District facing financial crisis
By SUSAN MCMILLAN
mcmillan@sanduskyregister.com
MARGARETTA TWP.
Tuesday, June 22, 2010
Margaretta Schools administrators will need to develop concrete plans in the next several weeks to solve their budget crisis.
On July 1, the district will enter a new fiscal year with a 3.74-percent deficit, which is within range for a declaration of fiscal caution and possibly fiscal watch.
Superintendent Ed Kurt and treasurer Jude Hammond must submit a financial recovery plan to Roger Hardin, the Ohio Department of Education’s assistant director for the office of finance program services.
Hardin said he will set a deadline of 30 days or 60 days for the school district to submit a plan that goes beyond, “We’ll pass a levy.”
“It has to be very precise,” Hardin said at Monday’s school board meeting. “They’ll have to come up with approximately $417,000 of cuts.” A 60-day timeline would allow officials to submit a proposal after the August levy.
Hardin and Ohio Department of Education fiscal consultant Neil Allen attended the board meeting to lay out what state officials have learned about Margaretta’s financial status and what could happen next.
If Margaretta Schools entersfiscalcaution, the Ohio Department of Education would monitor the district to ensure implementation of the recovery plan.
If a district does not implement its proposals — or the situation worsens — fiscal caution could proceed to fiscal watch or fiscal emergency. Fiscal emergency allows a district to receive a two-year advance on its state funding.
“It’s not free money,” Hardin said. “Don’t anyone leave here thinking that the state’s going to come in and give you free money because that doesn’t happen. It’s an advance.”
Margaretta already needs to ask for an advance on property tax payments from the Erie County Auditor’s office, Allen said.
The district will have about $120,000 left at the end of this month, not nearly enough to cover the three payrolls in July.
Allen spent three days in May reviewing Margaretta’s books. He noted a trend in the past five years in which the district spent more than it brought in.
He also drew attention to the percentage of revenues spent on salaries and benefits, which has ranged from nearly 83 percent this year to 89 percent last year.
“Those percentages are red flags to me. That indicates that you’re going to have problems down the road,” Allen said. “Actually, it should be around about 80 percent. When you take 88 and 89 percent of your operational revenue, that doesn’t leave much left.”
These financial problems do not necessarily spring from irresponsible spending, Hardin said after an audience member noted voters have not approved a new levy since 1998.
“The system is set up that you need to approve levies at least every five or six years. And if you don’t, it’s not necessarily a spending problem,” he said. “That’s when the revenue problem starts to come in.”
About 150 people attended the meeting in Margaretta Elementary’s gym.
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