The scathing report blames “poor business practices” and a “broken administrative culture” for the district’s fiscal crisis.
OAKLAND — Oakland Unified School District’s budget problems — often attributed to declining enrollment and inadequate state funding — are largely due to a “broken administrative culture” that squanders millions of dollars instead of spending the money on students, according to a scathing Alameda County Civil Grand Jury report.
During the 2017-2018 fiscal year, the district spent about $95 million more on non-classroom costs, including administrative staff, contractors and services, than the median amount spent by 37 Bay Area districts, according to the report released this week. It also spent more than $55.7 million for consulting services and operating expenses that year, or three times more than the statewide average.
Plus, the report adds, Oakland Unified spent 45 percent above the statewide average on non-teacher staff and six times the state average on supervisors’ and administrators’ salaries.
More than 20 witnesses — including school board members, top-level managers, outside experts on school district management, former and current district employees — testified before the grand jury. They criticized the district for failing to follow its own policies, inadequate monitoring of bond expenditures, lax competitive bidding practices and self-serving decisions.
The grand jury also scolded the school board for lacking a “sense of urgency” in dealing with the district’s ongoing multimillion-dollar funding shortfalls.
The grand jury calls on the district to “significantly reduce” its administrative staff, as well as how much it spends on contractors, consultants and other outside services. It also recommends the district realign its priorities to focus on student needs.
“The Oakland Unified School District board has failed in its responsibilities to serve the students of Oakland,” the grand jury said in one of its findings. “Collectively, the board has not provided leadership and strategic direction to correct the severe financial problems facing the district.”
Oakland Unified school board president Aimee Eng issued a statement Monday to this news organization saying district staff still needs to review the report and has 90 days to prepare a formal response.
“Coming out of an intense few years during which we wrestled with fiscal stresses, including midyear budget cuts and an employee strike, this report raises important questions,” Eng said. “Many of these issues are familiar, but we will use this report to face these issues head-on and improve how we operate.”
The report echoes some of the concerns raised by the Oakland Education Association during the seven-day teachers’ strike in late February. Union officials criticized the district’s spending habits at the time and asserted it could afford to pay teachers more and reduce class sizes if it spent less on administration.
In comparing the district’s revenue and expenses during the 2017-18 fiscal year with that of 36 other districts in the Bay Area, the grand jury found that Oakland Unified ranked low on special education spending. Out of the $532 million total the district spent that year, $81 million went to special education, the report said.
The district also ranked low in spending on teacher salaries, guidance counseling, health services and books and supplies district-wide.
Though Oakland Unified officials have cited the rising costs of special education as a “major contributor to their financial problems,” its per-student special education spending ranked 23rd among the 37, according to the report.
The grand jury also found that several schools either need “comprehensive updating” or should be closed due to low enrollment, yet the district has no concrete plan to do so. The district has identified up to 24 schools that may be closed over the next five years, but hasn’t specified how many and when.
Former Superintendent Antwan Wilson put a stop to many projects in the middle of planning, “wasting critical dollars,” while also adding $172 million in new projects, the report says. The “constantly changing priorities” and “years of second-guessing” led to a delay in the 21 projects promised under Measure J — a $475 million school facilities projects bond approved by voters in 2012. Nine of those projects — including new and renovated science classrooms and labs, playgrounds, and security upgrades at Fremont High School, Glenview Elementary, Madison Middle School and the Central Kitchen in West Oakland — were halted last year when they went over budget and the district ran out of funds.
The district also has used more than $12.5 million in capital improvement Measure J funds to pay rent for its administration offices at 1000 Broadway, the report says. Although the state’s fiscal oversight agency has questioned the legality of using bond funds for that purpose, the district’s legal team maintains such a use is proper.
The school board has been presented with options to permanently house the district’s administrative offices but has failed to take any action on them, according to the report.
Oakland Unified approves “a burdensome number of contracts each month,” the report added. In 2018, the facilities department approved nine contracts with one firm to maintain fire alarms, six separate contracts to replace and install fire alarm systems and three separate contracts to supervise the installation of security devices, according to the grand jury.
The grand jury also questioned the fiscal wisdom of the district’s policy requiring 50 percent of its construction contracts go to local businesses. Witnesses with construction backgrounds told the jury that the policy has increased costs 10 to 40 percent per project. The district has also paid a consultant more than $3 million since 2008 to make sure it adheres to its own policy — something that could be done in-house, the report said.
Of the 395 contracts with a total value of $78 million that the school board approved from January to June 2018, only one-sixth, or 33, with a total value of $12.5 million, were put out for competitive bidding.
“Poor financial controls, uncontrolled project budgets and misuse of school construction bond funds exhibit senior management’s lack of discipline and damages the public trust,” the grand jury said in the report.
The report mentioned several instances of “questionable conduct,” including an employee spending $600 of district money on car washes, though the department only had one car that never appeared to be washed. No disciplinary action was taken.
The district also paid a bus contractor — then a trustee of the Alameda County Board of Education — $82,000 over two years without ever getting board approval.
June 26, 2019
East Bay Times
By Ali Tadayon
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