City schools likely to need levy, oversight chief says

By Harold Gwin

YOUNGSTOWN — The chairman of the state fiscal-oversight commission controlling city school- district spending said the school board might have to consider seeking a renewal of a 4-mill emergency-tax levy when it expires in fiscal 2012-13.

“It’s not apparent to me how else they will remain solvent,” said Roger Nehls after a commission meeting Wednesday.

The commission had just heard a report from William Johnson, district treasurer, on Youngstown’s five-year financial forecast.

This report raises warning flags, Nehls said.

As the 9.5-mill levy expires, the forecast shows that spending will be more than revenue in 2013 and 2014. If that trend continues, the district could be $4 million in the red in 2015, he said.

No school board members attended Wednesday’s meeting, but board members have been saying in recent weeks that they don’t want to or can’t go back to the taxpayers for a levy renewal, at least not in the same amount. The board has asked the treasurer and superintendent to find an additional $2 million in cuts to keep the district solvent down the road.

The district already has cut some $32 million in spending over the last three years, eliminating about 520 jobs in the process.

“That levy may very well be a significant element,” Nehls said.

It is supposed to be producing about $5.3 million a year in new revenue, but a drop in real-estate tax collections, something Johnson said is attributable to the difficult economic times, has offset about $2.1 million of that new revenue.

Real-estate tax collections were just over $16 million in 2008 and should be about $21.5 million with the levy but are coming in only around $19.3 million, Johnson said.

The district is building somewhat of a financial cushion and should end fiscal 2010-11 in the black, Johnson said, predicting a $7 million fund balance, the first time since 2006 that Youngstown takes in more than it spends without having to borrow money.

That fund balance should grow to $10.3 million in fiscal 2011-12 but begin to decline in 2012-13, Johnson said.

As the levy expires, spending will once again outstrip income. The forecast shows $107.8 million total revenue in 2012-13 but spending at $109.2 million, a difference of $1.4 million. It gets worse in 2013-14, with revenue at $106.2 million and spending at $110.7 million, a difference of some $4.4 million.

The five-year forecast ends there, but Nehls said carrying its projections into 2014-15 would indicate Youngstown could be facing a deficit exceeding $4 million.

He said he’s not sure the district could find that much more to cut to cover that difference.

Johnson’s forecast predicts the state will increase its contributions to the district from the current $77.7 million to $81.1 million in 2011-12, but Paul Marshall, a member of the oversight commission, cautioned against relying on any state-funding increases.

The state is having its own budget problems, and state aid is a big question mark, he said.

The state placed Youngstown in fiscal emergency in November 2006.

gwin@vindy.com