How Oakland and SF Ended Up Among 7 CA School Districts Who Can’t Pay Their Bills

Updated 9 a.m. Tuesday, Feb. 18

Oakland public school parents, teachers and students packed La Escuelita Elementary School’s gym in December, ready for a fight. The district’s board was set to vote on a plan to merge 10 schools — a modest proposal compared to the number recommended by an efficiency study to align Oakland’s campuses with enrollment but a nonstarter for school communities.

After about 30 minutes of pleas from a long line of emotional students who shuffled to the podium, former board President Sam Davis paused the public comment period.

“I was like, ‘Do we still want to hear public comment given that the guy whose idea this was isn’t even here?’” Davis recalled referring to board Vice President Mike Hutchinson, who had left his seat at the dais during the comment period after no motion was made.

Davis and Hutchinson sparred all fall about how to address the district’s massive — and growing — budget crisis. Davis believed the district needed to close schools while Hutchinson, who originally supported voting on the merger plan, pushed back against more drastic consolidations, saying there hadn’t been sufficient community engagement to do so.

“We’re sitting in the meeting, and I’m like, ‘OK, is there a motion for this plan? And nobody makes a motion,” Davis said. “It’s not my place. I’m not going to make the motion.

“We basically didn’t vote.”

The anticlimactic finale of the school closure proposal is nothing new. Oakland’s school board has repeatedly floated, then backed off, plans to close schools and impose other “draconian” cuts in the name of budget balancing. Lisa Grant-Dawson, the district’s chief budget officer, described it as a pattern.

“It’s been decades of not dealing with systemic issues and ultimately asking the superintendent … and the staff to make it work for the year with some commitment that ‘We’ll do something in the future,’” she told KQED. “That doesn’t happen, and we just reach the place where we’ve run out of space for us to be able to make amends as we have historically.”

Oakland — under state receivership since 2003 but now less than two years from regaining control — certified a negative interim budget in December. That designation puts it among just seven of nearly 1,000 California school districts that see no clear path to meeting their financial obligations over the next three years. San Francisco’s school district is also on the list.

The two urban, considerably well-resourced districts are outliers among California’s districts with severe financial struggles. Their budgets are hundreds of millions larger. Mike Fine, the executive director of FCMAT, the financial company tasked with assisting California districts with financial management, said the reason they find themselves at the bottom is because of this skittish pattern.

“Districts all over the state are dealing with many of the same issues,” he said. “What distinguishes the districts on the negative list from others is the districts on the negative list aren’t really dealing with their problem in a timely way. Oakland, San Francisco have [spent] lots of years of ignoring, of not dealing with the problem at hand. Of having the same conversation year over year over year.”

A series of rolled-back plans

Last fall, rumors and fears about looming school closures and budget cuts swirled through Oakland and San Francisco’s schoolyards and board meetings. Like many districts across the state, both have experienced declining enrollment, shrinking the per-pupil funding they receive. COVID-19 relief money, which buoyed districts throughout the pandemic, is drying up.

In October, SFUSD released a plan to close three schools and merge another eight. After massive blowback, it was shelved, and the superintendent who proposed it was ousted. Weeks later, Oakland announced its more modest merger plan — combining 10 schools that already share five campuses. Davis said this replaced a proposition to close a larger number of campuses that didn’t curry enough board support.

Both districts have skirted around unpopular school closures for years. In 2006, SFUSD drastically scaled back a plan to close schools and abandoned another push for consolidations just before the pandemic. After opening more than 40 small schools in the early 2000s amid declining enrollment, Oakland approved five closures in 2022. The board reversed them before they took effect in 2023.

“We should have emerged from [state] receivership at some point recently, and the fact that we’re still kind of eking along in receivership, why? Why haven’t we made the progress to get out of it?” Davis said. “It’s because we’ll be like, ‘OK, we’re going to close schools. No, we’re not going to close schools. OK, we’re going to make a plan. And then, what’s the plan?’”

Fine said that closures are happening across the state and that, while painful, most boards approve and implement the plans without much squabbling. He said what eases the transitions is the way they’re usually rolled out. Most include at least a year of lead time and provide next steps for staff and students all at once.

“The parents already know exactly where their kids are going, all questions are answered,” he told KQED. “They probably have already hosted some open houses at the receiving schools so that the kids and families can start to be comfortable and meet people and integrate.”

Oakland and San Francisco’s school boards have said the plans they’ve been presented disproportionately affect minority groups and don’t present clear pathways for students. Past board members argued that small school environments are good for student outcomes, and closing schools is painful for families who have built community.

The majority of districts follow through

“Do we want a community school manager and a restorative justice coordinator at every school?” asked new OUSD board member Patrice Berry. “I do. I think that’s important.”

Those aren’t positions that the state covers in its base funding, though.

“The hard part about this is you are used to a lot of resources at your schools,” Elliott Duchon, SFUSD’s state-appointed advisor, said to the board at last week’s meeting. “Social workers are wonderful, but they are not generally part of the school allocation. It’s not really something that’s covered in your base expenditures.”

Even paying for the positions California does require to “keep the lights on” — a principal, classroom teachers, clerks and janitors — at every SFUSD school will exceed the district’s unrestricted budget by more than $57 million next year.

One of the main arguments for consolidating school sites last fall was to free up funds to support auxiliary positions — such as counselors, social workers and specialists — that parents say are needs, not wants.

“We need a smaller number of schools that keep better promises to kids,” Alameda County Superintendent Alysse Castro, who stepped up oversight in Oakland after the negative budget certification, said.

While Oakland’s negative budget certification is its first in more than 20 years, it hasn’t been skating by financially.

The district’s budget had been categorized as qualified — the equivalent of a maintenance warning light in your car — for seven years.

“We adapt and balance a budget year by year, make cuts mid-year to get through the year,” Grant-Dawson told KQED last month. “What we’ve not done is not created a comprehensive plan for it to be sustainable.”

In 2023, Oakland gave teachers a 10% raise after a tense, weeklong strike. The raise was paid for, in part, with COVID-19 relief money, Davis said.

San Francisco covered overspending with pandemic funding as well, and its current three-year budget dips into reserves.

“For many years, SFUSD has relied on one-time funds to help us carry ourselves from year to year,” Su told the board last week. “If we make these cuts [to expenditures] now, we will be in a much better place in two years’ time where this district will be fully solvent.

“We will be able to give our teachers and educators and staff a level of stability and predictability that they need, which then translates to a level of stability and predictability that our students need, but we have to do this really hard thing now.”

For the two decades Oakland has been in receivership, its school boards have come up with fiscal plans meant to set the district on a sustainable path, but they haven’t held up. The current iteration, dubbed the Re-Envision, Redesign, and Restructure plan, includes centralizing contracts for supplies and programs and potential staffing cuts. It’s been preliminarily approved but faces a final test next week.

San Francisco said it’s currently engaged in conversations to build its fiscal sustainability plan, which started under former superintendent Matt Wayne’s leadership and was mostly redone from scratch by Su last fall. Su is set to give insight into the staffing portion of the plan on Feb. 25.

Fine said whether the districts are able to get out of the red depends on if they commit to pushing budget cuts and possibly moving forward on site closures.

“The majority of [districts] follow through on their plans. The board adopts a plan and the board follows through on what’s required to implement the plan. The exceptions are the ones that we’re talking about,” he said. “Oakland is notorious for taking a plan and naming it five different times. All they do is change the name of the plan but never fully implement the plan. San Francisco has yet to come up with a plan, in my opinion.”

KQED’s Sara Hossaini contributed to this report.

Feb. 18: This story was updated to clarify that Mike Hutchinson, who was not present for public comment during the Oakland school board meeting in December, left his seat at the dais only after no motion had been made for a vote on the school closures.