Teacher Strike Could Crash Oakland Unified Finances

John Moorlach
State Senator representing the 37th Senate District

When school finances go bad, it’s the kids who get hurt most. That’s what’s happening in the Oakland Unified School District as its teachers prepare for a potentially “indefinite strike” beginning Thursday, as threatened by Keith Brown, president of the Oakland Teachers Association.

The teachers are seeking a 12 percent pay hike. The district offered 5 percent.

Here are some facts Oakland teachers should consider. First, a district budget deficit of $30 million already means shutting down a dozen schools, reported CBS SF Bay Area.

Next, in my recent analysis of the finances of 944 California public school districts, “Financial Soundness Rankings for California’s Public School Districts, Colleges & Universities,” Oakland Unified ranked 682nd – the bottom third.

The rankings are based on the Unrestricted Net Position, or UNP, from each district’s latest Comprehensive Annual Financial Report, or CAFR, available on district websites. If negative, it’s called an Unrestricted Net Deficit.

I have found this to be the best metric of a district’s financial soundness. For 2017, the latest available, Oakland Unified’s unrestricted net deficit was $427 million; or $1,001 per capita, based on the overall population the district serves.

However, when the district’s next CAFR comes out, for the first time it will include the liability for the unfunded retiree medical care, almost certainly worsening the unrestricted net deficit.

For example, both sides in the negotiations during the recent Los Angeles Unified School District teacher strike noted the district was in poor financial shape. Ironically, the strike occurred just after December 14, when the LAUSD released its CAFR for the year ending June 30, 2018. The CAFR showed the district’s unrestricted net deficit was $19.6 billion, almost double the $10.9 billion in 2017, because of the inclusion of retiree medical liabilities.

As I noted in a December 27 op-ed, LAUSD’s per capita unrestricted net deficit was $4,180, meaning about 4.7 million people would have to cough up this amount to bring the district to even.

Getting back to the Bright Side of the Bay, last year the district’s finances already were so dismal the Legislature passed Assembly Bill 840, which among other things required Oakland Unified “to develop short and long-term financial plans and update school district facilities plans aligned with their plans for fiscal solvency.” I voted for the bill.

Last October, a warning came from Michael Fine, CEO of the state Fiscal Crisis and Management Assistance Team, which supervises the finances of faltering districts, even taking over when necessary. “If you choose not to make a decision, a decision will be made for you,” he threatened.

Reported EdSource, “He and Alameda County Superintendent of Schools Karen Monroe reminded the board that if the district fails to balance its budget, it could need another state loan or the county and state could impose cuts, which would put the district back under state control.”

The district earlier was taken over by the state from 2003 to 2009 as part of a $100 million bailout.

It’s also scandalous how Oakland can’t properly educate its poor children, especially African Americans and Latinos, even though it now has become a wealthy city overall.

Reported World Population Review, “Oakland has the 5th highest cluster of ‘elite zip codes,’ which are ranked by the number of households with the highest combination of education and income, with close to 38 percent of the population over 25 having a bachelor’s degree or higher. Oakland is also in the top 20 cities in the U.S. for median household income.”

Yet according to Great Schools, just 33 percent of Oakland Unified students are “proficient” in English and 27 percent in math on state tests, compared 50 percent and 39 percent statewide, respectively.

The numbers of English proficient students were 24 percent for Hispanics and 19 percent for blacks; and for math, 17 percent for Hispanics and 12 percent for blacks.

Everybody in the state talks about closing the “proficiency gap” for these students, but clearly it’s not being done in Oakland Unified.

In addition to balanced budgets, what’s needed is a switch to performance pay for teachers. Let the best – those who raise student test scores the most – be paid more than the mediocre. And we need to end “last hired, first fired,” which discourages talented young people from becoming teachers. Because, when a recession hits and budgets are cut, seniority takes precedence over teacher talent.

Gov. Gavin Newsom and the Democratic leadership in the Legislature keep insisting they want to improve the test scores of poor students. Oakland Unified’s financial crisis is an opportunity to insist that tested reforms rewarding teacher competence and student performance be implemented.

For once, let’s put the kids first.

John M. W. Moorlach, R-Costa Mesa, represents the 37th District in the California Senate

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