State subsidy to reduce school district’s deficit

By Harold Gwin

School officials believe a proposed 9.5-mill tax levy will still be on the ballot.

YOUNGSTOWN — A larger-than-anticipated state subsidy will reduce the city school district’s general-fund deficit by more than $1 million this year.

William Johnson, district treasurer, told the school board’s finance committee Tuesday that the state has indicated Youngstown will receive just under $86 million in assistance for fiscal 2008-09.

That’s up between $1 million and $1.5 million over the original projection, he said.

As a result, the district’s five-year financial forecast, which had projected a year-end deficit of more than $11.5 million as of June 30, 2009, now shows that red ink reduced to about $10 million, Johnson said.

Youngstown has been running a general-fund deficit for two years, and the state placed the district under fiscal emergency in November 2006, setting up a financial oversight commission to control the district’s spending until it returns to solvency.

The district ran a $15 million deficit in 2006-07 and an additional $10.4 million deficit last year, borrowing a total of more than $25 million in state solvency loans to cover the debt.

Some $7.5 million of that has been paid back and $12.7 million more is to be repaid this year.

Johnson said Youngstown has already been approved to borrow up to $10.4 million more this year so it will end in the black. The money would have to be repaid over the next two years.

However, school officials have said that particular borrowing could be eliminated or severely reduced if voters approve a 9.5-mill, four-year tax levy in November that would generate $5.3 million a year in new revenue. The money would be enough to pay off the state solvency loans, and that would give the district a balanced budget.

The school district has cut $26 million in spending over the last two years, and it is now the solvency money borrowed from the state that is causing the ongoing deficit, Johnson said. The budget would be balanced if not for that debt, he has said.

It appeared last week that the levy plan hit a snag when the Ohio Secretary of State’s office refused to approve it for inclusion on the ballot.

However, Shelley Murray, school board president, and Dr. Wendy Webb, superintendent, said the problem was the result of a typographical error on documents submitted to the state that showed the levy as both a four-year and a five-year tax.

It’s not unusual for a ballot question error of that type to be redone and resubmitted in time to appear before the voters, Murray said.

Webb said the correction has been made and the document resubmitted for approval.

Secretary of State Jennifer Brunner said last week that the school board had sufficient time to make the correction for the Nov. 4 ballot.

gwin@vindy.com