Summary of Requirements for Fiscal Emergency
This page describes the summary of requirements, the financial planning and supervision commission, and the financial recovery plan for Fiscal Emergency as became effective 4/10/01 as a result of S. B. 345.
For questions regarding any of the information provided here, please email FiscalOversight@education.ohio.gov.
When Fiscal Emergency is Declared
(Section 3316.03 (B) of Revised Code)
(1) The Auditor of State shall declare fiscal emergency when both of the following conditions exist:
(a) “An operating deficit has been certified for the current fiscal year by the Auditor of State, and the certified operating deficit exceeds 15% of the school district’s general fund revenue for the preceding fiscal year;”
(b) The voters have not approved a levy that would raise enough money in the next fiscal year to eliminate the deficit.
(2) The Auditor of State shall declare fiscal emergency if a district under fiscal watch fails to submit an acceptable recovery plan within 120 days or fails to submit an updated recovery plan when one is required.
(3) The Auditor of State shall declare fiscal emergency when both of the following conditions exist:
(a) The Director of Education and Workforce reports to the Auditor of State that a district under fiscal watch is not complying with an original or updated recovery plan and the Director of Education and Workforce determines that fiscal emergency is necessary to prevent further decline;
(b) The Auditor of State finds that the Director of Education and Workforce's determination is reasonable.
(4) The Auditor of State shall declared fiscal emergency if a district while under fiscal watch restructures debt under section 3316.04 (D) and any of the following occurs:
a) An operating deficit is certified for any year prior to repayment of the restructured loan.
b) If the Director of Education and Workforce, in consultation with Auditor of State, determines that the district is not complying with the terms of the financial recovery plan.
c) If the district fails to submit an updated recovery plan that is acceptable.
(5) The Auditor of State may declared fiscal emergency if all of the following conditions exist:
(a) “An operating deficit has been certified for the current fiscal year by the Auditor of State , and the certified deficit exceeds 10%, but does not exceed 15%, of the school district’s general fund revenue for the preceding fiscal year.”
(b) The voters have not approved a levy that would raise enough money in the next fiscal year to eliminate the deficit.
(c) “The Auditor of State determines that a declaration of fiscal emergency is necessary to correct the district’s fiscal problems and to prevent further fiscal decline.”
The Financial Planning and Supervision Commission
(Section 3316.05 of Revised Code)
Commissions appointed after July 1, 1999 shall consist of five voting members:
- Two ex officio members: The Director of the OBM (or a designee of the director);
- The Director of Education and Workforce (or a designee of the director);
- Three appointed members, Business person appointed by the Governor;
- Parent with child in the district appointed by the Director of Education and Workforce;
- Business person appointed by the mayor or county auditor.
Appointed members shall be appointed within 15 days after the declaration of fiscal emergency.
Director of Education and Workforce or designee shall serve as commission’s chairperson.
Commission elects a member to serve as vice-chair.
Commission may appoint a secretary who need not be a member of the commission.
Commission may adopt and alter bylaws and rules.
Three members of the commission constitute a quorum.
Section 3316.17 of the Revised Code gives the commission authority to remove the superintendent or treasurer.
Section 3316.07 of Revised Code
The Financial Planning and Supervision commission has the following powers:
- To review or assume responsibility for tax budgets, levy requests, appropriation measures, certificates of estimated resources, etc. to ensure a balanced budget.
- To inspect and secure copies of documents effecting district finances.
- To bring civil actions to enforce this chapter of the law.
- To implement steps to bring accounting reports and procedures into compliance with Auditor of State requirements.
- To assist or assume responsibility for terms and conditions of school debt.
- To make and enter into contracts necessary to perform its duties.
- To make recommendations and implement cost reductions and revenue increases to achieve balanced budgets and carry out the recovery plan.
- To make reductions in force to bring district’s budget into balance not withstanding any provisions to the contrary in the collective bargaining agreement.
Financial Recovery Plan for Fiscal Emergency Districts
(Section 3316.06 of Revised Code)
Within 120 days after its first meeting, the commission shall adopt a financial recovery plan.
Any recovery plan may be amended subsequent to its adoption but must be updated annually.
The Director of Education and Workforce shall review the recovery plan and either approve or disapprove it within thirty days from its submission. If the plan is disapproved, the Director of Education and Workforce shall recommend modifications that will render it acceptable.
No commission shall implement a recovery plan unless the Director of Education and Workforce approves it.
Section 3316.061 of the Revised Code
If the commission fails to submit an acceptable plan or if the Director of Education and Workforce and director of OBM find that a commission is not materially complying with the recovery plan, the two may jointly dissolve the commission and appoint a fiscal arbitrator.
Last Modified: 11/2/2023 3:38:29 PM