Connecting with Kyla- COVID and the Budget

Monday, May 11, 2020Kyla
Dear Oakland Community,Eight weeks ago, we closed schools for in person instruction. Since then our world has been turned upside down as we deal with the effects of this health crisis. Our focus has been on meeting immediate needs – providing food, diapers and other necessities, raising money for direct aid, getting Chromebooks into kids’ hands, and pivoting to distance learning. That work is ongoing because our families continue to face intense need. We also must begin to look up from the immediate challenges and plan for what the next phases of this crisis will mean for us.

We’ll be sharing more information soon about future plans, but the impact of the coronavirus on our budget is one factor that will drive and shape our work for years to come. The coronavirus health crisis is deeply impacting global, national, state, and city economies. Put simply, the coronavirus is hurting the economy and when that happens, schools receive less money. 

Although we don’t yet know the specifics, we are preparing for what is coming and how it will impact Oakland.
A direct budget impact for this and next year 
In the coming weeks and months, the ongoing economic impact of this health crisis will become more clear. At this point, we just don’t know what is going to happen, but we may be facing an economic downturn worse than the Great Recession. Some experts are predicting that these budget issues will stretch out for four to five years. In the meantime, based on the best available information, we are projecting that:We may receive $1-3 million less for the current year’s budget (through June); andWe may recieve less funding for next year’s budget (July 2020 – June 2021). The Governor’s January budget projected a 2.29% cost of living adjustment (COLA) increase. We are now preparing different budget scenarios for COLAs of:  0%; -2%, -5% and -10%.School district budgets are created based on projections of state tax revenue which are becoming less reliable because of the economy. We will pass our new budget in June. In August, the state will update its budget projections and we will then have to readjust our budget. The severity of the downturn also increases the possibility of mid-year reductions.

At the state level, the same financial options that we used during the Great Recession are back on the table, such as relaxing spending requirements (e.g., routine maintenance), decreasing instructional days, and furloughs. None of these are good options for kids.

We will hope for the best, but prepare for the worst. Our interim CFO Luz Cazares and new Chief Business Officer, Lisa Grant-Dawson, gave the Board’s Budget and Finance Committee an update last Thursday night.
We are taking action to prepare
Transition support for new Chief Business Officer (CBO): Our new CBO, Lisa Grant- Dawson, brings a wealth of experience. Due to the crisis, our interim Chief Financial Officer will stay on for two months to support the transition and help Ms. Grant-Dawson to get grounded in Oakland’s systems.Additional layer of review for spending: All purchases are getting an additional layer of review to ensure they are essential.Building reserves to help ease any mid-year reductions: We are trying to build/maintain our reserves in order to protect against mid-year cuts which are particularly difficult to make.We must face our issues head on
I love Oakland too much to sugarcoat tough issues. We were already in a difficult budget situation before the pandemic hit. In February, we had to make ~$27 million in budget adjustments to deal with costs that were growing faster than our revenue. When I started as Superintendent, I named increasing OUSD’s fiscal vitality as one of my three priorities. We have made some progress, but we still need to address our ongoing issues, such as our internal controls/systems, the number of schools we have, and aging infrastructure. 

This economic crisis underscores the importance of continuing our work to improve our systems and address these structural challenges head on.
Updated projections are coming
In mid-May, the state will issue the May Revise. This is the first updated budget projection since the coronavirus shelter at home issue was ordered. Based on that new projection, we will begin to see how we need to adjust our current budget and next year’s budget. 

The challenges we will face will require us to work together in entirely new ways and that’s why I am sharing with you the complexity of these issues that lie ahead. These are statewide challenges, not just here in the District. They are challenges for our community and our city and we will get through them together.
Any feedback you’d like to share?Respectfully,Kyla Signature Dr. Kyla Johnson-Trammell
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