Pay delay would give Ohio $100M surplus

6/26/2002

COLUMBUS - The state is expected to end the fiscal year with a $100 million surplus, in part by delaying payments to school districts and local governments in at least seven counties.

The state has the power to delay expenditures for up to 30 days. The school districts and local governments affected are in Wyandot, Mercer, Cuyahoga, Tuscarawas, Union, Stark, and Washington counties, said Tim Keen, assistant state budget director.

The issue centers on property-tax rollback dollars. The payments are made by the state as reimbursements to local governments and school districts. The seven counties involved are those that submitted their paperwork for the money after June 1.

The state pays 10 percent of the tax bill for real property - which is the taxable value of land and buildings. The state also pays 2.5 percent for owner-occupied dwellings and another 2.5 percent for elderly property owners.

Mr. Keen said the state has not decided whether to delay payment of property-tax rollbacks.

The fiscal year for the state and school districts ends June 30. Local governments run on calendar-year budgets.

“It's a misrepresentation to say that we are balancing our budget by withholding payments.... We are not targeting this particular category of state spending,” Mr. Keen said.

Of the municipalities affected, the biggest effect could be on Cleveland, said Sue Cave, executive director of the Ohio Municipal League.

The state budget office has indicated that school districts in danger of running a deficit could receive the payments before July 1, said Barbara Shaner, director of legislative service for the Ohio Association of School Business Officials.

Democratic legislators pounced on the issue.

“The Taft administration apparently decided to shortchange schools and local governments to balance the budget,” House Minority Leader Dean DePiero (D., Parma) said in a statement. “Instead of controlling state spending, the governor's office is forcing schools to deal with the administration's budget mismanagement.”

Joe Andrews, Mr. Taft's press secretary, said it is the budget office's job to make sure the general fund budget is balanced, as required by the state Constitution.

“How they chose to do this is an administrative decision on their part,” he said.

Celina City Schools is waiting for $450,000 from the state, said district Treasurer Mike Marbaugh.

“We have enough cash balance on hand that it is not a critical issue, but next year if this were to happen, we would be in a world of hurt,” he said.

Mr. Marbaugh said the district receives checks from the state twice a year and the payment that usually arrives in May or June has not. He said he did not know why until he recently received an e-mail from other school treasurers.

“It's not something I like. They owe the money, and they should be paying the money. But I understand that they have to balance their books,” Mr. Marbaugh said.

Scott Armstrong, treasurer of Upper Sandusky Exempted Village schools, is waiting for a $170,000 payment.

The district is not in danger of ending the fiscal year in a deficit, given it has a projected carryover of $2.6 million.

But Mr. Armstrong said that if the state withholds the payment until after July 1, it could affect citizens' perception of the district's fiscal picture.

“The state using our funds to balance the budget is probably not an appropriate way to do business. If we receive money next year that we should receive this fiscal year, it overstates our revenue for one year, and it makes your financial picture kind of funny,” he said.

Mr. Armstrong, the treasurer of Upper Sandusky Exempted Village schools, questioned why the state did not inform school districts about the delay in payments.

Asked if the state should have done so, Mr. Keen replied: “Perhaps.”

Warren Russell, a lobbyist for the Ohio School Boards Association, said school districts receive $708 million of the $1.1 billion annually that the state provides in property-tax rollback payments.