By John Bombatch
The state could soon take over financial control of the Monroe School District.
Officials with the Ohio Department of Education confirmed Tuesday Monroe's fiscal recovery plan was not accepted and they recommended to the state auditor's office the district be placed into fiscal emergency, which would be a first for any Butler County school system.
"We don't have notification from the auditor's office yet, but we anticipate that we will get the notification early next week," said Elizabeth Lolli, superintendent of the school district, which has more than 2,220 students.
If a fiscal emergency is declared, the elected school board will continue to meet and make some decisions, but a commission appointed by the state will take over financial control of the district and will be tasked with presenting a financial recovery plan within 120 days of its first meeting.
Last fall, an independent review of the district's financial records showed that Monroe was in a "significant deficit situation" that may have been ongoing since 2009. The district's five-year forecast showed projected deficits of $1.6 million and $2.7 million for the 2012 and 2013 fiscal years respectively.
It was then learned that the district faced an operating deficit of around $1.62 million, plus money was misused from a bond retirement fund. That misuse of funds created its own deficit of $3.1 million. Those funds were allegedly moved by the school's former treasurer without board approval.
The state auditor can declare a fiscal emergency when a school district shows that an operating deficit has been certified for the current fiscal year, and that deficit exceeds 15 percent of the district's general fund revenue for the preceding fiscal year. Another prerequisite is that voters have not approved a levy to raise money to erase the deficit.
Michael Maurer, a spokesman for state auditor Dave Yost's office, confirmed that they had been notified by the ODE.
"We're doing that evaluation now, and we hope to have that evaluation complete within approximately one week," Maurer said. The state auditor's office placed Monroe under fiscal watch on Feb. 2. Monroe was one of five districts in Ohio to be placed under fiscal watch. The others are: Coventry Local (Summit County); Niles City (Trumbull); Brookfield Local (Trumbull) and Mansfield City (Richland).
Little Miami Local Schools, located in Warren County, was placed under fiscal emergency in July 2010. Four other school districts -- Bellaire (Belmont County), Ledgemont (Geauga), Liberty (Trumbull) and Cloverleaf (Medina) -- currently are under fiscal emergency.
Thirty seven Ohio school districts have dealt with fiscal emergencies since 1996, but 32 have become financially solvent. It takes an average of 3.4 years for a school district to right itself out of fiscal emergency.
Monroe officials said they didn't realize they needed to have a levy because they initially thought they were in good financial shape. In a 2010 Middletown Journal article, former treasurer Kelley Thorpe said thanks to a 9.71-mill substitute continuous levy that was passed in November 2009, the district would be operating "in the black until 2014."
"It was a tough day yesterday," Lolli said. "But at least we know right now what the direction is, and hopefully we can pull out of it pretty quickly."
Lolli said the school board will meet on Monday to discuss possible wording of a property tax levy, hear union officials' concerns regarding the contracting out of services and to review the findings from the Ohio Performance Audit. That meeting is scheduled for 5 p.m. in the Monroe Elementary cafeteria.
The Monroe district received an Excellent rating on the 2010-'11 Ohio Department of Education Report Card, having met or exceeded 26 of 26 state indicators. That same report card listed a 96.1 percent graduation rate.
Josh Blankenship, who has a 5-year-old daughter in kindergarten, said he's not worried.
"I have confidence that (the 1 percent income tax levy) will pass," he said. "A lot of people that move here do so because of the school district."
(c)2012 the Middletown Journal (Middletown, Ohio)