The Oakland Unified School District regained complete local control from the state of California on Tuesday, but the district still faces an estimated $30 million deficit and larger projected shortages in the coming years.
“As it stands, the District is projected to survive the 2025-26 school year intact,” Superintendent Emeritus Kyla Johnson-Trammell said in a statement. “There will have to be difficult decisions made in the coming year to ensure the District remains solvent.”
OUSD went under state control in 2003 after reaching fiscal insolvency and taking an emergency $100 million loan from the state, the largest school bailout in California history. The district spent the next six years governed by state-appointed administrators instead of school board-appointed superintendents.
In 2009, the district was allowed to appoint superintendents but remained under state fiscal oversight until the final payments on the loan were made this year.
Also included in the requirements for OUSD to exit receivership was a Fiscal Systems Audit, which the district announced it had completed in April. The 88-page report highlighted sustained leadership, the transition to Alameda County Office of Education financial systems for budgeting and payroll, and the elimination of all non-voter-approved debt as key factors that have improved OUSD’s financial outlook.
However, despite the win for home rule, the district is projected to operate under a $30 million deficit this year, which will cut into its $57 million in reserves that were already depleted by $60 million in deficit spending this year.
The California State Board of Education also requires OUSD to keep 3% of its expenditures in reserve; the district’s 2025-26 budget projects to only retain a 2.9% reserve by the end of the year.
“Without a strong action plan, we are in dangerous territory in the following years as our expenses continue to outpace our revenues,” Johnson-Trammell said.
‘Going bankrupt is not an option’
Projected deficits of $78 million in 2026-27 and $72 million in 2027-28 highlight OUSD’s continued tenuous financial position. Johnson-Trammell says those deficits could lead the district right back to where it started.
“Of course, going bankrupt is not an option. The state and the county will not allow that to happen. Alameda County would take over the District with a new state loan to ensure it can pay its bills. That would mean falling back into receivership less than two years after exiting receivership,” she said.
Johnson-Trammell, who was removed from her position via a “voluntary separation agreement” by a 4-3 vote of the OUSD school board after receiving a three-year contract extension last August, spent her final day as superintendent on June 30. She assumed an advisory role as “superintendent emeritus” that will last until Jan. 15, 2026, while the district searches for a permanent replacement.
Denise Saddler, who began her career in OUSD in 1979 as a resource specialist and served for six years as the president of the Oakland Education Association, took over as interim superintendent on July 1.
“The District is a huge billion-dollar organization, and like an aircraft carrier, it is slow to turn. …”
Superintendent Emeritus Kyla Johnson-Trammell
Johnson-Trammell had served as OUSD superintendent since 2017, succeeding a 14-year period where the district had seen nine different superintendents and state-appointed administrators.
In a farewell announcement, she said that OUSD would benefit from a committed superintendent who could stay for more than a couple of years.
“The District is a huge billion-dollar organization, and like an aircraft carrier, it is slow to turn. If a leader is not in place for an extended period of time, it is nearly impossible to institute truly effective and lasting change,” she said.
OUSD, with a total enrollment of 44,647 students, is the 11th-largest school district in the state and the second largest in the Bay Area, behind only the San Francisco Unified School District.
OUSD begins its 2025-2026 school year on Monday, Aug. 11.
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