EXECUTIVE SUMMARY – To read the full report go to https://grandjury.acgov.org/reports.page?
For years, the Grand Jury has reported on the Oakland Unified School District’s (OUSD) financial woes and academic struggles. Blame has been spread in many directions: declining enrollment, charter schools, inequitable funding and so on.
This year, the Grand Jury received eight complaints from within the walls of OUSD, each challenging the common belief that the school district was struggling because of outside pressures. Together they alleged that abandoned policies and procedures, misguided priorities and poor business practices have greatly contributed to a broken administrative culture that thrives on dysfunction and self-interest.
Outlined in the complaints and confirmed by the testimony of over twenty witnesses, the Grand Jury was presented with example after example supporting the conclusion that the district’s poor business practices and broken culture have greatly contributed to its financial instability. For example, within the facilities department, constantly changing priorities left the district without a facilities master plan, contributing to a district full of under-enrolled schools. Poor financial stewardship of the district’s nearly billion dollar bond program coupled with unnecessarily costly policies that do not directly benefit students have left OUSD with little to show in the way of completed school projects. District-wide, decentralized procurement with lax competitive bidding practices have led to overspending and waste. Finally, within management ranks, self-interested decisions by midlevel staff and repeated breakdowns in the chain of command without anyone being held accountable has helped perpetuate all of this dysfunction.
OUSD certainly has greater financial needs than many surrounding districts, but state data shows that it also receives considerably more money than surrounding districts. OUSD received $562 million in General Fund revenues in Fiscal Year (FY) 2017-2018 or $16,154 per student, which ranked sixth among 37 local school districts. Total spending was $532 million or $15,269 per student, which ranked seventh. An analysis of spending revealed that OUSD expenses that directly affect students in the classroom (teachers’ total compensation, local administrative and support staff, pupil services and books and supplies) were either near or far below the median of the 37-district sample and state averages. However, spending on activities other than the classroom (central staff and administration, contractors and services) were above or far above the median of the 37-district sample and state averages. OUSD’s extra spending per student was $2,726 over the median spending for the same sample. This translates into total extra spending for OUSD of $95 million per year.
While the district is large and complicated to run, it is struggling to survive financially, in part, because district leadership has not committed to a long-range, comprehensive strategic plan, implemented using sound financial practices. All too often, policies and procedures have fallen by the wayside and administrative staff who are frequently undertrained in best practices make decisions that are not in the best interests of the school district.
The culture in OUSD’s administrative offices must change in order to provide its students with the quality of education they deserve. OUSD is wasting millions of dollars well in excess of its projected annual deficits. Drastic action is required to “right the ship” and this must begin at the top. OUSD needs to bring comprehensive and modern best business practices into district offices and leadership. Staff need regular training inculcating these throughout the organization. If staff refuses to buy into these plans, they must be held accountable. OUSD can no longer afford to be philosophical. Restoring financial stability requires sacrifices throughout the organization. Stringent controls, adherence to contracting procedures, updated policies, and school consolidations are immediate priorities.
Yet staff cannot be expected to buy into these changes if the elected Board continues to lead by reaction. Failure to put into place a strategic plan and have the courage to carry it out will ensure that the district continues to sputter with under-enrolled schools and shoestring budgets. Over one thousand school districts in the state operate competently with the state’s current funding structure. Oakland is not one of them even though it receives significantly more funding than the median district in the region. The Board has “kicked every can down the line” and rarely acted with a sense of urgency on many vital issues. The state of the district today is the inevitable result.
This report has detailed repeated examples of mismanagement, favoritism, disregard for authority and poor controls. Policy and procedures are ignored causing one poor decision after another. Moreover, lack of accountability is rampant. Those who have attempted to instill better methods are ignored or quickly pushed aside. Well-intentioned policies such as individual school autonomy or hiring local businesses cannot continue at a premium in the face of dismal finances. OUSD cannot afford them.
The Board and OUSD’s senior management have a monumental task in front of them. Full support from the Board, OUSD’s leadership, management, and employees, as well as recently added support from the Alameda County Board of Education is needed to make progress possible.
The Oakland Unified School District consistently spends near or below the median of the 37- district sample on the needs of students (teachers’ salaries, local administration, classroom support, books and materials and pupil services). It spends above and sometimes far above the median on non-classroom administrative, central office staff, contractors and consultants.
The Oakland Unified School District’s financial problems result from a combination of spending priorities skewed toward non-classroom staff and activities plus poor enforcement of competitive bidding requirements, expensive contracting policies, poor financial discipline and poor business practices.
The Oakland Unified School District’s Facilities Department does not follow best practices in developing and managing its operating budgets.
The Oakland Unified School District’s Facilities Department staff frequently ignored direct orders from superiors, often going over their manager’s heads.
The Oakland Unified School District’s Facilities Department has not provided appropriate leadership in managing the capital program for the district. Approved project costs and schedules have not been controlled, required bidding was often avoided through exceptions, and the district’s use of the lease-leaseback method has not demonstrated cost savings or resulted in speedy completion of projects.
The Oakland Unified School District’s 50% local business utilization policy adds significant cost to projects.
The Oakland Unified School District has been using Measure J bond funds to pay rent (now over
$12.5 million) for their administration offices at 1000 Broadway. There is no approved plan to relocate the district’s central administrative offices to a permanent location, raising serious legal questions about its continued use of bond funds to pay rent at 1000 Broadway.
The Oakland Unified School District’s culture is broken. It has been described as a district of exceptions with an attitude of “what’s in it for me?” These attitudes harm the district whether it is displayed as favoritism, nepotism, or disregard for board policies. Employees trying to change this culture and move the district forward are sidelined and sometimes forced to leave because the proposed changes “aren’t the way it’s done at OUSD.”
The Oakland Unified School District’s Board policies are out-of-date.
The Oakland Unified School District’s Board meetings and meeting processes create extraordinary burdens for Board members, the district’s management and staff, and the public. Excessively long meetings fail to focus the Board on its priorities and details, which results in a lack of actionable decisions on key issues.
The Oakland Unified School District Board has failed in its responsibilities to serve the students of Oakland. Collectively, the Board has not provided leadership and strategic direction to correct the severe financial problems facing the district.
The Oakland Unified School District must realign its current spending priorities to ensure the focus is on the needs of students (certificated teacher salaries, classroom support, books and materials, pupil services including guidance counseling, social workers, and other critical student support services.)
The Oakland Unified School District must significantly reduce the number of classified supervisors, administrators and staff and its expenditures for contractors, consultants, and other outside services.
The Oakland Unified School District must incorporate best practices for financial management, budgeting and control, and if staff is unwilling to adopt these practices, they must be held accountable.
The Oakland Unified School District must provide training to all personnel to clarify roles, responsibilities and accountability.
The Oakland Unified School District’s Board, Superintendent and Facilities Department must finalize and approve a robust Facilities Master Plan that can be immediately implemented, including proposed school closures, consolidations, and project priorities.
The Oakland Unified School District’s Facilities Department contracts must be publicly bid and broadly advertised, and follow an open, competitive bidding process. Recommendations within the bond program management performance audit regarding facilities program management and change order control should be immediately and fully implemented.
The Oakland Unified School District Board must review, update and enforce its policies and regulations regarding conflicts of interests, bid exceptions, and school autonomy. The 50% local business utilization requirement should be immediately suspended until the district finances can afford it and until the policy is reevaluated.
The Oakland Unified School District Board must restructure its board meetings to better align with district priorities, including: move critical topics to the beginning of meetings, aggregate like items for approval, and use the consent calendar to reduce time spent on minor items. Focus needs to be on gaining budget control, financial stability and improving students’ access to a great education.
The Oakland Unified School District must hire an effectiveness coach with the Alameda County Office of Education’s approval for the superintendent and the Board as a whole and for individual members to improve effectiveness and transparency, leading to timely board decisions on identified priority items.
The Oakland Unified School District Board must approve a plan to relocate its administrative offices as soon as possible.