‘A decision-making problem’: County schools chief warns Oakland Unified is at risk of running out of money
Alameda County Superintendent Alysse Castro warned in an April 16 letter that the Oakland school board keeps making new spending promises "without a clear plan to pay for them."
Oakland Report continues its coverage of the Oakland Unified School District (OUSD) board of education as it tries to close a long-term budget gap and avoid sliding back into state receivership. In this installment, we look at an April 16, 2026 warning letter from the Alameda County Office of Education (ACOE) to the OUSD board.
Oakland Unified School District (OUSD) takes in more than $800 million a year for 34,000 students, making it one of the best-funded urban districts in the state.
Alameda County Superintendent of Schools Alysse Castro issued a letter on April 16, confirming that the district may or may not be able to pay its bills over the current and next two school years.1
Castro warns that the back pay owed under a proposed new teacher’s union contract – which has not yet been shared publicly or added to the district’s budget – “could quickly shift the District from uncertainty to insolvency.”
Castro’s letter says that OUSD does not have a revenue problem — it has a “decision-making problem.”
Castro issued a formal ‘Going Concern Notice’ under the California Education Code, signaling a step up in oversight that sets up “safeguards for rapid intervention if conditions worsen.”
The Going Concern notice comes less than a year after OUSD finally got out from under 22 years of state control.2
A step up in oversight – and a step toward another state takeover
“At this time, the District is actively drawing down reserves, weakening the safeguards that have prevented insolvency to date, and continuing to increase expenditures without implementing compensatory reductions—placing both fiscal solvency and recently restored local control at risk.”
— Alysse Castro, Alameda County Superintendent of Schools, Apr. 16, 2026
A Going Concern Notice is a tool that lets the county superintendent require certain actions from a school district while still allowing the school board to make its own decisions. Under Education Code § 42127.6, by April 30 OUSD must:
Lock in all contracts through June 30, 2026
Update its records of money owed and money due
Turn in two separate two-year cash flow projections — one based on OUSD’s Second Interim Budget report as filed, and one that also includes every board decision made since January 31, such as the layoffs and the proposed Oakland Educators Association (OEA – teachers union) contract.
A board-approved Third Interim Budget Report is due to ACOE by June 1, 2026.
The proposed teachers union contract — which includes up to 13% raises — is not in the budget yet, and the board has no plan how to pay for it
A main point in Castro’s letter is that OUSD is “continuing to make new commitments without a clear plan to pay for them.” The tentative OEA union contract reached on February 27 — which gives the most senior teachers a 13% raise over two years and all other educators 11%, with extra raises for special education teachers, early childhood educators, nurses, and social workers — is not included in the Second Interim budget numbers.3
Neither is the roughly $40 million, three-year Service Employees International Union (SEIU) Local 1021 contract the school board approved in December, which set a $25-an-hour minimum wage for the district’s lowest-paid workers.4
“The issue is not the raises themselves, but the absence of a Board-approved, sustainable plan to support them… Local control is not simply the authority to make decisions; it is the responsibility to make hard choices and sustain them over time.”
— Alysse Castro, Alameda County Superintendent of Schools, Apr. 16, 2026
The Second Interim Budget Report projects a $20.6 million shortfall in the unrestricted general fund for 2025-26, followed by small surpluses in the following years — but only if the district makes $36 million in still-unnamed cuts for 2026-27 and another $57 million for 2027-28. Without those cuts, the district’s ending fund balance would drop below zero by 2027-28.
“A series of cuts is not a plan”
Castro’s sharpest criticism is about a lack of responsible financial planning by district leadership. The district, she writes, “appears to have moved directly to balancing the budget with a series of cuts, without the intermediary step of adopting a coherent fiscal solvency plan.” In plain terms: OUSD is making cuts one at a time without a full plan that explains how all the pieces fit together.
“The District’s instability is driven by deferred decisions and unimplemented actions that continue to compound risk. Stability will follow only from making budget-balancing decisions and implementing them.”
— Alysse Castro, Alameda County Superintendent of Schools
The letter points to three plans the board started and then dropped: the 3Rs Plan, the Fiscal Vitality Plan, and the Blueprint for Quality Schools. Quoting the state’s Fiscal Crisis and Management Assistance Team, Castro notes that the district “continues to alter or bypass” its own plans “when faced with difficult decisions.”5
Close 4-3 board votes and an OEA-backed school board majority
“Collective Bargaining: The Board cannot authorize future compensation increases without corresponding tradeoffs. We share this Board’s belief in retaining great staff. However, sustainable compensation requires offsetting reductions elsewhere.”
— Alysse Castro, Alameda County Superintendent of Schools, Apr. 16, 2026
Among the “Leadership Uncertainty” risks Castro calls out by name: “Recent board actions related to fiscal oversight have frequently been decided by narrow 4-3 votes, reflecting a significant divide on key decisions.”
She also notes that OUSD is currently operating without a permanent superintendent or a permanent chief business officer.
The four-member board majority — President Jennifer Brouhard, Vice President Valarie Bachelor, Rachel Latta, and VanCedric Williams — is backed by the teachers union and has voted together on several major decisions over the past year. These include the abrupt dismissal of former longtime Superintendent Kyla Johnson-Trammell and the December 10 approval of the $102.5 million “Scenario 3” budget plan.6
See this related article:
Hours before that December vote, OEA emailed its members claiming that “OUSD does not have a structural deficit” and accusing then-Chief Business Officer Lisa Grant-Dawson of “blatant insubordination” for preparing a staff analysis that pushed back on the union’s budget math.7 (Grant-Dawson resigned two days later.)
The OEA email also explicitly called on the OEA-backed board majority to “keep cuts away from classrooms and students” (i.e., teachers) and instead cut “outside contracts, central office spending, and books and supplies.”
The three-member minority — Directors Mike Hutchinson and Patrice Berry, often joined by Clifford Thompson — has repeatedly objected to what they describe as thin financial details and a lack of clear timelines.
On March 25, Hutchinson publicly called on Interim Superintendent Denise Saddler to resign, warning that if the OEA tentative agreement is approved without matching cuts, OUSD’s 2026-27 budget shortfall will again top $100 million.8
Video clip 1. OUSD board member Mike Hutchinson sharply criticizes interim superintendent Denise Saddler and calls on her to resign on Mar. 25, 2026. (Source: OUSD)
Loss of local control of Oakland’s schools is still on the table
The District’s recent history shows a well established pattern of deferring difficult decisions and reversing or delaying corrective actions… OUSD recently regained local control after many years of state oversight. Preserving that control depends on the elected governing board making timely decisions, implementing adopted actions, and aligning commitments with capacity.
— Alysse Castro, Alameda County Superintendent of Schools
Castro closes the letter with a clear reminder that the Going Concern notice is not, by itself, a state or county takeover. “This is entirely within the Board’s control,” she writes.
But her earlier warning — from November 2025, when she reluctantly approved the adopted 2025-26 budget — still rings true in the April letter: if the state ends up stepping in, local control will have been “forfeited through inaction.”9
The OUSD board’s next regular meeting is scheduled for April 22.
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Castro, Alysse. “QUALIFIED Certification of 2025-26 Second Interim Budget Report with Going Concern Notice.” Alameda County Office of Education, Apr. 16, 2026. (See embedded document, above)
McBride, Ashley. “After 22 years, OUSD will control its schools again. Here’s why receivership was such a ‘difficult time.’” The Oaklandside, May 13, 2025. https://oaklandside.org/2025/05/13/ousd-leaving-state-receivership-22-years-loan/
McBride, Ashley. “Oakland teachers avert strike, reach tentative deal with OUSD.” The Oaklandside, Feb. 27, 2026. https://oaklandside.org/2026/02/27/oakland-teachers-avert-strike-reach-tentative-deal-with-ousd/
McBride, Ashley. “OUSD has agreed to tens of millions in new labor contracts. How will it cover the cost?” The Oaklandside, Mar. 12, 2026. https://oaklandside.org/2026/03/12/ousd-oakland-schools-two-new-labor-contracts-budget-crisis/
Fiscal Crisis and Management Assistance Team. "FCMAT Annual Review," Jan. 1, 2025; as cited in Castro, Apr. 16, 2026 letter (see note 1).
DeBenedetti, Katie. “OUSD Just Got Control of Its Finances Back From the State. It’s Already in Major Trouble.” KQED, Sept. 19, 2025. https://www.kqed.org/news/12055977/ousd-just-got-control-of-its-finances-back-from-the-state-its-already-in-major-trouble
Borek, Bob. “Oakland school board (OUSD) approves $102.5 million in budget cuts in 5-2 vote.” Oakland Report, Dec. 13, 2025. https://www.oaklandreport.org/p/oakland-school-board-ousd-approves
Oakland Report. "'You should resign': Oakland school board member calls for interim superintendent to quit." Oakland Report, Mar. 31, 2026. https://www.oaklandreport.org/p/20260330-ousd-hutchinson-saddler-resign
Borek, Bob. "Oakland school board kicks budget can down the road, passing 'absolute minimum requirements' for county's approval." Oakland Report, Nov. 4, 2025. https://www.oaklandreport.org/p/oakland-school-board-kicks-budget