Lorain Schools enters fiscal caution, budget deficit looms

LORAIN — Lorain Schools' dwindling finances could place it under state control by 2028. In an updated five-year forecast presented Monday evening, Treasurer Tia Kearney predicted the school district could see a $12 million deficit next fiscal year (the 2026-27 school year), which could balloon to $65 million by fiscal year 2029 even if its renewal levies pass this November. Lorain Schools has long been in a precarious financial state, but Monday's updated budget will see it placed under fiscal caution with the state due to how close it is to a deficit, which will require it to submit a corrective plan to balance its budget before it falls into the red. The last time Lorain Schools was under fiscal caution was in 2024. That plan required the district to cut about $10 million from its budget to remain in the black, which it did largely through the elimination of positions through attrition or cutting unfilled roles. If the district reaches fiscal emergency — triggered when its deficit exceeds 15 percent of its budget — the state budget commission would assume control of Lorain Schools. Kearney's current forecast predicts fiscal emergency by 2028 if no corrective action is taken. Lorain Schools was previously under state control due to its academic failings for about a decade. It was returned to local control in 2023. Lorain Schools has two renewal issues on the ballot: Issues 21 and 22. Issue 21 is the renewal of a longstanding 23.85-mill current expense levy that dates to the 1990s. It raises about $11 million per year for the district, and if passed would cost the owner of a $100,000 home $338 per year continuously. Issue 22 is a 10-year renewal of a 3.22-mill emergency levy that generates approximately $3.1 million annually for the district. If passed, it would continue to cost the owner of a $100,000 home about $113 per year. With the renewal levies, the district still faces a $12 million deficit next fiscal year; but without them that deficit would grow to $15 million for 2027 and as high as $116 million in 2029 if Kearney's projections stay true. The district's expenses average approximately $118 million per year, according to the updated forecast, but its revenue averages around $89.4 million over the same period. Those revenue numbers include a loss of about $3.5 million each year in state supplemental targeted assistance, which was additional funding for low-income schools, as well as about $900,000 each year in other state budget cuts and $1 million per year from the county's recent increase to the homestead and owner-occupancy property tax exemptions. On Oct. 7, the Lorain County Commissioners voted to double the owner-occupancy and homestead exemption credits for homeowners, effective for the 2025 tax year — which will be collected next calendar year. Public schools were some of the hardest hit by the board's decision. While revenues have decreased, its expenses are expected to continue to grow, largely from increased personnel costs and buses purchased in fiscal year 2026 to move transportation in-house. There is an up-front cost of about $1.3 million to buy 10 additional buses, and another estimated $500,000 for new bus drivers' salaries and benefits, but the move is expected to save the district money in the long run when compared to outsourcing its transportation costs to a third-party company. After Monday's meeting, Kearney said the district will need to review its programs and services while it creates a new financial plan to submit to the state in the coming months. The district will also need to go to voters for new operating money — something it has not done successfully since 2012. It attempted to ask its voters for additional operating money in 2021 through a 6.8-mill, five-year levy that would have generated about $4 million per year for the district. It failed by less than 500 votes that November. A video of Kearney's presentation is available on the district's YouTube page. Contact Carissa Woytach at (440) 329-7245 or cwoytach@chroniclet.com.