Will OUSD Have Another Round of Midyear Cuts?

The number one question our network has been asking this fall is whether or not schools should expect to see another round of midyear cuts. The good news is that as of last night, the answer appears to be that they should not be expecting cuts to their 18-19 budgets.

At the September 12 school board meeting, OUSD staff presented information about how the district “closed their books” for the 2017-2018 school year.  As you may recall, it was during this same time last year that OUSD found $9.1 million in new and unaccounted for expenses.

This year we learned that the district’s unrestricted expenses from the 17-18 school year ended up being $10.0 million less than expected, mostly due to the ongoing effects of midyear budget cuts. This is very good news, because it makes it very unlikely that school sites will experience any midyear cuts and because it demonstrates a step in the right direction.

Combined with revenues that came in slightly higher than what the district expected, OUSD will officially end the last school year with a 3.4 percent reserve, which is higher than what they’d expected. And while 3.4 percent is above both the state-mandated two percent and the OUSD Board Policy of maintaining a three percent reserve, it should be noted that national best practices for reserves is 10%. A higher reserve gives districts additional emergency funds to manage unforeseen costs.  

Despite the generally good news from the Close of Books, OUSD still has a lot of work to do to become fiscally solvent. The district is facing ongoing costs that are growing much more quickly than their revenues. To stay afloat, the district plans to cut about $30 milion from the 2019-20 budget.  

Another frequently asked question we receive from our network is why it takes so long for OUSD to close their books on the previous school year. For more information on why the close of books is important and why it takes so long to report, click here.

Now that we have closed the books on last year and are bracing ourselves for big cuts to the 19-20 budget for next year, the next big story to follow is a OUSD budget relief bill that is currently sitting on Governor Brown’s desk for signing. As described in the linked Edsource article, there is indication that the bill will come with expectations: “Oakland Unified will also be required to make tough budget cuts, which could include consolidating schools, selling or leasing surplus property and increasing its budget reserves. The district must come up with its budget solutions for 2019-20 by March 1 in order to receive an allocation in next year’s budget.” The team at GO will be closely following this bill, and you can look for an update from us soon about what the bill will do for Oakland, and what Oakland will need to do to satisfy the requirements of receiving millions in budgetary relief.

And in case you missed it, last week I put out this budget update video to give you a quick update on the news and storylines to follow this fall for the OUSD budget.

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