Bill to Appoint Trustee to Run Financial Affairs of Oakland Schools OKd by Panel

Unprecedented legislation authorizing appointment of a state trustee to supervise the financial affairs of the beleaguered Oakland school district was approved Wednesday by the state Senate Education Committee.

The state has appointed a few such trustees in the past but always at the request of local school officials. In this case, if the legislation is approved by the full Senate and signed into law by the governor, the state will impose a trustee on the unwilling school district, to try to solve its fiscal problems.

‘They’re going to go broke by next April and they don’t have a plan to do anything about it,’ California Supt. of Public Instruction Bill Honig said in an interview.

Under the bill, the Oakland school board is offered a $10-million state bailout loan, if it agrees to accept a trustee that would serve until the loan is paid off. But even if Oakland decides not to seek the loan, it would get the trustee for at least 30 days, and perhaps for as long as three years, if Honig decides that is necessary.

The 50,000-pupil school district faces at least a $2.6-million deficit in the next year, despite laying off teachers and administrators and cutting back on art, music and sports programs.

Kurt Sjoberg, acting state auditor general, said an investigation by his office found that the deficit will climb to at least $16 million if the district follows through on plans to build up reserves to pay for self-insurance, asbestos abatement and other needs.

Half a dozen district employees and former employees have been arrested or indicted in recent weeks on charges of misappropriating funds or stealing school district property and more arrests are expected.

An Alameda County Grand Jury found ‘gross mismanagement” in the district and the state controller’s office is investigating the possible misuse of more than $5 million in state desegregation money.

The district has had no superintendent since last December, and two potential successors have turned down the job. All of this prompted Assemblyman Elihu M. Harris (D-Oakland) to propose legislation authorizing Honig to appoint a ‘trustee-adviser” to supervise the district’s finances for at least 30 days.

‘There is a time when the state has a responsibility to step in when things are out of control,” Harris told the committee, “and let me tell you, in Oakland things are out of control.”

Committee Chairman Gary K. Hart (D-Santa Barbara) said the bill means “we are going to step further than we’ve gone before” in terms of state control over local districts. But Hart said it is a necessary step because “the Legislature appropriates billions of dollars each year for schools and we have an obligation to make sure the money is spent properly.”

School board members, city officials and others from Oakland argued that conditions in the Oakland schools are not as bad as Harris portrayed them and that the district should be allowed to work out its own problems without state interference.

“If we’re going to be held accountable, let us do it our way,” said school board member Sylvester Hodges.

Hodges also said Harris introduced the bill only because he is “running for mayor” of Oakland in November, 1990.

But the committee waved aside those objections and approved the bill by a 6-2 vote, sending it on to the Senate Appropriations Committee. It has already passed the Assembly.