Despite loan, debt to persist in district

The deficit could grow as large as $48.3 million by 2011.

By HAROLD GWIN

VINDICATOR EDUCATION WRITER

YOUNGSTOWN — A $15 million loan from the state helped the city school district balance its budget this year, but the debt remains and will continue to grow, according to a financial five-year forecast.

The interest-free state loan must be repaid over the next two years, which means the budget deficit actually hasn’t been paid off, only delayed.

The five-year forecast, prepared by district Treasurer Carolyn Funk, begins with this fiscal year and shows the cumulative effect of the deficit over that period, projecting that the red ink could grow to a whopping $48.3 million by June 30, 2011, unless steps are taken now to prevent that from happening.

Revenues will continually fail to keep pace with expenditures, despite substantial spending cuts imposed by the school board, according to the forecast.

Employee salaries, at $55.6 million this year, will decline to about $46.1 million in 2011, provided that salaries remain frozen and further staff reductions occur as the pupil population declines, district statistics show.

Fringe benefit costs are expected to remain constant at just over $20 million a year.

Purchased services, primarily tuition the district must pay for city pupils attending charter schools and other public schools through open enrollment, is another big ticket item, expected to grow from $35.2 million this year to $44.1 million in 2011.

The district’s revenue picture remains static over the five years, with no increase expected in state subsidies to boost that side of the budget, Funk said. Despite spending cuts already in place, the expenditure side of the budget will continue to run $10 million to $15 million ahead of revenues each year, she said.

Real estate taxes are expected to show minimal growth, increasing from $16.9 million this year to $17.6 million in 2011. State general education subsidies are expected to remain constant at about $66 million each year.

Job, spending cuts

The district already has made about 250 job cuts (nearly 100 this year and 153 more targeted for next school year, which begins July 1) and reduced spending by about $17 million for that two-year period, but it isn’t enough.

Funk told the school board recently that further reductions and a tax increase will likely be required to overcome the red ink.

Both are part of the district’s financial recovery plan required by the state, which placed Youngstown under fiscal emergency last November after the district announced it expected to run a deficit this year.

A state-appointed fiscal oversight commission has already ratified that plan and directed the school board to put a new tax levy on the ballot this November.

The size of the levy must be determined by July 12, the commission said.

Voters turned down a 9.5-mill, five-year tax levy proposal last November, and school board members have repeatedly said the district needs to show the taxpayers that it can reduce spending before making another attempt at getting a new levy passed.

Detailing what cuts already have been made will have to be part of a plan to get voters to approve additional taxes, school officials said.

The five-year forecast could have been worse.

It doesn’t include any increase in base salary rates for any employee groups for the entire period, although, so far, only the nonprofessional employees represented by the American Federation of State, County and Municipal Employees union and some crafts union employees have agreed to a three-year wage freeze.