Schools’ proposal to borrow $3M OK’d

State: Youngstown’s plan shouldn’t affect emergence from fiscal emergency

By HAROLD GWIN

VINDICATOR EDUCATION WRITER

YOUNGSTOWN — The state fiscal oversight commission controlling city school district finances has given its approval to a plan for Youngstown to borrow $3 million from the state to balance its 2008-09 budget.

The school district has already borrowed $25 million in state solvency loan funds over the last two years after the state placed the district in “fiscal emergency” after its general fund was facing a deficit in 2006-07.

The last $5.2 million of that will be repaid in fiscal 2008-09.

The oversight commission had suggested that Youngstown find a way to borrow needed money from other school district accounts, rather than going back to the state for another loan for this year.

That could help speed up the district’s emergence from fiscal emergency, suggested Roger Nehls, commission chairman.

The district did borrow $5.2 million from its own school building construction bond account and had hoped to borrow up to $3 million more from its employee- self-insurance and food-service accounts for this year.

However, that plan didn’t work out, said William Johnson, district treasurer, explaining to the commission Thursday that the self-insurance fund won’t finish in as strong a condition as earlier anticipated and can’t be used as a loan source.

The result is that the school board’s finance committee recommended that the district go back to the state for assistance, he said.

Nehls, pointing out that the state controlling board has already approved up to $3.688 million in solvency funds for Youngstown this year, said borrowing additional funds shouldn’t adversely affect the district’s emergence from fiscal emergency.

Youngstown has a good track record in repaying those loans, and the school board and administration have shown a willingness to make the tough decisions and institute cuts in spending, he said.

Part of the release process from fiscal emergency is a demonstrated ability to remain solvent over the long period, and reductions to downsize the district made by the school board show that Youngstown should eliminate its deficit in 2011, he said.

“I’m pleased with the response the district has made,” Nehls said.

gwin@vindy.com