Seven school districts in Ohio are under fiscal emergency, and six are under fiscal watch. Fiscal emergency is the most severe stage of a district’s financial solvency problems. A fiscal watch is declared when a district’s financial condition threaten its solvency. Mahoning Valley districts and duration as of Thursday under the designations:
McDonald Local Schools, 1.6 years
Beaver Local Schools, 1.3 years
Niles City Schools, 8.2 years
Brookfield Local Schools, 5.2 years
Liberty Local Schools, one day
Source: Ohio Auditor Dave Yost
By Jeanne Starmack
The state has placed the school district in fiscal watch, which is one step away from fiscal emergency.
State Auditor Dave Yost said the watch status became effective Thursday.
Failure to submit a recovery plan that eliminates a $2.5-million deficit projected for fiscal year 2012 and incomplete financial records prompted the action, the auditor’s office said.
The district now has 60 days to prepare and submit its plan to eliminate the deficit, which is projected in the district’s most recent five-year forecast.
Otherwise, the district will be placed in fiscal emergency and be subject to state financial oversight.
But preparing that plan isn’t going to be easy right now, said the district’s interim treasurer, James Wilson. He took over the post May 5 after the sudden resignation of treasurer Tracey Obermiyer.
Under Obermiyer’s watch, the district’s financial books became “unauditable,” according to the state auditor’s office, and the office couldn’t get records it needed for routine audits.
An independent auditing firm is reviewing the district’s financial records right now. The district can’t prepare a plan until the firm’s work is finished, Wilson said. He estimated that may be in another month.
The auditor’s announcement comes after school board president Diana DeVito reported at Monday’s board meeting that the board asked the state to certify the district’s debt to determine if it should be placed in fiscal emergency.
Districts fall under emergency status if their debt exceeds their revenues by more than 15 percent, Wilson said.
The Ohio Department of Education, in a letter to the board dated March 31, said the projected 2012 deficit represents 16.1 percent of the previous year’s revenue. The ODE wanted a recovery plan submitted by May 16, or it would recommend to the state auditor the district be placed in fiscal watch or emergency, the letter said.
The auditor’s office said it received a letter from the ODE May 17 that asked the auditor to place Liberty in fiscal watch.
Obermiyer resigned in a letter to the board April 29 after the board became aware she hadn’t provided the state auditor’s office with the needed records.
The auditor’s office notified the board Feb. 7 that it wasn’t receiving records that included bank reconciliations and bank statements, and it also said the district’s books were unauditable. The letter gave the district 90 days to correct the problem or face legal action that could include a suit filed by the state attorney general.
The district doesn’t believe at this point that there was any criminal misconduct on Obermiyer’s part, said John Britton, an attorney for the district. Her letter of resignation cited “personal reasons” for her departure. The Vindicator has been unable to reach her for comment.