Nickel and Diming the District to Death; A Real Fix to OUSD’s Fiscal Problems

Death by a thousand cuts is what the headstone of OUSD will say if we can’t get our fiscal house in order.  We have current deficits and huge deficits looming, 20 and 60 million dollars roughly in each of the next two years.  And so far the approach has been to keep trimming the edges of the budget, reducing positions and expenditures (at least on paper).   This will not work.

This month after Alameda County rejected OUSD’s budget, the district put forward a proposal to eliminate up to 340 positions by the end of February.   Last year we had cuts at the beginning of the year and mid-year, and now it looks like that same painful cycle all over again.  There is a better way.

Here is the situation according to EdSource,

the district anticipates deficits of $20.3 million in 2019-20 and $59 million in 2020-21 if it doesn’t make $30 million in ongoing cuts a year from now.

In the next few months, Oakland Unified officials will meet with employee unions to identify up to 340 positions that could be eliminated in 2019-20 to balance the district’s budget.

The Oakland school board on Wednesday unanimously agreed to revise the district’s three-year budget to reflect these possible upcoming cuts after the Alameda County Office of Education rejected the budget adopted by the board in June. That budget showed nearly $30 million in budget reductions in in books and supplies in 2019-20 and 2020-21, resulting in negative balances of $10 million in those categories for two years in a row.

Beyond Cutting to the Bone and Towards a Real Solution

The system can only take so much.  And each of these rounds of layoffs and departmental cuts are demoralizing both to staff and families.  At some point you reach the bone.  Where you can’t actually deliver education with the stripped down organization you have.  And let’s just be honest, OUSD has had a hard time cutting $5-10 million. how is it going to do $20 million one year and $60 the next practically?

It’s not.  At least not in the current mode of action.

We need to rethink this, and take bold action to dig ourselves out of the hole, buy ourselves some breathing room and fix some of the structural issues in OUSD.  There is a way out.  It is politically perilous, but possible.  However, the window on it may be closing.

The Billion Dollar Real Estate Solution

What underutilized resource does OUSD have, that is actually at its peak value right now?

Land.  Billions and billions of dollars of land.

OUSD has roughly 500 Acres of land, 10% of that is undeveloped, the majority of it is in programmed outdoor space, and as everyone who has been watching notes, many OUSD schools are underenrolled and/or too small to be financially viable, with roughly 38,000 students for 55,000 classroom seats according to the MK Think analysis.

Here is the slide from an OUSD presentation looking at the district’s land inventory,

The price to buy a home in Oakland from Trulia is $611 per square foot.  Someone who knows more about real estate can correct me.  But some quick math, they sell 50 acres (10% of property) at $611 per square foot, and there are 43,560 square feet in an acre.  So that is 2,178,000 square feet, times $611 per sq/ft which comes to just over 1.3 billion dollars.  Even if the number is half or a tenth that, it could get us out of debt and invest in the schools that remained.

I have also wondered, in a City with epic homelessness and displacement, why couldn’t we even just use those underutilized spaces better–let families that are living in cars safely park overnight in lots, or even some simple structures for families on parking lots or outdoor spaces, or why not allow them to stay in an underutilized wing of the school.  The public has a huge asset, that sits largely unused– and we need to do better.

Its not quite that simple though.  California law requires that charter schools be given access to reasonably equivalent facilities, so if they say they don’t have space for charters, and then start selling buildings, you will get a lawsuit.  OUSD will need legislation from Sacramento as well.  But whatever it does it has to get smarter about using the public’s land.

So, like many of these issues this will have to be a negotiation between the public school sectors.  But one where there is a real possibility of a win-win.  While right now we are caught in a lose-lose conflict, with underserved children destined to bear the bulk of the burden.

What do you think?

One thought on “Nickel and Diming the District to Death; A Real Fix to OUSD’s Fiscal Problems

  1. Generally it is not smart for a school district to sell land. Wiser would be to lease land. Leasing could add ongoing funding. Oakland School District has I believe at least two 20-year leases with charter schools.

    Problem with leasing is that the School District starts to move away from its primary mission of educating children when adding real estate as an additional mission.

    Adding missions to the District’s education mission might make sense if the District has been doing great job of handling its finances. That hasn’t been the case.

    But, adding real estate mission to the District’s education mission that has been under financial stress seems like a move that will make the District’s financial problem more complicated and piling up leases; therefore is not such a good idea.

    I don’t think that selling/leasing District land is a win/win solution.

    Nor do I believe that my approach is a win/win solution. There is nothing about winning when you have to cut programs and people from a school district budget.

    I believe in order for the District to pull out of this financial crisis it must cut its budget and cut its attachment to school-based budget decision acquired over years of site decision making in order for the central administration to have the power to cut the consultants and programs sufficiently to get a budget that balances.

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