City schools fight ongoing deficit

By Harold Gwin

The district is losing $26 million this year to charter schools, the treasurer said.

YOUNGSTOWN — The treasurer of the city school district said the loss of state subsidy money to local charter schools is hampering the district’s financial recovery efforts.

The state placed Youngstown in fiscal emergency in November 2006 when the district was running a $15 million general fund deficit, and a fiscal oversight commission was appointed to control the district’s finances as it seeks to return to solvency.

Despite making $27 million in spending cuts over the last two years and in the new school year beginning July 1, the district is still running a deficit, Treasurer William Johnson told the Financial Planning and Supervision Commission on Thursday.

Area charter schools are “the main thing that’s working against us at this point,” he said, explaining that charter schools are now taking $26 million a year to cover city school children who have moved to those schools.

Had those children stayed in the city schools, Youngstown wouldn’t be losing that money, Johnson said, adding that the loss to charter schools has grown rapidly from just $10 million four or five years ago.

School officials reported earlier this year that 2,655 city school children were enrolled in charter schools. Another 727 were attending open-enrollment public schools elsewhere, and 180 were using state EdChoice vouchers to cover their tuition at various private schools.

State subsidy funds follow the pupils. If they move to another school, the money goes with them.

Youngstown borrowed $15 million in state solvency loan funds to cover the initial deficit and is paying that back over two years. It’s borrowing another $10.38 million now to stay in the black and will repay that over two years as well.

Paying back those loans is also a big drain on the general fund, Johnson told the commission.

The state doesn’t wait for the district’s checks on the debt, but instead withholds the funds from future subsidy payments.

Johnson’s latest five-year forecast shows the deficit still between $15 million and $17 million by 2012.

“We need that levy to get us out of the hole,” he said, referring to a five-year tax levy the district has been trying to persuade voters to pass. “There’s just no hope [of overcoming the deficit] without that levy.”

The district has been proposing a 9.5-mill levy that would generate about $5 million a year in new revenue, but voters have turned it down three times.

They will be asked again in November to approve a levy, and Roger Nehls, chairman of the oversight commission, said that a decision on just how large that tax should be must be decided within the next four to six weeks.

That’s a joint issue for the school board and the commission, he said.

Nehls repeatedly has said that the district can’t cut its way to solvency. There must be an influx of additional funds to return the district to financial stability, he has said.

gwin@vindy.com