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City Council grilled the Cleveland schools CEO over finances. Here's how it got to this point

Cleveland Metropolitan School District CEO Warren Morgan (left) addresses Cleveland City Council at a Feb. 26 caucus meeting over the district's projected budget deficit.
Abbey Marshall
Ideastream Public Media
Cleveland Metropolitan School District CEO Warren Morgan (left) addresses Cleveland City Council at a Feb. 26, 2024, caucus meeting about the district's projected budget deficit.

Cleveland Metropolitan School District CEO Warren Morgan was in the hot seat Monday as he came by Cleveland City Council’s caucus meeting to discuss the district’s looming deficit and cuts.

The Board of Education is set to vote Tuesday on a plan for reducing the district’s budget by tens of millions of dollars over the next two years as the district says it faces a $143 million deficit next fiscal year. The district will send the plan to the state for approval.

Morgan came to address Cleveland City Council directly after members last week questioned Cleveland Mayor Justin Bibb about the district’s deficit and how it appears to have gone under the radar for so long.

One of the most critical voices so far has been Councilmember Richard Starr, who wore a shirt during the caucus meeting reading, “Who’s Getting Fired?”

"My shirt that I have on that says, 'Who's getting fired?' today," Starr told Morgan, "I'm looking at leadership."

Councilmember Richard Starr sits wears a gray shirt reading, "Who's getting fired?"
Abbey Marshall
Ideastream Public Media
Councilmember Richard Starr wears a shirt reading, "Who's getting fired?" at a Feb. 26, 2024, caucus meeting. Starr has been a vocal critic of how the Cleveland Metropolitan School District has managed its budget ahead of a projected shortfall of $143 million next fiscal year.

Morgan has only been the district's top leader for about seven months. Council members' concerns stretched back before his tenure.

"At the end of the day, you're the new guy on the block," said Councilmember Mike Polensek. "You've been dealt a severe blow.

City Council has also been critical of a decision to use the $20 million gift from philanthropist MacKenzie Scott — initially styled as a way to provide new opportunities for students and teachers — to help plug the budget gap.

Twelve members of council sent a Morgan a letter Friday detailing their grievances on the subject.

Councilmember Kevin Conwell said the district went back on its promise, and he said that was a big blow to students' and families' sense of hope.

"I told you I ended up crying about it," Conwell said. "When I walk my neighborhood and I see the active poverty in Glenville and fatherless households... Children want something to believe in. I mean, some children go to Glenville to go to school just to get a meal."

Morgan said the district has always held the $20 million gift in its general fund, which would put it in worse financial shape if it were to use the money for non-essential purposes. He asked the council members to partner with the school district to find ways to close its budget gap, which could mean eventually restoring the Get More Opportunities program funded by Scott's grant.

"Give us time," Morgan told council members. "It's not easy coming in and having to make these decisions, but as the CEO of the system, I have to make tough decisions."

Polensek called on the district to return to an elected school board model. Members are currently appointed by Cleveland's mayor.

"I don't even know who the hell is on the school board," he said. "There is no engagement, no accountability."

A spokesperson for CMSD's Board of Education didn't immediately respond to a request for comment.

Starr raised the issue of returning to an elected Cleveland Board of Education system and for City Council to have control over the school district’s budget at Monday night's city council meeting.

The district’s handling of a the budget deficit shows the current system is not working, he said.

"I'm going to take a trip, and I'm going to lobby because we need elected school board," he said referring to the state legislature in Columbus. "We need to make sure anybody that gets hired as CEO, they need council approval."

The school district has been under mayoral control since 1997.

What's being cut?

Morgan in mid-February laid out a proposed plan for cuts that would keep the district away from a negative cash balance for the next two years of operation. He said the plan, as of now, keeps cuts away from the district's classrooms and focuses on other expenses and programs, including:

  • Completely zeroing out the district's support for 93 after-school programming provided by non-CMSD partners, a program that was started with COVID-era pandemic relief funding to help catch students up. This will save the district almost $34 million over the next two years but will not affect programs directly run by CMSD like sports and music.
  • Cutting back on summer programming. The district had significantly boosted its summer learning program through federal pandemic relief. But Morgan has said the district will still be providing more funding for that program than it had prior to the pandemic; about $6.6 million a year, compared to about $15 million in 2023.
  • Two phases of cuts at CMSD's central office. It'll start with 25 positions, which could involve cutting employees and open positions, saving about $5 million. A larger "second phase" will mean another $40 million in cuts to the district administration down the road.
  • Cuts in several other areas including technology for students.

When did the mayor, former officials know?

A spokesperson for Cleveland Mayor Justin Bibb said in a statement Monday that the mayor was aware of a projected deficit as of November 2022, when former CMSD CEO Eric Gordon updated the CMSD Board of Education about a $157 million budget deficit that was coming at the end of 2026.

"This information was shared with the mayor's office," spokesperson Marie Zickefoose said. At that time the possibility of considering a levy in 2025 or 2026 was raised, but this was not a substantive discussion. Given the timeframe, the decision was made to first address the CMSD leadership change and then dig deep on the budget so that financial decisions would be made and aligned with the next leader's strategy and vision."

She added that the budget deficit identified by Morgan, after he got into office in summer 2023, was larger and required action sooner.
"The Bibb administration is actively working to support the district in its efforts to reach the goals Dr. Morgan laid out in his State of the Schools address," she said. "This includes CMSD's efforts to manage the budget in ways that further progress those goals."

Cleveland City Council members and Cleveland Mayor Justin Bibb sit in chairs around a conference table.
Abbey Marshall
Ideastream Public Media
Cleveland City Council President Blaine Griffin addresses Mayor Justin Bibb and Chief Finance Officer Ahmed Abonamah on Tuesday, Feb. 20, 2024, the first day of budget hearings.

When Gordon announced his departure in September 2022, he had said the district was in a "strong" financial state. He didn't respond to a request for comment sent Friday. During a November 2022 Board of Education meeting, however, he said the district had forecasted a budget deficit coming in the time frame of 2025-2026 for some time, and was planning to adjust spending to meet that problem. He also said a school levy would likely be needed by the 2025-2026 year.

CMSD Board of Education members have also talked about a “cliff” coming due to the fall-off of federal pandemic relief since at least early 2023. CMSD also received a larger portion of pandemic relief funding, around $465 million, than other school districts across the country, partly due to the large number of low-income students it serves, the 74 Million reported.

Five-year forecasts have shown a deficit coming as soon as 2025-2026 for some time, since at least November 2021. Voters last approved a tax increase through a levy in November 2020; forecasts before that showed the district with a negative cash balance by 2022.

Cleveland Teachers Union President Shari Obrenski said the district's budgeting under former CEO Eric Gordon was "sound" and used limited-time pandemic relief funds wisely. She said the intention all along was for most of the pandemic relief-funded programs to go away.

"What I don't understand is why the district presented a five-year forecast to the state in November, where they essentially pretended as though they were going to continue to have these ESSER (relief) funds, or that they were going to continue to spend on all of the temporary programing that... We've been able to use under the ARPA-ESSER dollars," she said. "There was never any intention that every single thing that was done with recovery dollars would continue long term, because those dollars would end. So, they shouldn't have budgeted that way."

Spending on administration is high at CMSD

Financial records from the Ohio Department of Education show CMSD spends the most per pupil on administration out of any of Ohio’s eight big urban public school systems, about $4,098 per student as compared to Columbus City Schools' $3,494 per pupil, according to fiscal year 2023 statistics. About $143 million of an $833 million budget in that year went to administrative spending, compared to $461 million going to instruction. Cincinnati Public Schools, with a similar-sized enrollment, spent $86.5 million on administration out of a $696 million budget, with about $350 million going to instruction.

When the district was struggling academically and financially in 2011, the Ohio State Legislature charged school officials, the city, and other local leaders with developing a plan. Called the Cleveland Plan, it envisioned a number of investments and changes to the way the district operated. At the time, the district moved to a "building-based budgeting" model and boosted staffing on a number of fronts in order to accomplish systemwide change. It ultimately resulted in improvements to the district.

However, a 2016 update, created by the nonprofit Innovation Ohio, analyzing progress made through the Cleveland Plan called out ballooning administrative spending as one potential issue that resulted from the plan.

"Between 2011-12 and 2014-15, Cleveland increased the number of people working in administration by more than 25 percent and their pay by nearly 3 percent. Administration is the only personnel category that saw both an increase in staff and salary," the update reads. "Administrative spending ballooned nearly 70 percent from $52 million to $88 million."

The district said that was partly due to need created under the Cleveland Plan.

"The district acknowledged in interviews that they have had to hire more administrators to help building level leaders deal with the newfound autonomy The Plan gives them," the analysis reads. "District officials said the plan is to eventually curtail the number of additional central office help staff as building-level administrators become more comfortable with their new, building-level staffing and budgeting authority."

Updated: February 26, 2024 at 9:21 PM EST
This story has been updated to include Councilmember Richard Starr's comments from the Feb. 26 city council meeting.
Conor Morris is the education reporter for Ideastream Public Media.
Abbey Marshall covers Cleveland-area government and politics for Ideastream Public Media.