Schools could be in black by 2011
By Harold Gwin
The oversight chairman wants the district to avoid borrowing from the state.
YOUNGSTOWN — Revenue from a new four-year tax levy coupled with a proposed $2.9 million in additional spending cuts could return the city school district to solvency as early as fiscal 2011.
That’s the latest projection from William Johnson, district treasurer, as reported to the state-appointed fiscal oversight commission, controlling district spending since the state placed the city schools under fiscal emergency in November 2006.
State intervention occurred when the district reported it was running a $15 million general-fund deficit.
Voters passed a 9.5-mill tax levy earlier this month that will produce $5.3 million annually in new revenue for four years and then expire.
Johnson had said last week that the levy passage could get the district out of the red by fiscal 2012 but that, when the levy expires, the district will slip back into the red in fiscal 2014 unless further spending cuts are made.
The school board has trimmed spending by $26 million over the last two years, and Superintendent Wendy Webb said last week that she is working on a proposal to cut an additional $2.9 million next year.
Johnson presented the oversight commission with a revised five-year forecast reflecting both the levy revenue and the additional $2.9 million in cuts discussed by Webb, showing the district will end the current fiscal year about $6.1 million in the red, fiscal 2010 about $2.7 million in the red but fiscal 2011 some $3.5 million in the black.
Fiscal 2012 shows $9 million in the black and fiscal 2013 shows $11.3 million in the black, under the new projection.
The numbers don’t reflect the likelihood that Youngstown may have to borrow $6.1 million from the state to end this year in the black and then repay that debt over the next two years.
Johnson said borrowing that money could push the recovery back initially but that Youngstown would wind up with the same positive numbers in five years.
Roger Nehls, chairman of the oversight commission, said he would like to see the district come up with a plan that would allow it to balance this year’s budget without borrowing any money from the state.
Youngstown has borrowed some $25 million in state solvency loan funds to balance its last two budgets, and, as of June 30, 2009, will have repaid all but $5.2 million of that debt. The remainder is to be paid back in fiscal 2010.
Nehls suggested the district look at borrowing from private lenders against other funds it may have to avoid borrowing more from the state. Eliminating the debt to the state would speed up Youngstown’s exit from state-designated fiscal emergency, he said.
The district will be updating its financial recovery plan in March or April, and Nehls said he would like to see that become the fiscal emergency “exit plan,” if the district can find a way to avoid tapping state solvency loan funding.
gwin@vindy.com