By Mark Kovac
The state Controlling Board has approved an advance payment of more than $1.9 million to help the Liberty Township school district pay its bills.
The funding comes from the state’s school-district solvency assistance fund, which is used to assist schools that cannot meet their financial obligations due to fiscal emergencies.
The district’s current five-year forecast projected a deficit of $1.9 million for fiscal year 2012, which ends June 30.
The financial assistance, a normal step for school districts in fiscal emergency, was delayed after the state auditor determined that the district’s financial records were unauditable and subsequently declared it to be in a state of fiscal emergency May 26.
The advance payment from the state will enable the district to pay its bills during the current fiscal year and will be repaid over the next two years, according to documents, which added, “The district will not be able to meet payroll or other financial obligations without this advance.”
The Controlling Board request Monday was approved without objection, though state Rep. Jay Hottinger, a Republican from Newark, asked why the funding was being released before the district’s recovery plan was in place.
The fiscal commission, charged with guiding the district out of fiscal emergency, began working on that plan in August. Roger Hardin, assistant director of the Ohio Department of Education’s finance program services section, said the recovery plan is expected to be completed in early December and likely will require the district to seek voter approval for a levy next year.
But the district needs the funding before the end of this month, he said.
“In this particular case, they are having financial cash-flow problems at the end of November,” Hardin said.
Liberty schools Treasurer James Wilson projects that by the end of November, the district will owe $32,389 and more than $1 million by the end of December.
Sharon Hanrahan, Liberty fiscal commission’s representative from the Ohio Office of Budget and Management, was not surprised by the controlling board’s pause for questioning before approval.
Members of the controlling board have a “legitimate fear that they’ll see more districts asking for this,” she said. “Just because of the overall state of the economy and because not a lot of school levies are being passed.”
But Hanrahan said she was never nervous of it passing.
“Just the fact that it’s on the agenda is good news,” she said.
Roger Nehls, chairman of the fiscal commission, said that with the advance approved, it is time to chip away at the district’s deficit.
“Next thing we need to do is look at the expenditure side of the district and work with the administration on establishing a reduction plan,” Nehls said. “That is integral to getting them back to solvency.”