San Francisco Bay Area school district faces a county budget takeover

The Richmond, California-based West Contra Costa Unified School District, which failed to approve an accountability plan necessary to pass a budget by the end of the fiscal year, got a reprieve Monday as Contra Costa County prepared to take over budget activities.

If the school district fails to approve a budget by the July 1 start of the fiscal year, the county education office is supposed to take control, but has given the district until its July 17 board meeting to pass a budget, according to a report from online news site Richmondside.

The situation was set in motion when a school board majority refused to approve the school district's local control accountability plan at Wednesday's board meeting.

Rich Saskal, Bond Buyer Managing Editor

The district will continue to maintain control of its day-to-day operations, as well as pay employees and maintain expenses without interruptions, the district's associate superintendent of business services, Kim Moses, told the Mercury News.

Moses couldn't immediately be reached for further comment.

The accountability plan outlines the district's goals to improve student outcomes and steps it will take to achieve them. Board members said the LCAP plan presented by district staff failed to adequately explain how it would support vulnerable school populations, according to another Richmondside report.

Without passing the LCAP, the board cannot vote on the budget, according to the proposed budget document for fiscal year 2024-25.

The LCAP gives the district a blueprint on how to allocate funding for its $484 million budget. The plan failed to pass on a vote by the five-member board of two against, one for, one abstention and one absent member.

The district will run off the 2023-24 third interim budget, adopted on May 29, but that excludes any grant funding related to the LCAP. If the plan and budget aren't approved by September 15, the county Office of Education may impose a budget.

Marcus Walton, head of communications for the county's office of education, could not be reached for comment.

In a May report, the state's Fiscal Crisis and Management Assistance Team found the West Contra Costa school district to be at high risk for fiscal insolvency, citing declining enrollment and deficit spending.

FCMAT is designated by the state government to support school districts in financial stress. It became involved in WCCUSD after the county superintendent of schools issued a Lack of Going Concern designation to the district in 2023.

The school district, which serves five cities and six unincorporated areas, had 25,737 students enrolled for the 2022-23 school year, according to EdData.org, a number that has declined by more than 3% a year for four years.

The report found the district projected deficit spending of $6 million for the 2023-24 school year and $6.8 million for 2024-25.

The school district's superintendent had identified on Sept. 26 several critical issues for the district to address in accordance with FCMAT's list of indicators of risk of potential insolvency, FCMAT's report said.

The district had $1.4 billion in outstanding general obligation bonds in 2023 and $1.9 billion in total long-term liabilities including pensions, according to its most recent audit report posted on EMMA.

It's no stranger to financial stress. Under its previous identity as the Richmond Unified School District, it defaulted on certificates of participation and attempted to declare bankruptcy in 1991, events that led to the state government taking on a more active role with financially stressed school districts, including creating FCMAT.