Office of the Board of Education Oakland Unified

Staff and Board of Education efforts to circumvent established budgeting policies along with board efforts to interfere in the administrative responsibilities of the superintendent invite financial instability and contribute to Oakland Unified School District’s financial problems. The District agrees with this finding with the clarification that it does not believe the efforts referenced in the finding are intentional. One component of the District’s theory of action is to maximize decision-making at school sites regarding staffing, finances, calendars, and programs. Asa result, there are numerous Board policies supporting each principal's and particular school community's fiscal and programmatic autonomy to best meet the needs of the school community. There is considerable research highlighting some of the advantages of this method of budgeting. See, e.g., Rennie Center for Education Research & Policy. (October 2012). Smart School Budgeting: Resources for Districts. Cambridge, MA: Rennie Center for Education Research & Policy. Some of the advantages for these budgeting policies are: “Those who best understand needs have the authority to make decisions. Provides greater control/ reporting of school-level data and greater school-level accountability. Staff/community given a voice, generating public support.” Jd. However, these policies require substantial training and deeper understanding and attention to financial matters than alternative ways of budgeting. In a district with significant administrator turnover and deep instructional needs, these responsibilities can be challenging. Also, it can cause an otherwise “unified” system to have internal discord through numerous parts working separately on individualized goals and accountability. In spring 2017, the Board’ proactively engaged Fiscal Crisis Management Assistance Team (FCMAT) to conduct an independent analysis of the District’s fiscal health, based on factors identified by FCMAT. The Board believed this tool would help the Board gain clarity of the various factors impacting the District's fiscal health. FCMAT published its Fiscal Health Risk Analysis of the District on August 15, 2017 and recommended further analysis of the District’s cash flow and multi-year projections, which has been conducted. In addition, to commissioning the FCMAT analysis, the Board in the last 12- 14 months has instituted several policies, resolutions, and oversight practices that are focused on stabilizing the District’s finances and putting in piace systems that will safeguard against financial instability. Many of these policies are modeled on best practices recommended by the Government Finance Officers Association. These policies, resolutions, and implementation reports are appended to this response and include: e Board Policy 3100.1 — Financial Reserves e Board Policy 3100.2 — Structurally Balanced Budget ¢ Board Policy 3650 - Enrollment Impact Analysis e Board Policy 6006 — Community of Schools ‘The Grand Jury report mistakenly suggested that the Superintendent initiated FCMAT’s review of the District's fiscal health factors. e Board Resolution 1718-0069 FCMAT Implementation Plan ¢ Board Resolution 1718-0097, 1718-0097A Confirming District’s Commitment to Fiscal Solvency e Board Resolution 1718-0144 Commitment to Continuous Improvement of Fiscal Practices e Board Resolution 1718-0197 Direction FY 18-19 and 19-20 Budget Reductions e Board Resolution 1718-0242 Confirmation of Commitment to Fiscal Solvency The Board in September 2018 will consider a policy on Long-term Financial Planning. Additionally, the Superintendent has instituted internal controls and procedures and the District has migrated its financial records and accounting systems to the system that is used by the Alameda County Office of Education, Escape. Some of the Board’s legislative proposals in the past year relating to the creation of personnel positions tended to focus upon development of positions that could assist the Board in fulfilling its role in overseeing the District’s budget at a time when the District’s financial department was understaffed; key vacancies were filled earlier this year. These positions were proposed in adherence to the Board's Bylaws and, ultimately, were not adopted by the majority of the Board. The Board has engaged in numerous trainings over the last 18 months to improve its governance, as described below.

Oakland Unified School District's inability to control overstaffing and poor position control decisions have contributed to the district’s financial instability. The District agrees with this finding. The District’s largest fiscal expenditures are salary and salary-driven benefit costs. To drive school improvement, the District has focused on increases to resources to schools, often in the form of staffing. In 2017, $419.2 million, approximately 80% of the District’s budget, was spent on employee salaries and benefits. During the same time, the statutorily required pension benefits for District employees continued to rise an additional 2% from the prior year’s increase without additional funding allocated for such purposes. In addition to increasing costs, in 2017, the District’s staffing at schools and District-wide support positions (such as substitutes, school security, custodial, nutrition services, and special education staff), increased by 621 general fund positions while central office general fund positions decreased by 383. This finding highlights the complexity of the District’s budget and enrollment patterns, and the pressure placed on specific school communities and the Board when the enrollment upon which school budgets were based changes. Each of the District's eighty-seven schools gets its following school year’s budget allocation in the spring based on projected enrollment. Schools develop their staff assignments, class lists, and master bell schedule/ class offerings accordingly. After schools, school communities, and students are assigned to teachers, it is programmatically and politically difficult to make changes to staffing and scheduling after the school year begins and to adjust a school's budget downward. Also, the District also often receives immigrant students, newcomers, and/or transfer students during the school year and need to ensure sufficient staffing to meet these late enrollment needs. Given teacher shortages and recruitment challenges, the District risks being unabie to meet these needs if teachers are separated from employment based on enrollment in the first weeks of school. Unfortunately, the state funding mode! which is based on student attendance rather than the fixed costs of staffing classrooms disparately impacts districts like Oakland Unified that have large numbers of late enrollees and absenteeism due to chronic health conditions.

Lack of transparency related to Oakland Unified School District's financial positions has led to mistrust between the district, the community, and labor organizations. The District agrees in part with this finding but believes that other factors, including historical context in Oakland and negative media coverage of the District contribute to distrust even though there is greater access to information. Also, the District’s prior financial system, data management, and generation of reports were inconsistent and unreliable. One issue facing the District is how to best communicate complex fiscal information to a wide audience. For example, in January 2016, School Services of California and the District fiscal team presented information in the District’s public board meeting about the expectation of a slowdown in revenue as the Local Control Funding Formula “gap” funding started to narrow to only a cost of living increase while pensions costs were increasing; subsequent budget presentations continue to note this data. Yet, the complexity of the overall budget shields public awareness of this issue. The District's utilization of and access to data surpasses most other districts. All minutes, videos, and actions taken by the Board since 1999, including all budget presentations and all financial decisions impacting the District, are available in an easily searchable database on the District’s website at https://www.ousd.org/domain/67. In our analysis of other school districts, few have this level of transparency and accessibility. In addition, the District's Research and Development department maintain data dashboards (www.ousddata.org) relating to student demographics, performance, discipline and attendance, teacher data, attendance patterns, accountability, wellness, climate and culture data, and post-secondary readiness data for use by the public. In spring 2016, the District also added comprehensive data dashboards of fiscal information that is viewable by school, department, resource, or expenditure type to analyze multiple years of fiscal data. (https://www.ousd.org/fiscaltransparency) (https://www.ousd.orq/fiscalvitality)

High turnover of key administrators has created an atmosphere of mistrust, destroying the continuity of the district’s educational mission, and crippling the district's effectiveness in addressing its most pressing fiscal issues. The District agrees with this finding. After the Board regained governance in July 2009, following state receivership, the District had five different Superintendents (two of which were interim superintendents) in nine years. Although the overall strategic plan, Community Schools, Thriving Students, has remained in place, each Superintendent's initiatives and focal points within the plan have varied. Without clear leadership and focus, work within District departments and schools seemed less aligned and targeted. Similarly, during leadership transitions, retention efforts of other key staff became more difficult, which increased costs. Moreover, turnover in Superintendents has required the Board to spend significant time and energy on recruiting, selection, and vetting of Superintendent candidates rather than other important work of the Board. However, the investment in the selection process for Superintendent Kyla Johnson-Trammell, who started in July 2017, has helped position the District on a new trajectory. As an Oakland native and acclaimed educator in OUSD, Dr. Johnson-Trammell has begun to rebuild the trust of the community and staff and is poised to stabilize and lead the District toward its vision.

Financial instability and high staff turnover contribute to poor student performance. The District agrees in part with this finding but qualifies its response based on the myriad factors that may impact student performance. The District believes that inadequate educational funding, even if stable, detrimentally impacts student performance. For districts like Oakland Unified, where schools must serve a variety of students’ physical, mental, social, safety, linguistic, and academic needs, incremental cost of living increases to educational funding that are insufficient to cover increasing mandated costs, will continue to contribute to poor student outcomes. Relatedly, research data reflects that high teacher and administrator turnover negatively impact student performance; adequate funding is a component of retention, particularly in the context of the current teacher shortage.

Operating 86 schools is unsustainable and will lead the district to insolvency. The District agrees with this finding in part. Assuming that all current conditions, including revenue, enrollment, class sizes, staffing levels, number of schools, and expenses, remain the same, the District will continue to operate at a fiscal deficit and will become insolvent. Reducing the number of District-operated schools is one way to reduce expenditures. However, from prior experiences, the District believes that to reduce potential loss of enrollment (and corresponding revenues) and avoid unintended consequences, school consolidations need to be thoughtful and focused upon increasing quality options for all students. As reflected in a comprehensive independent study, Oakland Unified School District New Small Schools Initiative Evaluation by Ash Vasudeva, Linda Darling-Hammond, Stephen Newton & Kenneth Montgomery The Schoo! Redesign Network at Stanford University, the Oakland community has indicated previously that it values small schools and regarded many as successful. These perspectives and outcomes must be balanced with the District's resources and commitment to a citywide system of high-quality schools. Alternatively, if the District increases enrollment or other revenue options, such as optimizing under-utilized property, or decreased expenses, the current school portfolio may be more sustainable. The Board, through its Special Committee on Fiscal Vitality, is currently exploring a variety of options and combinations of ways to eliminate the structural deficit. Lastly, there are some factual inaccuracies in the report relating to Rudsdale Academy and the School of Language (SOL). Contrary to the report, Rudsdale Academy is not a new school. Rudsdale Academy is an alternative high school that opened in 2001; prior to that it operated as a continuation high school and prior to that it was a traditional high school. Although SOL was a new school in 2017-18, there was a great deal of strategic planning, development, and community outreach for years preceding the formal Board vote to open the school. Oakland SOL was added to the District's portfolio of schools in order to build a PK-12 multilingual pathway in alignment with the district's strategic plan to “implement strategies that accelerate academic achievement while closing the opportunity gap” (OUSD Pathway to Excellence, 2014) and create strong pathways and feeder patterns in every Oakland neighborhood (OUSD Superintendent's 2016-17 Workplan). The English Language Learner and Multilingual Achievement (ELLMA) office and the Office of Continuous School Improvement supported the launch of Oakland SOL middle school as a critical component of growing equitable dual fanguage/bilingual pathways in furtherance of the District’s 2015-2018 plan for improving outcomes for English Language Learners (ELL Roadmap for Success 2015- 2018). This lengthy planning process and alignment to the District’s strategic plan, particularly for underserved students, was not captured in the Grand Jury’s report.

Collaboration between traditional public schools and charter schools operating in the district benefit all students in Oakland Unified School District. The District agrees with this finding in part. The District does not believe that expending precious, limited resources fighting with charter schools is beneficial to students living in Oakland. The District agrees that collaborating with charters about school quality standards, enrollment and feeder patterns, professional development, placement of programs, special education, governance, fiscal transparency, equity and innovation would be beneficial to students in Oakland. However, there are some areas in which District schools and Charter schools have divergent interests and differential standards imposed by the Education Code. For example, the California Charter Schoot Association, on behalf of its Oakland charter school member(s), initiated and is currently pursuing litigation against the District which the District is vigorously defending. In spring 2018, the Board worked diligently to debate and discuss various issues relating to District and charter schools and the number of schools in Oakland. The discussions culminated in a robust, visionary, and collaborative new Board Policy 6006 Community of Schools (attached). The work to build a citywide plan for a coherent community of schools is ongoing and a retreat on the issue is anticipated for November 2018.