Assembly OKs Amended Oakland School Bailout

The largest school bailout in state history was approved by the Assembly Friday, moving an Oakland school district closer to financial solvency and oversight by a state administrator.

The Assembly voted 54-9 to approve a $100-million emergency loan to the Oakland Unified School District.

Sen. Don Perata (D-Oakland) said the district had run up debts because of an antiquated accounting system, declining enrollment and rising expenses, including higher salaries.

Without the loan, the district expects to run out of money by the end of the fiscal year, Perata said, and won’t be able to pay employees.

“This is unfortunate situation,” said Assemblywoman Wilma Chan (D-Alameda). “I don’t want to excuse what happened in Oakland, but we have an obligation to maintain education for these children.”

Under California law, if the loan is finally approved a state-appointed administrator will take over the district until it can pay back the money and balance its books.

The Assembly amended the bill, giving the school district permission to sell its office building near Lake Merritt, which has been estimated to be worth $30 million. The measure now returns to the Senate for concurrence on that amendment.

Gov. Gray Davis set aside money in his January budget proposal to bail out the district. If the bill is again approved by the Senate and signed by the governor, it would be the second time this year the state has bailed out a struggling school district.

Davis signed a $2-million loan to the West Fresno Elementary School District, where classes at its two schools ceased when teachers weren’t paid.