YOUNGSTOWN SCHOOLS Ohio auditor to end fiscal emergency

By RON COLE
VINDICATOR STAFF WRITER
YOUNGSTOWN -- This has been a year of milestones for Jeff Hundt.
He celebrated his 50th birthday. He and his wife marked their 25th wedding anniversary. His twin son and daughter graduated from college.
And this week, Hundt, associate director of school finance for the Ohio Department of Education, reaches a professional milestone that he thought he might never see.
State Auditor Jim Petro will be in Youngstown on Friday and is expected to remove the city school district from fiscal emergency.
Hundt, chairman of the seven-member commission that has overseen the district's finances for the past 41/2 years, said it will be a day to savor.
"We've accomplished a lot in a very difficult situation," Hundt said last week from his Cleveland office.
"There's a lot of satisfaction in going into a place that had so many problems and hopefully knowing that you were a part of what fixed it."
Petro's announcement would abolish the oversight commission and return full financial authority to the elected board of education for the first time since September 1996, when Youngstown was the first school district in Ohio declared a fiscal emergency.
Accomplishments: Petro, Hundt and even critics of the fiscal emergency law say the district's financial reversal is nothing short of remarkable:
UDebt has dropped from $43 million in 1997 to $9.2 million this year and will be gone by 2007.
ULast year, for the first time in seven years, the school system balanced its $90.5 million general fund budget without borrowing money.
UThe district has saved $35 million since 1996 through budget cuts, Petro said.
UIn November, district voters approved a 4.4-mill tax issue to fund the city's share of a $163.5 million project to improve city school buildings. It was the first tax increase approved in 11 years.
"It really is a good example of how the fiscal emergency law was meant to work," said Petro, who wrote the law in 1996 and got it through the General Assembly.
"The financial condition was abysmal. They've really turned it around."
The key now, Petro and Hundt said, is keeping it that way.
"They need to continue to hold the line on spending," Petro said.
"This isn't the time to sit back and be satisfied," Hundt said. "I think the school board and administration have grown and have a much greater understanding of what needs to be done."
Hundt said that wasn't the case in 1996.
In very bad shape: In addition to a skyrocketing debt and a bleeding general fund budget, the district's accounting practices were in a shambles, Hundt said.
When we first got there, I didn't think it was fixable," he said. "Then, as we started opening drawers and file cabinets and looking into things, there were even more outstanding liabilities than we anticipated."
The district didn't even have a firm grasp on the number of employees, he said.
"They didn't know who they were paying, who they weren't paying," Hundt said.
Within five months, district Treasurer Ralph Logozzo was fired after an audit showed he had diverted nearly $90,000 in school district funds for personal use.
Once Hundt's staff cleaned up the books, the commission set staffing levels and made sure they weren't exceeded.
All purchases over $10,000 required the commission's approval, and purchases under $10,000 required the OK of Hundt's staff.
"I say we single-handedly put the Wick-Pollock Inn out of business because when we first got there, there were thousands of dollars being spent on breakfasts, lunches and dinners," Hundt said.
Superintendent Ben McGee, a commission member, said the district stopped spending money unless it was in the budget.
"If it's not in the line item, we don't spend it," McGee said. "So, we're constantly aware of each line item -- what we have and what we don't have."
Job cuts: The commission cut 122 jobs, including 10.5 percent of the teaching staff, closed four school buildings, converted East High School into a middle school and kept schools open during a three-day teachers strike in September 1998.
"That was a turning point in the finances for the district," Sarah Brown-Clark, school board president when the commission took control, said about the strike. "I'm not sure the school board would have held as firmly."
In the past six years, teacher pay has increased only 6 percent. "Being able to hold down salaries has been a huge factor," said Carolyn Funk, who replaced Logozzo as treasurer.
Edna Pincham, a former school board member, said the commission made decisions the school board could not.
"We certainly needed assistance," she said. "I think the structure and authority that was brought by the commission was very important."
But board-commission relations were anything but cordial at first. Hundt refused on many occasions to even meet with board members. The board ended up suing, claiming the commission's takeover was unconstitutional. The two sides sniped at each other at public meetings and in the press.
Brown-Clark said she still thinks usurping an elected body's authority is wrong.
But on the school board at the time was "one brouhaha after another" and many people "felt like the school system was just soaking up money and showing nothing positive," she said.
Just by virtue of its presence, the commission improved the public's perception of the system, she said.
"People were enamored with the idea of bringing in an independent third party to oversee things," she said.
As the perception improved, so did community acceptance, which led to the bond issue approval in November.
Challenges remain: Although the school district's five-year budget forecast projects large carry-over balances, Hundt said some serious challenges are looming, including another set of employee contract negotiations in two years.
With the state's school-funding situation still unresolved, Hundt said it's likely the district also eventually will need to pass an operating levy.
"They're going to get to a point where they won't have any place to cut any more, and then they run the risk of getting back into that cycle of debt," he said.
Lessons learned: McGee said he and the board will maintain most of the commission's fiscal practices.
"There's been a change in the culture of thought about finances," he said.
"We are now proactively looking at budget forecasts over a multiple-year period more so than maybe was the case previously so that we can make difficult decisions ahead of time as opposed to making them after the bottom line isn't balancing."
"We have to be not unlike General Motors and not unlike any other private industry," Funk said. "We have to run a leaner machine."
"I'm hoping for the best," Hundt said.