Reflections on Budget Cuts for 17-18 School Year

One of the first things I learned about OUSD as a candidate was how top-heavy the administration was. Through the listening tour that I did as part of my campaign, I heard it over and over again, and then I observed it for myself once I joined the School Board.

We will be a lot less top heavy next year, because of the budget cuts to the central administration that we are making in order to balance our budget for next year. While many positions being eliminated are vacant, still I recognize that soon layoff notices will be going out that are going to severely disrupt the lives of many existing OUSD employees, and I feel responsible for that. That is one thing no one tells you about when you decide to run for office; being responsible for decisions that can devastate the lives of employees.

My main focus has been on keeping the cuts away from school sites, which we managed to do, with the exception of some vacant SSO (School Security Officer) positions and of course the mid-year budget freeze. 

Since there is still a lot of confusion about why we are in the position of having to make cuts, I wanted to take this opportunity to explain it in detail.  

The biggest drivers are (in this order): declining enrollment, increasing pension contribution costs, Special Education costs, staff salary increases related to the minimum wage increase in Oakland, the large number of schools we operate, and also the increased spending on cabinet positions. There is also a great deal of uncertainty about the future of Title 1 funds that districts like Oakland depend on heavily. I'll talk about each of them in turn.

Declining enrollment has been an issue in OUSD for years. This year we have 450 fewer students than we did last year, and 900 fewer than was projected. The reason that declining enrollment was not noticeable for the last few years is that we were receiving massive influxes of resources from the state under a new funding formula (LCFF, Local Control Funding Formula).

The new resources masked the impact of the enrollment decline that is attributable to growth in the number of charter schools and families leaving Oakland due to the high cost of housing. The kinds of adjustments that need to be made are never as quick as the loss in revenue (for example, consolidating schools, collecting rental income for leases at underenrolled or vacant sites, etc). Now the new state money has slowed to a trickle.

What is more, where we are experiencing growth in enrollment (in Special Education and especially newcomer/refugee students), the students are more expensive to serve because of their particular needs. There is a need for Oakland charter schools to start pulling their weight more when it comes to Special Education students, and some of them are starting to, but no Oakland charter schools serve the same percentage of special education students that OUSD does, and none of them serve the severely disabled students that OUSD does. Most of the charter schools are not serving the newcomer population to the extent that OUSD does either. These issues are being discussed as part of the Equity Pledge, but it remains to be seen whether there will be any movement on the part of charter schools to address the fairness issues regarding which students are being served in each system.

All school districts across California are going to have to address increasing pension costs in the coming years. The wonky can read this article to learn more about this, but the bottom line is that CalPERS and CalSTRS are not getting the rate of return that they need to be able to fund pension obligations to retirees, and are still recovering from investment losses during the recession. This means that school districts and other public employers are going to have to pay more. This is only going to go up, so we have to be prepared to make difficult choices for many years to come in order to meet our obligations to our retirees.

For those who do not know, special education funding is highly inadequate because the amount that is provided from federal and state sources does not cover the full cost of special education services, but many districts have budgeted for a long time as though those funds alone should be sufficient. On average it costs twice as much to meet the needs of special education students, and Oakland, like many other school districts, has increased the Special Education budget to meet the growing need for many years now. What is more, the amount of federal and state funding is not related to the specific disabilities that students have. So in districts like Oakland, where we have a large number of severely disabled students, we are not getting more per student than districts that do not (for example, the all-charter SELPA El Dorado County). This is something that has to be changed so that we remove the perverse incentive for schools to avoid serving students with disabilities.

In the meantime, the district is working on building an in-house program for many of the students that are currently placed in expensive non-public schools because of severe disabilities, and is undertaking other efforts to provide better services for special education students, like expanding access to inclusion programs. Realistically, I don't think we should expect these efforts to reduce costs any time soon. The focus from my perspective should be on building better special education services, and that will reduce demand for private placements and make it possible to place more students in least restrictive environment settings. What will make a huge difference in special education is stable leadership, and I am hopeful that we will figure that out soon.  It's hard to move major change initiatives without stable leadership.

The part of the budget shortfall that has been particularly frustrating for me has been related to staff salary increases. When the minimum wage in Oakland was increased by voters in 2014, the impact on the district was large, because it affected many of our staff in Nutrition Services, Early Childhood Education and Special Education. Many of these staff are funded through other sources than LCFF, which meant that we agreed to salary increases without any additional revenue to pay them, and we made assumptions about enrollment in ECE and cost reductions in Special Education that turned out to be unrealistic. I believe we should have made more conservative projections given the history of the Special Education budget, and it was foreseeable that we would run into trouble raising salaries without receiving any additional revenue to fund them.  

These are some of our lowest-paid employees, and the raises were long-overdue; we just need to be more careful going forward to ensure that the pay increases we give are sustainable. The reality is that when you agree to raise pay, you are also agreeing to increased pension contributions as well, and I will be more watchful about this going forward.

This year we are going into bargaining with our teachers and staff. I do not know how negotiations are going to go, since we are in such a different financial position than we were the last time we were in bargaining. I am interested to hear ideas from our unions about where we could find additional cost savings, but I am also aware that we are in a much different financial condition now than we were last time.

Oakland has a large number of schools relative to the number of students we have.  This is a legacy of both declining enrollment, the small schools movement that was responsible for the creation of some of our best schools today, and the growth of charter schools. We cannot control how many charter school petitions we get as a district (we can control how many we approve, though we can be overturned by the County Office of Education board), but I believe that there are too many district schools and too many charter schools. In the coming year, there will be planning for OUSD school reconfiguration that will take place in the 18-19 school year. I am not interested in reconfiguring for the sole purpose of saving money. Any reconfiguration needs to expand access to our strongest programs, otherwise what's the point?

We have to be very deliberate about how we do this, because if we alienate families or school communities in the process, we will lose students and end up worse off financially than we are now. I also do not want to see us leave any school sites vacant. I am going to be very interested in this work, and will be focused on how the school communities that are part of those conversations are treated.

This post is getting very long, so I'll just wrap by saying that the cabinet has grown, as well as the salaries of the people who comprise the cabinet. There is a lot of pressure on board members to stay out of hiring decisions, and so I kept quiet when I had real reservations, seeing the number and size of salaries grow, mostly for people who are not critical to the mission of the district. Going forward, if I see that happening again, I will vote against those contracts and will be more vocal about it. I do believe it is part of the reason we are in this situation.

Finally, there is a lot of concern that the new national administration will use Title 1 funds (funds for low-income students) differently, turning them into block grants for vouchers or some other scheme. OUSD relies heavily on this funding, particularly in flatland schools (it's about $16M annually). Part of the reason that we are looking at ways to increase our reserve fund is so that we can absorb some of the blow if we lose Title 1 funding.

Part of what I am looking for in our next Superintendent is strong leadership on the financial front, and a willingness to not only lead the board through making hard decisions, but also someone who will make the necessary decisions in a spirit of partnership with our schools and our community.

Everyone wants the best for students, but it is hard to believe district leaders when there is not full transparency about why we are in the situation we are in.

There needs to be greater transparency going forward about how we got here, the numbers we need to hit, and greater honesty about the trade-offs that can be made, and much more inclusivity in decision-making.  Principals, teachers, staff, unions and parent groups all need to be given the opportunity to weigh in on these decisions. 

If you have thoughts on the Superintendent search, I'd love to hear them. The full board will be doing a town hall on February 11 at 10 am at McClymonds High School, 2607 Myrtle St, in West Oakland. 

If you got this far, thanks for reading!

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