According to the most recent budget updates, OUSD is projected to end this school year below the state-mandated 2% reserve, partially due to an additional $3.7 million in unexpected expenses that hit the OUSD budget this school year. The district presentation to the school board did not provide any clarity on how the district will return the reserve back to 2%.
This means that the district continues to be at serious risk of being taken over by the state. While it is unclear what specific criteria the state would use for a takeover, falling under the state mandate 2% reserve is a clear indication that Oakland continues to have problems with overspending.
How did we get here?
GO has closely followed the district’s financial challenges as part of our Budgeting for Impact campaign this year. Last December, the school board voted to re-purpose $9.0 million from its current budget to increase OUSD’s fiscal health.
According to the plan, the district would use that $9.0 million in three categories:
- State Mandated Reserve: $1.1 million to rebuild the reserve for economic uncertainty to the state-required level.
- Specified Risks: $3.9 million to address known operating expenses identified by the Superintendent.
- Unspecified Risks: $4.0 million to address possible unknown expenses or overspending due to poor internal controls.
In March, the district shared an update that only $6.5 million of the planned $9.0 million had been realized for re-allocation. In our March budget update, GO expressed concern about the district’s progress to enact their planned mid-year cuts.
Important Questions to ask:
When the district identifies unexpected expenses or overspending, and our reserve falls below the state-mandated level, it is important to understand how and when we will rebuild our reserve and where those funds will come from. We would have expected district staff to answer the following questions in their board presentation on April 11th and hope the community receives updates on these topics in the near future:
- How will this news affect OUSD’s 2018-2019 school year budget? If we need additional money to rebuild our reserve, which existing budget will that come from?
- OUSD had identified $9.0 million in re-allocated funds in December, and as of March only $6.5 million of these funds had been re-allocated. Will the district be able to realize the additional $2.5 million this year?
- What steps is the district taking to ensure that school sites do not experience a 3rd year in a row of mid-year budget cuts to their site budget?
For school communities that have experienced budget freezes or mid-year fund re-allocations over the last two years, the information from the April 11th school board meeting indicates that the district is still struggling with financial stability and that there are signs that school budgets could be impacted again for a third straight year.
During these difficult financial times, GO Public Schools continues to advocate for budget transparency, clear communication and engagement with community members, and implementation of national best practices in district level budgeting.