Auditor mulls downgrading financial status

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The Ohio Department of
Education has called for
'fiscal emergency' status.

By HAROLD GWIN

VINDICATOR EDUCATION WRITER

YOUNGSTOWN — The Ohio auditor is considering placing the city school district in "fiscal emergency."

Carolyn Funk, school district treasurer, told the board of education Tuesday that she has been informed that the Ohio Department of Education has recommended downgrading the district's financial status from "fiscal watch."

The department said it believes Youngstown has failed to submit an acceptable plan of economic recovery, Funk said, noting that the auditor's office makes the final determination of the fiscal designation.

Youngstown ended last fiscal year June 30 with a $2 million deficit and is projecting an $8 million deficit this fiscal year.

The red ink prompted the state to put the district into "fiscal caution" in March and then downgrade that to fiscal watch in June.

The state prefers a fiscal recovery plan that clearly shows a district emerging from deficit spending, but Youngstown's plan is contingent upon voters' passing a five-year, 9.5-mill tax levy in the Nov. 7 election.

Funk had said in the past that hinging a recovery plan on a proposed tax levy wouldn't win state approval.

Drive for levy

The move by the Department of Education to call for a fiscal emergency ranking comes just as the school district has launched a drive to get voters to approve the tax levy. The bulk of that money, 8.5 mills or some $3.6 million, would be channeled into the general fund to cover operating expenses. The remaining mill would be set aside for permanent improvements.

The additional general fund revenue, coupled with a projected $22.5 million in staff cuts, building closings and other reductions over the next couple of years, is expected to eliminate the budget deficit by 2010, school officials have said.

Funk said she fully expects the auditor's office to reduce Youngstown's rating to fiscal emergency, but, should the levy pass, it would seem unlikely that the state would move to take over the district's financial operations.

Normally, under fiscal emergency, the state would appoint a five-member Financial Planning and Supervision Commission to take over some or all of the local board of education powers to devise a plan to eliminate the deficit.

However, should voters approve the levy, the state would most likely just closely monitor the district's spending over the next couple of years to make sure that the cuts of $22.5 million are implemented and that tax revenue from the new levy is spent appropriately as the district recovers, Funk said.

Although the levy proposal has generated some radio talk show discussions and a few letters to the editor, no one from the public showed up at Tuesday's school board meeting to speak against the proposal.

The board did pass a resolution thanking its 120-member Urban Congress for publicly supporting the levy.

The Urban Congress, made up of education, business and community leaders, was created to assist the district in promoting education.

gwin@vindy.com

Wednesday, October 11, 2006