Commission wants district to borrow more from itself

By Harold Gwin

The district treasurer said other school funds could be used instead of state money.

YOUNGSTOWN — The fiscal oversight commission controlling city school district finances wants the district to borrow more money from itself rather than rely on state assistance to balance this year’s budget.

The state Financial Planning and Supervision Commission gave its approval Thursday to a plan to borrow up to $3,688,000 from the state’s school solvency loan fund, but Roger Nehls, commission chairman, said it would be to the district’s advantage not to borrow any.

Youngstown, which has been in state-declared fiscal emergency since November 2006, has borrowed $25.4 million from the state over the past two years and has repaid all but $5.2 million of that debt so far, with that last portion to be repaid in fiscal 2009-10.

Borrowing another $3,688,000 from the state would push the payback out another year, while not borrowing any money from the state could speed up the district’s emergence from fiscal emergency, Nehls said. The district has access to other internal funds that it could tap temporarily to balance the budget, he said.

Youngstown, at the oversight commission’s suggestion, has already borrowed $5.2 million from its own bond fund to help balance this year’s $118 million budget, and the school board has passed a resolution asking for the state solvency loan assistance as well. The bond fund money is being repaid over the next four years.

Treasurer William Johnson said that although the solvency request is for $3,688,000, the district likely won’t need all of that money. Youngstown’s need should actually be more in the $1 million to $2 million range, he said.

Johnson said the district’s health care self-insurance fund and its cafeteria fund, which are expected to run year-end balances of $2.5 million and $1.6 million respectively this fiscal year, could be temporary sources for that additional money.

The district could tap those funds for advances to the general fund to end the year in the black, and then pay them back at the beginning of fiscal 2009-10 in July, he said.

It’s an issue the school board has not had an opportunity to address yet, he said.

Nehls pointed out that the district must be able to produce a five-year fiscal forecast that shows no red ink as part of the process of emerging from fiscal emergency.

Avoiding any more borrowing from the state would put the district back in the black in fiscal 2010-11 which would be the start of that necessary five-year positive projection, he said.

gwin@vindy.com