\u201cWe wanted to hear directly from her about what options she had in supporting OUSD on a path to long-term financial stability and thriving schools for all of our students,\u201d Otto told The Oaklandside. Otto also helps produce The Dig<\/a>, a new newsletter by parents that covers OUSD school board meetings.\u00a0<\/p>\n In her comments Monday, Castro was unequivocal that the root cause of OUSD\u2019s structural deficit is declining student population. She recalled an annual report from the 1965-1966 school year showing OUSD had 64,000 students in 88 school buildings. Sixty years later, she said, the district has roughly half as many students in 78 schools.\u00a0<\/p>\n \u201cThe root problem is enrollment,\u201d Castro said. \u201cThat sets up all the other complexities. That sets up the screwy staffing ratios, the screwy central office, the exhausted facilities. There\u2019s a huge mismatch between the infrastructure that we built and the student enrollment that we have right now.\u201d<\/p>\n \u2018OK, board, you need to make these cuts\u2019<\/p>\n All year, OUSD\u2019s board and leaders have been navigating a projected budget deficit<\/a> of more than $100 million for the 2026-2027 school year \u2014 driven by a combination of expiring COVID funds and decreasing revenues due to declining enrollment. The school board\u2019s planned budget cuts so far<\/a> include drastic reductions at the district\u2019s central office and cuts at school sites amounting to around $50 million. Other adjustments include using more restricted dollars for expenses<\/a> that are currently paid out of the general fund \u2014 a move that will leave many schools without some vital staff<\/a> such as literacy coaches, attendance clerks, and community school managers.\u00a0<\/p>\n Castro said that approach, of redirecting the district\u2019s supplemental and concentration funds, appears to be valid, but would have to be approved by the OUSD parent and student advisory committee<\/a>, the body that makes recommendations for how the district should spend those dollars.\u00a0<\/p>\n As superintendent, Castro and her team review budget reports for all 18 Alameda County school districts. Districts must each self-certify whether or not they are able to meet their financial obligations over the next two years, certifications she and her staff review. In December, when OUSD issued its the first interim budget projections through Oct. 31, district staff including the former chief business officer, Lisa Grant-Dawson, recommended a negative budget certification, indicating OUSD would fail to meet those obligations, but the board instead voted to certify it as qualified, the category one level above negative, which means the district may or may not be able to pay its bills.\u00a0<\/p>\n Following the December report, Castro wrote to the board<\/a> and district leadership that their finances more closely aligned with a negative self-certification, but \u201cdebating the label obscures the more important point: the remedy to fiscal instability is the same regardless of certification status. The district\u2019s instability is driven by deferred decisions and unimplemented actions that continue to compound risk.\u201d<\/p>\n On Monday night, Castro added that the follow-up from her office on a negative or a qualified certification would be the same.<\/p>\n \u201cPretty much all the county superintendent\u2019s actions are to gently lob the ball back to the board,\u201d she said. \u201cThe direction was, \u2018OK, board, you need to make these cuts.\u2019\u201d<\/p>\n Last week, the school board voted to self-certify its second interim budget report<\/a> as qualified. Castro\u2019s office will issue its own analysis and certification in the next few weeks.\u00a0\u00a0<\/p>\n Throughout the Monday evening conversation, Castro reiterated the district\u2019s problem:<\/p>\n \u201cThe OUSD has a long history of making plans and abandoning them and making decisions and reversing them,\u201d she said. \u201cWe all have a part of that because we keep voting people to reverse those decisions and make new plans and change direction.\u201d<\/p>\n In May 2024, Mike Hutchinson, then president of the school board, put forward a resolution called the \u201cThree R\u2019s: Re-envision, redesign, and restructure,\u201d to chart a roadmap for OUSD to overhaul its spending and address the district\u2019s footprint. The board passed the resolution in August 2024. In December of that year, the district certified its budget as \u201cnegative,\u201d putting the county on alert<\/a> that OUSD was in financial trouble.\u00a0<\/p>\n The negative certification resulted in Castro\u2019s office bringing a fiscal advisory team to OUSD<\/a> in February 2025 to help district leadership and staff develop the re-envisioning plan. That work never materialized under new board leadership. (Jennifer Brouhard and Valarie Bachelor were voted in as president and vice president that January.) Last year also saw the early departure of longtime superintendent Kyla Johnson-Trammell, who still had two years left on her contract, with the board narrowly approving a separation agreement<\/a>.\u00a0<\/p>\n A call for \u2018a radical restructure\u2019<\/p>\n The main difference between Oakland\u2019s school district and others facing budget challenges, Castro said, is that other districts make hard decisions and stick with them. Oakland Unified has for years commissioned various financial stabilization plans, plans to restructure the district, or plans to shrink the number of schools that have been approved and then cast aside, Castro said.\u00a0<\/p>\n Otto, the parent moderator, mentioned that the state education code outlines several ways for the county to intervene in OUSD, including conducting fiscal reviews, implementing stronger financial controls, requiring additional budget information from the district, ordering a fiscal recovery plan, assigning another state agency to review the district\u2019s operations, or withholding pay from the board and superintendent. Castro said each of those actions has been taken with OUSD \u201clike 47 times.\u201d Notably, in 2021, Castro\u2019s predecessor L.K. Monroe threatened to withhold pay<\/a> from the superintendent and board directors if they didn\u2019t comply with a county review of the district\u2019s financial controls.\u00a0<\/p>\n \u201cCurrently most of these are in place in some way,\u201d Castro said. \u201cIt\u2019s time to require a fiscal recovery plan.\u201d<\/p>\n If OUSD wants to maintain all 78 of its schools, including the small ones, many of which have fewer than 200 students, they would need to be radically restructured, Castro said. As a veteran educator who has worked at alternative and continuation schools, she said she\u2019s versed in the finances of small schools, but said there have to be tradeoffs. There might be one teacher for a cluster of grades and staff who take on multiple roles, she said.\u00a0<\/p>\n Castro said that with an $850 million annual budget and 108 properties on more than 500 acres of land, OUSD has vast potential for reimagining the district\u2019s offerings. But restructuring or closing and merging schools, she said, also requires at least a year\u2019s notice and deep collaboration with community stakeholders. And it also requires difficult decisions about which resources and initiatives to let go of.\u00a0<\/p>\n \u201cYou can\u2019t have a full school choice model and a full commitment that every school will be the same with half the enrollment you had and make all that work,\u201d she said. \u201cI truly believe that we could build a school district with those resources that could actually meet the needs of the next generation of Oakland\u2019s children. But it is a radical restructure, and it involves engaging every community.\u201d<\/p>\n The last time OUSD closed a school was in June 2022. A wider list of closures had been announced<\/a> in January of that year, but in February the board pared back the plan and voted only to shutter Parker K-8<\/a> and Community Day School<\/a>. Other changes included merging New Highland Academy and RISE Community Elementary into Highland Community Elementary, and eliminating the middle school at La Escuelita<\/a>, leaving it only as an elementary school. The plan also included closing five schools in June 2023, but new directors joined the board in January, and the new board reversed the remaining closures.<\/p>\n Last year, the board briefly considered a plan to merge 10 schools<\/a> that share a campus into five schools, but that failed to get traction<\/a>.\u00a0<\/p>\n![\"2025.02.12_Middleton_SchoolBoard_05\"\/](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/03\/2025-02-12_Middleton_SchoolBoard_05.jpg\")
Castro addresses the school board during the Feb. 12, 2025 meeting at La Escuelita Elementary School. Credit: Florence Middleton for The Oaklandside<\/p>\n![\"Community](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/03\/large-Community-Day-School_20220303_5471.jpg\")
Community Day School, an alternative school for students who had been expelled, was closed in 2022. Credit: Amir Aziz\/The Oaklandside<\/p>\n