By Jennifer Mrozowski
Enquirer staff writer

Cincinnati's schools chief on Wednesday said he will address the district's fiscal problems by developing an employee buyout plan, consolidating more schools and finding additional ways to increase the district's revenues, such as through grants.

Superintendent Alton Frailey said he would outline his fiscal plan within 90 days. The district has already instituted a hiring freeze.

"The financial challenges that face us are significant, but not insurmountable," he said, reiterating that the budget's size has been a concern to him for two years. "Like the challenges we have faced in the past, we can overcome these obstacles by working collaboratively. In the end, we will have a district that operates better, faster and, yes, cheaper."

Additional school consolidations would be planned for 2005-06, Frailey said, and the employee severance incentive package should be ready by spring. Four of the district's schools have already been consolidated into two for this school year.

Frailey said the fiscal plan is necessary to downsize the district's staffing levels and number of schools to match Cincinnati schools' dwindling student enrollment.

He made his announcement just moments before the district's assistant treasurer presented a $469.5 million budget for 2004-05 that is $15 million more than the budget proposed in July. The announcement also came just two days after the district acknowledged that it overspent its previous year's budget by nearly $22 million.

District officials said some of those overruns resulted from uncontrollable expenses, such as tuition payments to other agencies that educate Cincinnati school students or payments that the district must make to charter schools. Other overruns resulted from unanticipated raises following contract negotiations this year for teachers and other staff.

Treasurer Michael Geoghegan said the district would use cash reserves to pay for the overruns.

After paying for the 2003-04 overruns, about $98 million remains in reserves.

Geoghegan said the district expects to spend $43 million of the revenues in 2004-05. That would leave $55 million in reserves.

Geoghegan said the district should reduce spending by as much as $40 million. If it did, the district could stave off a deficit until 2007 or later, he said.

Board President Florence Newell said she was pleased with Frailey's announcement.

"The superintendent has outlined the critical areas he will address soon that will help stabilize the district," she said.

Sue Taylor, president of the Cincinnati Federation of Teachers, said she hadn't heard about the possibility of a severance incentive package for teachers, but she welcomes the idea.

"No one has had any conversations with me, but obviously I think it is a step that is needed and needs to be negotiated," Taylor said.

Taylor supported a teacher severance incentive plan during contract negotiations this year.

Such a plan was negotiated into a tentative agreement between the union and school board's representatives, but was struck from the contract. Frailey opposed that contract agreement, in part, because it included the severance incentive package. He said the school board never approved the package.

A state-appointed fact-finder, who was brought in to resolve the dispute, ruled against the inclusion of the severance plan, and it was taken out of the final contract.

Taylor said the district should consider offering incentives to encourage the most experienced teachers to leave because they are the highest paid.

"There are positives and negatives," she said. "You would be losing teachers with a high level of experience, but it could very well be a fiscally responsible step given the need to downsize in the district."

Frailey also said he want to reorganize business operations so the financial staff reports to him. The treasurer now reports directly to the school board.

"Because I am ultimately responsible, it is essential that I have more control of the financial side of our operation. It is essential that I have information that is accurate and timely regarding all financial matters."

E-mail jmrozowski@enquirer.com