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Mission accomplished? OUSD’s structural deficit, closure savings and other budget questions

This spring, Oakland Superintendent Tony Smith heralded the elimination of a $40 million structural deficit that he had inherited when he came to OUSD in 2009. Soon thereafter, his financial services team discovered a multimillion-dollar shortfall, which was followed by major reductions in the proposed special education budget for 2012-13 and other adjustments.

Then, last Friday, the administration made the deficit-eradication claim once again. A public statement about the Lakeview Elementary School sit-in, which is now in its second week, said that the closure of Lakeview and other elementary schools had allowed the district to “eliminate a $40 million structural deficit…”

If you look at Slide #23 in the budget presentation (second-to-last link), and your eyes automatically run to the highlighted green line, that sure looks to be the case: You see a $665,071 surplus. But scan a bit further down and you’ll find a different number — a structural deficit of $10.28 million.

The non-highlighted bottom line takes into account the use of adult education funds and other special-purpose grants that the district has leaned on to backfill its k-12 spending cuts. That’s how OUSD used to calculate its structural deficit: a breakdown of its true ongoing costs and revenues. (Those funds are sometimes referred to as “Tier 3.” In 2009, the state Legislature allowed districts to use them for other programs — at least, temporarily.)

Using that second number, the district’s structural deficit is now about $1.8 million smaller than it was projected to be a year ago (see Slide 31), before the school closures, using a similar calculation: $12.09 million.

Either way, the district’s bottom line is improving. And it’s worth noting that central office does plan to give schools 5 percent more in per-student funding for next year. Still, if OUSD wants to use a deficit calculation method that makes its budget look more balanced than the old one did (and if it appears that school districts will forever have adult education money and other funding sources to spend however it wishes), then it should probably scrap the $40 million figure along with the old formula. Otherwise — as far as I can tell — it’s not a true comparison.

Other points I’m trying to pin down:

SCHOOL CLOSURE SAVINGS: Some news reporters received an email from OUSD’s communications department last week, telling us that Superintendent Tony Smith objected to our use of the $2 million ongoing savings estimate that he had used to make the case for school closures. We were told that the $2 million estimate merely reflected “an estimate for savings on facilities costs, which are just one part of the overall picture” — and that, as the presentation clearly showed (Slide #20 of Wednesday’s draft), “close to $6 million in savings will be realized from the closure of five Oakland elementary schools.”

Curious about this $6 million number, I went to Slide #20. That line, as labeled ["eliminate budgets for the closed schools (5 elementary)"], appears to represent the sum of the five elementary schools’ general-purpose budgets. If that is the case — I’ve asked the district spokesman to clarify; he’s checking on it — then that $5.76 million figure wouldn’t represent a net savings, as some of the costs will follow the students to their new schools.

LAZEAR’S CHARTER CONVERSION: I also can’t find in the budget a mention of Lazear Elementary School’s charter conversion, which the county board of education approved this month on appeal. I keep asking about it, as it was projected to be a major financial hit to OUSD. Lazear is one of the five elementary schools the district voted in October to close, but it will remain open next year after all, as a charter school.

As I reported two months ago after the Lazear hearing:

According to a fiscal analysis by district staff, approving the charter would cost OUSD $1.4 million, as the savings from the closure had already been factored into the 2012-13 budget. Superintendent Tony Smith said the conversion would wipe out the additional 5 percent per-student funding allocation that he said would be given to remaining OUSD schools as a result of those savings.

The budget presentation includes the conversions — and subsequent enrollment losses — of ASCEND and Learning Without Limits, but it doesn’t seem to reflect the Lazear development. Does anyone else see it?

I should note that these are simply questions that came up as I was analyzing the budget; perfectly reasonable clarifications and answers may follow, which I will duly report.
2012-13 Oakland school district budget

Katy Murphy

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

  • Catherine

    Katy: I believe that you may be wrong about the $2 million savings as well. I have gone through the slides and the numbers as well. I believe the funds saved by closing the schools – after the charter school conversions, the necessary repairs to the Lakeview School building to offices with reconstruction costs for parking and handicap access is about -$1.2 million, maximum.

    I have reviewed the numbers again and again. I have spoken to some people at the district office who have approved out of district transfers and I have looked at the plans and costs from the division of the state architect’s office and to my mind’s eye my $1.2 million savings is on the generous side.

  • Katy Murphy

    Interesting. I should note that in my reporting, I’ve framed the savings as a projection made by the superintendent — not the result of my own analysis.

    On the subject of the deficit calculation and how to categorize special-purpose funds used for other purposes (also known as Tier III), such as adult education, OUSD Spokesman Troy Flint had this explanation:

    “Initially, Tier III monies were considered strictly as flex because the privilege to use the funds in that way was new and described as a three-year program, but Sacramento keeps extending it and the Governor’s actions and rhetoric have indicated he’s looking to reduce the mandated use of categorical funds and increase flexibility, so given all that, it made sense to consider those flexible.”

  • EffectsofReform

    Katy,
    Thank you for keeping up with this. I believe that the District will keep moving the goal posts in order to justify their behavior. Let’s see if these savings ever materialize. And while we do that, let’s remember that there’s been a tremendous cost to the communities that have had their neighborhood schools historically underfunded and under-resourced, then stigmatized as “failing,” and ultimately, closed. Smith’s focus on “choice” will usher in more and more charters (esp. with recent legislation-AB1476), and his financial goals will be forever unattainable.

  • OUSD Parent

    Why don’t I trust these numbers?

  • J.R.

    OUSD,
    You can’t trust the numbers because there is an agenda and a purpose behind them. As Carol Kwan responded to a reporter whos asked where the money was going in OUSD Carol responded paraphrasing ” this is literally a 400 million dollar organization and I can’t at this moment pinpoint for you specifics”.

    Translation: With a 400 million dollar per year seemingly endless stream of taxpayer money, why are you worried about, and who is going to miss a few million here or there.

    http://www.youtube.com/watch?v=8lHEPOwKA_k

    Maybe if these people weren’t so woefully underpaid, they would do better, isn’t that the way it works?

  • livegreen

    EffectsofReform, What underfunding and under resourcing do you mean? And were low test scores the primary criteria for school closure?

    I do agree: Katy thanks for keeping up with these #’s.

  • EffectsofReform

    The underfunding is at the State level. CA is 35th in the nation in terms of per-pupil spending. And if you look @ urban school districts and the high rate of poverty concentrated in those areas, you can see that our schools are not fairly resourced: http://schoolfinance101.wordpress.com/2012/06/02/americas-most-screwed-city-schools-where-are-the-least-fairly-funded-city-districts/

    You’re right I need to clarify my use of the term “failing”–I wasn’t actually talking about scores. The API score isn’t necessarily cited as a reason for closure, although I think that looking at the correlation between API scores and school closures might be worthwhile. If these schools were underenrolled (failing, not “schools of choice”), why was that so? This is where I think it is important to examine the District’s emphasis on “choice” and how that aligns with test scores. When you talk about “choice” as a right and an ultimate goal, you ignore the limited choices faced by students and families who have less resources. More resources, more choices. What will happen to families with fewer choices? What if “choice” means fewer of these families might be served? Is that what we want? How will these closures affect kids who may be navigating their own way through the system, or families who don’t have the resources to get across town to a different school? What does it mean to spend more time in transit, away from your neighborhood? School closures affect kids, and they will also diminish public space and resources in neighborhoods that need more, not less of these things.

    I don’t think that the finances will ever work out. There just aren’t enough schools to close in order to keep up with the State level cuts and underfunding. And for every school you close, communities get the message: here today, gone tomorrow. Maybe your school will stay open, maybe you’ll become a charter, maybe some new scheme with new consultants will find its way to OUSD. It’s a culture of instability unless you can get a toehold in one of those “schools of choice.” What’s happening in the name of eliminating the structural deficit–well, it’s just awful. It’s had a cost that’s not reflected in these “bottom lines.” But at least Katy can help us keep up with any inconsistencies at the “bottom line” level.

  • Nontcair

    We need to close schools in order to afford the six-figure salaries of all the OUSD bureaucrats who contributed to the crafting of this SlIDE SHOW.

  • Nontcair

    Give me a break!

    Who’s to say that, at #35 in the nation, California schools are “underfunded”?

    Couldn’t one also say that the public schools in 34 other states are OVERFUNDED?

    And that “per-pupil” figure is an intentionally low-balled, political statistic designed to put pressure on legislators to set funding at even HIGHER levels, ie to RAISE TAXES.

    When you consider the very real costs of construction, debt service, PERS, the salaries/benefits of the huge number of government bureaucrats whose 1/2 job is basically to collect taxes to fund the schools), and so forth, the per-pupil number is probably 2-3X the published figure.

    Of course we know that even if we could declare public education to be the new Manhatten Project and tripled per-pupil spending, > 90% of that extra money would just be chewed up by the public education bureaucracy.

  • J.R.

    Effects wrote,

    “let’s remember that there’s been a tremendous cost to the communities that have had their neighborhood schools historically underfunded and under-resourced, then stigmatized as “failing,” and ultimately, closed”.

    Underfunded? Have you looked at the numbers?

    In the year 2000 OUSD had 55,000 students and a 400 million dollar budget(that’s a 50% larger budget than comparable size districts in N.California). By 2010 the student population had dropped to 38,000 and a 280 million dollar budget. Underfunded, no! mis-allocation of funds Oh yes!!! Many California districts are underfunded but OUSD is not one of them.

    http://sunshinereview.org/index.php/Oakland_Unified_School_District,_California

    http://www.ibabuzz.com/onassignment/2011/09/07/a-closer-look-at-spending-and-test-scores-in-east-bay-schools/#comments

  • J.R.

    Non,
    Yes the public pension debt burden is massive, and you will see proof when multiple tax increases(already happening hidden or not) are levied on the productive people in this state(the tax measure in November would just begin paying for the massive debt, just as the redevelopment money has been used(Jerry said schools would get some of that money, and he lied). There is just not enough money to pay for these pensions.

    http://blogs.sacbee.com/the_state_worker/2012/06/californias-pension-gap-widened-in-2010-research-center-says.html

    http://www.contracostatimes.com/news/ci_20874772/daniel-borenstein-contra-costa-pension-overpayments-statewide-problem?source=rss

    http://www.insidebayarea.com/news/ci_20550031/daniel-borenstein-latest-oakland-pension-plan-continues-fiscal

    http://www.calwatchdog.com/tag/daniel-borenstein/

    http://www.calwatchdog.com/2011/12/01/forced-to-resign-first-5-director-gets-bonus/

    http://reason.com/blog/2012/04/16/nothing-left-to-cut-california-spends-20

    http://www.baycitizen.org/policing/story/developmental-center-police-officers/

  • Gordon Danning

    I find these discussions of school funding extremely frustrating. One side always argues that more money is needed, and the other other side argues that money is “wasted” on “bureaucrats” and “consultants.” Both sides ignore a very real problem, to wit:

    I served several years on the Oakland HS School Site Council, which is statutorily empowered to make decisions on how to spend supplemental state and federal money. In many years, the amount at issue exceeded $1,000,000.00. We certainly did our best, but really, how well equipped were we to determine whether X dollars were better spent on reducing class sizes, hiring anti-gang social service groups, or purchasing laptop computers? Even if we decided on the anti-gang group, how could we tell whether that group would be effective? How could we assess last year’s spending to determine which expenditures should be continued this year and which should be discontinued?

    The answer is, we didn’t know. We certainly never looked at research that attempted to assess the efficacy of various expenditures. Thus, I guarantee you that much of that spending was wasted, at least in the sense that it could have been spend more efficaciously.

  • Catherine

    Gordon: I think the a school site council is suppose to pull in community members that have expertise – several are teachers or school personnel, the principal, parents and community members. In my son’s school we had a parent who worked with government data and compared outcomes (this is how I learned that the best birth control is a college educated young person) and we had an accountant from a non-profit. Both gave valuable input. Often the teachers and the principal overrode the data and input to vote for their favorites but parents always wanted to “let the record reflect that the vote held was in direct opposition to the research presented available through —- (source was then listed). This made school personnel and some parents angry, but it was the truth.

    I wonder if community members with specific expertise joined the over site committees in larger numbers if the outcome would be different.

  • J.R.

    Catherine,
    I have witnessed the battle of expertise as well. There are “real world experts” who perform relevant tasks on a daily basis. We also must acknowledge that there are self professed alphabet degree “never in the real world”, “experts” who feel slighted and offended that their input is not summarily enacted “post haste”. A little scary when you consider that a parent who is an MBA accountant gets over-ruled by a district honcho who has a doctorate in English, anthropology or art and design.

  • livegreen

    Catherine, Since you’ve sited your stats about college education assisting with birth control 2x now, it’s worth pointing out that high school and some college/2year college students also had significantly less kids than HS dropouts.

    And a much more realistic goal for OUSD (while still encouraging those who can to go to college).

    Even if OUSD has your ultimate goal, it seems a valid interm goal to focus first on getting as many kids as possible through HS and 2 yr college…

  • Nontcair

    The government’s reliance on “experts” is another disasterous legacy from the wacky Progressive Era.

    Buckley’s famous comment about placing more trust in first few hundred names in the Boston phone book comes to mind.

  • Nontcair

    All in all, I *favor* public school closures. Little (if any) money will be saved but at least it’s a small step in the right direction.

    The decision also sheds much needed light on OUSD’s illegal school assignment policy, even if KM’s blog mistakenly focuses on the human non-tragedy of Crocker Highlands kids getting crowded out.

    What’s with this fascination with the birth rate?

    I’ve heard some pretty silly justifications for a college education but helping to promote a China-like, “one-child” policy certainly takes the cake.

  • Gordon Danning

    Catherine:

    Community members as such cannot be members of an SSC unless they are also parents or staff: “The SSC shall be composed of the principal; representatives of teachers selected by teachers at the school; other school personnel selected by peers at the school; parents of pupils attending the school selected by such parents; and, in secondary schools, pupils selected by pupils attending the school.” http://pubs.cde.ca.gov/tcsii/ch9/sscldrshp.aspx

    But, the District could certainly enlist local persons with expertise to advise SSCs regarding the state of the research, if any there be, on proposed interventions.

  • Oaklandotter

    At elementary schools, the SSC must be constituted to ensure parity between (a) the principal, classroom teachers, and other school personnel, and (b) parents of students attending the school or other community members. Classroom teachers must comprise a majority of persons represented under section (a). At secondary schools, there must be, in addition, equal numbers of parents or other community members selected by parents, and students. Members must be selected by their peer group. California Department of Education Sept 2010 Guide for the Single Plan for Student Achievement.

    As a parent, I joined my schools SSC in part because I believe my background in Public Administration would be most useful in that setting. Our SSC has welcomed participation from individuals with a broad range of life and work experiences. community members who have attended meetings along with parents. They would be considered for election (by peer group of parents and community members) if they step forward and asked to be considered.

  • Oaklandotter

    EffectsofReform asked, “If these schools were underenrolled (failing, not “schools of choice”), why was that so?”

    I think this is a great question and one that I have been pondering recently.

    7 years ago when I was first evaluating which school to send my children to I lived in Adams Point and Lakeview was our local school. While I listed Lakeview on my list of 7 possible schools it was not my first choice. So I became one of the many parents who optioned into a different school site, (Someone recently told me about half of parents choose school outside their neighborhood, but I have not verified this stat)

    Part of my decision was based on the fact that I was living in an apartment and expected to move neighborhoods. Lakeview’s close proximity to highly successful schools also worked into my equation. I could consider other school in part because Adams Point is near major public transportation routes making it easier for me to get to other school sites.

    Not all neighborhoods have strong multigenerational ties and home ownership. I would be interested in looking further into the community profiles of the site that were closed. Are we closing schools in neighborhoods with high turnover, lower home ownership and more apartment living? How can strong school partner to build strong neighboring schools? A school is not bad because it is next to a great school, nor is a school good because parents living nearby don’t have easy transportation to credible alternatives.

    As a parent at a overenrolled school I watch students dollars shift mid-year to cover gaps in funding at under-enrolled schools.

    I understand the hard choices around school closers the district is making. I also have sympathies for the families, including my former neighbors whose schools are closing.

  • Catherine

    Gordon: I understand what the state of California says about school site councils. Oakland Unified has made up their own rules. Please see OUSD document.

    http://www.urbanstrategies.org/programs/schools/documents/MicrosoftWord-WhatisaSchoolSiteCouncil_51908ej_001.pdf

  • Steven Weinberg

    I looked at the link Gordon cited for composition of the SSCs, and while he was correct in what he quoted, farther down on the page it mentions community members being selected by the parents. The two sections did not seem consistent to me.