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State calls city schools’ financial forecast far too sunny
By HAROLD GWIN
YOUNGSTOWN
“Overly optimistic” is how some members of the state panel controlling Youngstown schools’ finances describe the district’s revised five-year financial forecast.
Roger Nehls, chairman of the state fiscal oversight commission, called it “probably the most optimistic five-year forecast” of any district he’s reviewed.
It doesn’t take into account the potential loss of state foundation funds that may result from Ohio’s ongoing fiscal crisis, he said.
William Johnson, district treasurer, presented an annual update on the plan to the commission Monday, showing that Youngstown will end this fiscal year June 30 with nearly a $3.6 million cash balance.
His forecast predicts that balance will grow, reaching a high of about $10.1 million in fiscal 2012, despite a potential loss of state funds.
Johnson said about 80 percent of the district’s general-fund revenue comes from the state and that amounted to $81 million in fiscal 2007. The state’s aid dropped to $76 million this year, but Ohio tapped $4.4 million in federal stimulus dollars to bring it back to $81 million , he said.
His five-year projection shows state aid continuing at about that same level, though he acknowledged that there have been rumors of as much as a 10 percent reduction in state funding.
“I feel that this is, in my opinion, overly optimistic,” said commission member Paul Marshall.
Both he and Nehls pointed out that most districts in the state are being more conservative in their estimates of state aid. Most are projecting a drop, Nehls said.
“Whatever happens, you’re going to have to renew your levy,” Marshall told Johnson, referring to a four-year, 9.5-mill emergency levy approved by voters in 2009. It’s supposed to be producing about $5.3 million a year in new revenue but is providing only about $4.8 million and will expire in fiscal 2013.
City school board members have said they don’t want to ask voters for its renewal, but the fiscal oversight commission said the board may have no choice.
The district will have to renew that levy to stay in the black, Nehls predicted. Johnson’s forecast shows the year-end balance will begin dropping in 2013 with the expiration of the levy and fall to only $2 million in fiscal 2015.
Nehls said the district must show ongoing financial stability if it wants to be released from state-imposed fiscal emergency, a condition declared by the state when the district ran a budget deficit in 2006.