Seven months ago, the Liberty Local School District received an ominous warning: If the board of education failed to make an additional $1.3 million in budget cuts, the system could face dissolution.
The warning came from Paul Marshall, chairman of the state-mandated financial planning and supervision commission. The district has been in fiscal emergency since July 2011.
Board members voiced concern that a further reduction in spending — they had approved a $1.2 million deficit-reduction plan in January 2012 — would hamper student outcomes. They noted that the district loses $1.7 million a year because of open enrollment and school-choice programs.
And, they said, asking voters to approve a 10-mill levy that is needed to make the district fiscally solvent is a nonstarter.
Signs of progress
But progress is being made to deal with the financial challenges, and that has removed the threat from Marshall — for now.
A projected deficit of $10 million has been reduced to $2.6 million, while the system is paying back half of the $1.8 million loan without borrowing any money.
Personnel expenditures are being cut by $500,000 this year, and the district is eliminating 14 Ω positions, switching certain employees from full- to part-time and not filling vacancies due to retirements, or replacing them with lower-paid teachers.
“Things are definitely looking better than they used to,” Marshall, the chairman of the state commission, said last week as he issued another recommendation:
Negotiate a contract with the teachers’ union that will save “hundreds of thousands of dollars.”
The teachers have been without a contract since 2009. In 2012, the district paid $6.9 million for personnel services, compared with $7.3 million in 2011. For this year, the projected spending is $6.4 million.
But, the state fiscal oversight panel says that future cuts will have to be made whether or not a new contract is approved.
Focus on health
One item Marshall says must be addressed is employees’ health insurance. The district is self-insured, but joining a health insurance consortium would save hundreds of thousands of dollars, he contends.
Under the current contract, $2.3 million must be allocated to cover liabilities — even if the entire amount is not needed.
It is clear that the Liberty school district is under the gun, which means sacrifices must continue to be made.
With funding from the state stagnant — there are districts in the region that will receive an increase in funding under the plan unveiled by Gov. John Kasich — the board of education will have to persuade the employees that times are still tenuous, given Marshall’s warning.
“I’m confident that this district will make the right decision,” he said, noting that the commission’s role does not include participating in contract negotiations.
However, the chairman’s statement leaves little to the imagination.
Wage and benefit freezes must be a fact of life, not only for the Liberty school system, but virtually all public entities. Many in the private sector workforce are still experiencing the effects of the national economic recession that hit in late 2008.