The Oakland Unified School District “ignored standard accounting practices and inappropriately manipulated taxpayer funds, actions that in some cases amounted to the misuse of state or federal funding,” the San Francisco Chronicle reported, citing a report by the state’s Fiscal Crisis and Management Assistance Team.
The report comes as the district is pondering $5.8 million in budget cuts and is facing an estimated $20 million shortfall next year and $60 million the year after that.
“The analysis found that not only does the district have an unsustainable spending problem, it has significant work to do to clean up the problematic accounting practices,” the Chronicle stated. “Examples of the inappropriate use of funds included the use of its self-insurance fund to pay for parking and legal fees as well as the use of cafeteria accounts to make state loan payments. The report identified a lack of basic accounting practices. In one case, the district inexplicably closed its fiscal year on June 30, 2017 with a cash balance that was nearly $450,000 higher than the cash balance reflected for the next day – July 1, the first day of the next fiscal year. The numbers should have been the same.”
While the state called the accounting manipulation highly unusual, the report doesn’t identify any evidence of criminal behavior.
The Alameda County Office of Education, which provides fiscal oversight of district budgets, requested the analysis after Oakland Unified officials requested a deferment in state loan payments.
“The district has actually deteriorated in its systems and processes almost back to the place where they didn’t exist,” a state trustee said, referring to the district’s insolvency in 2003 and the related state bailout. “They’ve slid back.”
The Chronicle concluded: “Ultimately, how Oakland got in this mess – again – raises questions about the ability of the state, the county Office of Education, outside auditors and the school board – which all have an oversight role in the district’s finances – to detect the shoddy bookkeeping and suspicious accounting practices.” (Source: San Francisco Chronicle, June 21.)