Resolution of the Board of Education of the Oakland Unified School District Resolution No. 1718-0087A Confirming The District’s Commitment To Fiscal Solvency WHEREAS, the Closing of the Books for Fiscal Year 2016-2017 revealed: 1) A $9.1 million increase in expenditures over levels projected in the 2016-2017 Third Interim Report; 2) OUSD ended the fiscal year $8 million short of maintaining its 2% Reserve for Economic Uncertainties, a state-mandated requirement; and 3) OUSD used $8 million from the Self-Insurance Fund to pay for General Fund expenses, leaving the Self-Insurance Fund with a balance of $6.8 million; and WHEREAS, the District’s September 2017 budget revisions revealed that there were $4.4 million unbudgeted for expenses; and WHEREAS, the District is faced with significant additional PERS and STRS contribution for fiscal years 2014-15 through 2024-25; and employee benefits, including PERS and STRS, are projected to rise by $8.2 million for the 2018-19 school year; and WHEREAS, despite increased revenue from the implementation of Local Control Funding Formula, the District has experienced flat attendance over the past five years and has not made structural changes to its systems to account for the reduction from 50,000 student population decades ago to current approximation of 36,000; and WHEREAS, increased expenditures and fluctuations between adopted and actual budgets in several budgetary areas, particularly in the following areas: Books & Supplies, Professional & Consulting Services, Certificated Supervisors & Administrators, and Classified Supervisors & Administrators (see attached); and WHEREAS, the Board of Education recognizes that the current multi-year projection indicates that the District will need to identify expenditure reductions and/or revenue enhancements for each of the coming three school years and additionally; and WHEREAS, the Board of Education has been advised of the risk of a qualified or negative interim certification and/or fiscal insolvency if such budget balancing solutions are not realized for 2017-18; and WHEREAS, the Board of Education believes cuts to school site budgets should only be made as a last resort, if needed to maintain the District’s fiscal solvency. If cuts to school sites are necessary, they should be handled equitably, recognizing that each of our schools experiences varied fiscal realities and economic conditions; and WHEREAS, the Board of Education would restore funds to schools if additional funding is obtained by the State or via other means in a manner that is consistent with the value of Equity and reducing impact to the most vulnerable school populations; and NOW, THEREFORE, BE IT RESOLVED that for Step 1, in order to ensure that Oakland Unified School District remains fiscally solvent, and in accordance with the conditions of approval for the District's 2017-18 Adopted Budget as required by the County Superintendent, the Board of Education hereby directs the Superintendent of Schools to make $9 million in reductions to the 2017-18 school year adopted budget to support the following priorities: ● $1.1 million to restore the reserve for economic uncertainty to the state mandated minimum. ● $4 million to support unspecified risks identified by the Superintendent in her December 7 presentation, this amount to be held in the Board’s reserve for economic uncertainty in alignment with Board policy ● $3.9 million to support specified risks identified by the Superintendent in her December 7, 2017 presentation on our budget. BE IT FURTHER RESOLVED that 2017-18 adjustments should maximize dollars to school sites (BP 3150 Results Based Budgeting); ensure shared-decision making across stakeholders (BP 3625 School Governance Policy); and prioritize narrowing the academic and opportunity gaps between the highest and lowest performing students (BP 5032 Equity Policy) with the following priorities: a. Maximize the percentage of all OUSD revenues to be distributed to schools b. Preserve basic and critical services for highest needs students where school communities lack access to alternative funding streams or other resources acquired c. Equitably distribute financial resources based on the different needs and life circumstances of students d. Provide transparent communication around the impact of budget cuts for each site in order to more effectively harness our resources as a City and develop shared responsibility and solutions to support Oakland students e. Support district and school leaders and school communities to develop shared equitable solutions for every student in the District BE IT FURTHER RESOLVED that for Step 2, in order to ensure that Oakland Unified School District improves its fiscal condition, the Board of Education is committed to the following adjustments to the 2018-19 school year adopted budget to support the following priorities for 2018-19: ● Build the reserve for economic uncertainty to at least 3 percent in alignment with Board policy ● Contribute an amount necessary to rebuild the Self Insurance Fund to a minimum level of 40 percent of the actuary by the end of the 2021-22 school year as part of a plan to restore the fund ● Set aside any one-time funds from the State to continue to build the reserve for economic uncertainty BE IT FURTHER RESOLVED for Step 3, in order to ensure the Oakland Unified School District continues to work towards fiscal vitality and maximize funding to schools, the District will adhere to the following criteria for 2018-19: a. Implement zero based budgeting for all central and central services to schools departments in order to maximize resources for school based budgeting based on equity and in alignment with BP 3150 b. Reexamine the base allocation formula for all school sites for the 18-19 year to ensure schools have sufficient resources to support improved student outcomes c. Implement BP 3150 allocation of 88% to schools; 12% to Central. Central Office to be defined as Board, Superintendent, High School/Middle School/Elementary Network Superintendents, Legal, Finance, Human Relations, Research Assessment and Data, Enrollment, Custodial Services, and Buildings & Grounds d. Ensure all budget recommendations are justified in alignment with the board budget prioritization criteria produced by the Budget and Finance Committee (see attached) and the principles outlined above in Step 1 e. Convene districtwide School Site Council and Local Control and Accountability Plan Parent Student Advisory Committee meetings to promote shared decision making in the development of plans and budgets at the district and school site levels in line with the district’s Theory of Action, Board Policy 3625 and the Local Control Funding Formula BE IT FURTHER RESOLVED for Step 4, that the preliminary 2018-19 school year budget, be presented to the Board of Education by the second regular Board meeting in January and includes details in how the District will meet the goals delineated in Step 2 as well as the projected increases in PERS and STRS; and BE IT FURTHER RESOLVED that the reductions outlined above shall be reflected and incorporated into the District’s 2017-18 Second Interim Report and Multi-Year Projection, and shall be implemented immediately, no later than January 1, 2018. Certification PASSED AND ADOPTED by the Governing Board of the Oakland Unified School District on this 13th day of December, 2017 by the following vote: AYES: NOES: ABSENT: ABSTENTIONS: __________________________ James Harris President Board of Education Oakland Unified School District __________________________ Kyla Johnson- Trammell Secretary Board of Education Oakland Unified School District Attachment 1: Recent Fluctuations and Expenditure Increases Attachment 2: Guiding Principles Regarding Budget Development and Prioritization (adopted by the Budget and Finance Committee October 4, 2017) Attachment 1: Recent Fluctuations and Expenditure Increases 1. Over the past four completed fiscal years, total spending in Books & Supplies has fluctuated, but has never met or exceeded its original budgeted amount. Fiscal Year Budgeted Actual 2013-2014 $12,551,643 $12,364,422 2014-2015 $10,060,946 $8,323,758 2015-2016 $18,649,331 $12,366,086 2016-2017 $20,116,023 $6,817,615 2. Over the past four completed fiscal years, total spending in Professional & Consulting Services has steadily increased, and has always exceeded its original budgeted amount. Fiscal Year Budgeted Actual 2013-2014 $7,109,479 $22,692,840 2014-2015 $20,698,679 $23,802,726 2015-2016 $20,479,321 $29,396,665 2016-2017 $21,452,717 $28,298,078 3. Over the past four completed fiscal years, total spending in Certificated Supervisors & Administrators has steadily increased by 43%, and has exceeded its original budgeted amount each year for the last three years. Fiscal Year Budgeted Actual 2013-2014 $13,844,243 $13,906,595 2014-2015 $13,983,354 $15,261,544 2015-2016 $15,715,182 $19,773,226 2016-2017 $18,997,774 $20,010,231 4. Over the past four completed fiscal years, total spending in Classified Supervisors & Administrators has dramatically increased by 69%, and has exceeded its original budgeted amount by over 100% each year over the past two years. Fiscal Year Budgeted Actual 2013-2014 $12,193,285 $13,141,477 2014-2015 $11,093,287 $15,139,680 2015-2016 $9,661,823 $20,167,289 2016-2017 $10,404,809 $22,285,807 Attachment 2: Guiding Principles Regarding Budget Development and Prioritization (adopted by the Budget and Finance Committee October 4, 2017) · Student First: Understanding the impact of decision on students. · Data-driven decisions aligned to Theory of Action, Strategic Plan and LCAP. o Reviewing student-level data and incorporating feedback from the previous year budget development process and assessing effectiveness to inform decisions. o Engaging key stakeholders and incorporating their feedback into the budget process to the extent feasible given mandatory timelines. o In line with the district’s Theory of Action, resources and dollars at the school sites should be protected. · Adhering to best fiscal practices in order to position OUSD for improved short and long-term fiscal health. o Understanding short and long-term impact of key fiscal, programmatic and operational decisions. o Identifying and understanding the level of risk embedding in key fiscal decisions. · Equity: Budget adjustments should be made in a way that avoids disproportionately impacting the District’s most vulnerable students e.g. specific schools or student populations being impacted by a combination of budget adjustments · Transparent Communications: Ensuring the Board and community have timely access to clear, accessible, comprehensive information, including understanding the full range of options being considered and what choices are being made and by what timeline and according to what criteria.