The Oakland Unified School District board has some crucial decisions to make over the next few weeks and months regarding the district’s finances.
With declining attendance and enrollment rates, a hefty new contract with teachers, rising costs elsewhere, and county and state officials closely monitoring their every move, district leaders are faced with charting a path forward to not only make ends meet, but achieve a level of financial sustainability that OUSD hasn’t seen in a long time.
To get there, the board will almost certainly need to accept one or more of several controversial cost-saving options like closing or merging schools, reducing funding for school sites, and reorganizing the district’s central office. The board recently began discussing its financial priorities, and has until the end of October to submit a list of budget adjustments to the Alameda County Office of Education.
“We need to create a process to be able to do this. We also have to be really aware that we do have the (Alameda County) trustee breathing down our neck in terms of demanding that we follow through with past commitments,” said OUSD Board President Mike Hutchinson at Wednesday’s school board meeting. “The trustee does have the ability to stay or rescind any decision or any part of a decision. As we’re trying to navigate this and tailor an adjustment package that’s best for the community, we do have that threat looming out there.”
When the board approved a new contract for the Oakland Education Association teachers union in June, following a seven-day strike, directors knew they’d be tasked with making adjustments elsewhere in the budget to afford the salary increases and other agreements, which are projected to cost about $110 million over three years. State and county education officials have also told district leaders that they’ll need to make cuts to future years’ budgets in order to avoid insolvency.
Base salaries for OUSD employees—excluding health insurance and other benefits—will increase by about $2.1 million between the 2023-2024 and 2024-2025 school years. At the same time, declining enrollment and attendance means OUSD is expected to lose about $245,000 in the 2024-2025 school year, according to a recent budget presentation. The district’s health insurance costs are also expected to increase by 25% next year.
Superintendent Kyla Johnson-Trammell at a special budget session last week said that budget restraints have hampered district operations.
“There is a lot we’re trying to do and we’re getting to a breaking point with our district infrastructure,” said Johnson-Trammell. “We are not going to be able to keep everything because we don’t have room and the space to continue to fund everything that we want to do.”
Combining up to 10 schools that currently share a campus with another school was one option presented to the board this past spring that directors did not pursue, even as they made about $41 million in reductions elsewhere for the following year’s budget. That option is still a path the board could take, and could save about $2.5 million.
If the board does pursue mergers, the earliest they could happen would be in the 2025-2026 school year, Johnson-Trammell said.
District leaders are also planning to examine special education programs to learn why their cost has ballooned over the past five years. In the 2018-2019 school year, special education received nearly $57 million from OUSD’s unrestricted general fund. This school year, $100 million has gone to special education, which is about one-third of the district’s base revenue of $330 million, said Lisa Grant-Dawson, the district’s chief business officer. About 17% of OUSD students receive special education support.
“Based on the trajectory of growth over the last five years, it becomes a very significant area for us to review how this impacts the district,” Grant-Dawson said Wednesday.
In August, the school board received an analysis of the district’s central office and how it could become more efficient. District staff are expected to present the board with options in an upcoming meeting for how the central office could be reorganized and reduce costs.
The board is also considering school redesigns, which look at school academic programs to see how they can better serve their communities. School redesigns could also include merging schools.
OUSD has had some recent financial wins. In August, the district paid off one of two state loans it received when the district went into receivership in 2003, which frees up $3.8 million annually that was previously going to the loan payment. OUSD is within three years of paying off the other loan, and one step closer to shedding county and state oversight and becoming financially independent.
District leaders also saw the new teachers’ contract as a win, and hope that higher pay for educators will help increase retention. OUSD has contracts with five other labor unions, and district officials have said they want to increase compensation across the board for school support staff, buildings and grounds people, administrators and others.
The school board is expected to vote on a general list of budget adjustments at its next meeting on Oct. 25.
“Although we’re in a much better place [than in past years], we still have a lot of work to do. And we still have a very, very, small margin of error,” said Hutchinson at last week’s budget session. “We can’t afford to continue past practices blindly. And we have to look different in two years from now as a school district.”