Monday marked the end of more than two decades under state oversight for the Oakland Unified School District.
The district said Friday it had passed the required financial audit and paid off the last of its loan, wrapping the 2024-25 fiscal year Monday by finally ending state receivership and fiscal oversight under the Alameda County Office of Education. California had bailed out the troubled district with an emergency $100 million loan in 2003.
Oakland Unified’s chief business officer, Lisa Grant-Dawson, said that as of July 1, the district and board of education would regain complete local control and all county and state-appointed positions would end.
When a school district runs out of money — as Oakland Unified did more than two decades ago — the state steps in and provides an emergency loan. But that loan comes with consequences, including the loss of local school board control and financial decision-making.
Grant-Dawson said that for years, the district’s finances have been a constant subject of conversation and cast a shadow over the city and district community.
“It’s significant because there’s a big weight that’s lifted from not having that shadow continue to follow you around,” she said.
But the announcement comes at a precarious time for the district, which still has a gaping $30 million projected budget deficit for the 2025-26 school year and faces new leadership after the district ousted longtime superintendent Kyla Johnson-Trammell earlier this year.
Oakland Unified is just one of many districts across the state bracing for a potential decrease in federal funds under the Trump administration.
President Donald Trump has advocated for dismantling the U.S. Education Department, which provides about $8 billion in funding for California K-12 schools and threatened to withhold federal funds from K-12 public schools unless state education leaders and schools eliminate diversity, equity and inclusion programs and prohibit transgender athletes from participating in women’s sports.
Grant-Dawson warned that uncertainties surrounding the federal and state budget and continued declines in students’ attendance — which affects funding — could, combined with a bleak multi-year budget projection, see Oakland Unified return to state receivership in as little as two years.
Grant-Dawson said the district’s annual loan payments were about $6 million each year and the total loan amount neared $120 million after decades of accruing interest.
The Fiscal Crisis and Management Assistance Team — a state agency that helps California schools resolve financial and operational issues — has said state loans typically last about 20 years, but some districts struggle to recover completely. In the last 30 years, at least 10 districts have been forced to resort to state control, the agency said.
West Contra Costa Unified School District became the first district to require a state loan about 26 years ago; the district paid it off in 2012. Vallejo City Unified entered state receivership in 2004 after a financial collapse required a $60 million emergency loan from the state. The district also regained local control Monday.
Oakland board member Mike Hutchinson said Monday was devoid of any celebration because of the board’s recent actions.
“I think the fact that today Vallejo was celebrating their leaving receivership and OUSD did nothing is really indicative of the situation that we are facing here in Oakland,” Hutchinson said. “OUSD is in a financial crisis. And it’s because the Oakland school board has backed away from our restructuring work and our fiscal stability work.”
Just a few months ago, Oakland Unified was projected to run out of cash as early as fall 2025, with an anticipated $95 million budget shortfall. That deficit has been reduced to $30 million, the district said, in large part through a reduction and rearrangement in staffing.
But Grant-Dawson said the district is still spending more than it’s receiving and is staffing too many employees with money the district simply doesn’t have — a move she said has put the cash-strapped district at odds with its board, which leans in favor of the teachers union.
“This is a huge gain for our students, staff and community to have control over the finances of the district,” board president Jennifer Brouhard said in a statement Monday. “As board president, I am committed to working with district staff, site staff, labor partners, students, families and community to build a budget that centers students and those who work directly with students.”
Grant-Dawson said the district’s future budget projections are even more concerning, with a projected $78 million budget shortfall in 2026-27 and a $72 million budget deficit in 2027-28. If no changes are made, she said the district would likely go bankrupt in the first half of 2026, meaning the district would once again need a state loan.
The tumult comes as Grant-Dawson prepares to leave her position in June 2026. The district is also set to begin the new school year with an interim superintendent.
Grant-Dawson said that the district exiting state receivership in a stronger position — with the understanding of how to prevent the district from falling back into insolvency — is more important than the exit itself. She said she thinks the district’s operational knowledge and district-wide partnerships are stronger and continue to grow but she is still worried about the future.
“It’s such a time that should have been able to really have a more festive tone,” Grant-Dawson said. “We don’t, and I think that’s an unfortunate moment. But at the same time, I want to celebrate the Oakland Unified School District leaders and team. Their passion for the district and the community is so deep.”
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