Auditor Yost to Release East Cleveland City School District from Fiscal Emergency Status

Tuesday, May 24, 2011

Columbus - No new taxes were levied to help bring East Cleveland City School District out of fiscal emergency status today.  Auditor of State Dave Yost will be on hand to officially release the district from fiscal emergency during the final Financial Planning and Supervision Commission meeting at 6:30 PM today at Shaw High School, 15320 Euclid Avenue.
“This is a truly proud day for the East Cleveland City Schools,” Auditor Yost said.  “In times when schools must search for ways to streamline operations, East Cleveland City Schools has already taken many of the necessary steps.  Years of hard work have paid off, and my office is happy to have assisted them in getting their finances back on track. ”
The East Cleveland City School District was placed into fiscal caution by the Ohio Department of Education on June 15, 2001, based on unauditable financial records.  On March 13, 2003, the Auditor of State declared the district to be in fiscal emergency after certifying an operating deficit of $7,698,000 for the fiscal year ending June 30, 2003.  This operating deficit equaled 16.1% of the district’s general fund revenue, crossing the threshold of 15% outlined by Ohio law as one criterion to place a school district into fiscal emergency status.
As part of their efforts to emerge from fiscal emergency, the East Cleveland City School District enacted many changes to eliminate their operating deficit.  Approximately 240 staff positions were eliminated in various ways to save $13,897,550.  Annual savings of $585,043 were carried out through reducing the number of health insurance carriers from two to one and through a change in carriers.  By educating special education students within the district, $7,623,919 in savings was realized over a 5-year period.
The district received $7,698,000 in state solvency assistance funds in fiscal year 2003 and all funds were repaid in fiscal year 2005.
To be terminated from fiscal emergency, the East Cleveland City School district met the following criteria:

  • Adopted and implemented an effective financial accounting and reporting system;
  • Corrected or eliminated all of the fiscal emergency conditions, no new conditions have occurred, and it appears that, based on the five-year forecast, the East Cleveland City School District will remain out of fiscal emergency during the forecast period;
  • Met the major objectives of the financial recovery plan; and
  • Prepared a five-year forecast in accordance with standards issued by the Auditor of State, and the opinion expressed by the Auditor of State is “nonadverse.”
All of the outstanding financial audits of the East Cleveland City School District have been completed and were released today.  These audits include fiscal years 2007 through 2010.
A full copy of this fiscal emergency termination and all four audits of the district released today are available online at www.auditor.state.oh.us

The Auditor of State is one of five independently elected offices under the Ohio Constitution.  Auditor Yost’s office is responsible for auditing over 5,600 state and local government agencies.  Staff also works in partnership with state and local governments to deal effectively with financial, accounting and budgetary issues.

Carrie Bartunek
Press Secretary
(614) 728-7198