Teachers contract to cost cash-strapped Oakland Unified $36 million through 2021

OAKLAND — The contract agreement that ended Oakland’s seven-day teacher strike earlier this year will cost the cash-strapped district about $36 million through 2021.

If approved, that is. The school board will vote Wednesday on whether to approve the contract — about a month and a half after the strike ended March 4.

Documents submitted by the district to the Alameda County Office of Education earlier this month show the agreement — which provides teachers with an 11 percent raise through the end of the 2020-21 school year — will cost $3.6 million during the 2018-19 fiscal year, $15 million during the 2019-20 fiscal year and $17.4 million during the 2020-21 fiscal year.

The documents also show the cost of the contract will put the district over budget by $463,470 over the next three years. That’s even after the district cut $21.75 million from its budget for the 2019-20 school year, a portion of which district officials said paid for the teachers’ raises.

According to a certificate of affordability signed by Superintendent Kyla Johnson-Trammell and other Oakland Unified administrators, the district will reduce its books and supplies fund by $143,960 the 2018-19 fiscal year, and will still be over budget $200,871 for the second year of the contract and $208,351 the third year.

The district maintains that it can afford the contract. District officials do not expect to make any further budget cuts over the life of the contract, district spokesman John Sasaki said.

The amount over budget is far less than the district has in reserves, Sasaki said, and Oakland Unified is expecting to receive more grants to cover other expenses over the next few years. The district has yet to figure out how it will make up for the amount over budget for the contract in its second and third years, but Sasaki indicated that district officials aren’t really fretting over it.

Alameda County Superintendent of Schools Karen Monroe also gave the contract her blessing. Under California Education code, the county superintendent has the final say in major financial decisions such as this one.

In a letter to the school board dated April 15, Monroe said the agreement “does not endanger the well-being of the school district.”

However, Monroe projects that the district won’t meet the state’s minimum reserve requirement of 2 percent during the 2018-19 fiscal year if the same raises are offered to all Oakland Unified employees. The district may have to make further cuts or find additional revenue in order to fund those costs. The district may be able to make the reserves if teachers are the only employees to get raises at that rate, Monroe said

The documents show that the district expects to get a bump in Local Control Funding Formula funds in 2019-20 and 2020-21, to the tune of about $10 million a year. Under the Local Control Funding Formula, the state gives districts with greater enrollment of English learners, foster children and low-income students extra money in addition to daily attendance revenue.

State trustee Christopher Learned has the power to rescind the contract if the district can’t afford it; he told the Bay Area News Group earlier this month that he was still assessing it. The state appointed a trustee to oversee the district’s finances until Oakland Unified pays back a loan it took out from the state when going into receivership in 2003. The district still owes more than $30 million to the state.

The documents provided by the district don’t reference is the cost of the contract after it has expired. Under the agreement, teachers would receive a 2.5 percent raise on the final day of the contract, June 30, 2021, on top of the 3.5 percent raise they will receive at the start of that year. The district estimated in March that the cost of the contract in the 2021-22 fiscal year would be $25 million. That’s also when teachers will be rallying for a new contract, and likely another raise.

The district’s budget deficit — following years of overspending despite plummeting enrollment — is expected to reach $15.7 million in the 2020-21 school year, according to a report released last month from the state’s Fiscal Crisis Management and Assistance Team, which keeps tabs on the district’s finances. That figure does not take the teachers’ raises into account.

In order to address that deficit and provide for teachers’ raises, the school board voted last month to cut $21.75 million from the district’s budget for the 2019-20 school year — including eliminating the equivalent of 257.6 full-time jobs. That means reducing the hours of some employees, laying some off and finding grant funding for others, district spokesman John Sasaki said earlier this year.

“That was a big cut, and that hurt,” Sasaki said in an interview.

Under the recent budget reductions, several administrative positions were cut, including that of chief business officer Marcus Battle. To make up for the some of the lost jobs, the district has tapped the county to help it run its finances.

On March 29, the district and county Office of Education announced an unprecedented short-term collaboration, in which the county will immediately start providing financial professionals to help the district handle its accounting, budgeting and payroll duties, according to a news release. The district maintains that it has autonomy over its budget despite the assistance.

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