The New Richmond Exempted Village School District in Clermont County, Ohio, has been placed under fiscal caution by the state. This designation follows a review of the district's October five-year financial forecast, revealing a projected deficit that requires immediate action. Superintendent Paul Daniels has stated that significant changes are necessary to address the financial challenges.
The district must submit a comprehensive plan to the Ohio Department of Education and Workforce by December 21. This plan will outline how the district intends to eliminate a projected $2.3 million deficit by the 2028 fiscal year. Failure to meet state requirements could lead to more severe oversight.
Key Takeaways
- New Richmond School District is under state-imposed fiscal caution.
- A $2.3 million deficit is projected by fiscal year 2028.
- The district must submit a financial recovery plan by December 21.
- A 1.25% earned income tax levy is on the November ballot, aiming to generate $5.2 million annually.
- If the levy fails, significant cuts, including staffing, are anticipated.
State Oversight Begins for New Richmond
The Ohio Department of Education and Workforce officially placed the New Richmond Exempted Village School District in fiscal caution on Thursday. This is the lowest of three levels of financial oversight the state can impose on school districts. The decision stems from concerns identified in the district's recent five-year financial forecast.
Superintendent Paul Daniels emphasized the urgency of the situation. "There is no way out of this. We have to raise new funds," Daniels stated, highlighting the critical need for financial restructuring.
Fiscal Caution Level
Fiscal caution is the initial level of state oversight. If a district fails to address its financial issues at this stage, it can escalate to fiscal watch and then to fiscal emergency, which involves much stricter state control over district finances.
The Path to Financial Stability
The district faces a tight deadline to present a viable solution. "We are required to file a plan with the state of Ohio by December 21 of this year to give a roadmap of how we will make sure that $2.3 million in the 2028 fiscal year becomes a zero," Daniels explained.
The proposed plan must meet six specific state requirements. These include demonstrating active board engagement in expenditure reduction, detailing specific cuts, sufficiently covering the projected deficit, and providing a clear implementation timeline. It also requires a narrative summarizing revenue enhancements, expenditure reductions, and board monitoring efforts.
"Our story is very unique," said Superintendent Paul Daniels. "We had two large power plants that generated a lot of money for our district. For us, this really is a change. Most of our funding, 85% of it now, comes from our local property tax owners and our agricultural farming land that we have in our community."
November Levy: Plan A
The district's primary strategy, referred to as "Plan A" by Superintendent Daniels, involves a 1.25% earned income tax levy. This measure will be on the ballot this November. If approved by voters, the levy is projected to generate approximately $5.2 million annually, providing a significant boost to the district's finances.
This revenue is crucial for balancing the budget and avoiding deeper cuts. The district's financial health largely depends on the community's support for this levy.
Historical Funding Shift
New Richmond School District's funding model has undergone a significant transformation. Historically, two large power plants contributed substantially to the district's revenue. Now, approximately 85% of the district's funding originates from local property tax owners and agricultural land within the community.
Potential Cuts if Levy Fails
Should the November levy not pass, the district will be forced to implement substantial budget cuts. Superintendent Daniels indicated that these cuts would amount to roughly $2 million next year. The goal is to ensure a positive balance by 2028, even without the additional levy revenue.
Staffing reductions are a likely component of these cuts. However, Daniels assured that decisions regarding specific cuts would not be made in isolation. The administration plans to engage with staff, the community, and even students to determine where these necessary reductions will occur.
- Community Engagement: The district plans to involve stakeholders in budget cut decisions.
- Staffing Impact: Staffing levels are expected to be affected if the levy fails.
- Long-Term Goal: Achieve positive cash flow by fiscal year 2028 through cuts and revenue generation.
The Broader Financial Landscape
The district has already depleted its savings, making the current situation particularly challenging. "The district has spent all of our savings. So, the only way to get to that positive cash flow is cut as well as raise revenue," Daniels explained.
The state's requirements are clear: the district must demonstrate a path to positive cash flow by 2028. This means a combination of expenditure reductions and, ideally, new revenue sources. The community's decision on the November levy will play a pivotal role in shaping the district's financial future and the scope of necessary cuts.
If the district's plan does not meet state requirements, or if the levy fails and the deficit persists, the Ohio State Auditor could elevate New Richmond to a fiscal watch status. This would indicate a more serious financial condition and trigger even greater state intervention.
