BILL ANALYSIS
AB 45
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Date of Hearing: April 25, 2007
ASSEMBLY COMMITTEE ON EDUCATION
Gene Mullin, Chair
AB 45 (Swanson) - As Amended: April 23, 2007
SUBJECT : Oakland Unified School District: governance.
SUMMARY : Establishes a process for the return of all rights,
duties, and powers to the governing board of the Oakland Unified
School District (OUSD). Specifically, this bill :
1)Requires the Fiscal Crisis Management Assistance Team (FCMAT)
of the Kern County Office of Education, commencing in 2008 and
annually thereafter, to submit a progress report on OUSD's
Assessment and Recovery Plan by January 1.
2)Requires that the governing board of OUSD and the State
Administrator appointed by the Superintendent of Public
Instruction (SPI) annually by April 1 reach agreement on the
operational details of returning any areas of responsibility
recommended for return to OUSD in the previous progress report
submitted by FCMAT, and to make that agreement in the form of
a Memorandum of Understanding (MOU) executed by both parties.
3)Requires that if OUSD and the State Administrator are unable
to reach the agreement specified in 2) above, then the OUSD
governing board shall by May 1 produce a statement in-lieu of
and serving the same purpose as the MOU. This statement stands
unless the SPI presents just cause to the contrary to the
Office of Administrative Hearings such that an administrative
law judge orders changes in the statement and execution of
that statement as the MOU by both parties.
4)Requires that any areas of responsibility recommended for
return to OUSD by FCMAT in the annual progress report become
part of the rights, duties, and powers of the governing board
of OUSD on the next July 1.
5)Allows members of the governing board of OUSD to draw
compensation for their service at any time during which this
process returns any area of responsibility to OUSD; such
compensation shall be made in the same manner and amount as
was allowed prior to state takeover.
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6)Requires that any area of responsibility previously returned
to OUSD be reverted to the control of the State Administrator
upon such recommendation by FCMAT in its annual progress
report.
7)Requires that this process continue until all areas of
responsibility are returned to OUSD.
8)Restricts compensation to FCMAT for costs incurred as a result
of this bill to $145,000 annually and makes this amount
subject to a Budget Act appropriation.
EXISTING LAW requires the Superintendent of Public Instruction
to assume all the rights, duties, and powers of the governing
board of the Oakland Unified School District and to appoint an
administrator to act on behalf of the Superintendent in
exercising the authority of the Superintendent over the school
district. Existing law continues the authority of the
Superintendent and the administrator over the school district
until certain enumerated conditions are met, including the
completion of an improvement plan for the district. Existing law
requires the County Office Fiscal Crisis and Management
Assistance Team (FCMAT) to prepare the improvement plan for the
school district by July 1, 2003.
FISCAL EFFECT : Unknown. Subject to a Budget Act Appropriation,
FCMAT may receive up to $145,000 annually to cover costs
associated with this bill.
COMMENTS :
Historical background : According to OUSD in 2003, district
officials became aware of a negative general fund balance for
the 2001-02 fiscal year, and of potential deficits in its
2002-03 budget, in August 2001. The district projected at the
time that it would run out of cash in May of 2003 and be unable
to pay school employees. In 1999, OUSD had negotiated a 24.4%
teacher salary increase to be phased in over three years. Also
from 1999 to 2003, the district estimated that it had lost 3,265
pupils, worth $15 to $22 million in annual revenues. Despite
making budget cuts for the 2002-03 fiscal year that the district
believed would save approximately $31 million, the district
continued to project a negative fund balance at the close of the
2002-03 fiscal year and the district governing board requested
an emergency loan.
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The district also noted at the time that, "in contrast to the
circumstances surrounding other school districts that have
recently received state loans, there have not been any
accusations of intentional mismanagement or fraud in OUSD. The
budget deficits at the OUSD were inadvertently hidden by an
inadequate system of checks and balances in the district's
financial services division, and were exacerbated by declining
enrollment, increases in health care costs, and state education
budget cuts".
SB 39 (Perata), Chapter 14, Statutes of 2003, appropriated $100
million for an emergency loan to OUSD, and required the
Superintendent of Public Instruction to assume all the rights,
duties, and powers of the governing board of the district and to
appoint an administrator to act on behalf of the Superintendent
of Public Instruction in exercising the Superintendent's
authority over the school district. The bill authorized the
administrator, with the approval of the Superintendent, to enter
into agreements on behalf of the school district and to change
any existing district rules, policies, or practices, as
provided. The bill also specified that the governing board of
the school district not receive any compensation during the
period of the Superintendent's authority over the district, and
continued the authority of the Superintendent and the
administrator over the school district until certain conditions
were met, including the completion of an improvement plan for
the district. The bill required the Kern County Office Fiscal
Crisis and Management Assistance Team (FCMAT) to prepare an
improvement plan for the school district by July 1, 2003, and to
report on the implementation of the plan in written progress
reports until September 2004; budget actions subsequently
extended these reports until September of 2006. The bill
required the district to repay the loan as a straight line loan
amortized over a 20-year term, with interest as provided, and
required the district, except as specified, to bear 100% of all
costs associated with implementing its provisions.
SB 39 also stated six conditions which, when met, would trigger
return of all rights, duties, and powers to the governing board
of OUSD:
1)Two complete fiscal years have elapsed following the
appointment of the administrator or, at any time after one
complete fiscal year has elapsed following that appointment,
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if the administrator determines, and so notifies the
Superintendent of Public Instruction, that future compliance
by the Oakland Unified School District with the improvement
plan is probable.
2)FCMAT completes the improvement plan as specified.
3)FCMAT, after consultation with the administrator, determines
that for at least the immediately previous six months the
school district made substantial and sustained progress in
implementation of the plan in the major functional areas.
4)The administrator certifies that all necessary collective
bargaining agreements have been negotiated and ratified, and
that the agreements are consistent with the terms of the
improvement plan specified in Section 7 of this act.
5)The district completes all reports required by the
Superintendent of Public Instruction and the administrator.
6)The SPI concurs with the assessment of the administrator and
FCMAT that future compliance by the Oakland Unified School
District with the improvement plan and the multiyear financial
recovery plan is probable.
It is unclear to what extent OUSD has met the first five of
these original conditions for return of power to the district.
However, it is clear that condition 6) has not been met in that
the SPI has not returned any powers to the district governing
board. In September 2005, FCMAT found the district to be above
the evaluative threshold marking satisfactory performance in the
area of Community Relations and Governance, and recommended the
return of this function to the OUSD board. A subsequent review
(report issued September 2006) yielded the same findings and
recommendation. The Superintendent and the State Administrator
have not acted on this recommendation. The State Administrator
has stated that she expects the district to be above the
evaluative threshold marking satisfactory performance in all
areas, except Financial Management, in the next year.
Existing law provides no specific criteria to be used to
determine when the district's future compliance with the
improvement plan and the recovery plan is probable (i.e., when
condition 6) above has been met), and provides no direct
evaluative link between this determination and the reviews
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completed by FCMAT. Having no clear statutory criteria for
return of control could lead to results ranging from a premature
return of control, which is not in the students' or the state's
best interest, to an overly prolonged period of Superintendent /
State Administrator control, which may not be in the best
interest of any party; in addition, either of these extreme
results could occur despite FCMAT recommendations to the
contrary. The author and members of the Oakland community state
that the ambiguity and open-ended nature of this decision
process and of OUSD's current situation makes it difficult to
motivate students, parents, staff, and the community at large to
continue work toward improvement in the district.
The current FCMAT review-recommendation process focuses on five
areas of responsibility to be considered for return to the
district: 1) Community Relations and Governance, 2) Financial
Management, 3) Personnel Management, 4) Facilities Management,
and 5) Student Achievement.
The OUSD Board is voluntarily undergoing training in
Boardsmanship and responsibilities of a Board; this training
began in January 2007, will continue in April, and be completed
in June 2007; there has been a complete turnover in board
membership since 2003.
There is a considerable state's interest in this issue, in that
a return to dysfunction in the district (either because the
district is not yet ready for a return of control or because the
district "backslides" once control is returned) should be the
paramount concern, both because of the resulting impact on
students and the state's outstanding receivable, the $100
million loan.
Supporters of the bill argue that having a set of performance
evaluations conducted by an independent expert on a certain
timeline, where positive evaluations trigger the return of
specific areas of responsibility to the OUSD Board meets the
needs of the OUSD Board and the Oakland community for a defined,
unambiguous return process. They argue that this bill also
includes a mechanism for dealing with the possible disagreements
and ambiguities between the district and the State Administrator
that might result from returning areas that are not clearly
defined as to what specific responsibilities are held by which
party; this mechanism has a default in the interest of the
district, but allows the Superintendent to present arguments
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against return of control. The fact that return of control, as
well as potential reversion of control to the State
Administrator, is triggered by an evaluation of performance
ensures that an external evaluator determines when the district
is ready for those responsibilities and protects the interests
of the state. It can also be argued that returning control to a
school district, when a independent entity determines that the
school district can handle the return of that control,
constitutes a return of local control and makes the controlling
entity more responsive to the needs of the local community.
Opposing arguments would include that the interest of the state
is so compelling that it overrides any local interest and
suggests that control by the State Administrator should
continue. It has also been argued that there should be a
greater compelling interest, than that argued by supporters,
before the Legislature considers changing current law, which
makes a statewide elected Constitutional Officer responsible for
administration of school districts in fiscal crisis and for
making decisions on the return of power to those districts.
Amendments : Committee staff recommends and the author has
accepted the following amendments:
1)Clarify that FCMAT use the same standards, scoring
methodology, and evaluative threshold as employed in their
Fourth Progress Report on the OUSD Assessment and Recovery
Plan to make future evaluations of the district's progress and
recommendations as to operational areas that should be
returned to the control of the governing board of OUSD.
2)Make the requirement that any area of responsibility
previously returned to OUSD be reverted to the control of the
State Administrator upon such recommendation by FCMAT in its
annual progress report, permissive and at the sole discretion
of the SPI.
3)Limit the compensation the FCMAT receives to an amount not to
exceed $145,000 annually to cover all costs associated with
its responsibilities pursuant to this bill, and make this
compensation subject to an appropriation made in the annual
Budget Act.
REGISTERED SUPPORT / OPPOSITION :
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Support
16th AD Democrats
Alameda County Democratic Party
American Federation of State, County, and Municipal Employees
Boardmember Alice Spearman, Oakland Board of Education
Boardmember Christopher Dobbins, Oakland School Board
Boardmember Gay Plair Cobb, Alameda County Board of Education
Boardmember Greg Hodge, Oakland Board of Education
Boardmember Kerry Hamill, Oakland Board of Education
Boardmember Noel Gallo, Oakland Board of Education
California ACORN
California School Boards Association
California Teachers Association
Congresswoman Barbara Lee
Councilmember Jean Quan, City of Oakland
Councilmember Larry Reid, City of Oakland
Councilmember Nancy Nadel, City of Oakland
Councilmember Patricia Kernighan, City of Oakland
Crocker Highlands Elementary School Parent Teacher Association
Mayor Ronald V. Dellums, City of Oakland
Metropolitan Greater Oakland Democratic Club
Oakland Education Association
President David Kakishiba, Oakland Board of Education
Supervisor Alice Lai-Bitker, Alameda County
Supervisor Keith Carson, Alameda County
Supervisor Nate Miley, Alameda County
Trustee Linda Handy, Peralta Community College District
Vice Mayor Henry Chang, City of Oakland
Wellstone Democratic Renewal Club
More than three hundred individuals
Opposition
None on file.
Analysis Prepared by : Gerald Shelton / ED. / (916) 319-2087