The following article was recommended to us. It is from Lorain County, OH, the former school district of Dr. Cheryl Atkinson, our Dekalb County Superintendent. Please note the discussion of loans and state takeover as they are the same issues currently being discussed by our board members in Dekalb.
News
Lorain School Board member objects to cost, legal uncertainty
Wednesday, December 5, 2012
LORAIN — The Lorain school board is expected to vote Thursday on taking out a $3 million loan to stave off fiscal emergency for a year, but board member Jim Smith contends that would be both fiscally unwise, and maybe even a legal breach of school officials’ financial duties.
Borrowing the $3 million now and repaying it with interest on top of paying down a 2011 loan would cost, in total, up to $2 million a year, which is two-thirds of the money brought in by the school levy voters just approved in November, Smith said.
Continually borrowing money to stay out of the red may violate the board’s legal obligation to balance the budget and operate in the black, Smith noted. He is pushing for the board to get a legal opinion on that question.
Lorain schools must repay interest on money borrowed to stay out of fiscal emergency, Smith said. If the district were in fiscal emergency, Lorain could get an interest-free loan from the state.
“Why don’t we just bite the bullet, go into fiscal emergency, get the money from the state?” Smith said. “I think it’s a benefit. I think it’s a benefit of the system for us to get this money and use it for two or three years and not have to owe any interest.”
Smith noted that despite millions being borrowed in recent years, the school system remains in rocky shape, both financially and academically. A state financial commission could help iron out the financial problems, while academic repairs could be considered by a state academic commission that is coming this way because the schools have fallen into academic emergency, according to Smith.
The state financial commission that would oversee Lorain schools would have three locally appointed members, and, “Those people aren’t going to do damage to their hometown,” Smith said.
Superintendent Tom Tucker, Treasurer Dale Weber and some board members favor taking out the loan now and pushing the state fiscal takeover a year into the future.
The board members “had a very in-depth discussion” at their Nov. 14 meting, President Tim Williams said.
The recommendation going forward will be to borrow the money, he said. Delaying the vote to Thursday’s meeting gave the board members time to reflect on the district’s financial plan and to be present for the vote, Williams said. He predicted the meeting will be short because the board members already have discussed the financial issues.
Williams declined to discuss further details until the school board gathers and votes this week.
“I’m kind of reluctant to talk about stuff that’s going to happen, that we haven’t done,” Williams said.
The school district’s financial recovery plan also includes cutting 25 teachers in July 2013, Smith said.
Lorain schools already have lost about 400 students this year and that number could top 600 by the end of the school year, Smith said.
“If we lose 25 teachers and that many students, we’re just not going to have enough kids to operate the schools,” Smith said.
Each student brings in about $6,000 in state funding. When a student leaves for another school district, Lorain schools lose that $6,000.
Lorain’s school system has been constructing new buildings and likely would draw the ire of state officials if the district had to close a new building to reconfigure the district because of falling enrollment, Smith said.
The school board meeting is set for 5:30 p.m. Thursday at Frank Jacinto Elementary School, 2515 Marshall Ave.
Borrowing the $3 million now and repaying it with interest on top of paying down a 2011 loan would cost, in total, up to $2 million a year, which is two-thirds of the money brought in by the school levy voters just approved in November, Smith said.
Continually borrowing money to stay out of the red may violate the board’s legal obligation to balance the budget and operate in the black, Smith noted. He is pushing for the board to get a legal opinion on that question.
Lorain schools must repay interest on money borrowed to stay out of fiscal emergency, Smith said. If the district were in fiscal emergency, Lorain could get an interest-free loan from the state.
“Why don’t we just bite the bullet, go into fiscal emergency, get the money from the state?” Smith said. “I think it’s a benefit. I think it’s a benefit of the system for us to get this money and use it for two or three years and not have to owe any interest.”
Smith noted that despite millions being borrowed in recent years, the school system remains in rocky shape, both financially and academically. A state financial commission could help iron out the financial problems, while academic repairs could be considered by a state academic commission that is coming this way because the schools have fallen into academic emergency, according to Smith.
The state financial commission that would oversee Lorain schools would have three locally appointed members, and, “Those people aren’t going to do damage to their hometown,” Smith said.
Superintendent Tom Tucker, Treasurer Dale Weber and some board members favor taking out the loan now and pushing the state fiscal takeover a year into the future.
The board members “had a very in-depth discussion” at their Nov. 14 meting, President Tim Williams said.
The recommendation going forward will be to borrow the money, he said. Delaying the vote to Thursday’s meeting gave the board members time to reflect on the district’s financial plan and to be present for the vote, Williams said. He predicted the meeting will be short because the board members already have discussed the financial issues.
Williams declined to discuss further details until the school board gathers and votes this week.
“I’m kind of reluctant to talk about stuff that’s going to happen, that we haven’t done,” Williams said.
The school district’s financial recovery plan also includes cutting 25 teachers in July 2013, Smith said.
Lorain schools already have lost about 400 students this year and that number could top 600 by the end of the school year, Smith said.
“If we lose 25 teachers and that many students, we’re just not going to have enough kids to operate the schools,” Smith said.
Each student brings in about $6,000 in state funding. When a student leaves for another school district, Lorain schools lose that $6,000.
Lorain’s school system has been constructing new buildings and likely would draw the ire of state officials if the district had to close a new building to reconfigure the district because of falling enrollment, Smith said.
The school board meeting is set for 5:30 p.m. Thursday at Frank Jacinto Elementary School, 2515 Marshall Ave.
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