State Declares Fiscal Emergency in Cleveland Schools

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Ohio declared a fiscal emergency in the Cleveland public schools late last month, just days before a citywide vote on a measure aimed at helping bail out the beleaguered district.

Under the state's recently enacted fiscal-emergency law, a special commission will be appointed to take control of the debt-ridden system's purse strings and chart a course for restoring its fiscal equilibrium.

The commission is to submit a recovery plan to the state schools chief within 60 days of its first meeting, which was scheduled for Nov. 6.

"This oversight will help return the district to financial stability and provide a basis for improving the quality of education to students," Jim Petro, the state auditor, said in declaring the state of emergency.

The move marks the latest intervention by the state in the management of the Cleveland schools. In March of last year, a federal judge ordered the state education department to take charge of the 74,000-student district, and since then it has been governed by a superintendent appointed by the state.

One of the crucial factors in triggering the new state law was the district's operating deficit, which stands at $89.5 million this year. The district has an annual budget of about $600 million.

Bailout Sought

A local Nov. 5 ballot measure sought to raise $67 million a year in additional funding. The last time such a tax increase won voter approval was in 1983. ("Voters in L.A., Cleveland Face Key Questions," Oct. 30, 1996.)

The new fiscal-emergency law was prompted by an audit unveiled by Mr. Petro last spring projecting a $1.4 billion operating debt for the district by 2004 unless spending was curtailed.

Immediately after the law took effect in September, Youngstown became the first Ohio district to be given emergency status. The state has put five other school systems on so-called fiscal watch, a less serious type of intervention that leaves up it up to the district to devise its own recovery plan.

In Cleveland, the oversight commission will include both the state and district superintendents, the mayor, the state budget chief, and three local residents. It will have authority over all spending decisions, including those related to curriculum and personnel.

The commission will remain in place until the state auditor determines that the district has put its financial affairs in order.

Vol. 16, Issue 10

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