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38 Ohio Districts Seek Help From State 'Bail Out' Funds

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Small increases in state aid in recent years and voters' rejection of property-tax levies have forced a record number of Ohio communities to turn to the state for emergency loans to keep their schools open.

According to state education officials, 38 school districts asked the state controller this month to approve loans totaling $29.8 million.

The districts' financial troubles stem in part from a round of local tax issues that failed in an August special election. Of 70 districts that sought local levies on the ballot, only 15 won voter approval.

Officials said the situation could take a turn for the worse next month, when tax elections will be held in 232 of Ohio's 612 districts. More than half of the measures are expected to be rejected.

The defeat of the levies has forced substantial cutbacks in those districts already forced to seek a state bailout. Teachers have been laid off, athletics and other extracurricular activities have been eliminated, and plans to begin badly needed repairs have been shelved.

"If we're not in a crisis right now, we're right next to it," said William Phillis, assistant superintendent for public instruction.

"When you've got districts that can't afford transportation, and kids can't get to school ... or a district that doesn't have its indoor plumbing [working], that's a crisis," he added.

The record number of loan applications comes one month after a school-finance panel created by Gov. Richard F. Celeste concluded that "what used to be a very sound and rational way of financing our public schools [is] an archaic and inequitable method today."

Ohio districts now obtain about 49 percent of their revenues locally and 46 percent from the state. Over all, spending per pupil among districts ranges from a low of $2,280 to more than $10,000.

In addition to the Governor's panel, three legislative committees are readying finance-reform recommendations in preparation s legislative session. But according to Matthew C. Cohen, director of federal relations for the state board of education, many in the state feel "there's little in the way of a coherent focus" among the groups.

"We have to come to grips with the fact that current revenues are just not sufficient," he said.

Mr. Cohen and others note that all four study groups have raised the possibility of increasing state taxes to help address the problem. Officials in the state department of taxation have estimated that 1 percent increases in the sales, income, and corporate taxes would add a combined total of $1.34 billion to school coffers.

At the local level, officials attribute the defeat of tax levies in part to the popular misconception that the state lottery contributes generously to schools. Lottery profits, however, provide only six cents of every dollar spent by the state on education. (See related story, page 1.)

State school aid, meanwhile, rose by only 3.4 percent in the current fiscal year and 2.6 percent the year before, increases that school officials complain did not keep pace with the rates of inflation for those years of between 4 percent and 5 percent.

Mr. Cohen said the state board has already been told by the Office of Budget and Management to expect no increase in state aid for the upcoming fiscal year and only a 3 percent boost in fiscal 1991.

"It's been a long, long time since Ohio has had to go four straight years under current inflation levels," he said.

The combined effects of relatively low levels of state aid and local anti-tax sentiment have been felt particularly hard in the 15,500-student Youngstown City School District, which is seeking a $5.02-million loan from the state, the largest requested thus far.

In order to obtain approval for the loan, which is expected to carry an interest rate in the neighborhood of 7.5 percent, district officials were forced to promise to eliminate all extracurricular activities next fall and to limit student transportation beginning in January.

The district's staff has already been cut to "near bare bones," according to a spokesman, Charles M. Zillo.

"There's very little to be flexible with at this point," he said.

Next month, the district will ask voters to approve a tax levy that would generate $7.7 million, most of which would be used to pay off the loan over the next two years.

Mr. Zillo said school officials are worried that voters will defeat the levy request in the mistaken belief that the emergency loan will "bail out the schools."

"We're trying to convince people here that the school system is really broke," he said.

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