Emergency Bailout of Oakland Schools OKd

An emergency $100-million loan for the insolvent Oakland Unified School District cleared its final hurdle in the Legislature on Thursday and was headed to Gov. Gray Davis for signing.

On a 28-9 vote, the state Senate approved a bill authorizing the loan. Davis is expected to sign the measure, approved earlier by the Assembly, providing the largest bailout for a school district in California history and a state takeover of Oakland schools.

The bailout bill was introduced as an urgency measure and required a two-thirds vote in both legislative houses. It will take effect after Davis signs it, which is expected within days.

State Supt. of Public Instruction Jack O’Connell will soon appoint an administrator to take control of the district, reducing the 10-member elected school board to an advisory panel. The administrator will have the authority to fire current Oakland schools Supt. Dennis Chaconas and other staff.

State officials view the loan, which will be offered as a line of credit as early as next week and paid back with interest over 20 years, as a new start for the financially troubled school system of 48,000 students.

“I’m bullish on the opportunities here,” said state Sen. Don Perata (D-Alameda), who wrote the bill. “It’s going to save them.”

Some of the senators who voted against the bailout said it could backfire by signaling to other fiscally irresponsible school districts that the state will come to their rescue.

“It’s a dangerous precedent,” said Sen. Richard Ackerman (R-Irvine). “It’s exactly the wrong message.”

The version of the bill passed Thursday gives the Oakland administrator authority to sell off buildings, such as warehouses and offices, to raise funds.

Oakland is meeting its monthly payroll by dipping into accounts that are supposed to pay for school construction and repairs.

The district is $82 million in the hole this year and faces a $64-million shortfall next year. It has laid off 330 teachers and counselors for next year, and wants teachers to take a pay cut and pick up more of their health care costs, as well.

The financial collapse happened, in part, because officials miscalculated the cost of teacher pay raises as enrollment was declining.