LORAIN — The school district is expected to become insolvent and declare fiscal emergency this spring, triggering a state financial takeover even if a levy passes in November.
“I won’t have the cash to finish out the year,” School Treasurer Dale Weber said after Thursday’s Board of Education meeting where board members closed out the 2011-12 school year. The district closed out the year with a nearly $91.8 million general fund budget. The 2012-13 budget is about $89.6 million.
Weber said short-term borrowing will get Lorain Schools through the winter, but it will become insolvent between April and June, forcing the district to declare fiscal emergency. The declaration would allow the district to receive a no-interest advance of up to $4.5 million from the Ohio Department of Education which the district would have about two years to repay.
Shrinking local, state and federal money and competition from charter schools and open enrollment left Lorain Schools with a projected $12 million deficit. The district, which has about 7,500 students, has lost about 3,000 in the last decade.
Within the last year board members have laid off 182 employees — nine teachers were later recalled because of retirements — in cutting nearly $7.4 million of the deficit. Board members are leaning toward proposing a 4.8 mill levy that would raise $2.9 million annually, but Weber said passage that wouldn’t be enough to eliminate a $4.7 million projected deficit. Lag time in the first year of collection would also restrict revenue.
Board members say an advance would give them time to recruit new students increasing state taxpayer aid, but besides voter disenfranchisement, a takeover by a five-member panel would likely mean more cuts.
Interim Superintendent Ed Branham said the panel could cut the district to minimum standards, which could mean eliminating school nurses, sports and extracurricular activities such as bands.
Under a takeover, officials from the department and Office of Budget and Management would appoint three of the members, with Gov. John Kasich and Mayor Chase Ritenauer appointing the other two. Commission members would approve all expenditures of $5,000 or more.
Takeovers average about four years and Branham said they usually end after voters approve levies. “Eventually they got fed up,” he said.
Contact Evan Goodenow at 329-7129 or firstname.lastname@example.org.