Recent analysis of the latest financial forecasts submitted by Ohio's public schools shows that close to 10% of districts in the state will experience severe financial strain by the end of the current fiscal year. By the 2030 fiscal year, that number is projected to jump to over 63%.
Districts in financial trouble have few options for turning things around. They can raise money through a levy or charge higher student fees for activities like music, theater and sports. But the quickest way a school district can balance its checkbook is by reducing its expenses through budget cuts.
And if none of that works, the state steps in — specifically with oversight administered by the Ohio Department of Education and Workforce, as well as the state auditor.
Ohio has three official fiscal distress designations for school districts: fiscal caution, fiscal watch and fiscal emergency. Here's what those three tiers mean, and what schools can do to get out of them.
What it means to be in 'fiscal caution'
This spring, North College Hill City Schools' financial forecast showed a projected deficit of $2 million, so it laid off around a quarter of its teachers and five educational aides. Superintendent Eugene Blalock says it didn’t stop there.
"We cut soccer at the beginning of this year," he told WVXU. "We cut fifth and sixth grade band; we cut high school jazz band."
Despite already cutting millions over the summer, the small urban district’s latest financial forecast showed yet another deficit brought on by a combination of rising expenses and a lack of revenue. In September, Blalock received a letter from the Ohio Department of Education and Workforce requiring decisions to be made on another $1.8 million in future cuts before the end of the year.
The letter North College Hill received indicates it's in the first stage: fiscal caution. That means it must develop a cost-cutting plan to avert a projected financial crisis in the next few years, likely by cutting jobs and services. If it can’t, the district could quickly end up in one of the next two, more severe designations: fiscal watch or fiscal emergency.
What it means to be in fiscal watch
Ryan Ghizzoni, a former public school treasurer who has worked in several districts in Northeast Ohio and is now director of analytics for the school administration software company Frontline Education, says that after caution, the size of a school's deficit determines what happens next.
"It typically depends on your negative cash balance," he said. "Specifically, for fiscal watch and fiscal emergency, does your general fund have a negative cash balance? And what percentage is it?"
For fiscal watch, a district must have a financial deficit ratio between 8% and 15% of its total operating budget. Currently, only one Ohio school district — Springfield Local in Summit County — is in this stage.
What it means to be in fiscal emergency
After a watch declaration, if the deficit isn’t addressed within 60 days, or exceeds a 15% ratio, the school district enters the last stage: a fiscal emergency, place no school district wants to be.
Ghizzoni says when a school reaches a fiscal emergency, the state comes in with its own commission that essentially acts as the district’s new school board and has final say on all financial decisions.
"They're going to get a lot more control of the overall say and contracts for the district, spending for the district," Ghizzoni said. "The district still has to make the decisions, but it then has to be approved by this fiscal oversight commission, and it takes some time to get out of specifically fiscal emergency."
On average, it takes about three and a half years for a school system to get released from an emergency. Across the state, three schools — Barberton City in Summit County, Trimble Local in Athens County, and Mt. Healthy in Hamilton County — are currently at this stage.
Mt. Healthy has been in a fiscal emergency for two and a half years. The state approved the district's financial recovery plan in April, and after four attempts, passed a new earned income tax this May, which will bring in much-needed cash beginning in 2027.
Still, the fiscal emergency left its mark. Mt. Healthy fired more than a hundred employees, changed superintendents, and cycled through six different treasurers since 2024, and still hasn't been released from its emergency.
About a mile of road separates the district offices of Mt. Healthy and North College Hill, and Blalock knows how uncomfortably close his district is to being in the same boat as expenses are projected to grow with each year.
"We are definitely in danger of being in a fiscal emergency," he said. "Even if we cut $1.8 million, the next year we're going to have to make additional cuts because we're not generating any more money."
North College Hill is putting a 1.25% earned income tax levy before voters this November to avoid more cuts. And they won’t be alone. In Ohio, more than 60 public school districts will have either a new property or income tax on the midterm ballot, which, if approved, will raise residents' taxes.
Read more:
