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Dear Oakland Community:OUSD’s financial operations are improving. The significant challenges in the years ahead make this work even more critical. We will reflect on last year to inform how we improve our practices. We have modeled the commitment to sound fiscal practices and will continue to prioritize and execute this work. Becoming financially healthy is essential to supporting our employees and improving educational quality for our students.That was my key message at Wednesday’s Board of Education meeting when I presented the Year End Closing of the Books for the 2019-20 school year. Click here for a video and here for the presentation materials.
Below are some additional insights.
Celebrating our successes.This past year, we provided raises for our employees, improved our systems, and slowly grew our reserves all while dealing with a pandemic for the last quarter of the fiscal year.I joined OUSD as Chief Business Officer just last April so it’s important that I recognize our staff in the financial department, and the hard work they have put in over the entirety of the last fiscal year and beyond. I also want to acknowledge my team’s perseverance and success at putting many improvements in place, as well as closing the year under pretty extraordinary circumstances. We also benefited from the work of Luz Cazares and our partnership with the County Office of Education. We look forward to making more improvements this year.A slowly growing reserve means that our overall financial picture is improving.Our “reserve for economic uncertainty” is part of our unrestricted end fund balance. California requires OUSD to keep a “reserve for economic uncertainty” of at least 2% of our operating budget (~$11.3M). For context, one month of OUSD’s payroll is ~$40M. Best practices in school finance calls for a 17% reserve. This money ensures a level of stability for our students in times of emergencies or economic hardship.Over the past four years, we have slowly built our reserve for economic uncertainty from a dangerous low of 0.5% ($3M) in 2016-17, to 3% (~$17.7M) this year. This has been, in part, the product of increased financial discipline by the Board of Education.
The rest of the unrestricted fund balance:There are commitments we plan to cover using the unrestricted fund balance such as legally mandated Prop 39 Charter Repairs, audit adjustments, stale dated warrants which are uncashed district-issued checks over three years old. (Of note, last year we had to reserve $1.8M for these old checks, but this year we were able to clear over a million dollars in one-time funds which we can now use to build our reserve.)
Restricted Fund Balance (or carryover):Restricted funds are only allowed to be spent for specific purposes and “carry over” is the amount of money carried over from one fiscal year to the next. We have ~$35M in restricted carry over at the close of books. In this case, the carry over funds in the restricted fund balance fall into one of the following categories:
Multi Year funding with unspent funds (e.g., Title I is a two year allocation),Already committed for a particular expense this year (e.g., Measure G1 paying for raises), orIntentional reserves (e.g., Measure N reserve to help provide stable funding).
We are planning for financial challenges in the coming years.Obviously, the pandemic has and will continue to impact our finances for the foreseeable future. It has changed how we spend resources (for example, buying more laptops and protective equipment). We have received one-time funds from the state and federal level to support our efforts and pay for some of these new costs. While we were already planning for a predicted economic recession, it will likely be worse than we thought. Additionally, the conditions that were leading to financial challenges for school districts all over California have not changed (e.g., flat funding coupled with rising compensation and retirement costs, and increased local spending on special education).
We are continuing to improve the long-term fiscal vitality of the District.There are several improvements planned for this year. In addition to the issues raised in our fiscal vitality plan, we are also actively working on the following:Aligning our budget development process to best practices, Aligning board policies to support fiscal vitality,Increasing our budget monitoring, andBetter monitoring the impact of our spending and programs.
We will also continue to work to increase revenue to the district, become more efficient in our operational processes, and streamline the central office to improve service to schools and families.I look forward to updating you all in December with our First Interim Report on 2020-21.
Please share your thoughts about this messageIn Community,
Chief Business Officer
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