Schools decrease deficit, still must borrow $8.5M

The board will meet Aug. 4 to finalize plans for two potential levies.
By HAROLD GWIN
VINDICATOR EDUCATION WRITER
YOUNGSTOWN -- The city school district will borrow $8.5 million to help offset a budget deficit and fund operations for fiscal year 2007, which began July 1.
The district ended fiscal year 2006 in the red, and projections show a $1.6 million additional spending deficit for July, the first month of the new year, said Carolyn Funk, district treasurer.
The board of education voted Tuesday to sell tax revenue notes in the amount of $8.5 million to J.P. Morgan Chase Bank, essentially borrowing the money against anticipated real estate tax revenues.
The debt will have to be repaid next June with the end of fiscal 2007.
Funk said the interest rate is expected to be 5 percent, although a final figure won't be known until the end of this week. She said she hopes to be able to invest the money until it is needed and earn enough interest to break even on the deal.
State regulations allow school districts to borrow up to one-half of their estimated real estate tax revenue.
Youngstown should get about $18 million in real estate taxes this year, Funk said.
She had predicted the district would end fiscal 2006 with a $4 million deficit but told the board Tuesday that the final figure won't be that high. Not all of the numbers have been reconciled yet, she said, declining to give a firm estimate on the revised year-end deficit.
The lower figure, however, will put the district in a somewhat better economic position this year, Funk said.
Earlier projections had suggested the deficit would grow to $11.9 million as of June 30, 2007, but Funk said a preliminary cash flow estimate now shows a deficit of just over $10 million.
She said the district spent nearly $3 million less than expected on various purchased services in fiscal 2006. That category includes such items as utilities, charter school tuition for city children and contracted services.
Further cutbacks urged
Board member Lock P. Beachum Sr. said he would like to see the district borrow less than $8.5 million, suggesting that additional spending cuts need to be made.
The district has already implemented a plan to save $8.5 million this year, primarily through the elimination of about 100 jobs.
Dr. Wendy Webb, superintendent, said the administration intends to put together a five-year fiscal plan that protects academics while streamlining operations in an effort to reduce costs.
The district needs to show fiscal responsibility in the long term, she said.
Youngstown's real and projected deficits have resulted in the state's putting the district under "fiscal watch," requiring it to develop a financial recovery plan the state finds acceptable.
The board is considering placing two tax levies on the November ballot to provide the revenue needed to overcome the deficit. One would be an emergency five-year levy for 12 mills, generating about $6 million annually in new revenue.
The other would be a 2.5-mill permanent improvement levy that would generate about $1.25 million a year.
The board will meet at 4 p.m. Aug. 7 to finalize the tax levy plan. Aug. 24 is the final submission date to get a levy issue on Mahoning County's November election ballot.