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Oakland Schools Announce $3 Million Deficit Increase

By J. Douglas Allen-Taylor
Friday August 31, 2007

Oakland Unified School District board members were informed on Wednesday night that a $1.4 million district deficit in the adopted 2007-08 budget—which district officials had said had been whittled down from a projected $4.3 million deficit last June—was now up to $4.7 million in updated figures recently compiled by the district’s interim chief financial officer.  

A district spokesperson said by telephone today that the in-creased deficit figures was a rollover from higher than expected enrollment that has not yet been matched by increased state funds to handle the necessary teaching personnel, causing “financial pressure in the short run.” 

“The increased enrollment is a good thing,” district spokesperson Troy Flint said by telephone. “But the revenues needed to take care of that increase has not yet caught up, and that, of course, is a bad thing.” 

The bad financial news was presented to board members this week by OUSD State Admini-strator Kimberly Statham and interim CFO Leon Glaster for information purposes only. 

Under the terms of the 2003 state takeover of the OUSD, board members have neither responsibility for budget problems nor the ability to cure them. The board only recently won back limited self-control in the areas of community relations and governance. Fiscal control remains in the hands of the state-appointed administrator. 

In her report to the board, Statham said she had instructed Glaster to “establish a plan to correct our ongoing structural deficit” and to present a balanced budget by December of 2007.  

The figures that led to the $1.4 million deficit projected in the adopted June budget were prepared by former OUSD CFO Javetta Robinson, who Statham fired in July. The revised figures were prepared by Glaster, Robinson’s interim replacement. District spokesperson Flint said the revised figures were based upon Glaster’s “more conservative projections. We are trying to be exceptionally prudent, and think that it is best to err on the conservative side.” 

The revised figures put the blame for the increase deficit primarily on increased certificated salaries ($1.3 million more than budgeted), classified salaries ($1.2 million more), benefits ($325,000 more), and services and operations ($987,000 more).  

Flint explained that Glaster penciled in a higher number of substitute teachers to ensure that each classroom in the district was staffed at all times, and also added an increase in the custodial staff. 

California school districts are prohibited by law from passing out-of-balance budgets, and it was the discovery of a massive deficit that led to the state takeover of the Oakland schools in 2003. But since the only penalty for the introduction of such a budget is takeover by the state, the state does not appear to be subject to any legal consequences when passing unbalanced budgets in school districts it already runs. 

OUSD Board President David Kakishiba called the situation a “fiscal crisis” on Wednesday night. During a telephone interview on Thursday, Kakishiba said that “Under normal circumstances, if we were an out of state receivership and had passed an initial budget that was $1.4 million in the red and then, two months later, moved the deficit up to $4.7 million, it would begin to raise questions about the reliability of the board and the administration to keep the district fiscally solvent.” 

Kakishiba added that “we are in the fifth year of state receivership. There is no excuse at this point not to have a balanced budget.” 

The board president said that it was time for the district to begin to analyze increases in the number of full-time teachers and administrators over the last two years that might have led to the current structural deficit. “Personnel is 80 percent of our budget, and if we are overspending, it is likely that the problem will be found there,” he said. 

Kakishiba added that there are two specific areas that may have contributed to personnel increases. 

“We have created more schools,” he said, and the Expect Success! administrative model the district has been operating under for the past three years “requires that more administrators be hired.” 

Kakishiba said that Expect Success! in particular “deserves some reflection time for the district. One of the tenets of Expect Success! is to establish good business practices for district operations. I think it’s ironic that our fiscal situation has deteriorated following its adoption by the district. That doesn’t sound like very good business practice.” 

Flint added that the district is still in the discovery phase of the process, and while officials have identified some, but not all, of the areas where cuts will be made, the district is not ready to reveal any of them.  

“It’s evident that some belt-tightening will take place,” the spokesperson said. “We are looking at every aspect of district operations,” adding that the cuts will be made without sacrificing the district’s core educational goals. He said that the district expects to restore the legally mandated two percent operating reserve and eliminate the structural deficit by June of 2009.