it on educators, blame it on lack of fiscal integrity. I am sick of PEC getting nothing but blame.

    If it is true that Sharon Casanares has left OUSD, that is a loss by all accounts. Any district will be fortunate to have her leadership and knowledge.

  • Katy Murphy

    Sharon Casanares is retiring, according to Troy Flint, OUSD’s spokesman.

  • Jesse James

    The PEC takes another hit to its program. :(

  • OUSD principal

    I am deeply frustrated and disappointed. As an OUSD principal, I treat every dollar in my budget as if it were gold. I check multiple vendors for the best quote. I buy used items. I ask for discounts. I try to stretch every dollar. I assumed everyone in the district was doing the same. The consequences for fiscal mismanagement on this scale hurts everyone, not simply one department. I hope we learn what really went wrong. We can not blame only one person for incompetence. There are multiple checks as money is spent. (At least this is true for school site budgets.) There must have been systemic failures in several places along the way. I hope there is some transparent accountability surrounding what happened. The students, families, and other OUSD employees deserve to understand what happened and how this will affect services next year. More importantly, we need to fix the problem so it does happen again.

  • Peach

    Does this remind you of the Morgan Stanley Chase ongoing episode? The people at the top “find” the error after ignoring it for months. Then they blame it on a technical calculating error. It’s also announced that the people responsible are managers who are not part of the old _____’s club, and they are on their way out.

    Just before the Chaconas administration’s financial debacle, with BAYCES leadership as its consultants, it was decided to gut the Budget Office and to eliminate the post of internal auditor to save money. Deja vu.

    This might be a fixable problem or, for political reasons, it can balloon into another manufactured crisis that distracts from the core education mandate.

  • LK

    I have been underwhelmed by Tony Smith’s leadership at ousd. Cronyism, privatization, incompetence, bad faith moves with teachers…what is the board waiting for? It’s time to show him the door. On the other hand, I’m sure there is a way to blame veteran teachers, seniority, and unionism for this latest mess.

  • http://www.tigerthegecko.blogspot.com maestra

    isn’t this what happened last time? 10 years ago or so?

  • Do the Math

    Close five schools to save 2 million.
    Trim an accounting clerk and lose 8 million
    Special Ed chief won’t face board’s questions…priceless

  • Special Education Parent

    As a parent who sees the under-resourcing of Special Education programs and supports on the ground on a daily level, I am saddened by the perception that this staff error is already triggering. The lack of expertise and capacity in the classrooms that support many children with Special Needs are deeply damaging their development and creating greater costs along the line of their academic lives. I have observed that many Special Ed programs and classrooms are staffed with low-cost interns, ill-prepared aides or worse, and physical spaces equipped with less in materials and supplies than the typical General Education classroom. Behavioral and mental health supports are largely non-existent or minimal. Therapists and specialists have huge caseloads. Special Education is dismally under-resourced for most children with the exception of those whose parents have the resources and capacity to gain greater supports or non-public options.

    What’s saddest in watching the video of this meeting is to hear Vernon Hal continue to speak about “encroachment” as if Special Education is separate from the system that he is charged with supporting. He constantly speaks of “they”, dismissing his role as a support for all departments, PEC included. The suggestions that were made—quarterly budgeting meetings of the PEC financial manager with the rest of OUSD’s financial staff, regular meetings with other managers, etc.–should have been happening a long time. That they are a “new” suggestion speaks to the isolation of PEC from the rest of OUSD. PEC is a “department” not a separate mini-district that you throw rocks at when money comes up missing or when money in the entire district gets especially tight. Collaborate; don’t segregate then pass on the blame. Vernon Hal; you are responsible for attending to the entire system. That includes PEC. Help to staff it appropriately and provide it with the leadership that you provide to the rest of OUSD.

    If this error accomplishes that kind of meaningful integration, then it happened for the better. If it impacts the already weak supports provided to children, the whole district will be weaker as a result.

  • Jim Mordecai

    Special Education Parent:

    If no speaks up in the fashion you are rightly doing, then the already weak support for PEC will become much weaker.

    It is just not right to think of special education as special in the sense of not one of us. It is even worse to see the other as an economic liability, a threat to the general population of students.

    This District saw the Adult Education program as the other and reduced their program from $11 million to $1 million. Other districts reduced their programs across the board and didn’t let one program take the brunt of the economic cuts..

    Will all the District’s departments equally share in backfilling the error? Will the Superintendent that brought an end to the District’s structural deficit, Superintendent that took District money to pay a consultant for the single sex 100 Black Men Charter School to get started, Superintendent that is supporting a budget with half-a-million for extending the school year for teachers without students, in three high schools, put aside ego investment in his program initiatives cut any of his signature programs to close the hole in the budget? Will the 12-13 year allocation of $12 million to sites he has promised continue?
    $10 million is received by the District from former Adult Education funding the School Board cut. Meanwhile the state for the time being continues to send the District adult education funding that the School Board flexes and spends on funding school sites. $10 million of the $12 million it promises school sites can be thought of coming out of the State revenue that was originally for an Adult Education program that has been cut down to $1 million in funding. And, although there is no longer an Adult Education program the State continues to forwards $11 million flexed dollars that can be spent on any priority the Board decides. And, the District could decide to use $8 million of the $12 million to close the Special Education budget gap.

    I fear for the PEC department in the current circumstance. I read Los Angeles is an example of a Special Education program that is under court review because they reportedly short-changed their special education program and didn’t follow the law in providing the services required for identified children. Los Angeles had brought in a consultant that made changes that short-changed students and lead to a court date. Meanwhile, children didn’t get the services they needed when they needed them.

    Without a very strong parent voice the PEC department will be reduced and the Los Angles story repeated.

    Jim Mordecai

  • livegreen

    I am curious about how the accusations lot cronyism and nepotism apply to these errors? Ate they related and if so, how? Or are they separate problems that apply to the same department? Or are they vindictive name calling? (Something Oakland politics excels in).

    Some details and substantiation would be refreshing and welcome.

  • Jesse James

    Could you clarify which accusations you’re talking about?

  • Cranky Teacher

    You could employ 145 4th-year teachers (including benefits) for $8 million.

    That would staff 15 small elementary schools or 2 big high schools.

    Just saying: That’s a lot of money.

  • Mr. Fantastic

    Cronyism and nepotism run rampant in major departments including the Superintendent’s office (see the hiring of old friends from S.F. and N.Y.); I hate to say it, but I think it’s just time for new leadership in Oakland. The corrupt police force (see officer involved shootings and racism flap over the past two years). Black Male Achievement office is not the problem, but the program ideals are not equitable either (see unrealistic goals for 2014 for a single target group, and the fact that it’s the only district employee designed charter school). Nice to see minorities in power, but the head of this dragon is wildly out of control. The board has little to no spine (excpet Spearman, who I at least respect although her style is all worng). The Sup’e needs to go before he hires another racist HR manager or another inept leader to run SPED, but it’s not likely…

  • Task Forces Rule!

    @Livegreen

    How can cronyism not be a part of this $8 million error? Cronyism–because it puts political connections over merit–is a cancer on organizations. Cronyism disables the exchange of authentic feedback in an organization, which is essential to its success. Cronyism hinders healthy communication and engenders a hostile work environment.

    OUSD has brilliant teachers and administrators working for it. The district also has employees who are not good at their jobs but who are connected to the right people. Sshh, don’t openly criticize management or your colleagues for incompetence – they might be connected. Fear! $8 million mistakes!

    @LK – unionism and cronyism are similar. Both are narrow interests that benefit a few at the cost of many.

  • J.R.

    Task Forces,
    Good point about unionism and cronyism. Just to amplify the point, unionism(and facets thereof,forced dues,seniority etc) are written into law and protected as sacrosanct. As the saying goes, ” a million here, and a million there and pretty soon you’re talkin’ about real money”.

    http://www.educationnews.org/commentaries/opinions_on_education/54478.html?print

    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/04/09/BUDF1O0U4E.DTL

    http://sacramento.cbslocal.com/2012/04/10/california-teacher-pension-shortfall-rises-to-65-billion/

    http://calpensions.com/2012/04/23/calstrs-on-the-road-to-ruin-or-recovery/

    California is in trouble, and Jerry knows it, he just wants to delay the inevitable(for a short while).

  • Gordon Danning

    Just to clarify, none of the money at issue was “lost,” because the District never had the money in the first place. It is just like when you accidentally enter a debit in your checkbook as a credit; when you discover the error and correct it, you haven’t “lost” the money.

    And, frankly, most of this is trivia. Let’s suppose that the District had been correct, and it truly was “structural deficit-free for the first time in at least a decade.” WHO CARES? How would that have affected the education of a single student? I would think that we have bigger fish to fry.

  • Jim Mordecai

    Gordon:

    The State take-over was $30-$40 million and not $8 million. However, there is rightly a concern of history repeating. That indeed would be a bigger fish to fry.

    Jim Mordecai