District Treasurer warns schools could be ‘dead in the water’ –
Story and photo by Patricia Beech –
The closing of Adams County’s coal-fired power plants, and subsequent loss of millions in tax revenues will have far reaching effects across the local region, but the immediate repercussions will likely be most deeply felt by the Manchester Local School District (MLSD).
At a meeting of the MLSD Board of Education on Wednesday, Feb 8, Treasurer Karen Ballengee presented the district’s amended Five-Year Budget underscoring the gravity of the school’s financial future after the power-plants are shuttered and tax revenue is lost.
“The estimated figures in this budget will show the Ohio Department of Education and state legislators what our school might look like without their help,” said Ballengee. “They need to understand what our future will be like if they don’t make some revisions in the School Foundation Program to correct some of the drastic changes that are occurring in our district.”
According to Ballengee, the district’s budget will plunge from an average of $12 million to $5 million annually – a 55% drop over four years after the plants are shut down. In subsequent years the district will be operating in the red.
“We can’t operate the schools on $5 million a year,”said Ballengee. “We’re dead in the water if the state doesn’t take action.”
In an effort to bring attention to the school’s plight, Superintendent Shreve, Ballengee, and School Board President Rick Foster met recently with 2nd District Representative Terry Johnson and State Senator Joe Uecker “to plea for a legislative solution that will bring money into our schools,” said Shreve. “We want to keep our issue in front of them without hurting our chances.”
Thus far, Shreve said, state officials have given no indication what action will be taken on behalf of the district. “They have promised us nothing,” he said. “They understand our problem and they will work to fix it, but how they’re going to fix it – or how they’re going to make us whole – we have no idea.”
In fact, the state’s funding options are limited by the district’s unique situation of “failing through no fault of their own”.
“It (our district) wasn’t negotiated, leveraged, or mortgaged away,” said Foster. “We were solid financially.”
Board member Kathleen Tracy agreed, saying the district’s money “had been judiciously managed” by Ballengee. She called the Treasurer’s efforts to amend the five-year budget “a profile in courage”.
Ballengee, who was named Treasurer of the Year by the Ohio Association of School Business Officials in 2012, has been instrumental in establishing the district’s stellar financial reputation.
Under her leadership, the district built and paid for an elementary school and the MEAC (Manchester Education Activity Center) without any cost to taxpayers.
“Our money was invested wisely in bricks and mortar – things the state cannot take from us,” said Tracy.
The district’s sound financial practices all but rules out the possibility of a state takeover – which requires a three-step fiscal process prompted by either mismanagement or maleficence on the part of the board of education.
“That situation doesn’t apply to us – we don’t fit the mold,” said Shreve. “We don’t meet the criteria for a state takeover.
In the interim, Ballengee and the board have stopped all spending for the current year, and are planning sharp cuts in personnel to make up for the $2.5 million the district lost following the devaluation of generating equipment at the plants.
The Assessed Valuation of the generating equipment dropped from $321 million to $263 million after
Duke Energy sold their interest in the plants to Dynegy.
Ballengee worries that both AEP and DP&L will likely seek the same tax relief as Dynegy – a move that will further devalue the plant’s equipment and carve even deeper into the district’s budget.
“We’re trying to get the state to use these new valuations and make us an ‘exception to the general rule’ which requires a three-four year waiting period on valuations,” said Ballengee. “We’re hoping to get them to route money into our school district more quickly because this situation was not caused by us, and is beyond our control.”
In addition to regular operating expenses, the district is bound by union contract to provide a 2.5% raise to employees this year as well as another 2% raise in 2019.
According to Ballengee, the district will cut $475,000 in personnel costs from its 2018 budget, and an additional $180,000 in salary cuts in 2019 to cover the cost of the raises.
“We’re trying to show everyone that we’re willing to do everything we can to help ourselves, as much as possible, by making these cuts,” Ballengee said, but added that any additional cuts in personnel would be impossible unless there were a mass exodus of students from the school causing enrollment to drop significantly.
While the district would prefer to maintain their autonomy by convincing the state to raise the funding caps in the School Foundation Program, the amount of state funds that a district receives is based on a formula that takes into account the student enrollment and the property wealth of the district – two factors that may well work against the Manchester district.