Unless you live in the southeastern corner of the state, you may not have heard of the Little Miami School District. It seems that taxpayers this past week yet again rejected a school operating levy.
Today’s Dayton Daily News reports that Little Miami, currently borrowing to maintain spending levels, may reach their state-imposed credit limit in the not too distant future.
Voters refusing to support school tax issues in one large, relatively wealthy public school district have state officials for the first time asking, “What if?”
What if voters don’t approve a new tax in the near future for Little Miami schools in southeastern Warren County, one of nine Ohio districts in fiscal emergency?
The district could reach its borrowing capacity with the state before its multimillion dollar deficit is resolved, according to Roger Hardin, assistant director of finance program services for the Ohio Department of Education.
There is no precedent for the state to look at. Little Miami would be the first district in Ohio to go beyond borrowing limits if taxpayers do not approve a tax levy in 2011.
“There could be a point (projected in fiscal year 2013) … when they may need to borrow more money than what the state foundation formula will allow them to pay back,” Hardin said.
The chances of that happening became more likely after Tuesday’s election, when voters rejected Little Miami’s seventh tax request in two years. The five-year incremental levy would have balanced the books by the 2012-2013 school year, according to the district’s five-year financial forecast.
Schools in fiscal emergency are entitled to “solvency assistance,” Hardin said, in which the state advances money to cover the district’s immediate expenses. The interest-free loan must be paid back within two years and the amount owed is withheld from state aid for each subsequent year.
In Little Miami’s case, district officials have already requested a loan from the state of $5.071 million to cover the district’s current deficit. In light of Tuesday’s defeat, no new revenue will be available and officials expect to need another loan next year, estimated at $6 million.
Hardin said ODE officials will be meeting to discuss what happens when what is owed approaches the total amount that the Little Miami district receives annually from the state foundation formula, currently a little more than $8 million.
“That’s getting close to where the district won’t have the capacity of repaying,” he said. “We don’t know what might happen. We will continue to encourage them to have new money approved and to make more reductions.”
State records show Little Miami has the 28th highest median income of the state’s 614 school districts. The average household income in the district is $67,120, according to state records.
The state oversight commission formed to get Little Miami solvent has held monthly meetings since July, but they have not identified any budget cuts that could or should be made. Michael Watson, commission chairman and ODE fiscal consultant, has said that Little Miami is in fiscal emergency because of “lack of funding,” not reckless spending.
Since 2008, the district has cut roughly $7 million in expenditures. Those cuts include reducing busing service to state minimums, laying off teachers, closing two school buildings and the high school library, as well as eliminating art, physical education and music classes for grades kindergarten through fifth grade.
The cuts have plummeted the district’s cost-per-pupil rate to below $8,000, which puts them among the lowest 2 percent of public school spenders in the state, according to Little Miami Treasurer Shaun Bevan.
Those actively opposed to Little Miami’s levy proposals, like Cheryl Geis of Morrow, say administrators and the teachers need to step up and take pay cuts in order to get the community behind a new tax.
“They keep saying they’ve cut, but they sure haven’t cut the high dollar items,” she said.
A couple of things come to mind:
Why in the world is a school district allowed to continue to borrow money to this extent? Doesn’t heavy borrowing just make the district’s financial situation worse? I can see perhaps allowing borrowing for one year, but after that borrowing just exacerbates the problem.
The financial oversight commission has met since July but hasn’t identified any potential cuts. Really? Well there’s a commission that’s really working hard.
I notice that the DDN doesn’t mention Little Miami’s tax effort. According to the 2008-09 edition of the Cupp Report, Little Miami taxpayers have a very low tax effort index. How low? The state average is 1.0. Little Miami’s index is .56. That means that approximately 98 percent of Ohio school districts have a higher index.
It sounds as thought the state could probably revoke the district’s charter and dissolve the district. (A district charter can be revoked if districts fail to meet state operating standards.)
So what should happen to Little Miami?
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