State fiscal emergency status could benefit Liberty schools

While the immediate response of government entities placed in fiscal emergency by the state of Ohio is one of consternation, the long-term effects of such drastic action are usually positive. The Youngstown City School District is a prime example of the good that can come from having an independent panel manage the system’s finances. For five years starting in 2006 the district was under the thumb of the state Fiscal Planning and Supervision Commission, but when it emerged from emergency status four months ago, its budget was no longer dripping red ink and its five-year plan reflected financial stability.

The Liberty School District can find solace in what occurred in Youngstown as it comes to terms with Ohio Auditor Dave Yost’s declaration Monday that the system is “in a state of fiscal emergency.” The announcement came as no surprise, given that the board of education on June 14 had adopted a resolution requesting the status. The reason: the district’s finances are a mess and officials have been unable to develop an economic recovery plan that is acceptable to the state superintendent of public instruction. The district was placed in fiscal watch, one level below emergency, on May 26. That designation followed the Ohio Department of Education’s decision to place the district in fiscal caution because of projected budget deficits of $293,000 for fiscal year 2011 and $2.56 million for fiscal 2012.

On Feb. 7, Yost’s office determined that the district’s financial records could not be audited.

The Liberty school board did the right thing in seeking the involvement of the state commission in the development of a recovery plan, and the state auditor was right in concluding that the district does not have the wherewithal to deal with its fiscal challenges.

As has been shown not only in Youngstown but also in the city of Girard, which had been in fiscal emergency for several years, having a state commission control the finances gives local officials much needed political cover.

This is especially important when deep cuts have to be made in spending — at least 80 percent of a public entity’s operating budget is taking up by employee salaries and benefits — and when additional revenue must be found.

In the Liberty School District, voters in recent years have twice rejected school levies, but having a state commission propose a tax increase puts the issue of revenue enhancement in an apolitical context. Board members who are elected by the people can’t help but take the temperature of the electorate. Not so a commission that has only one goal: To return the district to fiscal stability.

In announcing the emergency status, Auditor Yost made it clear that the commission, three of whose members must be appointed within 15 days, will “assume all or part of the powers of the board of education.”

Former treasurer’s role

One of the issues we believe the panel should address is how the district got into such a jam in the first place. Three teams of auditors are studying the financial records, and while there does not appear to be any sign of criminal activity, the role of the former treasurer, Tracey Obermiyer, cannot be ignored.

Obermiyer resigned April 29 in the wake of revelations about the district’s financial crisis.

As we noted in an editorial in May, the former treasurer had ignored requests from the state for information relating to the district’s finances and failed to attend a meeting with the board in April.

Taxpayers in the Liberty School District have a right to a full explanation of Obermiyer’s behavior. We urge the oversight commission to address that issue.