Bill could forgive Oakland Unified school debt

May 4, 2011 12:52:36 PM PDT
An Assembly bill that would forgive the Oakland Unified School District of millions of dollars in fines levied against it by the state is facing its first major legislative hurdle on Wednesday.

State Assemblyman Sandre Swanson, D-Oakland, introduced AB 609 to forgive about $22 million in fines accumulated because of administrative failures that happened when the school district was under state control between 2003 and 2009.

The bill goes before the Assembly Committee on Education at 1:30 p.m. Wednesday and would stipulate that school districts are not responsible for state audit fines associated with mistakes made when the districts are under state control.

"You don't want the state to be in a position to come into a district, create fines, and then leave the school district with those fines to pay," Swanson said today. "That seems to me like a common-sense approach."

The state took over Oakland Unified in 2003 when the district applied for a $100 million line of credit to avoid bankruptcy, according to legislative documents.

In order to make sure the district was reaching financial solvency, the state controller's office was required to conduct regular audits.

Administrative failures discovered during the audits led to $22.1 million in legally mandated fines over the years, controller's office spokeswoman Hallye Jordan said.

Findings included discrepancies between district records and funds in the county treasury, and accounts that were in such bad shape they could not be audited.

A private firm was finally hired -- at the recommendation of the state -- during the 2006-2007 fiscal year to reconcile the accounts, which took a year to complete.

School district officials managed to reduce the fines to $2.1 million through the state Education Audits Appeal Panel, but Swanson said even that was more than the district should have to pay.

"If my bill saves that $2 million to the district, we believe it would provide more money for education," he said. "It's also an important principle at stake."

The state controller's office agreed not to oppose the bill after Swanson's staff made a series of changes to the language, including removing provisions that would have put additional requirements on auditors, Jordan said.

Swanson said it is not clear yet how many districts the legislation would apply to, but that hearings will be held throughout the state this summer to see how many have situations similar to that of Oakland.

Oakland elected and public officials are joining parents, teachers and students at 6:30 p.m. today at Cesar Chavez Auditorium, located at 2825 International Blvd., to express their support of the bill.

It is unclear how much legislative support it will receive, but Swanson said he is optimistic about the bill's chances of making it out of committee.

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