McDonald schools in fiscal emergency

By Mary Smith

A projected $2.1 million deficit has pushed the school district into financial trouble.

McDONALD — McDonald Local Schools have it officially from the state auditor’s office: The district is in fiscal emergency.

Schools Treasurer Brian Stidham said notification was received by the district because it faces a $2.1 million deficit in 2010.

The district had been notified in September that it was placed in state fiscal caution, which is to warn the district of potential fiscal distress.

But after an audit by the Local Government Services division of the state auditor’s office, a deficit of more than $2 million is projected, which is 32 percent of the district’s budget for the year.

The projected budget for the district in 2010 is $6.296 million.

Stidham said the notification included information about a Financial Planning and Supervision Commission, which must be appointed and has 120 days to adopt a recovery plan.

The district had anticipated a deficit of $217,000 in September, but after hiring the state auditors to come in and audit the books, was informed of the much higher deficit. A public meeting took place for the auditor’s report Oct. 8.

The designation of fiscal emergency requires a forecasted operating deficit for the current fiscal year exceeding 15 percent of the school district’s general fund revenue for the prior fiscal year, and the district has not passed a levy to eliminate the deficit in the succeeding fiscal year.

The district does have a 4.9-mill emergency five-year operating levy on the November ballot to generate $260,000 annually.

A fiscal emergency is the last and most severe stage of a school district’s financial solvency problems. After a declaration by the auditor, a commission is created that may assume all or part of the powers of the board of education. The commission develops a financial plan to alleviate the district’s financial crisis.

The board of education has planned an open forum to answer residents’ questions about the deficit for 7:30 p.m. Tuesday at the high school auditorium.