After school district officials asked the state to place it in fiscal emergency, the state auditor's office has officially placed the district into fiscal watch.
"My office is ready to work with the Liberty Local Schools to bring them back to fiscal health," the auditor's office announced.
In an earlier interview, DeVito said the district had already been in fiscal watch, but, according to state records, it had not been placed in that category. The district has been in fiscal caution since January 2010, based on projected deficits in fiscal years 2010 and 2011.
The auditor's announcement noted the district's October 2010 five-year forecast projected a deficit of $2,565,000 during fiscal year 2012. In the most recent five-year forecast, which can be found on the Ohio Department of Education's website, the district projects a $4,429,850 deficit in the 2015 fiscal year.
Martin R. Kubic, a CPA in Yost's office, on Feb. 7, sent a letter to Liberty School Treasurer Tracey Obermiyer and Superintendent Stan Watson stating the conditions of the district's financial records for the period of July 1, 2009, through June 30, 2010, were unauditable.
In that letter, Kubic requested bank reconciliations for the period, bank statements for July and August of 2010, GAAP statements for fiscal year 2010, as well as other budgetary documentation.
Kubic gave the district 90 days to provide the information.
Roger W. Hardin, assistant director of the Office of Finance Program Services of the Ohio Department of Education, in a March 31 letter, indicated that the projected 2012 deficit would represent 16.1 percent of the previous year's revenue. The criteria for a school district to be moved into fiscal emergency is a 15 percent projected operating deficit.
Hardin requested the district send him a revised recovery plan by no later than May 16 that eliminates the projected deficit.
During the district's May 5 meeting the board accepted Obermiyer's resignation and named James Wilson as its interim treasurer. During the most recent board meeting on May 23, DeVito emphasized the district's financial difficulties were not due to wrong doing by Obermiyer.
In the state's announcement, it was noted the district has 60 days to submit a financial plan designed to correct their financial problems. If it is unable to do so, fiscal emergency will be declared.
School systems that are in fiscal watch have forecasted financial deficits that are at least eight percent greater than the budgets, and they have failed in attempts to pass operating levies. Districts deemed to be in fiscal emergency have forecasted operating budgets that are more than 15 percent of their operating budgets.
In response to the state inquiries, the district hired an independent audit firm to assess the status of its accounting practices, assist in putting its books in order and to look at any irregularities. The district also requested an audit of the LEARN and LEAD conversion schools.