The Cleveland Metropolitan School District (CMSD) is proposing cutting programs and administrative staff to close a growing budget hole as federal pandemic aid expires. 

But even these short-term fixes won’t provide the district with long-term financial stability, CEO Warren Morgan told media in a budget presentation prior to Tuesday’s board meeting. He left open the possibility of asking Cleveland voters to raise property taxes with another school levy. 

“This is a multi-year process of us really continuing to think about what are some of the challenges we have, what are some of the resources we need to pull on,” Morgan said. “Might there be additional funding or resources we ask for to help with our deficit? Might we need to rethink our operating model?” 

The cuts will fall hardest on CMSD “out-of-school time” programs, which third parties provided for students using the district’s federal coronavirus dollars. The district is proposing to zero out its out-of-school program budget. 

Even so, nearly 400 traditional extracurriculars such as athletics, music and clubs won’t be affected, Morgan said. 

The district is not proposing cuts or increases to the money it sets aside for individual schools. CMSD is proposing to cut 25 positions from the central office, a mix of layoffs and closed vacancies. Morgan did not raise the possibility of laying off teachers at the moment. 

CMSD also plans to reduce spending on summer school, serving fewer children but doubling instruction time. Other belt-tightening measures include eliminating free wireless hotspots and cutting the extra days and hours of instruction that some schools offer. 

At the heart of the problem is federal coronavirus aid from the Elementary and Secondary School Emergency Relief Fund, known as ESSER. CMSD used the aid to pay for many of the services that are now on the chopping block. In all, Cleveland schools received about $465 million from coronavirus assistance packages. 

That money was “temporary” and only for an “extraordinary” time, Morgan said. Now it is running out, and CMSD’s general fund cannot fill the gap. 

CMSD is projecting a negative cash balance of $168 million by 2026, equal to nearly 25% of the district’s revenue. Morgan’s plan wouldn’t fully close the budget deficit, but would eliminate that negative balance and keep the district in the black until 2027. 

The school board received a more detailed version of the presentation given to media earlier in the day. The district must send its deficit reduction plan to the Ohio Department of Education and Workforce.

Cuts in out-of-school programs, summer school

Over the last few years, the district spent tens of millions of dollars in pandemic aid for such after-school programs as photography, martial arts, wellness and financial literacy. A host of notable local institutions provided the services, from the YMCA to the Boys & Girls Clubs of Cleveland. 

Morgan said he plans to meet soon with those out-of-school time providers. His message: It’s time to find money elsewhere. Morgan cited the example of an unnamed provider that previously raised money from other sources before it began receiving $2.1 million from CMSD.

“We did this once before, before there were ESSER dollars,” he said. “The district can’t bear the load because these were temporary dollars only for a temporary, unique, extraordinary set of time. And now we have to think about how we continue these services moving forward.” 

The district spent $27.8 million on out-of-school time programs from 2022 to 2024, according to CMSD’s presentation to media. Eliminating that budget will yield an estimated $34.1 million in savings over two years. 

Summer school will also see cuts. The district plans to shrink its summer learning budget from $15.5 million last year to $6.6 million annually. Even with the cuts, CMSD will still be spending far more than the $1.2 million recorded in 2020. 

Last year, an average of 4,225 students took part in summer school each day. This year, CMSD will have capacity for 3,500 students, but it will double instruction time from 90 minutes to three hours. 

Morgan said he also planned to add an assessment at the start and end of summer school to see how the program is working. Speaking more broadly, he said the district needs to use more key performance indicators, or KPIs, to evaluate its programs. 

“We’re good at, sometimes, starting programs,” he said, “but if we don’t have a way of measuring that or measuring the impact, we won’t be able to show the value-add.” 

A CMSD budget shortfall long in the forecast

For years, CMSD’s financial forecasts have projected a budget deficit in the distance. Cleveland voters in 2020 staved off potential school closures and cuts with the passage of a levy replacement and increase. 

But red ink remained on the horizon. A five-year financial forecast submitted to the Ohio Department of Education and Workforce in November 2022 projected a negative cash balance as soon as 2025. Another forecast dated April 2023 also foresaw a negative balance in the future, noting that 80% of federal aid would be exhausted by the summer. 

CMSD leadership has tried to soften the blow by changing how it spends a $20 million unrestricted grant from philanthropist MacKenzie Scott. 

In November, the board approved a measure to recoup the remaining $16 million of the gift, which had been transferred to the Cleveland Foundation to administer grants for students. Morgan told the board that the gift could then be spent on school programs currently funded by ESSER. 

That change has allowed CMSD to continue summer instruction and its student tablet program, if at a reduced level, Morgan and schools CFO Kevin Stockdale told media. 

Under Morgan’s predecessor, then-CEO Eric Gordon, students voted on ways to spend $4 million from the grant that Gordon promised they would have direct say over. Asked about the students’ input over the money, Morgan said, “That program has ended,” though “it wasn’t an easy decision to make.” 

At Cleveland City Hall, council members and Mayor Justin Bibb’s administration repeatedly said that the city’s temporary federal aid shouldn’t go toward ongoing personnel expenses. As the city’s finance director once put it, “What happens when the music stops? Only pain.” 

But for a time at CMSD, operations personnel and school nurses were paid with federal ESSER dollars, according to Morgan. The district has since moved those jobs back to the general fund, increasing the pressure on the budget, he said. 

Morgan, who was hired to replace Gordon last May, emphasized that he had only been on the job for several months and couldn’t speak to all the decisions made before his arrival. 

“They were never supposed to be spent on permanent costs that we knew we would have, because it would go away,” Morgan said of ESSER dollars. “I don’t know exactly how it was set up or the conversations that were had or the pre-work that was done, but that is some of the things we found when actually uncovering our budget reality.”