Summary of Requirements for Fiscal Watch

This page describes the summary of requirements for Fiscal Watch and its provisions as allowed for by Section 3316.03 (A),  Section 3316.04, and  Section 3316.041 of the Ohio Revised Code.

For questions regarding any of the information provided here, please email FiscalOversight@education.ohio.gov.

When Fiscal Watch is Declared

(Section 3316.03 (A) of Revised Code)

(1) The Auditor of State shall declare fiscal watch 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 8% 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 declared fiscal watch if a district is released from fiscal emergency but still has outstanding securities issued under section 3316.06 (A)(4). [i.e., restructured debt while under fiscal emergency]

(3) The Auditor of State shall declare fiscal watch if both of the following conditions exist;

(a) The State Superintendent finds that a district declared to be in fiscal caution “has not acted reasonably to eliminate or correct practices or conditions that prompted the declaration and has determined that a state of fiscal watch necessary to prevent further decline.”

(b) The Auditor of State determines that the decision of the State Superintendent is reasonable.

(4) The Auditor of State may declare fiscal watch 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 operating deficit exceeds 2%, but does not exceed 8% 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 there is no reasonable cause for the deficit or fiscal watch is necessary to prevent further fiscal decline.”

Financial Recovery Plan for Fiscal Watch Districts

(Section 3316.04 of Revised Code)

  • Within 60 days of the Auditor of State declaration, board shall submit a financial recovery plan to the State Superintendent.
  • Plan to eliminate current deficit and avoid future deficits.
  • State Superintendent evaluates, then accepts or rejects plan within 30 days.
  • If disapproved, State Superintendent shall recommend modifications that would make the plan acceptable.
  • No district shall implement a recovery plan unless approved by State Superintendent.
  • Upon request, the Ohio Department of Education and Auditor of State shall provide technical
    assistance.
  • May amend plan at anytime with State Superintendent approval.
  • Board must submit an updated recovery plan annually.
  • State Superintendent shall accept or reject the updated plans no later than the anniversary of the date on which the first plan was approved.

Restructuring Loans While Under Fiscal Watch

(Section 3316.041 of Revised Code)

(A) District may restructure or refinance loans if all of the following are met:

  1. Certified deficit for current or preceding year exceeds 15% of prior year’s general revenue.
  2. Voters have approved a levy while district was under fiscal watch that is not a renewal or
    replacement levy and that will provide new operating revenue.
  3. The board has adopted or amended the financial recovery plan to reflect the restructured or refinanced loans, and set forth the means by which the district will bring operating revenues and expenditures into balance.

(B) The district may issue securities to restructure or refinance loans.

  • Securities issued may extend the original repayment period up to 10 years.
  • Securities issued under this section shall be repaid in equal payments and at equal intervals.
  • Securities issued under this section are not eligible to be included in any subsequent proposal to restructure or refinance.

(C) Unless the district is placed in fiscal emergency, the district shall remain in fiscal watch for the duration of the repayment period of any loan restructured or refinanced under this section.

Last Modified: 7/14/2023 11:27:10 AM