By Doug Oakley
doakley@bayareanewsgroup.com
Published Nov. 2014
OAKLAND -- For the first time since it took a $100 million emergency bailout loan from the state in 2003, the Oakland school district turned in a passing grade on a financial audit.
The bad news is that the latest audit completed by the State Controller's Office for the 2011-12 school year will not restore the district's bad credit. That won't happen until it completes an up-to-date audit showing the district can balance its books.
That lingering bad credit has cost taxpayers at least $29 million in extra interest the district has to pay when it borrows money.
"I worked on this audit in previous years, and the district's books were in much better order this time," state Audit Manager Kirk Ochoa told school board members last week when they approved the audit. "This is tremendous from what we had in previous years."
The latest audit showed issues in the financial books amounting to $2 million related to inaccurate attendance records of students and inaccurate time sheets of federally financed employees.
School board member Jumoke Hinton Hodge said the latest audit puts the district on the road to recovery and raises expectations of the public.
"It's so reflective of our growth," she said during last week's school board meeting. "This is a public issue in terms of a level of confidence."
The latest audit pales in comparison to the audit of 2007-08, which showed $124 million worth of problems, said Jacob Roper, a spokesman for the State Controller's Office.
"The lower number of findings this time around indicates that they have followed recommendations on how to repair some of their bigger systemic problems in record keeping," Roper said.
He said in the past audits, the district was not able to produce complete financial statements showing how much its assets were worth and where they were located. As a result, bond rating agencies withdrew the district's credit rating, and it now has to pay more when it borrows money, some of it financed by Oakland homeowners.
School board member Jody London praised the school district's financial team for finally producing enough documents to auditors that resulted in a "qualified" opinion by the State Controller's Office.
"On behalf of the voters of Oakland, who have been paying a penalty because we didn't have this every time we sold our bonds, I want to thank you," London said.
But the district will continue to pay higher interest rates until the state is current in its audits. The state will continue to audit the district's books until it repays the $100 million loan, now at about $69 million.
The latest audit took nine months to complete and the timing of future audits all depend on "access to their bookkeeping and how long it takes to get files that are requested," Roper said.
Follow Doug Oakley on Twitter at www.twitter.com/douglasoakley
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