BILL ANALYSIS
SENATE COMMITTEE ON EDUCATION
Jack Scott, Chair
2007-2008 Regular Session
BILL NO: AB 45
AUTHOR: Swanson
AMENDED: July 2, 2007
FISCAL COMM: Yes HEARING DATE: July 11, 2007
URGENCY: No CONSULTANT: James Wilson
SUBJECT : Oakland Unified School District Governance
SUMMARY
This bill establishes a process for the return of areas of
operational control of the Oakland Unified School District
from the Superintendent of Public Instruction to the
district's governing board, triggered by the finding of the
Fiscal Crisis Management Assistance Team (FCMAT).
BACKGROUND
In 2003, SB 39 (Chapter 14, Perata) appropriated $100
million from the General Fund to the Superintendent of
Public Instruction (SPI) for an emergency loan to the
Oakland Unified School District and required the SPI to
assume all the rights, duties, and powers of the district
governing board. SB 39 also required the SPI, to appoint
an administrator to act on behalf of the SPI with authority
to enter into agreements on behalf of the school district
and to change any existing district rules, policies, or
practices. SB 39 provided that the district governing
board is not to receive compensation during the period of
the SPI authority over the district. Oakland Unified has
received only $65 million of the $100 million authorized by
SB 39, although the remaining funds remain available. The
loan is scheduled to be repaid with interest over a period
of 20 years.
SB 39 required the Fiscal Crisis and Management Assistance
Team (FCMAT) to prepare an improvement and recovery plan
for the school district and report on the implementation of
the plan. FCMAT issued the Fourth Progress Report on the
plan in September 2006, reporting that the district had met
all standards in the operational area of "Community
AB 45
Page 2
Relations and Governance" with an average score of 7 on a
10 point scale. Based on this finding, FCMAT concluded
that the operational area was appropriate to return to the
control of the Oakland Unified School District governing
board.
SB 39 provided for the SPI to retain authority over the
district until all of the following conditions are met:
1) Two years have elapsed following the appointment of
the administrator.
2) FCMAT completes the improvement plan.
3) FCMAT, consulting 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 plans in the major
functional area.
4) The administrator certifies that all necessary
collective bargaining agreements have been negotiated
and ratified, consistent with the improvement plan.
5) The district completes all reports required by the SPI
and 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.
ANALYSIS
This bill:
1) Requires the Fiscal Crisis and Management Assistance
Team (FCMAT) to prepare and submit annual progress
reports on the Oakland Unified School District.
Reports are to be submitted to the Legislature, the
Superintendent of Public Instruction (SPI) and the
district's governing board every March 1 until
authority for all operational areas of the district
has been returned to the Oakland Unified governing
board.
AB 45
Page 3
2) Defines "operational areas" as:
a) Community relations and governance
b) Pupil achievement
c) Personnel management
d) Facilities management
e) Fiscal control
3) Requires the governing board and the state
administrator of Oakland Unified, by April 1 every
year, execute a memorandum of understanding (MOU) on
the details of returning authority, and the resulting
division of responsibilities, for any of the
operational areas recommended for return to the school
district in the most recent FCMAT progress report.
4) Provides that if the governing board and the state
administrator fail to reach an agreement by April 1,
the SPI must create a "statement" in lieu of the MOU
to return authority for the operational area, and
share the statement with the governing board.
5) Provides that the Superintendent's statement is final
unless the governing board, by June 1, presents just
cause to an administrative law judge of the Office of
Administrative Hearings that the statement should be
modified.
6) Provides that, the SPI must return authority for an
operational area recommended for return by FCMAT by
July 1.
7) Requires that the state administrator retain
authority, or be restored to authority by July 1, over
any operational area that FCMAT recommends be within
the authority of the state administrator.
8) Provides that the members of the Oakland Unified
governing board are entitled to receive full
compensation for services, once authority for one or
more operational areas is returned to the governing
board.
AB 45
Page 4
STAFF COMMENTS
1) Revising SB 39 . SB 39 made $100 million available to
the Oakland Unified School District but required that
the district's board surrender its powers to the State
Superintendent and his appointed administrator who
replaced the district board appointed district
superintendent. SB 39 provided for the district to
follow a FCMAT prepared improvement plan and
maintained the SPI control over operations of the
district until, the SPI determines that the
operational area could be returned. This bill alters
the roles of FCMAT and the SPI. FCMAT now becomes the
initiator of a process that must result within a few
months in the return of authority to the local board
over an area that FCMAT chooses. The SPI ceases to
have the last word on the return of authority since
this bill requires the transfer of authority by July 1
of the year if FCMAT recommends it.
2) Fiscal Control . The bill currently makes no
distinction among operational areas that may be
returned to the local board. Of the five areas, the
last one; fiscal control, is the most directly related
to the problems that forced the district to seek state
intervention in the first place. We know from prior
experience that districts that fail to solve their
fiscal control problems can return to insolvency and
require second or even third bail-out loans. This is
one reason why the state has a major obligation and
interest in assurance that fiscal control issues are
fully resolved before control over fiscal affairs is
returned to local authorities. In addition, so long
as the district owes the state many millions to repay
the emergency loan, the state has residual interest in
the fiscal solvency of the district. For these
reasons, staff recommends that the bill be amended to
require that, notwithstanding other provisions of the
bill, the area of "fiscal control" will not be
returned to the local board until the SPI positively
concludes that the district is a "going concern," and
no longer poses a risk of reverting to the policies
and behavior that would require the state to provide
an emergency loan.
3) How would the Office of Administrative Hearings
AB 45
Page 5
resolve things? The bill calls for an administrative
law judge from the Office of Administrative Hearings
(OAH) to decide how an operational area is to be
returned to district board control when the SPI and
the local board can't agree on an MOU or an SPI
proposed "statement." The bill fails to say how an
OAH decision is implemented. Does the judge re-write
the statement? Also, who pays for the OAH intervention
and can such a review and remedy be competed in the
one month allowed by the bill? Staff recommends that
the author address these matters in future amendments.
4) Fiscal effects . According to the Assembly
Appropriations Committee, this bill would require
$150,000 (in the Budget Act of 2007) for FCMAT to
complete progress reports. The original bill, SB
39 (Perata) appropriated $100 million for an emergency
loan to OUSD; however, Oakland only received $65
million. The annual payment of $3.9 million (1.778%
interest rate) is due in June. The outstanding balance
is approximately $59.5 million. The loan was issued
on June 4, 2003, and it is expected to be paid off by
June 5, 2023.
SUPPORT
American Federation of State, County, and Municipal
Employees
Board member Alice Spearman, Oakland Board of Education
Board member Christopher Dobbins, Oakland School Board
Board member Gay Plair Cobb, Alameda County Board of
Education
Board member Greg Hodge, Oakland Board of Education
Board member Kerry Hamill, Oakland Board of Education
Board member Noel Gallo, Oakland Board of Education
California ACORN
California Labor Federation, AFL-CIO
California School Boards Association
California Teachers Association
Central Labor Council of Alameda County
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
AB 45
Page 6
Mayor Ronald V. Dellums, City of Oakland
Metropolitan Greater Oakland Democratic Club
Oakland Education Association
President David Kakishiba, Oakland Board of Education
Representative Barbara Lee, Member of Congress
Supervisor Alice Lai-Bitker, Alameda County
AB 45
Page 7
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
Many letters from Individuals
OPPOSITION
Ed Voice
Superintendent of Public Instruction