Oakland sure knows how to ring in the new year. Not only is the city reeling from a return to the homicide rates of the early '90s, and a Super Bowl appearance that turned into a national disgrace, but now Oakland's school district has asked for what is likely to be the largest bailout in the state's history. Before the district broke its terrible news, the Richmond schools held that dubious distinction, having asked for a $29 million loan in 1991. But estimates of Oakland's needs range from $62 million to $100 million. Not even Compton, California's poster child for public-school ineptitude, approached such a scale. All the hopes for Oakland's schoolchildren, so tenuously nurtured by Superintendent Dennis Chaconas through two years of rising test scores, have been dashed against the rocks of a bookkeeping nuclear Armageddon. And now, the task of figuring out what went wrong and how to fix it has been poisoned by the emerging feud between Chaconas and state Senator Don Perata.
It all started in the late summer, when deputy superintendent for business services Phil White fired up some new accounting software and tested the audit function. In minutes, the software uncooked the books, and revealed that what appeared to be a balanced budget was actually tens of millions of dollars of debt. Shocked school administrators began the agonizing process of trying to figure out what went wrong. After six months, they managed to narrow it down to four main causes.
The most crippling factor was, oddly, gentrification. As the price of housing boomed, blue-collar families fled the city for places such as Tracy and Sacramento, and young, childless, professional couples took their place. This eroded the district's enrollment, and hence the amount of money it received from the state -- upon which it depends for the vast preponderance of its operating budget. Administrators regularly commission a study to determine just how many students are likely to attend school in years to come. The latest study produced three possible outcomes -- high-, medium-, and low-enrollment scenarios -- and Chaconas went with the middle figure, which for last school year was estimated at 54,484. In fact, enrollment ultimately plunged to roughly 48,000 students, 2,000 fewer than even the most pessimistic projection. By the time district officials knew the whole truth, it already had cost them more than $15 million. Although they reduced their payroll by not replacing retiring teachers, state law prohibits districts from laying off teachers in the middle of a school year.
Not only was Oakland employing too many teachers, it also was paying them more than it could afford. Supposedly one of Chaconas' greatest accomplishments was his 24 percent pay raise for teachers, which ensured that quality teachers would stand by Oakland kids for the long haul. It's a laudable goal, but district officials made some remarkably idiotic math mistakes along the way. Not only did the district fail to make enough cuts elsewhere to finance the raises, which cost it between $8 million and $15 million a year, but it failed to anticipate that its high teacher vacancy rate would decrease once jobs there became more attractive. Meanwhile, health and dental benefits have continued their skyward march, increasing the district's costs by $9.5 million in a single year.
Oakland also has been grappling with rising special-education costs and the costly popularity of charter schools, which take their own bite out of the budget. Finally, Oakland's very success at hiring qualified teachers killed its bottom line. Over the last few years, 425 public-school babysitters were replaced with fully credentialed teachers, whose annual salaries and benefits averaged $10,000 more. That comes to $4.25 million in additional costs that the district didn't take into account.
How could district administrators have failed to notice all these rising costs and declining revenues? Chaconas claims that an age-old system of accounting is to blame. Historically, he says, no one in the district's accounting department examined costs and revenue on a monthly basis. Instead, they waited till the end of the year to close the books. Since enrollment had always risen, and lousy working conditions guaranteed teacher turnover, the district always had more money than it spent and could afford a half-assed accounting system. But thanks to Chaconas' reforms and the city's demographic trends, the gap between revenue and expenditures first narrowed, then flipped, over the course of nine months in 2001-02. Because no one had bothered to change a bookkeeping system that appeared to work under very specific circumstances, no one caught it until it was far too late.
Still, one of the most infuriating problems in public education is the absolute lack of public accountability for system administrators. Berkeley superintendent Jack McLaughlin spent his district $6 million into the hole, and where is he now? He serves as superintendent of education for the state of Nevada. J.L. Handy bankrupted the Compton school district, and what happened to him? The Emeryville school board hired him and let him destroy their district as well. Walter Marks forced the West Contra Costa district to beg Sacramento for a $29 million bailout and soon thereafter the Kansas City school district hired him as its new superintendent.
If the East Bay's public schools are to do their jobs, this rotation of incompetent administrators has got to stop. The men and women responsible for these fiascos must be flogged in the city square before mobs bearing tar and feathers, or this will only happen again. Which begs the question: Who's really responsible for the Oakland mess?
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