From Ohio History Central
In 1978, the Cleveland, Ohio, Public School System nearly had to declare bankruptcy.
At that time, the Cleveland School System faced numerous difficulties that only additional funds could solve. Chief among these problems was a court order, in 1976, which demanded the school system desegregate. United States District Judge Frank J. Battisti ruled that Cleveland school officials had intentionally built schools and established school boundaries that segregated African-American students from white students. To end segregation, the school district implemented a busing program, which cost more than twelve million dollars in 1980 alone.
Partly due to the implementation of busing, many Cleveland residents moved to the suburbs, causing school enrollment to decline and the school district's tax base to diminish greatly. From 1976 to 1980, the number of students attending Cleveland's public schools declined from 123,000 to approximately 81,000. Worse, for the schools, roughly seventy percent of the remaining students received some form of public assistance, proof of a declining tax base. After Cleveland voters rejected an emergency school levy by a more than two-to-one vote in 1978, Cleveland school officials had to secure a twenty million dollar loan from Ohio's Emergency School Assistance Fund to keep the city's schools open. The school system implemented several cost-cutting measures, including reducing positions and extra-curricular activities, to help return the district to a stable financial position.