Oakland vs. the WorldOakvs.

Alameda County Says OUSD's Progress Is Real

16 min read

The Alameda County Superintendent of Schools is Alysse Castro. Judging by the election returns last time around, it's likely you voted for her (I did).1 As you may have realized from the previous sentence, her office, the Alameda County Office of Education (ACOE), is tasked with the rigorous oversight of public school districts including Oakland's.2 For years now, she has loudly and publicly voiced concerns about the fiscal stability of OUSD,3 most of which boils down to the same basic take on things, with which I largely agree:

  1. OUSD has a historical pattern of spending more dollars than it brings in.
  2. It also has a historical pattern of making big expenditures without being able to pay for them.
  3. Perhaps worst of all, OUSD keeps making plans to fix things but historically failed to follow through with them.4

This isn't news, and all of the criticisms here far pre-date the current board and district leadership.5

So you know that Superintendent Castro isn't crazy about how OUSD has been doing business, and I have personally heard members of our community here in Oakland go so far as to publicly implore her to take over the district 6, since their view is that our current board and leadership are just doing more of the things that got us here.

You know what everyone loves? A plot twist!

Castro Highlights "Difficult and Deliberate Work"

This past Tuesday, Superintendent Castro conditionally approved the budget OUSD submitted for 2026-27.7 What this means is that, after the unaudited books on 2025-26 have been turned in,8 and after a careful review of the entire financial picture to date, the County Superintendent of Schools now officially vouches for the approach that OUSD has taken this year. She says that while there is still plenty of work to do, everything her office has reviewed is above board. No fraud, no missing money, no shenanigans.9

This is great news, though not a surprise to your humble narrator since it's basically what I've been writing about for a year in this space.10 But it isn't really the most interesting thing about Alysse Castro's letter; her flowery prose however is downright fascinating:

"A significant change in budgeting methodology in 2025–26 makes the District's current fiscal picture look substantially different from prior years."

Hmmm…? "Substantially different" doesn't really mean substantially better, but maybe that's good, since she hates the fiscal picture from prior years?

"This year, the District has moved toward an approach of budgeting restricted resources first and assigning eligible expenditures accordingly. These changes reflect a material change in budgeting methodology—not the creation or disappearance of resources—and should not be confused with either misconduct or a resolution of the District's underlying fiscal challenges."

Ok, so Director Hutchinson's line about "missing funds" is baloney.11 Got that. But I don't know, she's not really saying it's a good thing, is she?

"There are three essential parts to addressing a structural deficit: staff must identify and bring forward hard choices; the governing board must make those choices; and staff must follow through and implement them. All three appear to be happening in OUSD, and that represents meaningful progress."

Holy meaningful progress, Batman! Did Superintendent Alysse Castro just acknowledge that this board and this district staff are actually doing something that didn't happen with their predecessors? That seems like… maybe not true? She was so frustrated with us before…

"ACOE wants to acknowledge that the District has submitted a budget that shows a positive fund balance, meets the state minimum reserve for economic uncertainty in each year of the multiyear projection, and is accompanied by a Board-adopted commitment to close the remaining structural gap. That is a materially stronger submission than the District has filed in recent years, and it reflects difficult and deliberate work."

Ok, I'm not a scientist or anything, but that sounded a lot like a compliment. And an indication that things are actually, really, honestly, moving in the right direction. In the county's opinion.

NB! All typographical emphasis above is mine. Sorry, I'm excited.

I know it sounds like I'm gloating here, but I'm not; I'm simply relieved that all the unfounded accusations of fraud and mismanagement, often made while using Superintendent Castro's correspondence as tinder for the fire, now can be set against her latest letter. There is no other way to read it but the way the district (and now the county) has been saying it: Everyone agrees we've got problems here at OUSD, but we're finally making progress on the fiscal side.12

But It's CONDITIONAL

As a parent of young kids, I really love making stuff "conditional," especially when it's in all caps. For example, my kids will sometimes submit a budget for the weekend that includes ice cream on Saturday afternoon. I take a good look at it and say, "Well this looks good to me, looks like meaningful progress in your actuals, but we're gonna set some CONDITIONS on the ice cream. Your room is still a total nightmare."

OUSD's loving-but-stern caregiver Castro has similarly set out her conditions for approving this budget thus:

"By October 8, 2026, review and respond to this letter at a regular meeting of the governing board, affirming the board's plans and commitments to

  1. Publicly share progress on implementation of 2026-27 budget balancing strategies and any related adjustments. This could be prior to or incorporated into the First Interim report.
  2. Adopt a board resolution this fall (no later than First Interim) that outlines the timeline for the Board's action to implement any needed budget-balancing solutions no later than February 2027."13

This will take real work, no doubt.14 But in this crazy upside-down world where OUSD is making progress, I believe maybe anything is possible?

Don't Call It a Comeback, Call It "A Material Change in Budgeting Methodology"

By far the most controversial thing I've published here was a post called Two Bad Doors. It was my interpretation of a news story about how, at its core, the seeming power play by Superintendent Saddler last December was in reality a large philosophical difference between her and her Chief Business Officer and Chief of Staff. In essence (according to the article in the Oaklandside) the CBO and CoS didn't think it was possible to keep the district solvent without taking out another loan and accepting oversight.

My opinion is that Dr. Saddler went against the advice of her subordinates to try and keep the district solvent, buying time and keeping local control instead of going into more debt. I also believed that was the best of two bad choices, since it required sweeping, controversial cuts that the board approved.15 At the time, I wrote that it was a sign of strong leadership. Superintendent Castro's letter reinforces that belief more than anything I've seen thus far.

I'd like to put all of this behind us now so we can focus on the future, since we still have a big financial hole to dig out of. Still, when will people start to ask: Why didn't OUSD implement this "material change in budgeting methodology" when Lisa Grant-Dawson was CBO?16 As I watched many of her presentations to the board, I personally had a lot of respect for Grant-Dawson's ability to deliver bad news to power, but that doesn't make her infallible.17

Simply put, according to Alysse Castro's letter, the material change that has led to this "meaningful progress" has all happened since Grant-Dawson left the district. It has happened with this board's support. It was all done on the watch of Superintendent Denise Saddler and her senior leadership team.

What it all means: the (unaudited) books are closed on 2025-26, and the district is solvent and not in debt to the state.18 We should support the board and district in 2026-27 as they take more difficult steps and continue what they've started.

Footnotes

  1. Castro first won the job on June 7, 2022. This past June 2, 2026 she was re-elected with 100% of 270,543 votes, which can happen when nobody runs against you (Ballotpedia). ↩

  2. Under California Education Code § 42127, every school district's adopted budget goes to the county superintendent, who must approve, conditionally approve, or disapprove it. The district's LCAP goes through the same review under § 52070. Castro's letter cites both sections in its first sentence. ↩

  3. Some of Castro's Greatest Hits: her November 2025 letter approving the 2025-26 budget came with what KQED called a "dire warning on financial future" (November 3, 2025). At a March 2026 community forum she said OUSD "has a decision-making problem" (The Oaklandside, March 18, 2026). On April 16, 2026 her office issued a precautionary Going Concern Notice under Ed. Code § 42127.6. And her June 18, 2026 AB 1200 letter on the teachers' contract warned that the agreement "endangers the District's fiscal stability." I went through most of these at the time in Where the OUSD Budget Stands and A New Year at OUSD. ↩

  4. This is the county's framing, not mine. Castro's November 2025 letter described a district pattern of requesting plans and then disregarding them (KQED, November 3, 2025, see note 3). Notice that the "three essential parts" passage quoted below is basically the same checklist, except this time she's said OUSD is actually doing it now. ↩

  5. Outside reviewers have been saying this for a long, long time. The 2017-18 Alameda County Civil Grand Jury wrote that "for more than a decade, numerous experts and outside reviewers, including the grand juries in 2013-2014 and 2015-2016, have highlighted the fiscal deficits plaguing OUSD" (2017-18 Final Report, "OUSD: A Broken Culture"). In its March 1, 2019 letter to the Legislature, FCMAT quoted the district's own self-assessment of "roll-over budgeting" and "a lack of sufficient controls in place to manage for long-term balance and sustainability." ↩

  6. One example that I witnessed first-hand: during public comment at the February 11, 2026 board meeting, a parent asked the county to take over the district explicitly. That was two weeks before the board voted on the layoffs that I called progress at the time, and the sentiment has come up many times since. It is not a fringe view, and I don't think the people who hold it are acting in bad faith, it's just clear that the county's own letter now cuts against their narrative. ↩

  7. Alysse Castro to Superintendent Saddler and the Board of Education, September 15, 2026, re: "CONDITIONAL approval of 2026-27 Local Control and Accountability Plan (LCAP) & Adopted Budget - Action Required." The caps are hers. Some mechanics: the LCAP "meets the minimum criteria for approval" while the budget "requires additional action," but since approval of each is contingent on the other, both are conditionally approved. ACOE must make its final call by the statutory deadline of November 8, 2026. The letter is followed by a four-page technical memo from ACOE's business services staff, which is where the numbers in notes 12 and 14 come from. ↩

  8. Being precise here: every district's unaudited actuals for the prior year are due to the county by September 15 (Ed. Code § 42100), and the figures in Castro's letter are labeled "2025-26 Estimated Actuals." The independent audit of 2025-26 comes later this year. So the books are closed in the sense that matters for this review. ↩

  9. Her exact words are that the changes "should not be confused with either misconduct or a resolution of the District's underlying fiscal challenges." A budget review under § 42127 is not a forensic audit, and Castro isn't claiming it is. But if she believed there were fraud or missing money, she has a tool for that. Ed. Code § 1241.5 lets a county superintendent order an extraordinary audit when there is reason to believe fraud, misappropriation of funds, or other illegal fiscal practices have occurred. She didn't. She wrote a letter that says the numbers moved because the method changed. ↩

  10. I know it's patting myself on the back but hey, I did write all this: This Is Progress (February), Where the OUSD Budget Stands (June), Two Bad Doors (July), A New Year at OUSD (August), and Fix OUSD from the Inside (September). ↩

  11. District 4 Director Mike Hutchinson, speaking at the June 24, 2026 board meeting, the same meeting at which the board adopted the 2026-27 budget. You can watch it yourself in the OUSD Parents Community recording, at the 2:40:04 mark and again at 4:45:36. It's a long meeting (nearly six hours), so bring a snack. Castro's letter is, to my reading, a direct answer to this: the numbers moved because the method changed, "not the creation or disappearance of resources." For the longer history of the fraud-and-malfeasance narrative, see the section on Director Hutchinson in Where the OUSD Budget Stands. ↩

  12. In fairness to Superintendent Castro, and to anyone who thinks I'm cherry-picking, the letter also has a "Budget Concerns" section, and it isn't short. The $30 million in 2026-27 reductions is board-approved but still has to be implemented. Beyond that, the multiyear projection assumes more reductions that have yet to be identified. The restricted reserve that held $201 million two years ago is projected to fall from $124 million at 2025-26 Estimated Actuals to $18.2 million by 2028-29, which the letter calls "a positive development in that these funds are being utilized for services" but also a clock that is ticking. Unrestricted cash "becomes alarmingly low" as those reserves are spent down. Castro's own summary: the district "is using one-time resources to create time to make the deeper changes necessary," which "is an important step forward, but it is not a sustainable funding model in itself." Then, in the very next breath: "Requiring clear milestones is not a lack of confidence in the progress OUSD has made." I'll take it. ↩

  13. Calendar check: the board must respond by October 8, which is a date set by § 42127 itself, not one Castro picked. The First Interim report covers the district's finances through October 31 and must be approved by the board no later than December 15 (Ed. Code § 42130). The February 2027 deadline for board action is not arbitrary; any reductions involving staff for 2027-28 have to be noticed by March 15 under Ed. Code § 44949 and § 44955, as I explained in A New Year at OUSD. ↩

  14. Some of the work is already on the books. On June 24, 2026 the board adopted Resolution No. 2526-0027 approving the budget and Resolution No. 2526-0026, the Financial Stabilization Implementation Plan, which the letter describes as acknowledging OUSD's "obligation to implement the budget reductions and adjustments necessary to address its structural deficit, balance the budget and prevent fiscal insolvency." The technical memo's table shows the current-year $30 million booked as "budget-balancing solutions" in a placeholder object code (4395), with $30 million in 2027-28 and $10 million in 2028-29 still needed, and notes that the reserve is met in all three years "only if Projected Budget Reductions in Report are made." The district's list of candidate reductions totaled about $41.5 million back in June; I walked through the line items in A New Year at OUSD. ↩

  15. The board's own direction came first: Resolution 2526-0177, adopted October 8, 2025, told staff to bring back scenarios to close the structural deficit. On December 10, 2025 the board voted for cuts totaling $102.5 million rather than a loan (The Oaklandside, December 11, 2025), and on February 25, 2026 it approved the position eliminations that followed (The Oaklandside, March 12, 2026). The full argument, and the receipts, are in Two Bad Doors. ↩

  16. Lisa Grant-Dawson was OUSD's Chief Business Officer from 2020 until her departure in December 2025 (The Oaklandside, June 26, 2026). The county's letter is blunt about the before-and-after: "Historically, the District did not consistently maximize available restricted and categorical resources for ongoing expenditures that were eligible to be supported by those funds." Castro's June 18 AB 1200 letter (see note 3) had already called the restricted-fund shift "a positive budgeting practice," and it has been part of the district's stated stabilization strategy since the fall (The Oaklandside, June 11, 2026). To be clear, I'm asking a question, not making an accusation. Restricted-first budgeting is easier to say than to do, and Grant-Dawson was CBO through the years when pandemic money papered over a lot of things. ↩

  17. A little history here. On her way out the door in December 2025, Grant-Dawson told the San Francisco Chronicle that the plan to shift general fund expenses onto restricted funds was "a precursor to malfeasance and noncompliance," adding, "There's no way they can walk backward from what this is leading up to" (Jill Tucker, "Upheaval hits Oakland schools with senior staff shakeup amid budget crisis", San Francisco Chronicle, December 15, 2025). Nine months later, the county superintendent, whose actual job includes catching exactly that sort of thing (see note 9), describes the same shift as "a material change in budgeting methodology" that "should not be confused with either misconduct or a resolution of the District's underlying fiscal challenges," and back in June (see note 3) called it "a positive budgeting practice." That word, "malfeasance," was tinder for a lot of the fires I mentioned above. It has not aged well. ↩

  18. Solvent: the letter says the budget "shows a positive fund balance" and "meets the state minimum reserve for economic uncertainty in each year of the multiyear projection." The technical memo puts the reserve at 3.38% in 2026-27 and 3.11% in each of the next two years, against a 3% minimum, with an unrestricted general fund surplus of about $8 million projected for 2026-27. (All contingent on the reductions actually happening; see note 14.) Not in debt to the state: OUSD made the final payment on its 2003 emergency loan on June 30, 2025, ending 22 years of receivership (OUSD announcement, April 22, 2025; The Oaklandside, May 13, 2025), and no new loan has been taken or requested since. ↩

Get Updates

Your info is safe with us.