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10 years after takeover, Emery Unified back in financial control

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A decade after a state takeover in response to fiscal mismanagement, Emery Unified School District in the East Bay has regained full control of its finances.

In a rare move, state officials took control of the tiny school district amid a criminal investigation into the spending practices of its former superintendent in 2001. The district was more than a million dollars in debt and unable to pay its bills. 

Officials gathered yesterday at Emery Unified's secondary school in Emeryville to announce the change. While the mood was celebratory, memories of the fiscal disaster 10 years ago lingered. This is a day to celebrate the teachers who “have lived through hell,” said Debbra Lindo, the district’s new superintendent.

“There are more schools all the time finding themselves in this position and it’s partly because there is not enough money being put into education,” said state Sen. Loni Hancock, D-Berkeley.

Currently, Oakland Unified, Vallejo Unified, West Contra Costa Unified and the King City Union school districts are under state control. There are 143 school districts in California in danger of financial failure within the next two years, according to the state Department of Education.

Some have criticized the state takeovers, saying that they take too much of the decision-making ability away from local officials. At Oakland Unified, the state returned some local control to the board in 2009, but the district was still left with an $80 million debt.

Kendall Taggart/California WatchState schools chief Tom Torlakson addresses officials at an Emery Unified school in Emeryville.

"During the receivership, when the State Controller's audit found deficiencies in progress, millions of dollars in fines were assessed against OUSD," Assemblywoman Sandre Swanson, D-Oakland said in a statement. "When the receivership was dissolved and local control returned to OUSD, the existing fines were deemed to belong to OUSD. OUSD should not be required to pay for fines that were incurred on someone else's watch."

Swanson, chair of the Select Committee on State School Financial Takeovers, recently held a hearing to examine flaws in school takeovers.

Although Emery Unified has recovered from financial disaster, many say it could have been prevented.

In 1992, a year before former superintendent J.L. Handy took over Emery Unified, he was fired from Compton Unified – the first district ever taken over by the state – amid similar accusations of fiscal mismanagement. Handy was later sentenced to five years' probation for using school funds for personal business.

The Alameda County grand jury wrote a scathing report in 2001 when Emery Unified relinquished control to the state, noting that the Alameda County Office of Education “bears responsibility for this debacle” for not taking timely action to support the district.

Despite concerns that many other districts are facing fiscal disaster, in early July the state Legislature decided to take away some of the oversight powers used by county offices of education to ensure districts are in good fiscal health.

Previously, if a county office of education saw potential fiscal problems for a district in the years ahead, it could initiate interventions, but that’s no longer the case. Now, county offices only require districts to submit a one-year budget in their final reports, instead of weighing in early on two- or three-year budgets.

“This does tie our hands,” said Sheila Jordan, Alameda County superintendent of schools, who held the post when Emery Unified was taken over by the state. But she thinks it’s more appropriate given the uncertainty of school funding right now. “The districts that are really edging on having issues we work with closely.”

Filed under: K–12, Daily Report

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