Answers to your OUSD budget questions: What to expect with budget cuts and state receivership

On Monday, May 7, the OUSD School Board held a special meeting retreat to discuss the state of the district’s 2017-2018 budget and initial thinking around the 2018-2019 school year budget. Throughout OUSD’s financial challenges this year, we have heard two consistent questions from our network regarding the current state and future of the district’s finances. Read below to learn more about the latest information about school cuts to school and the likelihood of OUSD going into state receivership.

Will there be more cuts to schools this year or next year?

In short, yes, more cuts to either central office or school sites is likely for 2018-19.

At the retreat the school board discussed the possible need to set aside money from the 2018-2019 budget in case they identified more overspending at the end of this year.  It is important to remember that the 2017-2018 budget does not “close” until an official close of books report in September of the following school year.  Because the current financial systems in OUSD cannot guarantee that significant overspending will not be identified next September, there is legitimate concern that money will need to be set aside this Spring or else it could result in a third straight year of mid-year cuts to schools.

Because school sites have already received their budgets for next year, district leadership has two options to address any potential overspending:

  1. Pull back some of those funds now to wait and see how the fiscal year closes in September, or
  2. Risk needing to pull those funds after the school year has started.

In order to avoid a third straight year of mid-year cuts, GO strongly advocates that the school board pull back funds now, in order to set aside a reasonable amount of money for potential overages immediately. We have consistently heard from our network that it is much more desirable to give additional dollars to schools mid-year or to save those dollars, than it is take them back from schools mid-year.

Is the district going into state receivership?

In short, no, there is no identified immediate risk of OUSD going back into full state receivership.  

During the Board budget retreat on Monday, the State-Appointed Trustee answered the question of OUSD entering state receivership directly. He stated that OUSD dipping below the 2% reserve will not trigger state receivership for Oakland, but that the trigger for receivership would be having no cash on hand. Cash on hand can be defined as funds that are immediately available to an organization, and can be spent as needed, as opposed to assets that must be sold to generate cash. So long as the district has enough cash in its accounts, or can continue to make cuts to ensure enough cash, it can avoid receivership.

While avoiding state receivership is good for maintaining local control, it is highly concerning that mid-year cuts to school sites is becoming the standard way OUSD operates.  Above all else, every fiscal decision OUSD makes must prioritize and ensure that school sites do not experience unexpected cuts.

The Third Interim and Next Steps:

We will learn important information about the status of OUSD’s 17-18 budget at the May 23rd school board meeting, when the school board will receive an important update the the district’s third interim report.  The third interim represents the third and final financial checkpoint of this school year. When the school board receives the third interim report, they will learn how their planned expenses and revenue compare to actual funding received and money spent.  

As the school year budgeting cycle heads into the third interim, GO is commitmented to advocating for financial prudence and a laser focus on the impact to students.  

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