Oakland school district projected to run out of cash

OAKLAND, Calif. (KRON) -- A county review shows that years of bandaging and kicking budget problems down the road has rendered the Oakland Unified School District fiscally strapped. Without immediate action by the school district and its board of directors, the Alameda County Office of Education predicts the district could run out of cash during the next academic school year.

In a letter from Alameda County Superintendent of Schools Alysse Castro sent Tuesday to the Oakland Unified School District Superintendent and its board, Castro said OUSD is operating on an unsustainable budget.

The school district's budget deficit is projected to reach $152 million this year. Without implementing the budget solutions approved by the board in December, the district could run out of cash by more than $30 million in November.

Last month, the school district filed a negative certification to the office of education. In Castro's letter, she agreed with the district's self-assessment saying, "Without significant intervention, the district is projected to run out of cash during the 2025-26 school year."

The office of education points to the district's increasing deficits resulting from approving employee pay increases without approving reductions to pay for the raises. That, combined with years of the board deferring big decisions, changing plans or delaying their implementation has led the school district to the difficult position it is in right now.

In response, Castro has appointed a fiscal advisor to help the school district rectify its budget woes. The last time OUSD received a negative certification was just before it went into receivership in 2003.

Back then, the State of California took control over district business and resulted in the district taking out a $100 million loan, which the district says has taken 21 years to pay off in full, plus $20 million in interest.

Currently, the county has oversight of the district's budget with the power to override board decisions. Now, Castro says OUSD will be the only state school district to have both a fiscal trustee and fiscal advisor.

The advisor is slated to help the board through June, and, in the coming weeks, help balance the 2025-2026 budget. The board has considered merging 10 schools that share campuses.

The school district says the move would save millions of dollars, but the board still has not voted on the option. By the end of next month, Castro says the board needs to make hard decisions on reducing personnel for the upcoming school year.

In the letter, Castro continues to say, "If the board does not make decisions now, it will rapidly lose the ability to make them at all."

She says the district operates too many schools for the number of students enrolled and operates too many under-enrolled schools.