After a close election, the Milford School district faced another defeat at the ballot for a proposed school levy that would have kept the district from facing tough state scrutiny.

With the loss in the election of around 700 votes, the district is now expected to enter “fiscal caution,” the first step of a series of designations designed by the state to deal with districts facing a budget deficit.

“What we’ll be doing in the next 60 days is to submit a new balanced budget to the state,” said superintendent Robert Farrell. “We’ll make some proposals and submit those to the board. The district is facing fiscal caution.”

The levy was placed on the ballot when it became clear that the district would be operating next year with more expenses than income. School districts are required in Ohio to not only remain in the black, but to have a buffer of unused money at all times. The district now faces the possibility of state intrusion should fiscal caution turn into fiscal watch or fiscal emergency. No decision has yet been made concerning running another operating levy campaign.

“You don’t make those decisions until closer to election time,” said Farrell. “The state was waiting to see what happened in this election, and in the next two weeks they will declare us to be in fiscal caution.”