In 11 Years of State Oversight, No Audits of Oakland Schools’ Finances

In the 11 years since the State of California declared the Oakland Unified School District bankrupt and seized complete control of district governance and finances, the state has not conducted an audit of the district’s financial condition.

According to a new report by the Alameda County Grand Jury, over 10 years of poor financial recordkeeping in the district cost city residents over $29 million in extra property taxes after the district lost its credit rating for borrowing money.

Moody’s removed its credit rating in 2012, and Standard & Poor’s withdrew its rating of the district in 2011, driving up the cost of borrowing on bonds.

The credit ratings were removed because the district’s state appointed trustees, acting under the authority of the State Superintendent of Instruction, did not require financial recordkeeping reforms since 2003 that would allow the district to do an audit.

The problem is a lack of internal accounting controls and books that are basically in shambles, according to a spokesman from the State Controller’s Office

In 2003, the state gave OUSD a $100 million emergency loan, and the State Controller’s Office became the district’s auditor. The superintendent of schools was fired, and the power of the elected Board of Education was suspended.

Yet during those years, the district has not been able to complete a single audit because “there was a weakness in internal controls and their records were in disarray,” according controller’s office spokesman Garin Casaleggio in an interview with the Oakland Tribune.

The latest audit the State Controller attempted to finish was for the 2010-11 school year. The controller will continue to audit the district’s books until it pays off the remaining $55 million of the emergency loan.

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