Financial problems alarm McDonald school board

McDonald schools find themselves in an unexpected deficit.

By Mary Smith

McDONALD — The local school district will officially be in state fiscal caution effective Monday.

Officials were notified of the situation by the state superintendent Friday.

“Fiscal caution” means the district budget will have a deficit between 2 percent and 8 percent of total operating funds.

School officials told about 50 residents at the board meeting Monday night that early figures show the district is anticipating a $271,000 deficit for the 2010 fiscal year, but the actual numbers may be much worse.

Schools Superintendent Michael Wasser said the state auditor’s department of Local Government Services has been hired by the board starting today at a cost of $20,000 to conduct an audit to determine the district’s exact financial condition.

The board also has taken action to request that the state auditor review the books to determine if a fiscal watch or fiscal emergency exists, and to request that the state department of education seek an advance from the School District Solvency Assistance Fund.

Wasser said he anticipated the district would be facing a deficit of around $200,000 because of higher gas and electric costs and the loss of 21 students. He added that the deficit projections are just a guess right now.

The superintendent was assisted Monday by Lori Simeone, treasurer at Trumbull County Educational Services, who told the board she has found bills that had not been paid totaling $1,517,000 from June and August.

While she noted that she has been at the district only for two days, she has found that some of these bills were paid in part and some were not. Simeone said she had time only to give the finances a “cursory look,” and more will be known as the auditors do their work.

Simeone is assisting the district in the absence of Thomas Radabaugh, who has resigned effective next Monday, but has taken unused, paid time.

The unpaid bills include $200,000 in employee federal and state taxes; tax penalties, $15,000; various unpaid bills of $143,000; insurance consortium, $219,000; and a $617,000 tax anticipation note that was rolled over to February2010.

Simeone said she found a stacks of checks “not sent out at the end of June, and stacks of checks not sent out in August.”

She said the backup for the bills and everything owed is there, adding, “There are a lot of projections he made that did not come to fruition. He didn’t ask for help soon enough,” she said.

School officials said no firm answers will be known until the state auditors complete their work.

Board president Robert Jones said: “We’ve been running the school district on a shoestring. We’re in a mess, and we’re going to get out of this mess.”

Board member Jeffrey Hughes commented: “This is kind of disturbing. ... to be certain. We’re going to need help.”

Board member LaDonna Lund told the board and residents, “I think we all know the levy is going to be very important. This came unexpectedly to all of us.”

The board has placed a 4.8-mill, five-year emergency levy on the Nov. 3 ballot to generate $260,000 a year.

Board member Katherine Harvey said, “The board has been working on policies and procedures to insure accountability, to make sure someone is reconciling the books to make sure this does not happen ever again in our school system.”

Wasser said he will let parents know the final outcome of the auditor’s findings in written communication sent home to them.

In other business, the board hired Brian W. Stidham, 36, of Vienna as new treasurer from Sept. 28, 2009, to July 31, 2013, at $60,000 a year.

Stidham was assistant treasurer with the Mahoning County Educational Service Center from July 2002 to the present.

He had been a retail banking officer and branch manager with second National Bank from July 1996 to June 2002.

He is a graduate of Hiram College with a major in management.