YOUNGSTOWN — A looming budget deficit was one of the key observations listed in the Youngstown City School District January 2024 performance audit.

According to the document from Ohio Auditor Keith Faber’s office, the district is projected to see a negative general fund balance beginning in fiscal year 2027.

According to the audit, the district is expected to experience an annual operating deficit for the next five fiscal years. The document said the operation deficit is projected to start at $4.2 million in 2024 and grow to a $16.9 million deficit by fiscal year 2028.

The audit states the spending deficit is projected to cause the district to “exhaust its cash balance completely,” by fiscal year 2027.

In November, voters in the district approved a four-year, 9.51 mill renewal levy that will generate $5.2 million annually for general operating expenses in the district and cost the owner of a $100,000 home $333 per year.

The auditor’s report states the deficit is expected even with the funds generated through the levy.

“The district will need to be mindful of operations and expenditures so that it can make strategic decisions that support the implementation and success of the Academic Improvement Plan,” the report states.

ACADEMIC IMPROVEMENT PLAN

According to the audit, the district was afforded the opportunity to have its Academic Distress Commission dissolved, assuming it meets more than 50% of the targets identified in the improvement plan.

Ohio law requires the superintendent of public instruction to establish an Academic Distress Commission for each school district that has been declared to be in academic emergency.

Youngstown City School District has held distress commission meetings since 2016.

In fiscal year 2023, the district met 16 of 24 benchmarks that had been set for the year.

“This shows YCSD is on track to meet the majority of their benchmarks if it sustains the gains it has made and continues improving,” the audit states. “If this continues, the district will have achieved sufficient progress at the end of FY 2025 to be removed from Academic Distress designation.”

But, the audit states many of the expenditures for the Academic Improvement plan come from the general fund and Elementary and Secondary School Emergency Relief funds.

The audit states with the projected general fund deficits and limited relief fund dollars, the district must “utilize the information presented in this performance audit in conjunction with their forecasted revenues and expenditures to identify whether cost-saving measures need to be implemented, and whether doing so would impact the Academic Improvement Plan.”

“Achieving a majority of the Academic Improvement benchmarks is important because it would allow the district out of academic distress,” the report states. “However, having a negative general fund balance puts the district at risk of fiscal distress. By identifying methods to reduce deficit spending, the district can prevent having a negative general fund balance.”

THE BUDGET

One of the recommendations suggested in the auditor’s report was for the school district to fortify its annual budgeting process.

According to the audit, while the district creates an annual budget, it does not have a formal, written budgeting process.

The audit states Government Finance Officers Association School Budgeting Best Practices outlines the steps of an ideal budget. The report states that while the district generally follows association guidelines, it does not meet the exact criteria.

CONSOLIDATION

Also noted in the audit was the decline in the number of students at the district.

According to the audit, the district’s student body has decreased 19.5% over the past decade. Because of the decline, the auditor’s office suggests the district could consider consolidating its buildings. The report states building consolidation could help the district in its pursuit of improving academic performance.

Any potential building consolidation could impact staffing in the district.

The report noted the district has more staff members per pupil when compared to the peer average.

The audit suggested a consolidation of buildings could result in staff reductions due to efficiencies gained by maintaining fewer buildings.

Other staff reductions could come through the district’s handling of its relief funds.

According to the report, in fiscal year 2022, the district spent $51.8 million in relief dollars. Of that $21.9 million, or 42.3 percent, was classified as capital outlay.

Also of the total, $20.5 million, or 39.7 percent, of the district’s fiscal year 2022 relief fund spending went toward purchased services.

Another $8.3 million, or 16.0 percent, was for the purchase of supplies, primarily COVID-19 rapid tests. Another $1 million, 2% of the relief fund expenditures paid for staff salaries, wages and benefits.

“It is important to note that any staff pay funded by ESSER dollars will have to be transferred to other funds upon the ESSER Fund’s expiration, or reductions in staff (full-time equivalents) will be required,” the report said.

The auditor’s report included a letter of response from the district.

The letter, signed by Superintendent Jeremy J. Batchelor and Treasurer Bryan Schiraldi, provided notes detailing how the district plans to address recommendations detailed in the audit.

mcole@tribtoday.com