October 31, 2014

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Lorain school board OKs $3 million loan for district

LORAIN — A $3 million loan approved Thursday by Board of Education members will keep Lorain Schools locally controlled but incur more debt for the school district.

Board President Tim Williams and board members Tony Dimacchia, Mitchell Fallis and Bill Sturgill voted yes. Board member Jim Smith voted no.

Despite passage last month of a levy that will raise about $3.1 million annually and $7.3 million in cuts earlier this year, the district still has a $4.7 million deficit. Without the loan, the district would go broke in the spring, triggering a state takeover.

Loan supporters said a takeover could mean automatic levies and cuts to minimum standards in a district that laid off 182 employees earlier this year and cut several academic programs.

“The reality is, if we don’t borrow again, we’re going to have to cut drastically,” Dimacchia said.

However, Smith has contended a takeover wouldn’t necessarily be hostile. In addition to a member appointed by Republican Gov. John Kasich and one appointed by the Ohio Department of Education, Democratic Mayor Chase Ritenauer would appoint a member and a Lorain parent and a Lorain businessperson also would be selected.

Smith previously said a takeover would allow the district to obtain an interest-advance of $3 million to $6 million from the department that could be repaid in three to 10 years. Despite the loan, an approximately $1 million deficit is projected by June.

“I don’t think it’s fiscally prudent to borrow to get out of debt only to get back into debt,” Smith said. “It’s going to have a negative effect on our children.”

The loan will cost taxpayers $240,000 in interest payments. The district has borrowed about $10 million since 2006, and with the new loan Smith said taxpayers owe about $1.5 million in interest payments.

“That money never sees the inside of a classroom,” he said “It sees the inside of a bank.”

Fallis, who often votes with Smith, countered that loan interest isn’t “insurmountable” in the context of the district’s $90 million general fund budget. Fallis challenged board members to make more cuts.

Besides the loan, board members also approved a financial recovery plan 4-1 with Smith voting no. The plan to be sent to the state includes about $815,000 in administrative cuts and 25 teacher layoffs by the end of June 2014 if enrollment drops by 625 students. The district lost about 3,000 students over the last decade due to depopulation, competition from charter schools and open enrollment.

Superintendent Tom Tucker, hired in August, said he’ll announce the administrative cuts in the spring as part of greater emphasis on improving academics and graduation rates.

“We aren’t satisfied,” Tucker said. “Our teachers are working hard, and we’ve got a lot to do.”

In other business

The board approved hiring former Palm Elementary School Principal Pamela Szegedy as assistant superintendent of school improvement through teaching. The hiring is to help get the district out of academic emergency status. Szegedy will earn $98,800 and be paid with federal taxpayer grant money.

Tucker said after the meeting that full-day kindergarten will resume Jan. 22 with about five teachers hired for approximately $150,000 to $160,000. Full-day kindergarten was part of the $7.3 million in cuts, but Tucker promised it would return if the levy was passed.

Contact Evan Goodenow at 329-7129 or egoodenow@chroniclet.com.