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Ohio school system faces $90M deficit from COVID-19 spending

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(The Center Square) – Continued hiring and millions in building projects pushed an Ohio public school system to a financial cliff, including a projected $90 million deficit by 2028, state Auditor Keith Faber said.

A new state performance audit says the Mt. Healthy City School District in suburban Cincinnati hired dozens of new teachers and staff and advanced $18 million in building projects without formal plans or funding to sustain operations.

Faber said the system should consider joining another district.

“There appears to be a failure of leadership, given the mismanagement of public resources and the financial mess the district now finds itself in,” Faber said. “Mt. Healthy schoolchildren and their families are not being well served – it may be time for the Mt. Healthy City School District to consider partnering with other school districts to fulfill its educational obligations to the community.”

The issues and state recommendations were part of a new performance audit recently released by the Auditor of State’s Ohio Performance Team. The audit began in December after the district pushed back on the process and delayed the state by several months in August, Faber said.

The report said the district’s spending on salaries and wages grew by nearly $9 million in fiscal year 2024 from 2021, mostly due to an influx of one-time federal COVID-19 money.

“The district chose to hire new teachers with temporary funding received from the federal government to address learning loss related to the COVID-19 pandemic,” the report said. “While the hiring of additional staff is not in and of itself a problematic decision, the district did so without a strategic plan to maintain or remove those teaching positions once funding expired.”

The report also said the district borrowed $10.5 million to build a new Early Learning Center for preschool and kindergarten students despite having sufficient building space for those grades. The district also used $7.4 million in COVID-19 money to fund a new Culinary Arts Center without a plan for ongoing funding to pay for staff, supplies and other costs.

Finally, the report said the district’s staffing levels were higher than similar schools on a per-student and per-building basis. It had 175.83 full-time teachers, which was 45 more than comparable systems.

At time of publication, The Center Square was unsuccessful in its request for comment from the district.

As previously reported by The Center Square, the state placed the district in a state of fiscal emergency in April due to a $10.8 million operating fund deficit for the current fiscal year.

Since then, the Ohio Controlling Board has approved a $10.8 million loan from the Ohio School District Solvency Assistance Fund for the district.

The district has said changes to the state funding formula and reductions in state funding allocations impacted its budget. Also, the district’s property tax revenue has decreased and is projected to continue decreasing.

At the same time, the district said its total expenses increased by $2.4 million each year. It said employee salaries and benefits are two of the expense categories it expects to continue to grow.

According to reports from Fox19 in Cincinnati in April, the system planned to lay off 80 employees. The district said 67 of its 227 teachers, nine administrators and four exempt staff positions are expected to be cut across five schools by the end of the year.

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