There's a lot to say about the past few days but I'm going to try and keep this readable. The TL;DR is this, then my (long) assessment follows:

• In the wake of the CBO's abrupt departure from OUSD, the board approved a contract with a respected firm (HYA) to work with district leadership on the budget shortfall.
• On Tuesday, there was a special board meeting where HYA presented an update on their work with the district, the result of an intense period of days and weeks where they are auditing everything so far.
• Superintendent Saddler and HYA are now saying that the budget deficit is less than half of what has been reported for months, reducing the supposed shortfall from $103 million to $50 million.
• Both the Board President and Dr. Saddler spoke at our PSAC meeting last night and (sort of) answered direct questions from myself and the community. There are so many questions.
• All parties continue to preach patience and have committed to providing all the "ugly spreadsheets" and specific numbers at or before the school board meeting next week.
• Our schools are finally receiving notices of cuts to school sites, and we are finally getting specific details about what is happening, and the news is predictably not good on that front.

Where to start with this? If you are cringing from the cognitive dissonance of being told that the deficit was ~$100 million for over a year and then seemingly overnight being told it's half that, you are on the same footing as pretty much everyone else in the district right now. I'll do my best to lay out what I think is going on, with the usual caveat that this is my perspective, and I'm trying to be as balanced and accurate as I can about it, but I'm certain you will hear wildly different opinions from others!

The obvious question is: Is this actually real? I want to start by saying I actually thought the HYA presentation was ok and the consultant giving the presentation seems to be an experienced and steady hand. He said all the right things and did seem to be a reliable source of information, but no specific numbers other than $50 million were presented. It is hard to believe, but here are a couple things to know:

• The Alameda County Superintendent, not exactly buddy-buddy with our district right now, upgraded the budget certification to "qualified" from "negative" based on what was presented to her by Dr. Saddler and HYA. That seems positive.
• At every opportunity, both HYA and Dr. Saddler are making this sound overwhelmingly like a concrete, positive development, and do acknowledge that there's still a deep hole to dig out of. In questions I posed to her directly in a public setting, Dr. Saddler insisted this is part of a larger plan to get to true solvency and structural stability within three years.

After many discussions, listening to district staff speak on and off the record, my personal assessment is that yeah, the new numbers are legit, but they come with long, sticky, gross strings attached.

First, the "What"

The immediate implications of all of this are being realized as we speak at school sites, but in short, the higher talking points (that I believe are accurate) are:

1. OUSD is not in immediate danger of re-entering state receivership and is cash-flow positive through at least the next year. This was mostly accomplished by instituting a spending freeze in December, re-allocating "unencumbered funds," and mid-year cuts at many school sites adding up to a 10% reduction in costs for that time.
2. There is currently no plan to close or merge any schools. This was repeated a few times so I guess they mean it!
3. Many cuts to next year's budget are in the works, and there is (as expected) a huge focus on staffing and getting notices out to folks who will be losing their jobs by a deadline of March 15th.
4. Schools are all receiving their one-pager budget notifications around now, so we should know soon how the cuts affect individual sites. We were presented with a comprehensive look at school site budgets at the PSAC meeting last night, and are already seeing a lot of vital services and staff being cut either partially or entirely.

The "How" Is More Important

I give Dr. Saddler a lot of credit for coming to the PSAC meeting to connect with our group and many members of the public last night. I'm saying this while also saying that I, like pretty much everyone else, am really anxious to see how this is all possible. She has been asked endlessly for details in many different ways and her answer is: Wait for next week, specifics are definitely coming. I take her at her word that the numbers aren't ready to release yet. I wish there was more transparency but I'll charitably read this as her wanting to keep people from picking things apart until they are as accurate as possible.

In the absence of those details, I believe that the "how" reflects the impossible realities of this situation, and perhaps a new strategy to buy time for more fundamental structural changes. Here's the world's shortest primer on what is called Supplemental + Concentration funding (S+C):

1. Among the many sources of funds that go into school district budgets in California, two big ones are "Base" funding (which every district gets based on attendance), and S+C funding on top of that.
2. S+C funding is complicated but is by law meant to provide services that benefit three specific groups of high-need students: English Learners, Foster Youth, and Low-income Students. Well over 80% of OUSD students are in at least one of these groups.
3. Because of our high concentration of these students, OUSD gets a large allotment of S+C dollars (over $100 million last year). By law if this money is not fully spent, it is carried over to the following year but retains the same guidance on spending. This is called the S+C Carryover.
4. The law around this is murky, enforcement is hard, and many districts (including OUSD) routinely classify expenses in the S+C budget that should probably be considered base operating costs.

The most important takeaway from this: OUSD's deficit is in base costs, while it currently has a substantial ($30M+) carryover in S+C funds. If things are being done by the book, simply re-classifying base costs as S+C costs isn't legal at all, which is why the carryover can't just be used to pay down the deficit without broad justification. The district would have to argue that those expenses provide services "above and beyond" base services to high-need students.

Beyond the legal implications, the law exists so that a district like ours retains an acceptable level of services to high-need students. It's very messy to apply a consistent standard here, but I believe it is a moral imperative to make a good faith effort at compliance.

All the same, based on these massive shifts in messaging, some sparse details from the HYA deck, and answers I personally got from Dr. Saddler, I believe OUSD is going to move a large amount of base costs into the S+C budget anyway. This will require the cutting or elimination of investments that are currently funded via S+C, and that is very concerning.

I'll Take a Stab at "The Why"

I'm trying not to stray into tin-foil hat territory but on the face of it this makes absolutely no sense. Why would the district be doing something that is this blatantly noncompliant while still cutting services to our highest-need students? I can't answer that, obviously, and I'm probably wrong about this, but since the only alternative is gross incompetence I'm hoping it goes something like this...

NB! I have no special knowledge or insider information here, so this can be read as a wacky conspiracy theory at this point. I'm just desperately looking for a way to make sense of this. Enough said.

Here are some things I have recently learned:

1. There is no really strong enforcement around the use of S+C dollars in California. Many lawsuits against school districts (including LAUSD and San Diego) have been filed by the state and won, but the state does not claw the money back in those circumstances, and the lawsuits take a lot of time.
2. The method for judging compliance is literally a written justification for usage of funds (which we do every year), so strong arguments may be made that make this look more compliant with the law at least in part.
3. There are strong signals from the Governor that all school districts will get a significant bump in funding from the state budget this year, but we likely won't know the final numbers until well after the OUSD budget process concludes.

So to me, the only way this approach makes sense is if the Superintendent is using it as a "bridge" strategy. Even if the district isn't in compliance with S+C regulations, legal action can't block the use of the funds in any meaningful way, and will take a year or longer to sort out anyway. Additionally, if attendance improves (a big if) and OUSD gets a large bump in base funding from the state, it's hopefully the intent to build back from a lot of the cuts that are coming out right now — following all the bad news with some good news later this year. Finally, this buys more time for the district to engage in the wide structural changes that are needed (hence the "3 year plan") to school footprints, contracts, staffing, etc., which need far more than a few months to put together.

I'm pretty queasy about this if this is the case, as it is definitely a shell game being played with staff and students. But I also see the three options on the table for the district:

• An immediate return to state receivership.
• A set of immediate cuts so deep and devastating that the Board won't accept them.
• Whatever this is. (This is the current strategy.)

I leave it to you to decide if things are any better or worse than before. I'm still trying to figure out how I feel about it. I will of course be tuned in to the meeting next week, as we have been promised over and over that the specifics are coming at that time.

This is tough to swallow for me and I'm sure anyone reading this, but it's a developing situation and I don't believe it's the last word. I hope you will all continue to stay as engaged as you can as we fight for an equitable approach to these terrible cuts.