May 30—A new tool released from the Ohio Auditor of State that measures how schools are doing financially shows that many local school districts appear financially healthy, with a couple notable exceptions.
The new tool analyzes 16 financial indicator for every district in Ohio. This includes revenue and fund balance trends, expenses versus revenues, and debt. Each indicator is rated critical, cautionary or positive.
Entities with at least six critical indicators or a combination of eight critical and cautionary indicators have historically ended up in a high state of fiscal stress, according to the auditor’s office.
Many of the region’s largest school districts — Dayton Public, Beavercreek, Fairborn, Huber Heights, Centerville, Hamilton, Springfield, Middletown — all have mostly green indicators, which are good, with only one or two red (critical) or yellow (cautionary) indicators.
These indicators are for the 2023-2024 school year.
David Roorbach, press secretary for Ohio Auditor of State Keith Faber, said after developing similar indicators for counties and cities, the state wanted to provide additional information beyond a school’s five-year forecast, which is mandated by the state to provide information about school district financials.
“Auditor Faber has had an ongoing concern about the accuracy and applicability of school districts’ five-year forecasts to detect fiscal stress,” Roorbach said. “Expanding our Financial Health Indicators to include schools was a logical step in providing more information to school officials and the public about potential fiscal distress.”
‘Fiscal emergency’
A handful of Ohio public school districts are dealing with fiscal issues, including Mt. Healthy near Cincinnati, which the auditor’s office placed in fiscal emergency in April 2024. Trimble Local Schools in Athens County is the other Ohio School district currently in fiscal emergency.
Previously, Jefferson Twp. Local Schools in Montgomery County was placed in fiscal emergency but was taken off the designation in 2011.
A fiscal emergency is the last and most severe stage of a school district’s financial solvency problems, according to the Ohio Auditor of State. When that happens, a Financial Planning and Supervision Commission will take some or all of the powers of the board of education and develop a financial plan to alleviate the problem.
“Certainly, Financial Health Indicators would have made this process much more transparent and prompted action sooner to address the district’s financial problems to the public and the school board,” Roorbach said of the Mt. Healthy situation.
Local school outlooks
According to an analysis by this news outlet, most of the local schools that provided data to the state appear to be fiscally healthy.
Centerville City Schools, for example, had two red indicators and one yellow indicator last school year, which means the district is doing well.
Centerville treasurer Laura Sauber noted that Centerville recently passed an $11.2 million school levy, which would alleviate one of the red indicators that showed Centerville was spending more than it was bringing in.
“This metric should turn to a ‘green’ indicator during the next few years,” she said.
Sauber said the condition of the schools likely contributed to the “yellow” indicator that Centerville got in a category showing the condition of the school’s “assets,” or physical buildings. Many of the buildings are older.
While the district was not included in the state’s data at the time of publication, Kettering Schools received a similar report from the auditor’s office that was shared with this news outlet. Kettering received one red indicator and one yellow indicator in areas that were commonly flagged among school districts in Ohio.
Dayton Public Schools has all green indicators except for a yellow on unrestricted net assets. The state says a cautionary, or yellow, indicator shows a decline in the amount of money that is unrestricted or not already put aside for use.
Dayton treasurer Hiwot Abraha said the district has gotten clean audits, managed expenses to keep money in reserve, managed debt and liabilities carefully, and maximized the money they can use from federal grants and dollars.
“We’re thrilled to see all green, that’s a testament to the teamwork, discipline, and forward thinking strategies our finance department has put in place,” she said.
Springfield City Schools received a similar report, with a yellow indicator for how much they have in equity and how much money is not assigned in the general fund.
Hamilton City Schools were awarded all good indicators across the board.
More negative outlooks
Springboro Schools in Warren County was one of two local school districts that the auditor’s office flagged as having possible issues in two or three years.
The issues flagged appear to be related to how much the district is spending versus how much it is bringing in. According to the district’s five-year forecast, by the 2028-2029 school year, Springboro Schools could be in a $3.2 million deficit.
The district would still have more than $6 million in reserves by the end of that school year, according to the same forecast.
The district did not reply to a request for comment by deadline.
New Miami Local Schools in Butler County, with eight negative indicators, has been overspending its revenues since at least the 2021-2022 school year, according to its five-year forecast.
Some Montgomery County Schools have more negative indicators than others, including Jefferson Twp. and Vandalia-Butler.
The auditor of state gave Vandalia-Butler three red indicators and two yellow indicators. The red indicators are for declining property taxes and having a low general fund balance, as well as “liabilities to net assets,” which looks at how much schools owe compared to how much they have in money and assets — this was the most common red and yellow flag among school districts in the state.
Vandalia was given two yellow indicators, one for the condition of its school buildings, which are older, and one for the average daily expense ratio in the general fund.
Vandalia-Butler reconfigured three of the district’s schools at the start of the 2024-2025 school year after a tax levy of 1% income tax that would have generated $6.4 million failed in May 2024.
Vandalia-Butler spokeswoman Mary Stephens said the district just completed their first year in the new grade configuration that occurred after the levy failed, and the district now runs on a Labor Day to Memorial Day school year calendar, saving additional money.
“With these measures, the district has reduced costs by over $3.2 million,” Stephens said. “We have worked tirelessly and continue to work to preserve student programming and staffing while also implementing strategic budget reductions where applicable.”
In November, Vandalia-Butler named Jordan Shumaker, the district’s previous athletic director, as a replacement for longtime treasurer Eric Beavers, who is retiring in July.
Vandalia-Butler school officials have said consistently in the last several years the district is underfunded by the state, forcing them to rely more on property taxes.
Similarly, Jefferson Twp. Local Schools, which had a levy on the ballot at the beginning of May for a 1.5% earned income tax but did not pass it, earned three red and three yellow indicators, mostly for how much the district is spending versus how much it is bringing in.
Treasurer Craig Jones said the district plans to put a levy on the ballot again, which would bring in additional revenue. But Jefferson Twp. made cuts after the levy did not pass, with four teachers, two paraprofessionals and one cook laid off.
“In addition to managing expenditures in a prudent manner, generating additional operating revenue is the primary way to ensure long-term fiscal stability and health,” Jones said.
