Oakland Unified School District must cut at least $115 million in the next two weeks to avoid state receivership
Since its 2022 election, the OUSD board of education has failed to address well-known financial gaps, and remains unprepared with only two weeks until the deadline
Oakland Unified School District (OUSD) must present a plan to address its budget deficit to the Alameda County Office of Education by November 8 in order to avoid state receivership, which must include at least $15 million in mid-year cuts to the 2025-2026 budget, and now $100 million of cuts to the 2026-2027 budget given ongoing deficit spending.
In recent public meetings, OUSD board members have been unprepared and don’t seem to understand the timeline or the stakes, with the notable exception of Mike Hutchinson. The board just barely pulled together high-level resolutions at midnight on October 8 to give the OUSD superintendent and budget staff some direction for where to propose budget cuts.
Given the dire state of affairs, it’s likely that OUSD will return to state receivership before the end of the year.
OUSD just emerged in April from more than 22 years of state receivership, after finally repaying a $100 million emergency loan from the state stemming from a fiscal crisis in 2003. All signs are that the district is headed right back in.
If OUSD were to return to receivership, the state would appoint an administrator to assume full control over the district, superseding the authority of the elected school board and superintendent. The state administrator has sweeping powers to make all financial and operational decisions, including approving budgets, staffing, and contracts, until the district demonstrates sustained fiscal stability.
In a letter dated September 12, Alameda County Office of Education Superintendent Alysse Castro, who provides fiscal oversight to all school districts in Alameda County, noted the need for further budget reductions to keep the district’s savings (the “reserve fund”) from falling below 2% of the general fund, a state-mandated requirement. Underlining the urgency, OUSD’s Chief Business Officer, Lisa Grant-Dawson, has stated that the District is currently deficit spending more than $4 million per month, which implies the district will be insolvent later this school year.
The necessary reductions included cuts of $78 million in 2026-2027 and an additional $72.6 million in 2027-2028. These numbers have since been increased based on continued deficit spending with the necessary 2026-2027 cuts now amounting to $100 million. Most painfully, they also require mid-year adjustments to the 2025-2026 budget — cutting currently active people and programs to avoid insolvency.
October 8 was the legal deadline to review and respond to the concerns raised by superintendent Castro, including the approval of a board resolution that outlines the timeline and plan to implement budget-balancing solutions that address the shortfall in this and the next school year.
The board meeting on October 8 was five-and-a-half hours long, meandering, and often tense. Board President Jennifer Brouhard did little to steer or shape the meeting, and the discussion made it clear just how little preparation the board had done going into the live, public forum. Multiple members demonstrated confusion around the requirements for the meeting, and the timelines mandated by the state. It’s hard to understate how unprepared the board was going into the meeting.
Only one board member, Mike Hutchinson, demonstrated competence and understanding of the gravity of OUSD’s dilemma. Hutchinson, who chairs the Budget & Finance Committee, alternated between pushing the board to adopt the resolution he had prepared and explaining the legal requirements, venting frustration with the board’s lack of urgency and understanding, and sitting with his head in his hands. “These are statutory requirements and statutory deadlines. There is no way to fake your way through it,” he explained during one memorable exchange.
The board finally voted on their resolution not long before midnight, after extending the length of the session to 11:45 p.m.
The October 8 meeting sets the stage for whether county superintendent Castro approves the board’s plan on November 8. It will take some truly heroic work by OUSD Superintendent Denise Saddler, Chief Business Officer Lisa Grant-Dawson and the budget staff to have any chance of gaining Castro’s approval.
Going into the meeting, there were two separate resolutions:
Hutchinson’s Resolution, which proposed at least $15 million in cuts to the 2025-2026 budget through hiring freezes, freezes on new contracts, furlough days for staff that don’t work at school sites, reducing the number of assistant principals and eliminating co-principals, and additional strategies proposed by the superintendent. It also laid out a plan to address the $100 million budget deficit in 2026-2027, and resolved that the board would have to make additional cuts before making any concessions to its labor partners. As Hutchinson himself acknowledged during the meeting, the $15 million in near-term cuts would likely be insufficient given that the reserve is currently at $19 million and the district is deficit spending more than $4 million per month.
Brouhard and Bachelor’s Resolution, which directed the district to prepare “budget scenarios” for 2026-2027 and 2027-2028. Among other items, the resolution directs staff to focus on centralized operations, reducing administrative overhead and spending on outside services and contracts. It instructed the superintendent to keep working to improve attendance (already a long-established aim of the district), estimating that each 1% increase in attendance yields an additional $5.25 million for the school; and directed the superintendent to inventory school programs. None of its prescriptions offered a tangible and specific path to solvency in the urgent timeframe at hand. Remarkably, it did not even address the 2025-2026 budget, which would have led to OUSD’s near-term insolvency, and the timeline for delivering its requested budget scenarios was after the statutory deadline of November 8.
It was clear that Brouhard and Hutchinson had not spoken going into the October 8 meeting, even though Hutchinson chairs the Budget & Finance Committee. The animosity between the two was on full display throughout the meeting. Hutchinson repeatedly urged the board to use his Resolution as the base text and then to propose amendments to it, but Brouhard and Bachelor insisted on using their draft despite its significant deficiencies.
Consequently, the board was forced to edit Brouhard and Bachelor’s resolution during the meeting itself, to incorporate aspects of Hutchinson’s proposal. There was no issues list, and no structured approach to comments and amendments. At one point, Grant-Dawson had to approach the dais to point out to the board some of the unintended consequences of the language they were drafting on the fly.
The actual hard work of proposing specific cuts to different line items will fall to Saddler, Grant-Dawson and the budget staff at OUSD. The resolution that was passed simply sets policy and a framework, providing limited direction to Saddler and Grant-Dawson to come back with specific recommendations on the cuts needed before November 8.
It’s hard to see how this could lead to anything but state receivership before the end of the year.
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In subsequent pieces, we will do a basic explainer series on OUSD’s budget: where the money comes from, where it goes, and how decisions are made. We will also dig more deeply into the backgrounds of the current board, the dynamics shaping their decision-making, and why balancing the budget continues to be such a challenge.
In the meantime, if you’d like to learn more, we recommend reviewing OUSD’s fall learning series (though it’s a major time commitment), and tracking the Board’s meeting calendar here, specifically watching excerpts of the October 8 meeting and reviewing any materials shared in connection with the November 8 meeting.
thank you for covering this.
Thank you for covering this meeting and explaining the stakes for OUSD.