Six years later after state takeover, members of the independently elected school board were given their authority back.
"I remember that day very clearly. It was a difficult decision for me to make but I was willing to give up my control to make sure that the kids continue their academic progress," said Oakland School Board President Noel Gallo.
The state bailout came in the form of a $100 million loan and a series of state administrators in charge of the district.
But state superintendent Jack O'Connell says Oakland has shown improvements in financial management and classroom test scores and now it's time to put local officials back in charge.
"Today we're able to return full local controlm, full responsibility and full accountability to the locally elected school board in terms of their governance and all of their response and that's the way it should be," said State Superintendent Jack O'Connell.
Even with the board's new power, the district still doesn't have complete control. A state trustee will continue to oversee the finances, making sure Oakland Unified lives within its means.
Some Oakland teachers say the district isn't in any better shape today. They're demanding a pay raise and more control of their own classrooms.
"We want to see a return to create academic freedom in the classroom," said Betty Olson-Jones from the Oakland education Association.
Oakland still has to repay the state $80 million.
The district's new superintendent, the first in years not appointed by the state, says coming up with the money won't be easy.
"Now, one of the responsibilities the district has is making those loan payments, otherwise we could possibly return to state control," said incoming Oakland Superintendent Tony Smith.