Akron’s Board of Education will have to cut more money than expected from next year’s budget now that officials have discovered they hadn’t accounted for more than $1 million in annual payments owed to the City of Akron.
The board had already projected a $15 million spending cut in the 2024-2025 budget, but Steve Thompson, Akron Public Schools’ chief financial officer and treasurer, said in a school board meeting Nov. 27 it could be closer to $17 million, or about 4% of the district’s total budget.
The cause is twofold: first, a $1.2 million annual payment to the City of Akron for the Akron Public Schools’ headquarters building wasn’t listed in the budget. And second, the district has so far exceeded its budgeted spending by $700,000.
“Every time you bring something in, you’re adding to cuts,” Thompson told the board. “There’s no other option.”
The agreement to pay the city for the headquarters dates to 2018. Thompson said knowledge of it was “lost in translation” during staff turnover in recent years.
In fact, Thompson said, he didn’t learn about the agreement – and required payments – until the afternoon of the board meeting, when an invoice arrived at his office. Then, he learned, the city had bought bonds the school district sold in 2018 to finance the purchase of its current building.
Because an audit showed the city had shorted the school district on money it owed from tax increment financing deals on developments, the city agreed to pay the first $4 million of the $10 million bonds.
“Now it’s our turn,” Thompson said of the unanticipated payment. “It is what it is.”
He said with changes in leadership on the board and in executive roles, the payments hadn’t been included in previous financial forecasts.
In the meeting, he said the district would look at refinancing the debt to pay the city back over 15 years instead of five, allowing for smaller payments and fewer cuts. Later, Thompson said he was looking at a 10-year payment period.
“We don’t want it to be an albatross, hanging on the next 20 years, but we do want to reduce that hit a little bit,” he said. “Of course it’s disappointing, to realize you’ve got to factor this piece in.”
Additional personnel, vehicle purchases unplanned
The $700,000 in additional spending largely went toward personnel and vehicles, he said. Thompson said deferred vehicle purchases and maintenance led to some of the current spending needs. Three additional vehicles needed to be purchased, including a heavy-duty truck to move dirt and snow. He cautioned board members that they could continue to defer transportation spending, but there would be consequences.
“We’re going to put ourselves in a financial situation we can’t get out of, not easily,” he said.
The additional staffers were necessary because additional gifted and English as a second language instructors were needed, Thompson said. Some of those costs were offset by executive positions that were vacated and not filled.
On top of already-planned cuts of $15 million in next year’s budget, the unexpected expenditures will now require a budget that’s $16.7 million slimmer next year, he said.
Superintendent Michael Robinson told board members he had “not in any way come in and exacerbated a budget” since he joined the district this summer. He said he anticipates both eliminating and creating positions and said, “there’s not one position in this district that’s off the table,” beginning with who has secretaries.
“I don’t want the misperception or misconception to be made or misunderstood that this administration has come in and blown the budget, because that is not the case,” Robinson said. “Coming in, there’s very little I can do to change a current budget, but there is a whole lot I will do to impact the new one.”
Robinson said he was going to “figure it out and fix it.” He did not respond to requests for additional comment about the district’s budget situation.
Barbara Sykes, a newly elected school board member who will take office next month, said she thinks the first thing the board needs to do is stop increasing the deficit. While some additional money was spent on safety improvements at schools, Sykes said a new contract with teachers that gave them raises of 4%, 3% and 3.5% over a three-year period necessitated cuts elsewhere.
The need to pay those salaries will not evaporate, she said.
“Expenditures did not happen overnight,” Sykes said. “When you make those types of decisions, those are with you forever.”
Thompson, for his part, said he’ll focus cuts on duplicative software and attrition before suggesting employee cuts. He said more information about any job losses should come in February.
“If somebody is going to lose their job, it’s contingent on us to give them as much notice as humanly possible,” he said.
