Live Oak School District (LOSD) Superintendent Daisy Morales announced her resignation in an email to staff and parents last Friday afternoon. She will stay on until June 30, 2024, the end of her current term.
“Upon reflecting on my time here, I acknowledge my imperfections. Errors were made, with the most recent being an avoidable negative budget certification that led to unnecessary stress and hardship for many. I apologize for this,” said Morales in her email.
The resignation came after calls from LOSD parents for her to step down after district administration revealed a budget crisis and subsequent plans to layoff teachers and staff last month.
Morales was hired as LOSD superintendent for the 2021-22 school year. Before this position, she worked as Assistant Superintendent of Business Services for the Salinas City Elementary School District.
Morales’ contract allows for the board to end her contract “without cause” —her current contract would have expired on 6/30/2026. The salary for the position was $228,900 for the 2022-23 school year and Morales is entitled to 12 months of severance pay.
“That is a significant expense to a district so it is disappointing that there was not a way forward,” said LOSD board member Jeremy Ray.
The Live Oak teachers union (LOETA) passed a “vote of no confidence” on February 27 and a petition from parents calling for Morales’ resignation has over 700 signatures.
Morales and the board agreed that it was time for her to go, according to Ray.
At a March 13 district board meeting, it came to light that the district’s financial situation was worsened by errors in the December budget. The Santa Cruz County Office of Education (COE) subsequently decertified the budget. In retrospect this “negative certification” was not deserved, according to the COE.
Layoffs would still have happened by March 15 despite the budget error, Ray said, but the district would not have been threatened by insolvency and a state takeover.
The board will be looking into all layoff notices that were sent because “it was forced in a way that was unnecessary which also led to potentially a larger number of positions being cut,” Ray said.
The COE’s decertification forced the LOSD Board to pass a Fiscal Stabilization Plan on March 6. This was a mistake, according to Ray. The decertification was triggered by the district’s estimate that their reserves would fall below the 3% mandated by the state.
Damage Control
Chief Budget Officer Hanswool Kim was fired from LOSD on March 12 after a meeting with Morales. According to Kim, Morales said, “it’s not a good fit.”
Kim called for the board to reconsider Morales’ contract at the meeting, before her resignation was announced.
“To have it presented like we messed up, while we were trying to clear it up and fix the solution that doesn’t feel right,” said Kim. “I gave her the benefit of the doubt. I trusted her and her strategy.”
According to Kim, his numbers aren’t wrong. Sara Perez, who is overseeing the budget now, was using them at the March 13 meeting, he said.
Perez, a consultant for the COE and ex-budget chief at LOSD, started looking at the budget weeks ago as “a second set of eyes” at Morales’ behest, according to Perez.
Perez trained ex-Budget Chief Officer Alison Warner, who left the district in 2023 after working on the June 2023 budget. Then Kim was hired in November 2023.
The problem in the December budget comes from how the general fund was used instead of dipping into “restricted funds,” put aside for particular expenditures like school books, or specific-programs. These “pockets of money” were budgeted unnecessarily but not spent, according to Perez.
The LOSD budget office is crunching the numbers to determine how much extra money the district has, according to Perez.
Jeremy Ray still has questions about the budget.
“It is a concern. I want to understand exactly how this happened and why,” said Ray. He has not heard of any fiscal or financial impropriety.
I think a great follow up story would be why Morales was allowed to execute transfers of several key school personel AFTER resigning. If you are so bad at your job that a bankrupt school district is paying you over $200,000 to NOT work for them, then you should not be allowed to execute several capricious, vindictive transfers of school principals – this is exactly the revenge response the teachers’ union warned against.