Mounting Debt: The Long Economic Boom Enabled School Districts Nationwide to Fund Expensive Reforms and Hefty Pay Raises. Now, However, They are Finding It Nearly Impossible to Cut Costs and Balance Their Budgets. What Makes It So Tough for Districts to Downsize?(Forum‪)‬

In April 2003,Joseph Olchefske, a nationally recognized reformer, announced his intention to resign as superintendent of the Seattle Public Schools. Surprisingly, given his background in investment banking and his previous experience as the school district's chief financial officer, Olchefske was felled by a financial crisis. In the fall of 2002, the school district had discovered an unexpected $23 million deficit for the previous fiscal year. The district was on track to ledger another $12 million deficit for the 2002-03 fiscal year. About a month later, Dennis Chaconas was fired as superintendent of the Oakland, California, public schools. New software, installed so that the school district could better understand its finances, had uncovered a $40 million deficit from the previous year. The deficit for the current year was expected to be equally large. To keep the district solvent, the state of California provided a $100 million line of credit and took over the district's operations, stripping the school board of all but advisory powers and appointing an administrator to replace Chaconas. Although Oakland had long been known as a troubled school district, it had appeared to be moving in the right direction under Chaconas. Teacher turnover was down and test scores were up.