Without the $1.9 million state loan, the Liberty School District’s cash flow problem would have been evident as early as the end of this month, but the bailout approved Monday by the state Controlling Board does not mean the financially embattled system is home free.
It must repay the money to the state in two years, and must develop a credible fiscal recovery plan. It is this second requirement that poses the greatest challenge to the entity that has been in state-designated fiscal emergency since July.
A statutorily required Fiscal Planning and Supervision Commission has been in control of Liberty’s finances and is working on the recovery plan, which should be ready in December. And here’s the kicker: In all likelihood, the commission will require the school district to place an operating levy before the voters next year. Residents have twice rejected school levies in recent years.
That, in itself, poses a major challenge to members of the board of education who must persuade a disagreeable electorate that the additional revenue is absolutely necessary. But there’s another factor that comes into play that is feeding the community’s cynicism: The absence of full disclosure of the circumstances surrounding former Treasurer Tracey Obermiyer’s tenure and resignation.
What went wrong?
In May and in July, we urged the board of education to share with the public every detail of what went so wrong with Obermiyer’s job performance that the office of state Auditor Dave Yost determined Feb. 7 that the district’s financial records could not be audited. The state also threatened legal action because it had been unable to obtain bank reconciliations from July 1, 2009, through June 30, 2010; bank statements for July and August 2010; financial statements and related footnotes under Generally Accepted Accounting Practices; and, budgetary documentation.
Members of the board of education may have taken comfort from the fact that the district’s lawyer, John Britton of the Cleveland law firm of Britton, Smith Peters and Kalail said there was no reason to believe the treasurer was engaged in any criminal misconduct and that there was no criminal investigation ongoing. However, the taxpayers have a stricter standard when it comes to the management of public dollars: Show us the money.
In other words, they want to be told in the simplest language possible why an individual who was, in effect, the chief financial officer was able to get away with running the finances into the ground.
Obermiyer resigned April 29 and shortly thereafter state Auditor Yost placed the district under fiscal watch. He gave local officials 60 days to submit a financial plan correcting the deficiencies or warned that a declaration of fiscal emergency would be issued.
In an editorial in May, we posed two questions we believe are pertinent to what went on in the Liberty School District. We repeat them in the hope that someone in a position of trust will realize that taxpayers aren’t in a very trusting mood these days: Was no one in the district aware that Obermiyer wasn’t doing the job and, in fact, had ignored requests from the state for information relating to the district’s finances? Were no red flags raised when the treasurer failed to attend a meeting of the board of education in April after she was told that the purpose was to discuss two letters from the state that highlighted the problems?
Answers to those questions will go a long way toward winning the hearts and minds of residents of the district who will decide next year if a new tax levy is justified.