Belpre Schools treasurer warns district will run out of money in 2019
BELPRE — Belpre City Schools will run out of money before the end of the 2018-19 school year, according to a five-year financial forecast released Monday.
District Treasurer Lance Erlwein presented the report to the Belpre Board of Education during a three-hour work session Monday and presented a more-brief overview at Monday night’s school board meeting.
At the end of the presentation, the board unanimously voted to freeze all hiring and spending above what is already budgeted, effective immediately.
Erlwein said the district’s revenue has declined in recent years while expenses, in part due to utilities and insurance costs, have increased.
“We’re going to end fiscal year 2018 (the current school year) with $923,000,” he said. “When we get to fiscal year 2019, we’re going to fall short before the year is over. We just fall over the cliff.”
The five-year forecast, which is based off economic trends from the previous three years, shows an eventual debt of nearly $5.5 million in fiscal year 2022. Erlwein said while school systems are allowed by state law to operate at a deficit, they cannot end their budget year at a negative number.
Erlwein said the state can declare the district in financial crisis, which would allow the Ohio Department of Education to put in place its own school board and financial advisor which will monitor officials and must sign off on all financial transactions. Erlwein said it can take a school system 10-15 years to come out from under state control.
“It’s not good news,” Belpre City Schools Superintendent Tony Dunn said Tuesday. “When we get so much cut from us by the state and federal government, there is no way to survive other than asking our local voters for money.”
Dunn said it is not a situation unique to Belpre, as state officials have purposely shifted the responsibility of paying for public education to local school systems.
“They have really, deliberately, taken the burden off of the state and have pushed it off onto local communities,” he said.
Erlwein on Monday pointed at Ohio’s antiquated and confusing funding system, which caps per-student allotments for school systems which are considered to be in wealthier communities. Instead of receiving the full state allotment, he said, part of it goes to subsidize school systems in other parts of the state.
Belpre has been classified as one of those capped school systems. As a result, Erlwein estimates Belpre City Schools loses about $828,000 in state funding each year, the equivalent of 200 students for which the district receives no money from the state.
“We don’t have an expenditure problem, we have a revenue problem,” he said.
Erlwein also pointed to a loss of tax revenue due to changes at the state level, a $100,000 drop in federal funding, and students transferring out of the district.
Erlwein said this year 83 students transferred into Belpre City Schools, but 155 transferred out. He estimates those transfers, with about $6,000 in funding following each student, cost the school system about $432,000.
The district currently taxes at the lowest level, and voters in 2014 approved renewal of an $825,000 emergency operating levy, which was calculated into the five-year forecast. The levy began in 2015 and will last until 2025, he said.
Officials said the district must look at bringing some sort of levy to voters within the next two years.
“You can’t cut your way out of this,” Erlwein said. “There are no state or federal funds to the rescue. It is up to the community to decide what the future of our district looks like.”
Both Erlwein and Dunn said while they are confident the district is being fiscally responsible already, they have requested help from the state to determine if there are any other areas of savings within the school system.
The state can place a district in one of three “fiscal distress” categories: caution, watch or emergency. Erlwein said he expects Belpre City Schools to be placed in one of those three categories next month.
Erlwein said districts that fall into the “emergency” category receive some auditing services from the state for free, and he has already requested those services.
“We’re just hoping to get them at no cost,” he said.
Erlwein said the five-year forecast will be made available online at http://www.belpre.k12.oh.us/ in the coming week, and the Ohio Department of Education will place all district forecasts on the state website in November.