Oakland Unified Has ‘No Plan’ for Fiscal Solvency, Top Alameda County Schools Chief Warns

Alameda County officials have again called out Oakland Unified School District for lacking a long-term financial plan, as it continues a yearslong trend of piecemeal budget cuts and unstable leadership.

A letter from Alameda County Superintendent Alysse Castro last week offered sharp criticism of the district’s financial decision-making, as it appears to have suspended its search for a permanent superintendent.

“The district 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,” Castro wrote. “While much better than inaction in the face of insolvency, a series of cuts is not the same thing as a plan for fiscal solvency.”

OUSD exited state oversight last summer, more than 20 years after it declared bankruptcy and was bailed out by a $100 million loan from the state. But even before the district regained local control, county officials began warning that the school board needed to make long-term financial changes in the face of a budget crisis.

In recent years, the district has plugged growing budget holes through rounds of short-term budget cuts and spending down reserve funds from more than $115 million in 2025 to just under $30 million this spring. Without about $93 million in cuts over the next two school years, which Castro said in her letter, OUSD has yet to identify, the district’s fund balance could dip into the negative in the coming years.

Castro said that OUSD has made “major financial decisions — like layoffs, budget cuts and labor agreements — without fully knowing or showing their total cost. Because of this, there is no single clear picture of the district’s finances right now.”

Since February, the district has approved plans to cut nearly 400 staff positions through early retirement buyouts, elimination of vacant positions, and layoffs for an estimated savings of about $11 million annually. It also reached new contract agreements with its two largest labor unions, the Service Employees International Union and the Oakland Education Association, which could add tens of millions of dollars to its payroll.

The district agreed to 11% raises for most educators, as well as other demands like class size caps, to avert a potential strike. OUSD has estimated that the raises could cost more than $55 million alone. Board member Mike Hutchinson believes that the SEIU deal will cost another $17 million.

But, he said, “it’s true that it still hasn’t been fully costed out.”

The letter from Castro last week isn’t the first the county superintendent has sent to OUSD warning that patterns of dysfunction could drive it back into receivership. For years, she and OUSD officials have warned that the district — like many across the state and Bay Area — needs to make significant changes to its year-over-year spending, as enrollment declines and operational and personnel costs rise.

Since 2023, the school board has directed district officials to come up with three different budget balancing plans to eliminate its structural deficit, which have included possible school closures, resource consolidations and staff reductions.

None of those initiatives has been implemented. In 2023, the board reversed a plan to close schools; in 2024, it failed to take any action on another merger proposal; and last year, it reneged on $95 million in ongoing budget cuts through layoffs and service reductions.

“The district has a pattern of initiating and discontinuing major planning efforts,” Castro wrote. “The absence of a stable, consistently implemented plan undermines long-term fiscal stability and community trust.”

Her letter also raised alarms about turbulence among the school board and top district officials, reflecting “instability in key roles and systems needed to manage complex fiscal conditions.”

Last year, longtime Superintendent Kyla Johnson-Trammell departed the district suddenly, seemingly forced out two years before her contract was set to end. In the fall, the district’s top budget officer, Lisa Grant-Dawson, resigned days after interim Superintendent Denise Saddler — backed by the teachers’ union and a slim board majority — appeared to undermine her budget-balancing proposal.

The district originally planned to hire a new permanent superintendent before next fall, and contracted with a search firm in November, but that plan has stalled.

Board President Jennifer Brouhard said the board now plans to begin its recruitment process next fall, ahead of the 2027-28 school year.

According to Brouhard, when the board began discussing the superintendent search in January, “most of us felt that we really needed to pay attention to the budget work,” she said.

“No work was done, no money has been paid for the work [to] the search firm for the superintendent search,” Brouhard said. “Hopefully we’ll be resuming that in the early part of the fall.”

Saddler’s current contract expires in June of this year and is likely to be extended.

Castro also pointed to conflicts among the school board as adding to district instability: “Recent board actions related to fiscal oversight have frequently been decided by narrow 4-3 votes, reflecting a significant divide on key decisions.”

A four-member majority aligned with the teacher’s union voted together on key decisions last year, including removing Johnson-Trammell as superintendent, hiring Saddler in May and adding strict guidelines around the district’s budgeting process. That majority includes Brouhard as well as Vice President Valarie Bachelor, Rachel Latta and VanCedric Williams.

“We are poised to be the first district anyone’s ever heard of to regain local control and then lose it again within a year,” Hutchinson said. “If we don’t pass a balanced budget, County Superintendent Castro and the state will have no option other than to step in and take over our finances.”

Castro’s letter includes a “going concern notice,” which marks an escalation toward financial oversight. It places demands on the district by the end of the month, including that the district must encumber all of its contracts through June, update its expenditures and receivables, and submit two separate two-year cashflow projections from July of last year through June 2027 by the end of this month.

It will also need to present a third interim financial report in June, prior to adopting its budget for next year.

In a letter to the board of education on Monday, Saddler said, “We take this notice seriously as we continue to develop and implement plans for improvement.

But, she said, the board has adopted a fiscal stabilization plan, and said the district was “building toward the long-range excellence plan Oakland’s children deserve.”