After an emergency levy failure in November, Tecumseh Local Schools faces a deficit and a possible “state takeover” — something Ohio Department of Education officials will discuss with the community Tuesday night at the high school.
A financial analyst and an assistant director with ODE will talk about what state takeover means and about fiscal monitoring and oversight.
Londa Schwierking will present her analysis of Tecumseh’s five-year financial forecast and discuss the financial picture for the district’s future.
Roger Hardin, assistant director to ODE’s Finance Program Services, will present the steps a district goes through to reach state takeover, including the phases of fiscal caution, fiscal watch, and fiscal emergency.
He will discuss each phase, speak about how Tecumseh can avoid a state takeover, and answer questions from the audience.
When fiscal caution occurs, said ODE Spokesman John Charlton, it involves ODE frequently analyzing a district’s finances to keep it moving toward solvency. The state auditor takes over when a district reaches fiscal watch and fiscal emergency, he said.
“Typically, if they’re going too be down just a little, they might eliminate programs or increase pay to play,” Charleton said. “But if it’s significant, that’s when we step in and create a corrective action plan.”
The district has cut or not renewed at least 95 positions since 2003 and has reduced student programs, cutting $7.5 million, or 22 percent, from the district’s budget, according to previous Springfield News-Sun reports.
“The biggest reason (the district is in this situation) is that we haven’t had new money since 1995,” aside from a bond issue for new school buildings, new Superintendent Brad Martin said.
One way to keep the district out of fiscal watch is to pass a levy, Charlton said.
“If that levy passes, (fiscal monitoring) might not be necessary,” he said.
Since voters rejected the 8.95-mill operating expenses levy request in November — and seven other requests since 2004 — the district will have have three more opportunities to seek new money from taxpayers, officials said, to avoid a projected $1.1 million deficit at the end of fiscal year 2014.
The district’s five-year forecast submitted to the state indicates it could see a deficit of $4 million in 2015, nearly $9 million in 2016 and nearly $16 million in 2017.
Revenues are expected to decrease each of those years while expenses, particularly in personnel and employee retirement and insurance costs, are expected to increase, according to the forecast.
Last year, revenues increased and expenses decreased due to some reductions, Martin said, but expenses are expected to be on the rise again due in part to to personnel step wage increases and insurance costs.
“We need to pass a levy so the school board and community can continue to choose our programs and not let someone from outside come in and determine what programs we have,” Martin said. “Once program is gone, it’s really hard to get it back.”
When on fiscal watch, the state can dictate to the district what level of programs it can have based on pre-defined state minimums.
The district will likely go back to voters in May to see if it can get some new money into its budget, Martin said. The request will likely be more than what was on the ballot in November, though it wasn’t yet known how much would be needed.
“I think the community needs to understand that we really do need to get a levy passed to avoid a state takeover,” he said. “They need to understand this is not free money and that if we have to take a loan out from the state (if we get to the fiscal emergency level), we’ll not only have to request money to run our district, but to pay back the loan.”
If the five-year levy had been approved in November, it would have cost the owner of a $100,000 home $274 annually.