COLUMBUS – Mt. Healthy City Schools hired dozens of new teachers and staff members and completed about $18 million in building projects without formal plans or ongoing funding to sustain its operations, state auditors determined in a recent review.

These decisions and others, made without a discernable, cohesive strategic plan or necessary attention to the long-term financial implications, have pushed the Hamilton County district to the edge of a financial cliff that will require deep reductions to school staff and services to address a projected $90 million deficit in fiscal year 2028.

“There appears to be a failure of leadership, given the mismanagement of public resources and the financial mess the district now finds itself in,” Auditor of State Keith Faber said. “Mt. Healthy schoolchildren and their families are not being well served — it may be time for the Mt. Healthy City School District to consider partnering with other school districts to fulfill its educational obligations to the community.”

Mt. Healthy Schools’ fiscal issues and recommendations for addressing them are described in a performance audit released Thursday by the Auditor of State’s Ohio Performance Team (OPT), which reviews the operations of government agencies and programs and offers recommendations to improve their efficiency and effectiveness.

The full report is available online via Search Audits (ohioauditor.gov/auditsearch/search.aspx).

OPT launched the performance audit in December 2023 due to the district’s deteriorating financial condition, including increasing budget deficit projections. Auditors initially attempted to begin their review in August 2023, but district administration pushed back on the process and delayed the start of work by several months.

In April 2024, the Auditor of State’s Office placed the district in a state of fiscal emergency, the last and most severe stage of financial solvency problems for school districts, as a result of a $10.8 million operating fund deficit for the current fiscal year. The state Controlling Board subsequently approved a $10.8 million loan to the district through Ohio’s School District Solvency Assistance Fund to meet payroll and other expenses through the end of the current school year.

The situation can be attributed to a combination of factors, including decisions in recent years to increase overall spending while general revenue funds remained relatively stagnant. For example, spending for salaries and wages increased to $29 million in fiscal year 2024 from $20.6 million three years earlier.

“In particular,” OPT noted, “the district chose to hire new teachers with temporary funding received from the federal government to address learning loss related to the COVID-19 pandemic. While the hiring of additional staff is not in and of itself a problematic decision, the district did so without a strategic plan to maintain or remove those teaching positions once funding expired.”

Thursday’s performance audit noted that the school district’s existing strategic plan is not tied to its financial planning, capital improvement, or formal budgets, and officials, at times, have made decisions based on their programmatic preferences.

For example, the Mt. Healthy school board borrowed $10.5 million to construct a new Early Learning Center for preschool and kindergarten students, though existing building space was sufficient to serve students in those grades. Additionally, the district OK’d $7.4 million in federal pandemic assistance funds for a new Culinary Arts Center, with no identified ongoing funding to pay for staffing, supplies, and other costs to operate the facility.

Mt. Healthy Schools’ staffing levels also surpassed peer averages on a per-student and per-building basis, employing 175.83 full-time-equivalent teaching staff members, or 45 full-time-equivalents over the peer average, and 21 full-time-equivalent central office administrators, 5.5 above the peer average.

OPT offered 15 recommendations that could result in about $8.2 million in annual cost savings, plus four additional recommendations that could provide more than $7.5 million in additional cost savings, though auditors noted on the latter, “The implementation of these measures could change the type or level of services offered by the district.”

Auditors added, “Using the most recent forecast, which was approved in February 2024, the district would not fully eliminate the projected deficit, even if it implements every recommendation contained in this report.”

OPT also sent a letter to the Mt. Healthy board of education and district administration following an April school board meeting, during which members attributed a vote on building reconfigurations to recommendations provided by state auditors.

At the time, OPT had not issued formal recommendations or endorsed any cost-cutting proposals.

“District officials either misunderstood or misconstrued information provided as we were working on our performance audit,” Auditor Faber said. “The public should read our full report for themselves if they’re interested in our recommendations for change in the Mt. Healthy City School District.”

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The Auditor of State’s Office, one of five independently elected statewide offices in Ohio, is responsible for auditing more than 5,900 state and local government agencies. Under the direction of Auditor Keith Faber, the office also provides financial services to local governments, investigates and prevents fraud in public agencies, and promotes transparency in government.

Public Affairs

Contact: Marc Kovac
press@ohioauditor.gov