Live Oak School District sees more unrest as superintendent letter surprises parents, teachers

Live Oak School District teachers and parents say they’re shocked after the outgoing superintendent, in a letter released last week, publicly disagreed with the Santa Cruz County Office of Education’s financial assessment of the district, an assessment that ultimately elicited months of turmoil. 

On May 9, Superintendent Daisy Morales forwarded to district families and staff a letter she had sent to the County Office of Education. She alleged that the COE leadership didn’t do a “proper and thorough investigation” of the district’s finances and “jumped” to give it a negative certification in January. 

County Superintendent of Schools Faris Sabbah rejected the claims a day later in a letter to the board and Morales, saying the negative certification was “necessary,” adding that her letter creates confusion. 

“While I appreciate that you have a different view of these matters, I regret that rather than appealing my decision or discussing this with me directly, you instead opted to disseminate a letter that misleads the LOSD school community,” he wrote in the letter last Friday. 

His letter and rebuttal were supported by an additional letter from the CEO of the Fiscal Crisis Management Assessment Team (FCMAT) – an organization created by the state to help educational agencies manage their finances. CEO Michael Fine explained in detail why the negative certification was justified. 

“The financial and budgetary reports submitted by the district as required by statute tell a story of a rapidly increasing condition of fiscal distress,” Fine wrote. “The governing board of the district did not offer any additional or other mitigating information. The county superintendent had a responsibility to act.”

Morales’ letter has now caused additional unrest in a district that has seen so much tumult over the past several months as the district has reeled with budget cuts, layoffs, Morales’ resignation, and the departures of the human resources and business assistant superintendents.

The negative certification required the district to create a stabilization plan – including layoffs – to steer it out of a budget crisis. The crisis surprised district families and teachers in February and led to months of contentious board meetings and several leadership resignations, including Morales’.

Earlier concerns on finances

LOSD’s odyssey became public in January, but apparently began earlier. Then, the county office classified the district’s first interim budget report with a negative certification saying it would not meet its financial obligations starting in the 2024-25 year due to several factors including a projected lack of cash, declining enrollment and budget shortfalls. 

Sabbah noted in his May 10 letter that the district’s “fiscal stability issues” came long before the county office’s designation in January that it had a negative certification. He cited a letter the COE wrote to the district in January 2023 about its interim budget then. 

“The district’s projected deficit spending is NOT within the established state standard for the 2022-23 budget year,” COE officials wrote. “The district is strongly cautioned against ongoing deficit spending other than one-time planned expenditures.” 

He also went on to write: “I have also raised these issues to you personally, as you are aware.” 

COE spokesperson Nick Ibarra declined to make Sabbah available for an interview for this story, saying what Sabbah had to say about the matter was in the letter. He added that Morales hadn’t responded to Sabbah’s letter as of Tuesday. 

Morales wrote in her letter that the COE’s “lack of due diligence” created “catastrophic effects” for her and the district. 

“The negative certification was the ‘linchpin’ that has caused all negative community uproar and chaos at the District. It has destroyed the District in many ways, not to mention the damage it has done to my name and reputation,” she wrote. “Parents, staff, and the community, unknowing of the true meaning of a negative certification, have equated it to mismanagement or misappropriation of funds, both of which are incorrect.”

In the letter, Morales said she first learned that the district might not have needed a negative certification from Sara Perez, Live Oak District’s interim chief business officer consultant. She said she later heard the same thing from individuals from the district’s auditing firm, Chavan & Associates, and two FCMAT representatives. 

Her claims surfaced previously in March at governing board meetings and in an interview with Lookout. Then, board president Kristin Pfotenhauer and board member Jeremy Ray raised similar concerns about the negative certification. At that time, in an interview with Lookout, Sabbah also denied that the COE failed to do due diligence and said the negative certification was necessary. 

Then in mid-May, Morales more widely distributed her claims, in communications sent out to LOSD community partners and parents.

“Totally unexpected” at this point, say parents

Parents and the teachers union told Lookout that they were surprised to see the letter. They said, in addition to adding confusion, the letter adds to the exhaustion they feel from the chaotic past few months. They just want to move on. 

Lauren Pomrantz, the teachers union co-president, said the union received the letter several days before it was shared with district families. She said many teachers felt that they would rather focus their attention on finishing up the year. 

Still, she added that it was “totally unexpected.”

“We had no kind of expectation that anything of that nature was going to be written,” she said. “So it was shocking – after having basically no communication whatsoever to suddenly have that show up in our emails.” 

Casey Curtiss, a parent of two kids at Live Oak Elementary, said he felt the letter was a “public relations move” by Morales and shows she’s trying to deflect accountability. In the parent groups he’s involved with, he said many parents expressed similar feelings. 

“[It’s like] somebody is trying to salvage their reputation, divert blame away from themselves,” he said. “And, as a parent reading that, and a section in the letter kind of pointing out that maybe the teachers, the parents, and the staff didn’t truly understand what was going on [with the budget crisis], kind of felt insulting to me reading that.” 

Morales told Lookout that the board looked over her letter and provided input before she sent it to the COE and the district community. Morales said she won’t be responding to Sabbah’s letter. 

She also said that she sent her letter out publicly because she felt the community should understand that the negative certification – which she continues to dispute – doesn’t necessarily mean that someone mishandled finances. 

“I thought it was important for them to know why a negative certificate happens,” she wrote via email. “There is a misconception that a negative certification is somehow linked to mismanagement and that is not the case.” 

Morales resigned March 15 from her post at the district saying that “errors were made” and she felt “a heavy heart and a deep sense of responsibility.” Her last day at the district is June 30. 

The district is moving forward with a superintendent search timeline with plans to appoint a new permanent superintendent in time to step in the day after Morales steps down, July 1. After conducting interviews Sunday and Monday, the board is scheduled to vote on a contract with a new district head at its regular June 12 meeting. 

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FOR THE RECORD: This story has been updated to add detail on the role and findings of the Fiscal Crisis Management Assessment Team in the assessment of Live Oak School District budgets.

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