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Repercussion of a failed levy: Deficit spending?

Zoe Greszler • May 23, 2018 at 4:00 AM

MONROEVILLE — “If we continue to spending the way we’re spending, we will be in deficit spending in 2020.”

Monroeville Local Schools treasurer Stephanie Hannah’s five-year fiscal report told the board what many of them already knew — the district needed a levy to pass. Both its first and second attempt at a renewal levy failed, the latter of which failed 283-409 earlier this month. 

“If we actually renewed the levy, it would have helped,” board member Mike Helmstetter said after Hannah revealed the severity of the deficit spending at Monday night’s board meeting.

Hannah said the deficit spending would start because of the expenses that would need to come out of the district’s general funds, expenses which she said should be coming out of permanent improvement (PI) funds. The failed levy would have fueled the PI account, supplying funds for things like text books, bus replacement and building repairs. 

“Everything is currently coming out of the general fund (account) just because we don’t have enough in the PI funds,” she said. “So then all of that could come out of the permanent improvements if (a levy) is passed. That will definitely help with the red there.”

The district currently collects taxes on houses based on their worth 45 years ago, about $80,000. The new levy would have brought in about double that. 

“Every little bit helps,” she said.

Superintendent Ralph Moore said he accepts responsibility for the “confusion” that contributed to the failed levy.

“Essentially, on a $100,000 piece of property, we currently collect $22 per year,” he said. “Under the new issue we would collect $63 per year. One of the things that we did was a bond refinance and we gave back to our voters. So for that, on a $100,000 piece of property, that accounts for $35 per year. So if you add the $22 and $35 together, you get $57; so subtract $57 from the $63, the increase to a $100,000 property owner would have been $6. I don’t think people understand that.

“I think the confusion came in when they didn’t understand where the $35 from the bond refinance came in and they thought that was misleading because they didn’t understand where it was from.”

He told the board it was time to move forward and move quickly to help the district avoid returning to a financially dangerous situation.

“The way I see it, we have several options,” he said. “One, we do nothing. We do that and we lose $80,000 a year. After one year, that’s $80,000. Year Two, that’s a $160,000 compounded loss, and it just continues to add up.

“Option Two, we put the same levy back on the ballot,” he added.

Moore said, while some of the confusion may be cleared up, this second option though isn’t full proof either. Hannah added that the cost of adding a levy to the ballot is between $6,000 and $10,000, making it a “fairly costly process” and something for the board to consider. 

Another option Moore suggested was a replacement levy — an option he said “wasn’t best for the district,” though it might be easier to pass.

“You all have tough decisions to make,” he said. “The way we’re going now, nothing is a sure thing anymore. ... If we lose this time, this district could (be where it was financially 12 years ago).”

Moore said 12 years ago the district was facing a difficult time economically that threatened to close the school.

“We were projected to be at 2.5-million deficit if it weren’t for those changes we made then,” he said. “I don’t even know that our doors would be open right now. We need that type of change again, and fast.”

The board has just a matter of weeks now to decide what to do. If the board decides to add a levy to the ballot, it will need to put its first resolution out for consideration a the June board meeting and have everything to the board of elections by Aug. 3.

A work session, which is open to the public, scheduled for 5 p.m. Tuesday in the MAC to discuss the board’s options and hopefully come to a decision on its next steps. 

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