• Addressing 2017-18 Budget Challenges - 12/7

    Posted by Troy Christmas on 12/7/2017 12:00:00 PM

    Much has happened since the last update here.  Unfortunately, doing the work has taken priority over writing about it.  


    Where are we?

    At 11/8 Board meeting, the Board adopted a resolution to direct staff to prepare a plan to make mid-year adjustments of $15.1 Million to ensure the District meets its 2017-18 financial obligations and begins the process of restoring reserves to its self-insurance fund which covers costs for workers’ compensation among other items.  I say “adjustments” instead of “cuts” because there are multiple ways to address the potential shortfall, including:

    • Raising revenue through donations or other means
    • Moving expenses to restricted funds, where allowable, so unrestricted funds are freed up
    • Reducing spending

    The $15.1 Million is $900,000 more than proposed by staff in October, which was based at the time on early information from September.  With better information, staff is preparing to update its recommendation at a Special Board Meeting, today, 12/7.  The Board will consider the updated financial information contained in the District’s 1st Interim Financial Report and then consider the revised recommendation for adjustments afterwards.  


    School Adjustments

    As I posted earlier with the initial target, the proposed adjustments to school budgets would be $5.6M (2.2% of $250M) and $8.6M (11.6% of $74M) for central services.  When the target was raised by the Board, the central target was raised to $9.5M (12.8% of $74M).  Schools expressed a strong desire to determine their adjustments locally.  As a result, each school was provided a target to reduce based on gradespan and number of students.  This method of deciding a target is consistent with how schools receive funding (e.g. different funds based on gradespan - K-3 vs. 9-12).  Principals have provided their supervisors with their proposed reductions and await approval of plans after the Board’s December 13th meeting.  Schools made individual choices with the categories of reductions shared at the November 27th Board Meeting.


    Central Service Adjustments

    Central office reductions have proved challenging.  Most of budgets are people.  Of the 650 FTE identified in central departments, 310 FTE serve directly at schools, including custodians, school security, nurses, restorative justice coordinators.  Excluding these positions, a mid-year reduction of the revised $9.5 Million would result in elimination of 50%+ of remaining positions.  This largely results from the fact that once legally-required 60-day notices are given, only about ¼ of a full year savings are possible.    


    Looking at non-personnel items, teams of leaders went through remaining balances of equipment, supplies and services budgets.  While $6 Million was “available”, nearly half were district-wide expenses related to licensing fees for in-use operational or school software and programs or transportation directly for students.  Remaining amounts included everything from custodial supplies to student transportation to school sports events. While some reductions were identified, it was not close to $6 Million.   


    The proposed reductions for central services are also being presented at today’s Special Board Meeting and can be found in the Board presentation.  After reviewing both the updated financial information and the potential reductions, the Board will take up potential modifications to their earlier resolution to make $15.1 Million in adjustments.  Final decisions on both amount and implementation are scheduled for the December 13th Regular Board Meeting.


    Staying Informed

    In supporting both staff and the public in understanding where reductions could come from, a few additional fiscal transparency tools were developed.  Specifically,

    • Historical Staffing Dashboard - shows historical staffing by funding, school/department, employee type and other categories to assess number and cost of staffing.
    • Historical Spending Dashboard - shows historical spending by funding school/department, expenditure type and other categories to assess change in spending over time.  Note, revenue to the District grew substantially over this period.
    • Contracted Services Dashboard - shows existing contractors and contracted services as of November 14, 2017.

    The last dashboard was created due to ongoing interest in the number and type of professional service contracts agreed to by the District, particularly by central departments. It allows anyone in the public to see all existing central services contracts paid with unrestricted funds.  It shows that although $28 Million of contracts were entered District-wide, the remaining balance on those that are from central services and paid with unrestricted funds was $3.4 Million as of November 14th.  44% of the remaining $3.4 Million are contracts for student transportation services.


    We’ll try to keep the public informed on this blog, but encourage use of all the tools found at ousd.org/fiscaltransparency

    Next Steps 

    Mid-year adjustment decisions are expected at the December 13th Board Meeting in the La Escuelita Great Room at 1050 2nd Ave, Oakland, CA 94606.

     

     

     

     

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  • KTVU Interviews Superintendent on Budget Issues

    Posted by Troy Christmas on 11/29/2017 6:00:00 AM
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  • Community Letter from the OUSD Superintendent

    Posted by Ericka Doolittle on 11/18/2017
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  • Addressing 2017-18 Budget Challenges (continued)

    Posted by Troy Christmas on 11/2/2017 12:00:00 PM

    Since the last update on 10/22, the Board, Staff, Budget & Finance Committee and others have been working to understand and make plans to address the District’s financial challenges this year. 

    How we got here

    Financial pressure has been building in school districts statewide and in 2017-18, OUSD faces significant challenges born out of that recent history and conditions specific to Oakland. To recap, 2016-17 was a very difficult year financially.  The District dipped into savings to cover overspending which resulted from a combination of factors including lower-than-projected enrollment, deciding not to reduce school staffing after the lower enrollment was discovered and budget surprises in areas like school cafeterias and special education.  

    At 2016-17 closing in September, the District needed to dip into savings even further than anticipated to close out all expenses for 2016-17.  The closing revealed that the savings added in the District’s 2017-18 adopted budget (Adopted in June) would be insufficient to maintain the 2% reserve required by the State.  Not meeting this reserve requirement can cause the State to remove local control and place the District in State receivership.  

    On October 11, 2017, the District presented a revised budget that outlined this shortfall and suggested $14.2 Million in 2017-18 spending reductions to ensure the minimum reserve requirement is met.  $1.2M million of the $14.2M is required to meet the 2% reserve requirement.  The remaining $13M was explained as a cushion to ensure the District remained solvent, given the threat of State receivership and noting a recent history of actual spending exceeding the amount budgeted.  

    At the October 16th, 19th and 30th Budget & Finance Committee Meetings and the October 25th Board meeting, staff and Board members discussed the history and evidence of why spending might end as much as $13M higher than projected.  Staff was not projecting a $13M increase in spending, but instead identifying trends and other evidence suggesting that such an increase might occur and therefore the importance of have savings to cover it.  Already, potential changes to 2017-18 revenue and expenditures have arisen and the District intends monthly reports to track these changes. 

    Creating a plan

    While the Board has not yet landed on a specific target, staff have begun working on a plan to at least address the $14.2M.  At a 2-day, 12 hour retreat on 10/23-24, staff leaders from across the District developed a framework for a plan.  They began with some guiding principles including minimizing the impact of any reductions on students.  The key components of the resulting framework were a $5.6M (2.2%) reduction in spending across schools and $8.6M (11.6%) reduction in spending by central departments.  The details of the reductions are being worked out over the next weeks with a final plan scheduled for Board approval in late November.  

    Staff has also sought input on plans from a variety of stakeholders.  After several convenings of principals, including an all principals’ meeting and associated survey, the clear preference from school leaders is a process that gives them the amount to be reduced and allows them to work with their school community on the specific reductions.  There have also been meetings with the District Budget Advisory Committee and all union leaders.  In addition, the District has received 100+ ideas in the Online Savings Suggestion Box.

    Determining where and how to reduce has also required lots of reports and data, much of which was not readily available.  Many of these reports and tools have been reviewed and discussed at the Budget & Finance Committee and include new tools that show OUSD’s spending history.

    The decisions ahead for the Board will be difficult.  Limited time, imperfect information and political pressures guarantee this difficulty.  The Board’s upcoming decisions have been described as a balancing act between confidence and pain.  Specifically, what level of reductions will provide confidence of solvency and continued local control balanced against how much pain any level of reductions might cause.  

    We will continue to use this space to provide the best available information to support the process.

    Upcoming Public Meetings to discuss District Finances

    • 11/6 - Budget & Finance Committee Meeting (5-9pm)
    • 11/8 - Board of Education Meeting (5-10pm)
    • TBD - Budget & Finance Committee Meeting
    • 11/29 - Board  of Education Meeting (5-10pm)

    Note: Board Meetings are held in the La Escuelita Great Room and Committee Meetings are held in the KDOL Studios at La Escuelita, both at 1050 2nd Ave, Oakland, CA 94606.

    Note: This update is being crafted on the flight to the Governor's Finance Officers' Association (GFOA) training where through generous external funding, a few District principals, Board members and finance/academic staff are learning about best practices in school district budgeting.  Learn more.

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  • 2018-19 Budget Planning Update - Vol. 3

    Posted by Troy Christmas on 10/29/2017 12:00:00 PM

    2018-19 Budget Development Update

    Once again, much of the week was spent addressing the financial challenges of 2017-18.  As the Advisory Team (e.g. executive leadership) met for 12 hours over Monday and Tuesday, they engaged deeply about potential reductions in spending in 2017-18 with an understanding those decisions would potentially set the frame for 2018-19 planning.

    Also, as mentioned in the last post, a smaller group met Wednesday with the Superintendent and other key leaders and walked through the key decisions needed to complete 2018-19 budgeting. That same group is scheduled to meet Monday 10/30 with the goal of clarifying the "who" and "when" for each set of decisions. 

    During the Superintendent meeting, the team clarified that to meet our internal timelines for budget development, all key decisions (e.g. allocation formulas, department changes, school structure changes) should be made by December 21, 2017.  The team recognized this as an extremely aggressive target given the continuing work for 2017-18, but this timeline is necessary to thoughtfully complete the budgeting tasks of the spring.

    With added support from WestEd, a smaller group met Friday to continue to plan the 2018-19 Budget Planning Retreat for the Advisory Team. 

    Next week - Through generous external funding, the Budget Planning Team heads to the Governors' Finance Officers' Association Training in Chicago - November 2-3.

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  • Addressing 2017-18 Budget Challenges

    Posted by Troy Christmas on 10/22/2017 8:00:00 AM

    A Brief History

    For those not following the District's budget challenges, much of this may be news.  California school districts across the state are facing increased pressure on their budgets.  California is already near the bottom in spending per student after adjusting for the high cost of living.  After years of increases under the state's Local Control Funding Formula, revenue growth is slowing and will soon be relatively flat. The same slowing cannot be said about costs for California districts.

    Unlike many districts in California, Oakland has a relatively low reserve (i.e. savings) account.  In the past two years, the reserve has been further depleted and is now projected to fall below the state required minimum of 2% of total General Fund Expenditures during 2017-18.

    Savings this low place the district at significant financial risk and the County has indicated the District must take action to cut spending in the current year.  At the request of the Board and County, in August, the Fiscal Crisis & Management Assistance Team (FCMAT) presented results of a Fiscal Health Risk Analysis of OUSD and also found many areas in need of improvement to better monitor and control spending within existing revenues.

    In September, the Board was presented the 2016-17 year-end closing which indicated spending in excess of revenues and required depleting savings more than expected to close that year.  In October, staff updated the 2017-18 Budget, projecting further depletion of savings during 2017-18.  Consistent with the request of the County, staff also suggested reducing net spending to build a cushion to address unforeseen expenses during the year and ensure 2017-18 would add back the needed 2% reserve.

    What next?

    At its Wednesday, October 25 meeting, the Board is expected to direct staff to build spending reduction scenarios consistent the spending reduction level determined by the Board at the meeting.

    History of key meetings

    Upcoming Public Meetings to discuss District Finances

    Note: Board Meetings are held in the La Escuelita Great Room and Committee Meetings are held in the KDOL Studios at La Escuelita, both at 1050 2nd Ave, Oakland, CA 94606.

     

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  • 2018-19 Budget Planning Update - Vol. 2

    Posted by Troy Christmas on 10/20/2017 12:00:00 PM

    2018-19 Budget Development Update

    Again, much of this week was spent focused addressing the challenges of the current year - 2017-18.  However, a small team is still diligently planning for the opportunity to engage a broader group on 2018-19 Planning.  On Tuesday this team met to clarify all the key decisions and decision-makers necessary to begin building the 2018-19 budget.  

    A key next step from the meeting was to schedule time with the Superintendent to identify those decisions she will make directly based on input already received and those that will involve further collaboration or delegation.

    This important necessary step will shape the framework for decisions based on the Board's standing policy guidance and the Superintendent's priorities.  It will also allow better scheduling of input and collaboration sessions needed to engage with both internal and external stakeholders.

    This planning team also met with WestEd on Friday to learn of best practices in budgeting and continue planning the Advisory Team (e.g. Senior Leadership) Budget Retreat currently scheduled November 9th.

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  • 2018-19 Budget Planning Update - Vol. 1

    Posted by Troy Christmas on 10/12/2017 12:00:00 PM

    Welcome to the OUSD Fiscal Transparency blog

    While the current focus of the blog is sharing about 2018-19 Budget Development, we'll post about other OUSD financial News as time permits. This blog will not be perfect, but is intended as a step in the right direction. 

    This is the first in a series of posts with the goal of keeping our stakeholders informed of the planning process for our 2018-19 Budget.  As presented to the Board's Budget & Finance Committee meeting earlier this month, we have many areas in which to improve our budgeting process and one key area is communications. 

    2018-19 Budget Development Update

    While much of the District is understandably focused on the challenges of the current 2017-18 budget, efforts are underway to better plan our 2018-19 Budget. 

    On Tuesday, a cross-functional group of District leaders from Academics, Equity, Finance, Communications and Enrollment met to dig deeper into building the process that will include the information, decisions and process steps needed to prioritize spending for 2018-19.  

    One key purpose achieved in the meeting was having the group begin to gain shared understanding of the complexities of the decision-making challenges ahead and likewise the complexity of building financial models to translate that complexity into a spending plan reflecting our priorities. 

    The group explored where our Unrestricted General Fund dollars are currently spent, includiing the proportions currently spent within School Budgets, Supporting Schools and in Infrastructure. 

    The group also discussed the need to set a few key priorities, incorporate stakeholder input, align with LCAP and address the opportunities for improvement shared with the Budget & Finance Committee.

    A smaller Budget Strategy team met before and after the larger group to plan for the meeting and next steps.

    Next Steps:

    • Budget Strategy Team to take learnings from group and best practices from GFOA to develop a process outline with roles and responsibilities for sharing and further refinement.
    • Equity Office to provide key questions to incorporate into process development to better interrupt any patterns of bias in our process or decision-making.
    • Map engagement opportunities with stakeholders using existing meeting and communication opportunities given limited time and capacity.

     

     

     

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