OAKLAND UNIFIED SCHOOL DISTRICT Financial Recovery Plan January 15, 2003

EMERGENCY APPORTIONMENT REQUEST District may request a State Loan of up to $80 Million This figure is based on the following assumptions: The current year budget deficit mirrors last year with adjustments for documented expenditure reductions The current year State budget cuts will not exceed the Governor’s current proposal The current downward trends in OUSD spending will be maintained if not enhanced

GENERAL FUND DEFICIT $62 Million* 2001 –2002 Deficit of $32 Million**: + $8.8 Million – Starting Cash Balance - $6.3 Million – Revenue shortfall - $17.5 Million – Unbudgeted salary and Benefits - $8.8 – Other unbudgeted expenses - $8.6 – Contributions to other funds *Does not include 2002-2003 Governor’s proposed cuts **Restricted Funds Year End 2001-2002 = $10.1 Million Surplus

GENERAL FUND DEFICIT, cont. $62 Million, cont. 2002 –2003 Deficit of $30 Million: - $41 Million – FCMAT Estimate + $11 Million – Documented reduction in salaries and benefits and other expenses

CAUSES OF DEFICIT Decline in enrollment: since 1999, enrollment has declined by 3,265 students Increased compensation and benefits: 25% salary increase for teachers Reduced the number of emergency permit teachers Reduction in vacancies Contribution to other funds Use of inaccurate data in financial planning

FINANCIAL DEFICIT NOT EDUCATIONAL CRISIS

INCREASING QUALITY OF TEACHING STAFF Increased the fully credentialed teaching force in the district from 69% to 83% Reduced the number of emergency credentialed teachers from 490 to 65

EDUCATIONAL GAINS ACHIEVED Significant increases in student achievement in all subjects K-8. Highest gains for lowest achieving students. SAT9 Gains Above the 50th Percentile (2000-01 to 2001-02) Grade 2nd 3rd 4th 5th 6th 7th 8th Reading +10 +4 +2 +1 Language +6 +7 +3 Math +5

Creating Small Learning Communities 8th Grade Academies: Achievement gains for students retained in 8th grade academies surpasses those retained in traditional settings SAT9 improvement above the 25th Percentile between 2000-01 and 2001-02 Reading Language Arts Math Bunche +14 +19 +11 Rudsdale +16 +15 +5 Traditional Sites +7 +8

Creating Small Learning Communities 8th Grade Academies: Achievement gains for students retained in 8th grade academies surpasses those retained in traditional settings SAT9 improvement above the 50th Percentile between 2000-01 and 2001-02. Reading Language Arts Math Bunche +7 Rudsdale +11 +3 +6 Traditional Sites +2

New Small Autonomous Schools Above 50th Percentile improvement between 2000-01 to 2001-02 Reading Language Arts Math ASCEND +7 +10 +5 ICS +6 +19 +17 UPA +8

Number of High School Dropouts

GUIDING PRINCIPLES TO RECOVERY PLAN Achieve balanced budget in 2003-2004 Protect core program Maintain competitive salary to attract and retain quality staff Implement strategic plan, including site autonomy Protect academic gains

RECOVERY PLAN Implementation of Budgetary Controls Budgetary Reductions Made to Date 2002-2003 Additional Reductions 2003-2004 - Produce balanced budget through collaboration with employee groups and community Redesign Operations

Implementation of Budgetary Controls Integrated Financial Management System implementation (ongoing) Position control “document” Reorganization of Financial Services On a monthly basis: All budget revisions go before the Board of Education Financial analysis by fund and resource Perform reconciliation of books Cash flow reports

BUDGETARY REDUCTIONS MADE TO DATE June 30, 2002 – Adopted budget with $14.1 Million in spending reductions October 1, 2002 – Cut supply budgets by 10% and adopted a freeze on non-essential expenditures and filling non-essential positions October 15, 2002 – First Semester Teacher consolidations (Net Reduction of 42 FTEs from Unrestricted General Fund) January 1, 2003 – Senior staff takes voluntary pay reduction of 10%

2002-2003 Additional Reductions January 6, 2003 – Administration Presents Draft of 2002-2003 Budget Reductions Totaling $8,990,000: Freeze step and column retroactive to June 30, 2002 Elimination of pre-employment medical Closure of two kitchens Elimination of Central Administration Positions (8.5 FTE) January 28, 2003 – Second Semester Teacher Consolidations (projected 25 FTEs)

2003-2004 Proposed Balanced Budget January 6, 2003 – Administration Presents Draft of 2003-2004 Budget Reductions Totaling $33.3 Million: Benefits freeze capped at 2002-2003 level Elimination of elementary prep teachers Teacher attrition due to decline in enrollment Reduce School Security Officers by 60 (out of 111) Special Education reduction Assistant Principal ratio increase Reduce Custodial staffing Reduce Purchasing and Warehouse allocation Reduce Central Administration (13.5 FTE)

Legislative Strategy Special Session Legislation Regular Session Requires simple majority Session lasts till end of month Regular Session Requires urgency legislation to provide loan in timely fashion Urgency legislation requires 2/3 majority

PROPOSED LEGISLATIVE LANGUAGE Appropriate up to $80 Million to SPI for OUSD Appoint an Administrator who would: Manage and oversee District Fiscal Operations Have final approval of budget Stay and rescind financially unwise expenditures The current district superintendent would retain: Ability to hire and fire all staff Manage instruction Manage other support services

PROPOSED LEGISLATIVE LANGUAGE, cont. The debt to be repaid as a straight-line loan amortized over a 30-year term. Allow the district to forego reserve requirements during the 2002-03 and 2003-04 fiscal years Require the district to appropriate ½% of GF total annually until Reserve Fund is reestablished Allow the district to sell or lease property to repay state loan

PROPOSED LEGISLATION LANGUAGE Allow the district to transfer up to 30% of funds within Categorical Mega Block Grants Authorize the district to calculate Class Size Reduction with an average of up to 22-1 OR Allow the district to select which Class Size Reduction grade level to reduce or eliminate (as per AB 42 Daucher)