By MARY SMITH
The state auditor’s office is recommending additional cost-cutting measures for the school district.
Though the district compares well to four of its peer school districts because it was placed in state fiscal emergency in October 2009 and projected a $2 million deficit for the 2010 fiscal year, the special-performance audit was mandatory, schools Treasurer Brian Stidham said after the audit was released earlier this week.
The district was found to have a “noteworthy accomplishment” of total expenditures per pupil that is lower than the peer average in 2008-09 and “is limiting costs in the areas that have the most-significant impact on its financial condition,” the audit concludes.
The district spends $7,986 per pupil compared with a peer average of $9,014.
The school districts that the state used for the comparison were Bristol and Southington in Trumbull County, Columbiana and Lowellville.
The district’s revenues per pupil were “significantly lower,” the audit reports, primarily because of local taxes. In fiscal year ’08-09, the McDonald local-tax revenues per student were $1,432, which is 51 percent lower than the peer average of $2,949.
The lower per-pupil revenues are due to lower property-tax valuations. The Ohio Department of Taxation’s 2008 report shows McDonald’s total property valuation was $54.5 million with a valuation of $71,690 per student, much lower than the peer averages of $91.1 million and $112,076 valuation per student.
The district’s total expenditures also are significantly lower than the peer average.
The state auditors also urged the district to develop a comprehensive strategic plan that outlines its long-term vision.
The auditor’s report concludes that school-board members, as a collective group, have not been proactively involved in the district’s finances before the 2009-10 school year.
It also recommends the board start to receive regular and consistent training on school-district finance issues, develop policies that could have assisted in recognizing the current financial difficulties and establish an audit committee to oversee finances.
The reports says the district’s financial status had been declining since fiscal year 2002-03, although the district was placed in fiscal emergency in October 2009.
Audited financial statements show deficit-ending balances in the general fund of $664,000 in fiscal year 2002-03, $547,000 in fiscal year 2003-04 and $623,00 in fiscal year 2004-05. Audits for 2006-07 and 2007-08 have not been released yet.
The audit notes the financial statements indicate the district attributed the financial difficulties to the state funding system’s being ruled unconstitutional and declining enrollment among other things.
The audit notes the board did not get routine financial reports by the treasurer and was given the financial forecast with handwritten notes and analyses and the monthly bank statements.
Four board members noted they had asked for additional information from the previous treasurer, but he often was unwilling to provide additional information.
The audit found the district compares high to its peers in custodial staff — averaging a cost per pupil of $928 compared with an average of $759 in peer schools.
The treasurer explained, however, that custodial staff in McDonald cleans and repairs both inside buildings and does outside maintenance and repairs, while other districts hire additional staff members to do outside maintenance at a lower rate.
MCDONALD SCHOOLS | State audit
Other financial recommendations the Ohio auditor’s office suggested for the McDonald school district.
The district said some of the recommendations already have been implemented.
Require the treasurer’s office to approve and issue purchase orders to department heads and record costs in advance of making purchases.
Consider cutting seven teachers. The district to date has cut 71/2 teaching positions.
Negotiate to eliminate health-insurance bonuses, switch all employees to a lower premium plan, which is currently required for employees hired after July 1, 2008, and require all employees to contribute at least 15 percent to the monthly premium costs.
Review the nonbargaining office/clerical salary schedule and job responsibilities and consider negotiating to revise the salary schedule and/or freeze wages for operations staff and reduce the supplemental compensation rates to be more comparable to peer districts.
Do a cost-benefit analysis before offering future early- retirement incentives.
Review the cost of its special-education program and look for overall cost-effective changes, such as hiring with other districts or using in-house or neighboring educational centers or private-sector providers.
Drop down to running one bus from its current two buses for local students and one bus for the Trumbull County Career and Technical Center. This would have to be an item negotiated with nonteaching employees.
Review its compensation rates for supplemental contracts, which are considered “generous” by the audit compared to peers. McDonald’s supplemental salaries are an average of 20.7 percent higher per contract than its peer schools because of a higher base teaching salary and higher percentages paid.
Source: State auditor’s office