The Rise And Fall Of The Land Scheme That Almost Cost The Oakland Unified School District
And Oakland, California Residents More Than 8 Acres Of Downtown Property





July 6, 2006

It's important to remember these days that during the events that led to the 2003 takeover of the Oakland Unified School District by the State of California, there was never an allegation the district's budget shortfall occurred because someone in the administration of Superintendent Dennis Chaconas or on the OUSD Board of Trustees was either stealing or misappropriating district money.

Don't take my word for it. SB39, the state law that mandated the takeover, reads at Section I(e): "While in need of a loan from the State of California, there have not been any accusations of intentional mismanagement or fraud in the Oakland Unified School District."

So what caused the shortfall? Former Superintendent Dennis Chaconas proposed, and the school board approved, a teacher pay raise that the district could not afford. From everything we've heard, the district's antiquated computer financial software did anticipate the full financial effect of the pay raise and, therefore, did not detect the looming budget shortfall until it was too late to patch it over.

The state legislature looking into the Oakland "problem" in 2003 also found that fiscal problems aside, Oakland schools were moving on the right track under the Chaconas administration. SB39's Section I(f) reads that "[t]he Oakland Unified School District has made demonstrable academic improvements over the last few years, witnessed by test score improvements, more fully credentialed teachers in Oakland classrooms, and increased parental and community involvement."

How Oakland was supposed to attract "more fully credentialed teachers" to our school district without that massive raise in teacher salaries is a fiscal management trick not explained by the state legislature either in its deliberations back in 2003 nor by anyone else in state government, to this day.

In any event, as a result of the 2003 OUSD budget crisis, it is widely believed that the State of California took three actions under SB39 to help the district get its fiscal house back in order. The first step was to provide enough money—a $100 million line-of-credit loan—for the district to balance its budget and weather the 2003 crisis. All of that loan has now been appropriated to Oakland.

The second state action was to authorize a state-appointed administrator—Randolph Ward, in this case—to take over the district and reorganize it so that the district maintained its "demonstrable academic improvements" and "continue[d] the key educational reforms that have benefited Oakland public school pupils in the last three years" during the Chaconas administration (as pointed out in Section I(g) of SB39) while putting in place sound fiscal policies and systems.

Despite the fact that some local commentators have already declared the soon-to-be-over Randolph Ward administration a smashing success in that area (see Chronicle writer Chip Johnson's Fourth of July column "Oakland Owes Debt To Randy Ward"), it is too soon to tell—and we're still too much in the dark to know—whether Mr. Ward is leaving Oakland in good fiscal shape.

But there was a third, implied state mandate in SB39, the widely-believed understanding that while the state was putting the Oakland schools back on the right track, the state would simultaneously train Oakland school officials in sound fiscal management policies so that once the schools were returned to our control, we wouldn't make the same mistake again. SB39, after all, was never intended as either a permanent state takeover or as a revolving door in which the state would have to permanently withdraw and intervene again, as Oakland continued to fumble our own educational ball.

So who was supposed to provide the "sound fiscal management" training? Here we begin to stretch out into the area of quantum physics, where the normal rules of logic start to break down, and we find a case of the dogs teaching the dogs not to bark.

In the months that led up to the fiscal decisions that ended in OUSD's 2003 fiscal crisis, the district's finances were being closely monitored by four separate agencies or organizations: the OUSD Board of Trustees, the office of the Alameda County Superintendent (Sheila Jordan), the semi-public Fiscal Crisis Management Assistance Team (FCMAT), and the office of the State Superintendent of Public Instruction (Jack O'Connell). All of them looked at the massive teacher pay hike proposed by Mr. Chaconas' administration, and none of them said that the pay hike would bust Oakland's budget.

Three of these four entities—the county superintendent, FCMAT, and the state superintendent—had their own, independent staff auditing teams to monitor and evaluate the budget figures supplied by the OUSD staff. Only one of them—the OUSD board—had no independent staff of their own. OUSD trustees had to rely completely on the staff presentations and assertions made by the OUSD fiscal office.

So guess which one of the four got blamed for failure of oversight in 2003, and whose authority got taken away by the state legislature under SB39. The OUSD Board of Trustees, of course. The local guys.

Under SB39, the same state superintendent who missed the fiscal problems that came close to bankrupting the district was rewarded, for his vigilance or lack thereof, with direct control over Oakland Unified. FCMAT was given broad and largely-undefined powers to decide when the district was "ready" to be returned to local control. And Alameda County Superintendent Sheila Jordan·? Well, SB39 devotes a whole section making sure she didn't lose any of her powers, with Section 12 mandating that "The Alameda County Superintendent of Schools maintains the responsibility to superintend school districts under its jurisdiction. This act does not remove any statutory or regulatory rights, duties, or obligations from the county superintendent of school. This act does not remove any statutory or regulatory rights, duties, or obligations from the county superintendent of school."

There is some irony, therefore, in the slightly paternalistic implication in SB39 that three of the four entities that dropped the ball on Oakland's 2003 school budget crisis—the state and county superintendents and FCMAT—should instruct the fourth—the OUSD Board of Trustees—on how to do things properly. Still, it's a fair question to ask, just for the sake of the discussion, how well have the elected trustees been kept informed along the way so that they are properly prepared to take over once state control has ended?

Not very well, apparently.

We already know that after local trustees authorized a Request For Qualifications (RFQ) in February of 2005 for the possible sale of the OUSD downtown properties, Mr. Ward and Mr. O'Connell kept local trustees in the dark for a year while they selected a firm for final negotiations. That's significant in part because at least one of the trustees who was initially in support of the property sale—Gary Yee—says he did so only in the belief that the money for the sale could be used to immediately pay off the state loan and possibly lead to a quick return to local control. Mr. Yee only learned when the Letter of Intent was released last month that under the initial terms negotiated with TerraMark/UrbanAmerica, the bulk of the money for the downtown OUSD properties is not scheduled to be paid by the developer to the district for five years. Not so immediate as Mr. Yee had envisioned when he voted for the RFQ back in 2005.

Another revelation of how much OUSD trustees have been kept in the loop—or not been kept in the loop—came during the emergency board meeting called by Trustee President David Kakishiba following the sudden announcement that Mr. Ward was leaving for San Diego. Several trustees complained that State Superintendent O'Connell had not been communicating with the board in general—and Mr. Kakishiba in particular—about much of anything over the three years of the state takeover. "O'Connell has never responded to David [Kakishiba] even out of courtesy," the longest-sitting trustee, Noel Gallo, said, a little bitterly. "We're still not informed." To which Alice Spearman, the trustee with the least tenure, replied that she did not understand the problem, since she talked with Mr. O'Connell on a regular basis, and he always returned her calls.

Taking all of the trustees at their word on this, and conceding the fact that Mr. O'Connell has a perfect right to speak with Ms. Spearman any time he wants, and she to him, what does it tell us about the superintendent's intent about local preparation for local control when Mr. O'Connell "regularly" speaks with the trustees' juniorist member, and no-one else? That the purpose of this whole exercise was never to help Oakland succeed at local control?

If so, then what was the purpose? That, my friends, continues to be the real mystery of the Oakland school takeover.

J. Douglas Allen-Taylor
Originally published in the UnderCurrents column of the Berkeley Daily Planet

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