Officials consider plan to borrow

By Harold Gwin

The district has borrowed $25 million from the state over the last two years.

YOUNGSTOWN — Some city school board members are less than enthusiastic about a plan for the district to borrow $5.2 million from itself to help make ends meet this year.

William Johnson, district treasurer, presented the board’s finance committee with a proposal to borrow the money from the district’s bond fund to help balance its general fund, which is expected to run a deficit of about $8.7 million.

The bond fund money is only available temporarily, and the loan would have to be repaid over a four-year period.

The amount is equal to one year’s worth of revenue from a new 9.5-mill, four-year emergency levy approved by voters in November.

The state placed Youngstown under fiscal emergency in November 2006 when the district announced it was running a general fund deficit.

Since that time, district finances have been under the control of a state fiscal oversight commission, and Youngstown has borrowed $25 million in state solvency loan funds to cover the annual red ink.

All but $5.2 million of that amount will be repaid as of June 30 of this year.

The oversight commission suggested in December that Youngstown consider borrowing from itself this year to reduce the amount of additional solvency loan assistance required, but Michael Murphy and Lock P. Beachum Sr., committee members, said Wednesday that they aren’t comfortable with that plan.

Murphy pointed out that it could affect overall district finances for years.

He indicated he would rather borrow the full amount of the anticipated deficit from the state solvency loan fund.

When asked for a recommendation, Johnson said he’s not comfortable with the concept, either, and Wendy Webb, superintendent, suggested that the full board schedule a meeting with the oversight commission to discuss the idea.

Johnson said that if the school board is to borrow from one of its other funds, it must, by law, act this month before any tax revenues are collected on the new levy.

Beachum asked that the administration arrange the board/commission meeting before Tuesday’s regular board meeting. The bond fund loan is listed as an item on that regular meeting agenda.

Johnson also presented the committee with several new five-year forecast scenarios, all reflecting the borrowing of $5.2 million from the bond fund.

Borrowing the money and securing a $3.5 million solvency loan would allow the district to end this year $426,000 in the black, but the district would return to a deficit of $3.3 million next year.

Borrowing the money, having the solvency loan, plus making $3 million in additional spending cuts in fiscal year 2010 as proposed by the administration would allow the district’s general fund to be back in the black to the tune of $1 million in fiscal year 2011.

gwin@vindy.com