AS OF 04/02/2018 
Excerpted from OBM's Fiscal Report

Map: Google Maps

Date Fiscal Emergency Declared: 10/09/2012

Brief Summary:

When declared to be in fiscal emergency by the Auditor of State, the City of East Cleveland had deficit fund balances in an amount exceeding $5.8 million. The city was previously in fiscal emergency from 1988 to 2006. However, many of the problems that plagued the city then continue today.

Despite continued erosion of income tax revenue, East Cleveland has benefited greatly from federal grants for fire and police services. These grants have allowed the city to maintain critical staffing while relieving the general fund of some of the obligation to pay for these safety services. As a result, the city has reduced its general fund deficit from $2.9 million at the start of 2017 to a $1.3 million deficit (or 12.5% of revenue) for the start of 2018. However, it is clear the City of East Cleveland will need to reduce safety forces if the federal grants are not reauthorized for 2019. The city is not showing an ability to grow revenues necessary to sustain critical services, and is in fact vulnerable to revenue deterioration if there is a loss of businesses located within the city.

Action Steps Taken:

• East Cleveland has increased garbage fees, leased a cell tower, sold property, combined some job positions, and instituted a city-wide layoff and salary freeze.
• It has also transferred cash from inactive funds via the general fund to reduce and/or eliminate deficit balances in all funds with the exception of the general fund.
• The city started 2017 with $2.2 million in accounts payable, an amount that has been reduced by $200K in early 2018.
• A change in leadership, the mayor and council president were recently elected, has renewed an effort to make the city’s finances sound and they have opted to cease discussions with the City of Cleveland regarding a potential merger.

Outlook:

The City of East Cleveland will continue to operate with little cash available for emergency purposes and will need to continue to exercise extreme restraint on spending for services usually provided by cities in Ohio. The City has very little cash and is vulnerable to any revenue losses due to lost business, or extraordinary expenses. Therefore, it is unlikely that East Cleveland will extricate itself from its financial distress any time soon and the commission has limited ability to remedy this status.

Resources:

• View state support for the City of East Cleveland: Ohio's Interactive Budget - City of East Cleveland
• Ohio Auditor Links:  East Cleveland Placed in Fiscal Emergency
• Additional Links: n/a