Thursday, October 27, 2011

California Poised to Take Over Dozens of Insolvent School Districts

Huck/Konopacki Labor Cartoons
110 California school districts are at risk of insolvency, compared with 37 five years ago, according to the Bay Citizen. Ironically, the distressed districts, which face expensive state takeovers, are distressed precisely because the state has slashed $21 billion from public education funding over the last three years (combined with declining revenue from property taxes and increasing costs).

As federal stimulus funding dries up at the end of this school year, the number of districts going belly up is likely to grow. According to the Bay Citizen, many districts are draining their strategic reserve funds to survive another school year, which puts them at risk of going belly up the following year.

Almost 50% of California's most desperate school districts are in the San Francisco Bay Area, which has some of the highest property values in the state. The Bay Citizen looked at financial reports from the 2010-11 school year and found that 13 CA school districts received negative certifications from the state and were not expected to meet all of their financial obligations. Six of these districts were in the Bay Area. 97 other school districts were identified as at risk of failing to meet their financial obligations.

Under California law, school districts cannot file for bankruptcy. Rather, the state must take them over and appoint administrators to bolster their finances. Since the state has already made it clear that it has no desire to fund schools sufficiently, the only way to shore up struggling school districts is by cutting costs. This will likely cause massive layoffs, exacerbating the state’s already high unemployment rate of nearly 12%, or lead to furloughs and shortened school years, which will dramatically reduce teachers’ already low incomes. It could also lead to increased class sizes, reduced course offerings, school closures and other cuts that will negatively impact student safety and wellbeing.

Much of this nightmare scenario has been playing out for the last few years in school districts that were already on the state’s watch list prior to the financial meltdown. Hayward Unified School District, for example, slashed around $26 million from its operating costs by firing staff, increasing class sizes and cutting music programs for fifth graders. Teachers who weren’t fired will be forced to take three to seven furlough days this year. Despite these “sacrifices,” the district is still considered at-risk and is being watched by the state.


  1. Let me tell you about being taken over by the State. In 2004, Vallejo was taken over by the State due to fiscal mismanagement from our superintendent and her chief financial officer. When our state appointed administrator (SAA) came in, many teachers in Vallejo, were relieved. We felt that finally having an outsider come in that things would get better.

    Ask us how we feel now.

    Suffice it to say that as soon as our SAA came in, not only was in put in charge of finances, but everything else as well. His team came in implementing pacing guides, district bench mark assessments that occur every six weeks, and other changes to the curriculum. These things had nothing to do with the reasons why were taken over.

    In the meantime, since 2004, our enrollment has declined by over 6,000 students and we have lost over 700 teachers. Vallejo's teachers continue to be the lowest paid in Solano County & the amount we contribute to our health benefits have more than doubled.

    State receivership means that districts lose control over everything, not just finances.

  2. Thanks for your comments Christal. Your situation sounds terrible. The examples of Oakland, Hayward and Vallejo ought to be sufficient to convince parents and the public of the stupidity of state takeovers.