As Introduced 1
123rd General Assembly 4
Regular Session S. B. No. 345 5
1999-2000 6
SENATORS GARDNER-CUPP 8
_________________________________________________________________ 10
A B I L L
To amend sections 3315.17, 3315.18, 3316.03, 12
3316.04, 3316.06, 3316.20, 5705.13, 5705.29, and 13
5705.38 and to enact sections 3316.031 and
3316.061 of the Revised Code to address certain 14
school district mandates and to establish
additional procedures for avoiding fiscal 15
problems in school districts. 16
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 17
Section 1. That sections 3315.17, 3315.18, 3316.03, 19
3316.04, 3316.06, 3316.20, 5705.13, 5705.29, and 5705.38 be 20
amended and sections 3316.031 and 3316.061 of the Revised Code be 21
enacted to read as follows:
Sec. 3315.17. (A) The board of education of each city, 31
exempted village, local, and joint vocational school district 32
shall establish a textbook and instructional materials fund and. 33
EACH BOARD ANNUALLY shall deposit into that fund four per cent, 35
or another percentage if established in rules adopted under 36
division (C) of this section, of all AN AMOUNT DERIVED FROM 37
revenues received by the district for operating expenses THAT IS 40
EQUAL TO THREE PER CENT OF THE FORMULA AMOUNT FOR THE CURRENT 41
FISCAL YEAR, AS DEFINED IN SECTION 3317.02 OF THE REVISED CODE,
MULTIPLIED BY THE DISTRICT'S FORMULA ADM FOR THAT FISCAL YEAR, AS 42
DEFINED IN THAT SECTION. Money in the fund shall be used solely 44
for textbooks, instructional software, and instructional 45
materials, supplies, and equipment. Any money in the fund that 46
is not used in any fiscal year shall carry forward to the next 47
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fiscal year. 48
(B) Notwithstanding division (A) of this section, if in a 50
fiscal year a district board deposits in the textbook and 52
instructional materials fund an amount of money greater than the 53
amount required to be deposited by this section or the rules 54
adopted under division (C) of this section, the board may deduct 55
the excess amount of money from the amount of money required to 56
be deposited in succeeding fiscal years. 57
(C) The state superintendent of public instruction and the 60
auditor of state jointly shall adopt rules in accordance with 61
Chapter 119. of the Revised Code defining what constitutes 63
textbooks, instructional software, and instructional materials, 64
supplies, and equipment for which money in a school district's 65
textbook and instructional materials fund may be used. The 66
jointly adopted rules also may designate a percentage, other than 68
four per cent, of district operating revenues that must be
deposited into the fund. The auditor of state shall adopt rules 70
under section 117.20 of the Revised Code authorizing up to a 72
three-year phase-in period for district boards to meet the
percentage requirements of division (A) of this section, and 74
specifying the manner in which district boards may deduct from a 75
required deposit an excess amount deposited into the textbook and 76
instructional materials fund in a prior fiscal year.
(D) Notwithstanding division (A) of this section, a 79
district board of education in any fiscal year may appropriate 80
money in the district textbook and instructional materials fund 81
for purposes other than those permitted by that division if both 82
of the following occur during that fiscal year: 83
(1) All of the following certify to the district board in 85
writing that the district has sufficient textbooks, instructional 86
software, and instructional materials, supplies, and equipment to 88
ensure a thorough and efficient education within the district: 89
(a) The district superintendent; 91
(b) In districts required to have a business advisory 93
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council, a person designated by vote of the business advisory 94
council;
(c) If the district teachers are represented by an 96
exclusive bargaining representative for purposes of Chapter 4117. 98
of the Revised Code, the president of that organization or the 101
president's designee.
(2) The district board adopts, by unanimous vote of all 103
members of the board, a resolution stating that the district has 104
sufficient textbooks, instructional software, and instructional 105
materials, supplies, and equipment to ensure a thorough and 106
efficient education within the district. 107
(E)(D) Notwithstanding any provision to the contrary in 109
Chapter 4117. of the Revised Code, the requirements of this 110
section prevail over any conflicting provisions of agreements 112
between employee organizations and public employers entered into 113
on or after November 21, 1997. 114
Sec. 3315.18. (A) The board of education of each city, 123
exempted village, local, and joint vocational school district 124
shall establish a capital and maintenance fund and. EACH BOARD 126
ANNUALLY shall deposit into that fund four per cent, or another 127
percentage if established in rules adopted under division (B) of 128
this section, of all AN AMOUNT DERIVED FROM revenues received by 129
the district that would otherwise have been deposited in the 131
general fund THAT IS EQUAL TO THREE PER CENT OF THE FORMULA 132
AMOUNT FOR THE CURRENT FISCAL YEAR, AS DEFINED IN SECTION 3317.02 133
OF THE REVISED CODE, MULTIPLIED BY THE DISTRICT'S FORMULA ADM FOR 134
THAT FISCAL YEAR, AS DEFINED IN THAT SECTION, except that money 136
received from a permanent improvement levy authorized by section 137
5705.21 of the Revised Code may replace general revenue moneys in 138
meeting the requirements of this section. Money in the fund 139
shall be used solely for acquisition, replacement, enhancement, 140
maintenance, or repair of permanent improvements, as that term is 141
defined in section 5705.01 of the Revised Code. Any money in the 142
fund that is not used in any fiscal year shall carry forward to 143
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the next fiscal year. 144
(B) The state superintendent of public instruction and the 147
auditor of state jointly shall adopt rules in accordance with 148
Chapter 119. of the Revised Code defining what constitutes
expenditures permitted by division (A) of this section and may 149
designate a percentage, other than four per cent, of district 150
operating revenues that must be deposited into the fund. The 152
auditor of state shall adopt rules under section 117.20 of the
Revised Code authorizing up to a three-year phase-in period for 154
district boards to meet the percentage requirements of division 155
(A) of this section. 156
(C) Notwithstanding any provision to the contrary in 158
Chapter 4117. of the Revised Code, the requirements of this 159
section prevail over any conflicting provisions of agreements 160
between employee organizations and public employers entered into 161
after the effective date of this section NOVEMBER 21, 1997. 162
Sec. 3316.03. (A) The existence of a fiscal watch shall 172
be determined DECLARED by the auditor of state. The auditor of 174
state may make the A determination on the auditor of state's 175
initiative, or upon receipt of a written request for such a 176
determination, which may be filed by the governor, the 177
superintendent of public instruction, or a majority of the 178
members of the board of education of the school district. The 180
auditor of state shall declare a school district to be in a state 181
of fiscal watch if the auditor of state determines that division 182
(A)(1), (2), or (3) of this section applies to the school 183
district:
(1) All of the following conditions are satisfied with 185
respect to the school district: 186
(a) An operating deficit has been certified for the 188
current fiscal year by the auditor of state, and the certified 189
operating deficit exceeds eight TWO per cent of the school 190
district's general fund revenue for the preceding fiscal year, 192
UNLESS THE AUDITOR OF STATE, IN CONSULTATION WITH THE
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SUPERINTENDENT OF PUBLIC INSTRUCTION, FINDS THAT THERE IS 193
REASONABLE CAUSE FOR THE DEFICIT BUT IN NO CASE MAY THE AUDITOR 194
OF STATE EXCUSE ANY DEFICIT OF FIVE PER CENT OR GREATER; 195
(b) The unencumbered cash balance in the school district's 198
general fund at the close of the preceding fiscal year, less any 199
advances of property taxes, was less than eight per cent THE SAME 200
PERCENTAGE of the expenditures made from the general fund for the 201
preceding fiscal year AS THE PERCENTAGE THE DEFICIT CERTIFIED IN 202
DIVISION (A)(1)(a) OF THIS SECTION IS OF THE DISTRICT'S GENERAL 204
FUND REVENUE FOR THE PRECEDING FISCAL YEAR;
(c) A majority of the voting electors have not voted in 206
favor of levying a tax under section 5705.194 or 5705.21 or 208
Chapter 5748. of the Revised Code that the auditor of state 209
expects will raise enough additional revenue in the next 210
succeeding fiscal year that divisions (A)(1)(a) and (b) of this 211
section will not apply to the district in such next succeeding 212
fiscal year.
(2) The school district has outstanding securities issued 214
under division (A)(4) of section 3316.06 of the Revised Code, and 215
its financial planning and supervision commission has been 217
terminated under section 3316.16 of the Revised Code. 218
(3) The school district has received an advancement under 220
section 3316.20 of the Revised Code. BOTH OF THE FOLLOWING 221
CONDITIONS ARE SATISFIED: 222
(a) THE SUPERINTENDENT OF PUBLIC INSTRUCTION HAS DECLARED 224
THE DISTRICT UNDER SECTION 3316.031 OF THE REVISED CODE TO BE 225
UNDER A FISCAL CAUTION, HAS FOUND THAT THE DISTRICT HAS NOT OR 226
WILL NOT COMPLY WITH THE RECOMMENDATIONS THE SUPERINTENDENT 227
PROVIDED UNDER THAT SECTION, AND HAS NOTIFIED THE AUDITOR OF 228
STATE TO DECLARE A STATE OF FISCAL WATCH FOR THE DISTRICT.
(b) THE AUDITOR OF STATE DETERMINES THAT THE DECISION OF 231
THE SUPERINTENDENT IS NOT ARBITRARY OR CAPRICIOUS.
(B) The auditor of state, after consulting with the 233
superintendent of public instruction, shall issue an order 234
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declaring a school district to be in a state of fiscal emergency 236
if the auditor of state determines that division (B)(1), (2), 237
(3), or (4) of this section applies to the school district: 238
(1) All BOTH of the following conditions are satisfied 240
with respect to the school district: 242
(a) The board of education of the school district is not 244
able to demonstrate, to the auditor of state's satisfaction, the 245
district's ability to repay outstanding loans received pursuant 246
to section 3313.483 of the Revised Code or to repay securities 247
issued pursuant to section 133.301 of the Revised Code in 248
accordance with applicable repayment schedules unless the board 249
requests additional loans under section 133.301 of the Revised 251
Code in an aggregate principal amount exceeding fifty per cent of 252
the sum of the following: 253
(i) The aggregate original principal amount of loans 256
received in the preceding fiscal year under section 3313.483 of 257
the Revised Code;
(ii) The aggregate amount borrowed by the district under 259
section 133.301 of the Revised Code, excluding any additional 261
amount borrowed as authorized under division (C) of that section. 262
(b) An operating deficit has been certified for the 264
current fiscal year by the auditor of state, and the certified 265
operating deficit exceeds fifteen FIVE per cent of the school 266
district's general fund revenue for the preceding fiscal year, 267
UNLESS THE AUDITOR OF STATE, IN CONSULTATION WITH THE 268
SUPERINTENDENT OF PUBLIC INSTRUCTION FINDS THAT THERE IS 269
REASONABLE CAUSE FOR THE DEFICIT BUT IN NO CASE MAY THE AUDITOR 270
OF STATE EXCUSE ANY DEFICIT OF EIGHT PER CENT OR GREATER. In 272
determining the amount of an operating deficit under division
(B)(1)(b) of this section, the auditor of state shall credit 274
toward the amount of that deficit only the amount that may be 275
borrowed from the spending reserve balance as determined under 276
section 133.301 and division (F) of section 5705.29 of the 277
Revised Code.
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(c)(b) A majority of the voting electors have not voted in 279
favor of levying a tax under section 5705.194 or 5705.21 or 281
Chapter 5748. of the Revised Code that the auditor of state 282
expects will raise enough additional revenue in the next 283
succeeding fiscal year that divisions DIVISION (A)(1)(a) and (b) 284
of this section will not apply to the district in such next 285
succeeding fiscal year.
(d) The school district is one that, at the time of the 287
auditor of state's determination under this section, had a total 289
student count of more than ten thousand students as most recently 290
determined by the department of education pursuant to section 292
3317.03 of the Revised Code. 293
(2) The school district board fails, pursuant to section 296
3316.04 of the Revised Code, to submit a plan acceptable to the 297
state superintendent of public instruction within one hundred 298
twenty days of the auditor of state's declaration under division 299
(A) of this section; 300
(3) BOTH OF THE FOLLOWING CONDITIONS ARE SATISFIED: 303
(a) THE SUPERINTENDENT OF PUBLIC INSTRUCTION HAS 305
DETERMINED AND REPORTED TO THE AUDITOR OF STATE THAT THE DISTRICT 307
HAS NOT SUBMITTED UNDER SECTION 3316.04 OF THE REVISED CODE A 308
FINANCIAL PLAN THAT IS ACCEPTABLE TO THE SUPERINTENDENT OR IS NOT 309
MATERIALLY COMPLYING WITH THE PROVISIONS OF THE PLAN AS APPROVED 310
BY THE STATE SUPERINTENDENT UNDER THAT SECTION. 311
(b) THE AUDITOR OF STATE FINDS THAT THE DETERMINATION OF 314
THE SUPERINTENDENT IS NOT ARBITRARY OR CAPRICIOUS. 315
(4) A declaration of fiscal emergency is required by 318
division (D) of section 3316.04 of the Revised Code; 319
(4)(5) The school district has received more than one ANY 322
advancement THAT REQUIRES REPAYMENT under section 3316.20 of the 323
Revised Code within a two-year period, or has received only one 325
such advancement but also has an operating deficit as described
in division (B)(1)(b) of this section. 326
(C) In making the determinations under this section, the 328
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auditor of state may use financial reports required under section 329
117.43 of the Revised Code; tax budgets, certificates of 331
estimated resources and amendments thereof, annual appropriating 332
measures and spending plans, and any other documents or 333
information prepared pursuant to Chapter 5705. of the Revised 334
Code; and any other documents, records, or information available 335
to the auditor of state that indicate the conditions described in 336
divisions (A) and (B) of this section.
(D) The auditor of state shall certify the action taken 338
under division (A) or (B) of this section to the board of 339
education of the school district, the director of budget and 340
management, the mayor or county auditor who could be required to 341
act pursuant to division (B)(1) of section 3316.05 of the Revised
Code, and to the superintendent of public instruction. 342
(E) A determination by the auditor of state under this 344
section that a fiscal emergency condition does not exist is final 345
and conclusive and not appealable. A determination by the 346
auditor of state under this section that a fiscal emergency 347
exists is final, except that the board of education of the school 348
district affected by such a determination may appeal the
determination of the existence of a fiscal emergency condition to 349
the court of appeals having territorial jurisdiction over the 350
school district. The appeal shall be heard expeditiously by the 351
court of appeals and for good cause shown shall take precedence 352
over all other civil matters except earlier matters of the same 353
character. Notice of such appeal must be filed with the auditor
of state and such court within thirty days after certification by 354
the auditor of state to the board of education of the school 355
district provided for in division (D) of this section. In such 356
appeal, determinations of the auditor of state shall be presumed 357
to be valid and the board of education shall have the burden of 358
proving, by clear and convincing evidence, that each of the 359
determinations made by the auditor of state as to the existence
of a fiscal emergency condition under this section was in error. 360
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If the board of education fails, upon presentation of its case, 361
to prove by clear and convincing evidence that each such 362
determination by the auditor of state was in error, the court 363
shall dismiss the appeal. The board of education and the auditor 364
of state may introduce any evidence relevant to the existence or
nonexistence of such fiscal emergency conditions. The pendency 365
of any such appeal shall not affect or impede the operations of 366
this chapter; no restraining order, temporary injunction, or 367
other similar restraint upon actions consistent with this chapter 368
shall be imposed by the court or any court pending determination 369
of such appeal; and all things may be done under this chapter 370
that may be done regardless of the pendency of any such appeal.
Any action taken or contract executed pursuant to this chapter 371
during the pendency of such appeal is valid and enforceable among 372
all parties, notwithstanding the decision in such appeal. If the 373
court of appeals reverses the determination of the existence of a 374
fiscal emergency condition by the auditor of state, the 375
determination no longer has any effect, and any procedures 376
undertaken as a result of the determination shall be terminated. 377
Sec. 3316.031. THE STATE SUPERINTENDENT OF PUBLIC 379
INSTRUCTION, IN CONSULTATION WITH THE AUDITOR OF STATE, SHALL 380
DEVELOP GUIDELINES FOR IDENTIFYING FISCAL PRACTICES AND BUDGETARY 381
CONDITIONS THAT, IF UNCORRECTED, COULD RESULT IN A FUTURE 383
DECLARATION OF A FISCAL WATCH OR FISCAL EMERGENCY WITHIN A SCHOOL 384
DISTRICT.
IF THE STATE SUPERINTENDENT DETERMINES FROM A SCHOOL 386
DISTRICT'S FIVE YEAR FORECAST SUBMITTED UNDER SECTION 5705.391 OF 387
THE REVISED CODE THAT A DISTRICT IS ENGAGING IN ANY OF THOSE 388
PRACTICES OR THAT ANY OF THOSE CONDITIONS EXIST WITHIN THE 389
DISTRICT, THE STATE SUPERINTENDENT MAY DECLARE THE DISTRICT TO BE 390
UNDER A FISCAL CAUTION. IF THE AUDITOR OF STATE FINDS THAT A 391
DISTRICT IS ENGAGING IN ANY OF THOSE PRACTICES OR THAT ANY OF 392
THOSE CONDITIONS EXIST WITHIN THE DISTRICT, THE AUDITOR OF STATE 393
SHALL REPORT THAT FINDING TO THE STATE SUPERINTENDENT AND THE 394
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STATE SUPERINTENDENT MAY DECLARE THE DISTRICT TO BE UNDER A 395
FISCAL CAUTION.
WHEN THE STATE SUPERINTENDENT DECLARES A DISTRICT TO BE 397
UNDER FISCAL CAUTION, THE STATE SUPERINTENDENT SHALL PROMPTLY 398
NOTIFY THE DISTRICT BOARD OF EDUCATION OF THAT DECLARATION AND 399
SHALL PROVIDE THE BOARD WITH WRITTEN RECOMMENDATIONS FOR 400
DISCONTINUING OR CORRECTING THE FISCAL PRACTICES OR BUDGETARY 401
CONDITIONS THAT PROMPTED THE DECLARATION AND FOR PREVENTING THE 402
DISTRICT FROM EXPERIENCING FURTHER FISCAL DIFFICULTIES THAT COULD 403
RESULT IN THE DISTRICT BEING DECLARED TO BE IN A STATE OF FISCAL 404
WATCH OR FISCAL EMERGENCY.
THE STATE SUPERINTENDENT MAY APPOINT A MONITOR TO INSPECT 406
AND VISIT ANY DISTRICT THAT IS DECLARED TO BE UNDER A FISCAL 407
CAUTION. THE MONITOR SHALL REVIEW THE RECOMMENDATIONS PROVIDED 408
TO THE DISTRICT BOARD TO DISCONTINUE OR CORRECT THE FISCAL 409
PRACTICES OR BUDGETARY CONDITIONS, SHALL PROVIDE ASSISTANCE TO 410
THE BOARD IN COMPLYING WITH THE RECOMMENDATIONS, SHALL MONITOR 411
THE DISTRICT'S PROGRESS IN COMPLYING WITH THE RECOMMENDATIONS, 412
AND SHALL REPORT THE DISTRICT'S PROGRESS TO THE STATE 413
SUPERINTENDENT.
IF THE STATE SUPERINTENDENT FINDS THAT A SCHOOL DISTRICT 415
DECLARED TO BE UNDER A FISCAL CAUTION HAS NOT OR WILL NOT COMPLY 416
WITH THE STATE SUPERINTENDENT'S RECOMMENDATIONS FOR DISCONTINUING 417
OR CORRECTING THE FISCAL PRACTICES OR BUDGETARY CONDITIONS, AND 418
IF THE STATE SUPERINTENDENT CONSIDERS IT NECESSARY TO AVOID 419
FURTHER FISCAL DECLINE, THE STATE SUPERINTENDENT MAY DETERMINE 421
THAT THE DISTRICT SHOULD BE IN A STATE OF FISCAL WATCH. THE 422
AUDITOR OF STATE SHALL DECLARE THE DISTRICT IN A STATE OF FISCAL 423
WATCH UNLESS THE AUDITOR FINDS THE SUPERINTENDENT'S DETERMINATION 424
TO BE ARBITRARY AND CAPRICIOUS.
Sec. 3316.04. (A) Within sixty days of the auditor's 433
declaration under division (A) of section 3316.03 of the Revised 435
Code, the board of education of the school district shall prepare 436
and submit to the superintendent of public instruction a 437
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financial plan delineating the steps the board will take to
eliminate the district's current operating deficit and avoid 438
incurring operating deficits in ensuing years, including the 439
implementation of spending reductions. The superintendent of 440
public instruction shall evaluate the initial financial plan, and 441
either approve or disapprove it within thirty calendar days from 442
the date of its submission. If the initial financial plan is 443
disapproved, the state superintendent shall recommend
modifications that will render the financial plan acceptable. No 444
school district board shall implement a financial plan submitted 445
to the superintendent of public instruction under this section 446
unless the superintendent has approved the plan. 447
IF A DISTRICT FAILS TO SUBMIT A FINANCIAL PLAN UNDER THIS 449
SECTION THAT IS ACCEPTABLE TO THE STATE SUPERINTENDENT OR IF THE 450
STATE SUPERINTENDENT FINDS THAT THE DISTRICT IS NOT MATERIALLY 451
COMPLYING WITH THE PROVISIONS OF THE PLAN AS APPROVED BY THE 452
STATE SUPERINTENDENT, AND IF THE STATE SUPERINTENDENT CONSIDERS 453
IT APPROPRIATE, THE STATE SUPERINTENDENT MAY DETERMINE THAT THE 455
DISTRICT SHOULD BE DECLARED TO BE IN A STATE OF FISCAL EMERGENCY. 456
THE AUDITOR OF STATE SHALL DECLARE THE DISTRICT IN A STATE OF
FISCAL EMERGENCY UNLESS THE AUDITOR FINDS THE SUPERINTENDENT'S 457
DECISION TO BE ARBITRARY AND CAPRICIOUS. 458
(B) Upon request of the board of education of a school 460
district declared to be in a state of fiscal watch, the auditor 462
of state and superintendent of public instruction shall provide 463
technical assistance to the board in resolving the fiscal 464
problems that gave rise to the declaration, including assistance
in drafting the board's financial plan. 465
(C) A financial plan adopted under this section may be 467
amended at any time with the approval of the superintendent. The 469
board of education of the school district shall submit an updated 470
financial plan to the superintendent, for the superintendent's 471
approval, every year that the district is in a state of fiscal 472
watch. The updated plan shall be submitted in a form acceptable 473
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to the superintendent. The superintendent shall approve or
disapprove each updated plan no later than the anniversary of the 474
date on which the first such plan was approved. 476
(D) A school district that has restructured or refinanced 479
a loan under section 3316.041 of the Revised Code shall be 481
declared to be in a state of fiscal emergency if any of the 482
following occurs: 483
(1) An operating deficit is certified for the district 485
under section 3313.483 of the Revised Code for any year prior to 488
the repayment of the restructured or refinanced loan; 489
(2) The superintendent determines, in consultation with 492
the auditor of state, that the school district is not
satisfactorily complying with the terms of the financial plan 493
required by this section; 494
(3) The board of education of the school district fails to 497
submit an updated plan that is acceptable to the superintendent 498
under division (C) of this section. 499
Sec. 3316.06. (A) Within one hundred twenty days after 508
the first meeting of a school district financial planning and 509
supervision commission, the commission shall adopt a financial 510
recovery plan regarding the school district for which the 511
commission was created. During the formulation of the plan, the 512
commission shall seek appropriate input from the school district 513
board and from the community. This plan shall contain the
following:
(1) Actions to be taken to: 515
(a) Eliminate all fiscal emergency conditions declared to 518
exist pursuant to division (B) of section 3316.03 of the Revised
Code;
(b) Satisfy any judgments, past-due accounts payable, and 520
all past-due and payable payroll and fringe benefits; 521
(c) Eliminate the deficits in all deficit funds; 523
(d) Restore to special funds any moneys from such funds 525
that were used for purposes not within the purposes of such 527
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funds, or borrowed from such funds by the purchase of debt 528
obligations of the school district with the moneys of such funds, 529
or missing from the special funds and not accounted for, if any; 530
(e) Balance the budget, avoid future deficits in any 532
funds, and maintain on a current basis payments of payroll, 533
fringe benefits, and all accounts; 534
(f) Avoid any fiscal emergency condition in the future; 536
(g) Restore the ability of the school district to market 538
long-term general obligation bonds under provisions of law 539
applicable to school districts generally. 540
(2) The management structure that will enable the school 542
district to take the actions enumerated in division (A)(1) of 543
this section. The plan shall specify the level of fiscal and 544
management control that the commission will exercise within the 545
school district during the period of fiscal emergency, and shall 546
enumerate respectively, the powers and duties of the commission 547
and the powers and duties of the school board during that period. 548
The commission may elect to assume any of the powers and duties
of the school board it considers necessary, including all powers 549
related to personnel, curriculum, and legal issues in order to 550
successfully implement the actions described in division (A)(1) 551
of this section.
(3) The target dates for the commencement, progress upon, 554
and completion of the actions enumerated in division (A)(1) of 555
this section and a reasonable period of time expected to be 556
required to implement the plan. The commission shall prepare a
reasonable time schedule for progress toward and achievement of 558
the requirements for the plan, and the plan shall be consistent 559
with that time schedule.
(4) The amount and purpose of any issue of debt 561
obligations that will be issued, together with assurances that 562
any such debt obligations that will be issued will not exceed 563
debt limits supported by appropriate certifications by the fiscal 564
officer of the school district and the county auditor. Debt 565
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obligations issued pursuant to section 133.301 of the Revised 566
Code shall include assurances that such debt shall be in an 567
amount not to exceed the amount certified under division (B) of 568
such section. If the commission considers it necessary in order 571
to maintain or improve educational opportunities of pupils in the 572
school district, the plan may include a proposal to restructure
or refinance outstanding debt obligations incurred by the board 573
under section 3313.483 of the Revised Code contingent upon the 575
approval, during the period of the fiscal emergency, by district
voters of a tax levied under section 718.09, 718.10, 5705.194, 576
5705.21, 5748.02, or 5748.08 of the Revised Code, that is not a 578
renewal or replacement levy and that will provide new operating 579
revenue. Notwithstanding any provision of Chapter 133. or 581
sections 3313.483 to 3313.4811 of the Revised Code, following the 582
required approval of the district voters and with the approval of 583
the commission, the school district may issue securities to 584
evidence the restructuring or refinancing. Those securities may 585
extend the original period for repayment, not to exceed ten 586
years, and may alter the frequency and amount of repayments, 588
interest or other financing charges, and other terms of 589
agreements under which the debt originally was contracted, at the 590
discretion of the commission, provided that any loans received 591
pursuant to section 3313.483 of the Revised Code shall be paid 592
from funds the district would otherwise receive under sections
3317.022 to 3317.025 of the Revised Code, as required under 593
division (E)(3) of section 3313.483 of the Revised Code. The 594
securities issued for the purpose of restructuring or refinancing 595
the debt shall be repaid in equal payments and at equal intervals 596
over the term of the debt and are not eligible to be included in 597
any subsequent proposal for the purpose of restructuring or
refinancing debt under this section. 598
(B) Any financial recovery plan may be amended subsequent 600
to its adoption. Each financial recovery plan shall be updated 601
annually.
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(C) EACH SCHOOL DISTRICT FINANCIAL PLANNING AND 603
SUPERVISION COMMISSION SHALL SUBMIT THE FINANCIAL RECOVERY PLAN 604
IT ADOPTS OR UPDATES UNDER THIS SECTION TO THE STATE 605
SUPERINTENDENT OF PUBLIC INSTRUCTION FOR APPROVAL IMMEDIATELY 606
FOLLOWING ITS ADOPTION OR UPDATING. THE STATE SUPERINTENDENT 607
SHALL EVALUATE THE PLAN AND EITHER APPROVE OR DISAPPROVE IT 608
WITHIN THIRTY CALENDAR DAYS FROM THE DATE OF ITS SUBMISSION. IF 609
THE PLAN IS DISAPPROVED, THE STATE SUPERINTENDENT SHALL RECOMMEND 610
MODIFICATIONS THAT WILL RENDER IT ACCEPTABLE. NO FINANCIAL 611
PLANNING AND SUPERVISION COMMISSION SHALL IMPLEMENT A FINANCIAL 612
RECOVERY PLAN THAT IS ADOPTED OR UPDATED ON OR AFTER THE 613
EFFECTIVE DATE OF THIS AMENDMENT UNLESS THE STATE SUPERINTENDENT 614
HAS APPROVED IT. 615
Sec. 3316.061. IF ANY SCHOOL DISTRICT FINANCIAL PLANNING 617
AND SUPERVISION COMMISSION FAILS TO SUBMIT TO THE STATE 618
SUPERINTENDENT OF PUBLIC INSTRUCTION UNDER SECTION 3316.06 OF THE 619
REVISED CODE A FINANCIAL RECOVERY PLAN THAT IS ACCEPTABLE TO THE 621
STATE SUPERINTENDENT OR IF THE STATE SUPERINTENDENT AND THE 622
AUDITOR OF STATE FIND THAT A COMMISSION IS NOT MATERIALLY 624
COMPLYING WITH THE PROVISIONS OF ITS FINANCIAL RECOVERY PLAN, THE 625
STATE SUPERINTENDENT AND THE AUDITOR OF STATE MAY JOINTLY 627
DISSOLVE THE FINANCIAL PLANNING AND SUPERVISION COMMISSION AND 628
JOINTLY APPOINT AN INDIVIDUAL TO ACT AS THE FISCAL ARBITRATOR OF 629
THE DISTRICT.
WHEN A FINANCIAL PLANNING AND SUPERVISION COMMISSION IS 632
DISSOLVED UNDER THIS SECTION, THE COMMISSION CEASES TO EXIST AND 633
THE APPOINTED FISCAL ARBITRATOR BECOMES THE SUCCESSOR TO THE 634
COMMISSION. A FISCAL ARBITRATOR APPOINTED UNDER THIS SECTION HAS 635
ALL OF THE RIGHTS, POWERS, AND DUTIES GIVEN BY THIS CHAPTER TO 636
THE COMMISSION THAT THE ARBITRATOR SUCCEEDS. A REFERENCE IN ANY 637
STATUTE, RULE, CONTRACT, OR OTHER DOCUMENT TO A SCHOOL DISTRICT 638
FINANCIAL PLANNING AND SUPERVISION COMMISSION IS DEEMED TO REFER 639
TO A FISCAL ARBITRATOR APPOINTED UNDER THIS SECTION. 640
BUSINESS COMMENCED BUT NOT COMPLETED BY A COMMISSION WHEN 642
16
IT IS DISSOLVED UNDER THIS SECTION SHALL BE COMPLETED BY THE 643
APPOINTED FISCAL ARBITRATOR WITH THE SAME EFFECT AS IF COMPLETED 644
BY THE COMMISSION. NO VALIDATION, CURE, RIGHT, PRIVILEGE, 645
REMEDY, OBLIGATION, OR LIABILITY IS LOST OR IMPAIRED BY REASON OF 646
THE DISSOLUTION OF THE COMMISSION AND APPOINTMENT OF A FISCAL 647
ARBITRATOR, BUT SHALL BE ADMINISTERED BY THE ARBITRATOR. 648
Sec. 3316.20. (A)(1) The school district solvency 657
assistance fund is hereby created in the state treasury, to 658
consist of such amounts designated for the purposes of the fund 659
by the general assembly. The fund shall be used to make 660
advancements AND GRANTS to school districts to enable them to
remain solvent and to pay unforseeable expenses of a temporary or 662
emergency nature that they are unable to pay from existing 663
resources.
Advancements AND GRANTS shall be made from the fund by the 665
superintendent of public instruction in accordance with rules 667
jointly adopted by the superintendent and the auditor of state 668
specifying advancement approval criteria and procedures necessary 669
for administering the fund.
(2) THERE IS HEREBY CREATED WITHIN THE FUND AN ACCOUNT 671
KNOWN AS THE SCHOOL DISTRICT SHARED RESOURCE ACCOUNT, WHICH SHALL 672
CONSIST OF MONEY APPROPRIATED TO IT BY THE GENERAL ASSEMBLY. THE 673
MONEY IN THE ACCOUNT SHALL BE USED SOLELY FOR ADVANCEMENTS TO 674
SCHOOL DISTRICTS. 675
(3) THERE IS HEREBY CREATED WITHIN THE FUND AN ACCOUNT 677
KNOWN AS THE CATASTROPHIC EXPENDITURES ACCOUNT, WHICH SHALL 678
CONSIST OF MONEY APPROPRIATED TO THE ACCOUNT BY THE GENERAL 679
ASSEMBLY PLUS ALL INVESTMENT EARNINGS OF THE FUND. MONEY IN THE 680
ACCOUNT SHALL BE USED SOLELY FOR ADVANCEMENTS TO SCHOOL DISTRICTS 681
IN THE EVENT THAT ALL MONEY IN THE SHARED RESOURCE ACCOUNT IS 682
UTILIZED FOR ADVANCEMENTS OR FOR GRANTS TO SCHOOL DISTRICTS UNDER 684
DIVISION (B) OF THIS SECTION.
(4) The fund shall be reimbursed for any amounts advanced 686
not later than the end of the second fiscal year following the 688
17
fiscal year in which the advancement was made. If not made 689
directly by the school district, such reimbursement shall be made 691
by the director of budget and management from the amounts the 693
school district would otherwise receive pursuant to sections 694
3317.022 to 3317.025 of the Revised Code, or from any other funds 696
appropriated for the district by the general assembly. 697
REIMBURSEMENTS SHALL BE CREDITED TO THE RESPECTIVE ACCOUNT FROM
WHICH THE ADVANCEMENT PAID TO THE DISTRICT WAS DEDUCTED. 698
(B) THE SUPERINTENDENT OF PUBLIC INSTRUCTION AND THE 700
DIRECTOR OF BUDGET AND MANAGEMENT, WITH THE APPROVAL OF THE 701
CONTROLLING BOARD, JOINTLY MAY GRANT MONEY FROM THE CATASTROPHIC 702
EXPENDITURES ACCOUNT TO ANY SCHOOL DISTRICT THAT SUFFERS AN 703
UNPLANNED CATASTROPHIC EVENT THAT SEVERELY DEPLETES THE 704
DISTRICT'S FINANCIAL RESOURCES AS DETERMINED BY THE 705
SUPERINTENDENT AND DIRECTOR. A SCHOOL DISTRICT SHALL NOT BE 706
REQUIRED TO REPAY ANY GRANT AWARDED TO THE DISTRICT UNDER THIS 707
DIVISION UNLESS THE DISTRICT RECEIVES MONEY FROM A THIRD PARTY, 708
INCLUDING AN AGENCY OF THE GOVERNMENT OF THE UNITED STATES, 709
SPECIFICALLY FOR THE PURPOSE OF COMPENSATING THE DISTRICT FOR 710
EXPENSES INCURRED AS A RESULT OF THE UNPLANNED CATASTROPHIC 711
EVENT.
Sec. 5705.13. (A) Except as otherwise provided for a 720
board of education under division (H) of section 5705.29 of the 721
Revised Code, a A taxing authority of a subdivision, by 723
resolution or ordinance, may establish a reserve balance account 725
to accumulate currently available resources for any of the 726
following purposes:
(1) To stabilize subdivision budgets against cyclical 728
changes in revenues and expenditures; 729
(2) Except as otherwise provided by this section, to 731
provide for the payment of claims under a self-insurance program 732
for the subdivision, if the subdivision is permitted by law to 733
establish such a program;
(3) To provide for the payment of claims under a 735
18
retrospective ratings plan for workers' compensation. 736
The ordinance or resolution establishing a reserve balance 738
account shall state the purpose for which the reserve balance 739
account is established, the fund in which the account is to be 740
established, and the total amount of money to be reserved in the 741
account.
A subdivision that participates in a risk-sharing pool, by 743
which governments pool risks and funds and share in the costs of 744
losses, shall not establish a reserve balance account to provide 745
self-insurance for the subdivision. 746
A taxing authority of a subdivision shall not have more 748
than three reserve balance accounts at any time. Not more than 750
one reserve balance account may be established for each of the 751
purposes permitted under this section. Money to the credit of a 752
reserve balance account may be expended only for the purpose for 753
which the account was established.
A reserve balance account established for the purpose 755
described in division (A)(1) of this section shall be established 756
in the general fund of the subdivision, and the amount of money 757
to be reserved in that account in any fiscal year shall not 758
exceed five per cent of the general fund revenue for the 759
preceding fiscal year. Subject to division (G) of section 760
5705.29 of the Revised Code, any reserve balance in an account 761
established under division (A)(1) of this section shall not be 762
considered part of the unencumbered balance or revenue of the 763
subdivision under division (A) of section 5705.35 or division 764
(A)(1) of section 5705.36 of the Revised Code. 765
At any time, a taxing authority of a subdivision, by 767
resolution or ordinance, may reduce or eliminate the reserve 769
balance in a reserve balance account established for the purpose 770
described in division (A)(1) of this section. 771
A reserve balance account established for the purpose 773
described in division (A)(2) or (3) of this section shall be 774
established in the general fund of the subdivision or by the 776
19
establishment of a separate internal service fund established to 777
account for the operation of the self-insurance or retrospective 778
ratings plan program, and shall be based on sound actuarial 779
principles. The total amount of money in a reserve balance 780
account for self-insurance may be expressed in dollars or as the 781
amount determined to represent an adequate reserve according to 782
sound actuarial principles. 783
A taxing authority of a subdivision, by resolution or 785
ordinance, may rescind a reserve balance account established 786
under this division. If a reserve balance account is rescinded, 787
money that has accumulated in the account shall be transferred to 788
the fund or funds from which the money originally was 789
transferred.
(B) A taxing authority of a subdivision, by resolution or 791
ordinance, may establish a special revenue fund for the purpose 792
of accumulating resources for the payment of accumulated sick 793
leave and vacation leave, and for payments in lieu of taking 794
compensatory time off, upon the termination of employment or the 795
retirement of officers and employees of the subdivision. The 796
special revenue fund may also accumulate resources for payment of 797
salaries during any fiscal year when the number of pay periods
exceeds the usual and customary number of pay periods. 798
Notwithstanding sections 5705.14, 5705.15, and 5705.16 of the 799
Revised Code, the taxing authority, by resolution or ordinance, 800
may transfer money to the special revenue fund from any other 802
fund of the subdivision from which such payments may lawfully be 803
made. The taxing authority, by resolution or ordinance, may 804
rescind a special revenue fund established under this division.
If a special revenue fund is rescinded, money that has 805
accumulated in the fund shall be transferred to the fund or funds 806
from which the money originally was transferred. 807
(C) A taxing authority of a subdivision, by resolution or 809
ordinance, may establish a capital projects fund for the purpose 810
of accumulating resources for the acquisition, construction, or 811
20
improvement of fixed assets of the subdivision. For the purposes 812
of this section, "fixed assets" includes motor vehicles. More 813
than one capital projects fund may be established and may exist 814
at any time. The ordinance or resolution shall identify the 815
source of the money to be used to acquire, construct, or improve
the fixed assets identified in the resolution or ordinance, the 816
amount of money to be accumulated for that purpose, the period of 817
time over which that amount is to be accumulated, and the fixed 818
assets that the taxing authority intends to acquire, construct, 819
or improve with the money to be accumulated in the fund. 820
A taxing authority of a subdivision shall not accumulate 822
money in a capital projects fund for more than five years after 824
the resolution or ordinance establishing the fund is adopted. If 825
the subdivision has not entered into a contract for the 826
acquisition, construction, or improvement of fixed assets for 827
which money was accumulated in such a fund before the end of that 828
five-year period, the fiscal officer of the subdivision shall 829
transfer all money in the fund to the fund or funds from which
that money originally was transferred or the fund that originally 830
was intended to receive the money. 831
A taxing authority of a subdivision, by resolution or 833
ordinance, may rescind a capital projects fund. If a capital 835
projects fund is rescinded, money that has accumulated in the 836
fund shall be transferred to the fund or funds from which the 837
money originally was transferred.
Notwithstanding sections 5705.14, 5705.15, and 5705.16 of 839
the Revised Code, the taxing authority of a subdivision, by 840
resolution or ordinance, may transfer money to the capital 842
projects fund from any other fund of the subdivision that may
lawfully be used for the purpose of acquiring, constructing, or 844
improving the fixed assets identified in the resolution or 845
ordinance.
Sec. 5705.29. The tax budget shall present the following 854
information in such detail as is prescribed by the auditor of 855
21
state, unless an alternative form of the budget is permitted 856
under section 5705.281 of the Revised Code: 857
(A)(1) A statement of the necessary current operating 859
expenses for the ensuing fiscal year for each department and 860
division of the subdivision, classified as to personal services 861
and other expenses, and the fund from which such expenditures are 862
to be made. Except in the case of a school district, this 863
estimate may include a contingent expense not designated for any 864
particular purpose, and not to exceed three per cent of the total 865
amount of appropriations for current expenses. In the case of a 866
school district, this estimate may include a contingent expense 867
not designated for any particular purpose and not to exceed 868
thirteen per cent of the total amount of appropriations for 869
current expenses. 870
(2) A statement of the expenditures for the ensuing fiscal 872
year necessary for permanent improvements, exclusive of any 873
expense to be paid from bond issues, classified as to the 874
improvements contemplated by the subdivision and the fund from 875
which such expenditures are to be made; 876
(3) The amounts required for the payment of final 878
judgments; 879
(4) A statement of expenditures for the ensuing fiscal 881
year necessary for any purpose for which a special levy is 882
authorized, and the fund from which such expenditures are to be 883
made; 884
(5) Comparative statements, so far as possible, in 886
parallel columns of corresponding items of expenditures for the 887
current fiscal year and the two preceding fiscal years. 888
(B)(1) An estimate of receipts from other sources than the 890
general property tax during the ensuing fiscal year, which shall 891
include an estimate of unencumbered balances at the end of the 892
current fiscal year, and the funds to which such estimated 893
receipts are credited; 894
(2) The amount each fund requires from the general 896
22
property tax, which shall be the difference between the 897
contemplated expenditure from the fund and the estimated 898
receipts, as provided in this section. The section of the 899
Revised Code under which the tax is authorized shall be set 900
forth. 901
(3) Comparative statements, so far as possible, in 903
parallel columns of taxes and other revenues for the current 904
fiscal year and the two preceding fiscal years. 905
(C)(1) The amount required for debt charges; 907
(2) The estimated receipts from sources other than the tax 909
levy for payment of such debt charges, including the proceeds of 910
refunding bonds to be issued to refund bonds maturing in the next 911
succeeding fiscal year; 912
(3) The net amount for which a tax levy shall be made, 914
classified as to bonds authorized and issued prior to January 1, 915
1922, and those authorized and issued subsequent to such date, 916
and as to what portion of the levy will be within and what in 917
excess of the ten-mill limitation. 918
(D) An estimate of amounts from taxes authorized to be 920
levied in excess of the ten-mill limitation on the tax rate, and 921
the fund to which such amounts will be credited, together with 922
the sections of the Revised Code under which each such tax is 923
exempted from all limitations on the tax rate. 924
(E)(1) A board of education may include in its budget for 926
the fiscal year in which a levy proposed under section 5705.194, 927
5705.21, or 5705.213, or the original levy under section 5705.212 928
of the Revised Code is first extended on the tax list and 929
duplicate an estimate of expenditures to be known as a voluntary 930
contingency reserve balance, which shall not be greater than 931
twenty-five per cent of the total amount of the levy estimated to 932
be available for appropriation in such year. 933
(2) A board of education may include in its budget for the 935
fiscal year following the year in which a levy proposed under 936
section 5705.194, 5705.21, or 5705.213, or the original levy 937
23
under section 5705.212 of the Revised Code is first extended on 938
the tax list and duplicate an estimate of expenditures to be 939
known as a voluntary contingency reserve balance, which shall not 940
be greater than twenty per cent of the amount of the levy 941
estimated to be available for appropriation in such year. 942
(3) Except as provided in division (E)(4) of this section, 944
the full amount of any reserve balance the board includes in its 945
budget shall be retained by the county auditor and county 946
treasurer out of the first semiannual settlement of taxes until 947
the beginning of the next succeeding fiscal year, and thereupon, 948
with the depository interest apportioned thereto, it shall be 949
turned over to the board of education, to be used for the 950
purposes of such fiscal year. 951
(4) A board of education, by a two-thirds vote of all 953
members of the board, may appropriate any amount withheld as a 954
voluntary contingency reserve balance during the fiscal year for 955
any lawful purpose, provided that prior to such appropriation the 956
board of education has authorized the expenditure of all amounts 957
appropriated for contingencies under section 5705.40 of the 958
Revised Code. Upon request by the board of education, the county 959
auditor shall draw a warrant on the district's account in the 960
county treasury payable to the district in the amount requested. 961
(F)(1) A board of education may include a spending reserve 963
in its budget for fiscal years ending on or before June 30, 2002. 965
The spending reserve shall consist of an estimate of expenditures 966
not to exceed the district's spending reserve balance. A 967
district's spending reserve balance is the amount by which the 968
designated percentage of the district's estimated personal 969
property taxes to be settled during the calendar year in which 970
the fiscal year ends exceeds the estimated amount of personal 971
property taxes to be so settled and received by the district 972
during that fiscal year. Moneys from a spending reserve shall be 973
appropriated in accordance with section 133.301 of the Revised 974
Code. 975
24
(2) For the purposes of computing a school district's 977
spending reserve balance for a fiscal year, the designated 978
percentage shall be as follows: 979
Fiscal year ending in: Designated percentage 982
1998 50% 984
1999 40% 985
2000 30% 986
2001 20% 987
2002 10% 988
(G) Except as otherwise provided in this division, the 991
county budget commission shall not reduce the taxing authority of 992
a subdivision as a result of the creation of a reserve balance 993
account. Except as otherwise provided in this division, the 994
county budget commission shall not consider the amount in a 995
reserve balance account of a township, county, or municipal 996
corporation as an unencumbered balance or as revenue for the 997
purposes of division (E)(3) or (4) of section 5747.51 or division 998
(E)(3) or (4) of section 5747.62 of the Revised Code. The county 999
budget commission may require documentation of the reasonableness 1,000
of the reserve balance held in any reserve balance account. The 1,001
commission shall consider any amount in a reserve balance account 1,002
that it determines to be unreasonable as unencumbered and as 1,003
revenue for the purposes of sections 5747.51 and 5747.62 of the
Revised Code and may take such amounts into consideration when 1,005
determining whether to reduce the taxing authority of a
subdivision.
(H)(1) Each board of education shall include in its tax 1,007
budget and shall establish a reserve balance account to 1,009
accumulate currently available resources to stabilize the school
district's budget against cyclical changes in revenues and 1,010
expenditures. The balance in the reserve balance account shall 1,011
not at any time be less than five per cent of general fund 1,013
revenues for the most recently concluded fiscal year, except as 1,014
provided in division (H)(2) or (3) of this section, and except 1,015
25
for deficiencies arising from the appropriation of money from the 1,016
account for unanticipated deficiencies in revenue or other 1,018
emergencies pursuant to a resolution adopted by two-thirds of the 1,019
membership of the board of education specifying the reason for 1,020
the appropriation. The auditor of state and the superintendent
of public instruction jointly shall adopt rules governing 1,021
conditions that constitute unanticipated deficiencies in revenue 1,022
or emergencies for which appropriations may be made from a 1,023
reserve balance account. The rules also shall provide that a 1,024
board of education that borrows against its spending reserve 1,026
established in its tax budget for a fiscal year under division 1,027
(F) of this section is not subject to division (H)(2) of this 1,028
section for that fiscal year. A board of education shall not 1,029
appropriate money from a reserve balance account without filing a 1,031
schedule for replenishing the account with the superintendent of 1,032
public instruction and receiving approval of the schedule from 1,033
the superintendent of public instruction. 1,034
(2)(a) Beginning with the fiscal year ending in 1999 and 1,036
continuing each fiscal year until the balance in the reserve 1,037
balance account equals five per cent of the district's revenues 1,039
received for current expenses for the preceding fiscal year, if 1,040
the growth in a district's total revenues received for current
expenses from one fiscal year to the next is at least three per 1,041
cent, the board of education shall credit to its reserve balance 1,043
account, from the general fund or from other sources that may 1,045
lawfully be credited to the general fund, an amount that, when 1,046
added to the account balance, is not less than: 1,047
(i) One per cent of revenues received for current expenses 1,049
for the prior fiscal year; plus 1,050
(ii) The sum of the amounts credited under this section 1,052
for all fiscal years that amounts were required to be credited 1,053
under this section.
Each board shall maintain the balance in the district's 1,055
reserve balance account at not less than five per cent of the 1,056
26
district's revenues received for current expenses for the 1,057
preceding fiscal year, except as otherwise authorized under 1,058
division (H) of this section.
(b) Notwithstanding division (H)(2)(a) of this section, in 1,061
no year shall a board be required to credit to its reserve 1,062
balance account more than one per cent of revenues received for
current expenses for the prior fiscal year. 1,063
(3) The balance in the reserve balance account of a school 1,066
district may be less than five per cent of the general fund 1,067
revenue for the most recently concluded fiscal year in any fiscal 1,068
year in which the school district is in a state of fiscal watch 1,069
or fiscal emergency pursuant to section 3316.03 of the Revised 1,070
Code.
(4) Notwithstanding any provision to the contrary in 1,072
Chapter 4117. of the Revised Code, the requirements of division 1,073
(H) of this section prevail over any conflicting provisions of 1,075
agreements between employee organizations and public employers 1,076
entered into after November 21, 1997. 1,077
(5) Notwithstanding division (H)(2) of this section, a 1,079
school district may, pursuant to rules adopted by the auditor of 1,080
state, credit less than one per cent of its prior year's revenue 1,081
received for current expenses into its reserve balance account. 1,082
(6) A school district board may apply to the state 1,084
superintendent of public instruction for a one-time waiver of the 1,085
deposit requirements of division (H)(2) of this section when it 1,087
determines that meeting the requirements in the current or next 1,088
fiscal year would cause the district to significantly reduce or 1,089
eliminate important educational services. The district shall 1,090
apply in the form and manner required by the state 1,091
superintendent, and the application may request a waiver of all 1,092
or part of the deposit required for the current or next fiscal 1,093
year. The state superintendent may grant a waiver if the state 1,094
superintendent and the auditor of state determine that meeting 1,095
the requirement in the current or next fiscal year would cause
27
the school district to significantly reduce or eliminate 1,097
important educational services. A waiver may entirely exempt the
district from making any deposit into its reserve balance account 1,099
during the current or next fiscal year or, regardless of whether 1,100
the district board applied for a waiver of the entire deposit, 1,101
may simply reduce the amount of the deposit otherwise required
during the current or next fiscal year by division (H)(2) of this 1,102
section. A waiver is valid for one fiscal year: either the 1,103
fiscal year in which the district board applied for it or the 1,104
immediately following fiscal year. A district board may receive 1,105
only one waiver under division (H)(6) of this section. 1,106
(I) Notwithstanding division (H)(2) of this section, 1,108
whenever a city, local, exempted village, or joint vocational 1,109
school district receives from the bureau of workers' compensation 1,110
a refund or other reimbursement of money that the district 1,111
previously paid to the bureau, the district shall deposit the 1,112
full amount of the refund or other reimbursement into the 1,113
district's reserve balance account, unless the account already 1,114
contains five per cent of the district's revenues received for 1,115
current expenses for the preceding year as prescribed in division 1,116
(H)(2)(a) of this section. A district may credit any amount it 1,117
deposits into that account under this division toward any minimum 1,118
deposit required for the account in that fiscal year. 1,119
Sec. 5705.38. (A) This division does not apply to school 1,129
district appropriation measures. On or about the first day of 1,130
each year, the taxing authority of each subdivision or other 1,131
taxing unit shall pass an appropriation measure, and thereafter 1,132
during the year it may pass any supplemental appropriation 1,133
measures as it finds necessary, based on the revised tax budget 1,134
and the official certificate of estimated resources or amendments 1,135
of the certificate. If adoption of a tax budget was waived under 1,136
section 5705.281 of the Revised Code, appropriation measures 1,137
shall be based on the official certificate of estimated 1,138
resources. If it desires to postpone the passage of the annual 1,139
28
appropriation measure until an amended certificate is received 1,140
based on the actual balances, it may pass a temporary
appropriation measure for meeting the ordinary expenses of the 1,141
taxing unit until no later than the first day of April of the 1,142
current year, and the appropriations made in the temporary 1,143
measure shall be chargeable to the appropriations in the annual 1,144
appropriation measure for that fiscal year when passed. 1,145
(B) A board of education shall pass its annual 1,147
appropriation measure by the first day of October. If, by the 1,148
first day of October, a board has not received either the amended 1,149
certificates of estimated resources required by division (B) of 1,150
section 5705.36 of the Revised Code or certifications that no 1,151
amended certificates need be issued, the adoption of the annual 1,152
appropriation measure shall be delayed until the amended 1,153
certificates or certifications are received. Prior to the 1,154
passage of the annual appropriation measure, the board may pass a 1,155
temporary appropriation measure for meeting the ordinary expenses 1,156
of the district until it passes an annual appropriation measure, 1,157
and appropriations made in the temporary measure shall be 1,158
chargeable to the appropriations in the annual appropriation 1,159
measure for that fiscal year when passed. During the fiscal year 1,160
and after the passage of the annual appropriation measure, a 1,161
district may pass any supplemental appropriation measures as it 1,162
finds necessary, based on the revised tax budget and the official 1,163
certificate of estimated resources or amendments of the 1,164
certificate. The annual appropriation measure, and any temporary 1,165
or supplemental appropriation measure, shall provide for the 1,166
reservation of a sufficient amount of money for the budget 1,167
reserve fund as required under division (H) of section 5705.29 of 1,168
the Revised Code. School district appropriation measures shall be 1,169
in the form as the auditor of state, after consultation with the 1,170
tax commissioner, prescribes. 1,171
(C) Appropriation measures shall be classified so as to 1,173
set forth separately the amounts appropriated for each office, 1,174
29
department, and division, and, within each, the amount 1,175
appropriated for personal services. In the case of a municipal 1,176
university, the board of directors of which have assumed, in the 1,177
manner provided by law, custody and control of the funds of the 1,178
university, funds shall be appropriated as a lump sum for the use 1,179
of the university. 1,180
Section 2. That existing sections 3315.17, 3315.18, 1,182
3316.03, 3316.04, 3316.06, 3316.20, 5705.13, 5705.29, and 5705.38 1,183
of the Revised Code are hereby repealed. 1,184
Section 3. After the effective date of this section, no 1,186
board of education of any school district shall be required to 1,187
establish and maintain a budget reserve account as previously 1,188
required under divisions (H) and (I) of section 5705.29 of the 1,189
Revised Code as that section existed prior to the effective date 1,190
of this section. Any money on hand in a school district's budget 1,191
reserve account established and maintained under those divisions 1,192
on the effective date of this section may at the discretion of 1,193
the district board of education be returned to the district's 1,194
general fund or may be left in the account and may be used by the 1,195
district board to offset any budget deficit the district may 1,196
experience in future fiscal years. However, any portion of that 1,197
money consisting of refunds or rebates from the Bureau of 1,198
Workers' Compensation that was required to be deposited in the 1,199
fund under Section 39 of Am. Sub. H.B. 770 of the 122nd General 1,200
Assembly or division (I) of section 5705.29 of the Revised Code 1,201
as it existed prior to the effective date of this section may be 1,202
used solely to offset a budget deficit or for school facility
construction, renovation, or repair; textbooks or instructional 1,204
materials, including science equipment or laboratories; or 1,205
professional development of teachers. 1,206
This section does not affect a district board's authority 1,208
to establish a reserve balance account under section 5705.13 of 1,209
the Revised Code as that section exists after the effective date 1,210
of this section. 1,211
30
Section 4. Sections 3315.17 and 3315.18 of the Revised 1,213
Code, which were enacted by Sub. H.B. 412 of the 122nd General 1,214
Assembly, required school districts to set aside percentages of 1,215
their general operating funds for textbooks and instructional 1,216
materials and for capital and maintenance costs. Section 1,217
3313.603 of the Revised Code, enacted by Am. Sub. S.B. 55 of the 1,218
122nd General Assembly, increased from eighteen to twenty-one the 1,219
minimum number of academic units required for students graduating 1,220
from high school in this state after September 15, 2001. The 1,221
Ohio Supreme Court, in DeRolph v. State (2000), 89 Ohio St. 3d, 1,222
concluded that all of these requirements impermissibly imposed 1,224
unfunded mandates upon school districts.
The General Assembly finds that the costs of the set-aside 1,226
requirements of sections 3315.17 and 3315.18 are not unfunded to 1,227
the extent the required set-asides are percentages of the base 1,228
cost formula amount. Since fiscal year 1999, these set-asides 1,229
have been included within the base cost formula amounts 1,230
prescribed by section 3317.012 of the Revised Code, which was 1,231
enacted by Am. Sub. H.B. 650 of the 122nd General Assembly. The 1,232
General Assembly has reanalyzed fiscal year 1996 fiscal data of 1,233
the one hundred three model effective school districts, described 1,234
in section 3317.012 of the Revised Code, which served as the 1,235
basis for the fiscal policies contained in Am. Sub. H.B. 650. 1,236
This analysis is based on testimony and evidence presented in 1,237
2000 before the Joint Committee to Examine the Base Cost of an 1,238
Adequate Education, which clearly demonstrated that in fiscal 1,239
year 1996, the model school districts spent at least the 1,240
percentages prescribed in sections 3315.17 and 3315.18 of the 1,241
Revised Code for textbooks and instructional materials and 1,242
capital and maintenance costs as those percentages were adjusted 1,243
by the auditor of state under those sections. The base cost 1,245
formula amount enacted in Am. Sub. H.B. 650 was derived from 1,246
these districts' costs, which include their expenditures for
textbooks and instructional materials and capital and maintenance 1,247
31
costs. The base cost formula amount therefore includes an amount 1,248
adequate for school districts to meet the requirements of 1,249
sections 3315.17 and 3315.18 provided that the required 1,250
set-asides are percentages of the base cost amount and not of 1,251
school district total revenues, accordingly, this act amends the 1,253
set-aside requirements to reflect this finding.
Other evidence submitted to the Joint Committee 1,255
demonstrated that in fiscal year 1996 the average minimum number 1,256
of academic units required to graduate from high school in the 1,257
model school districts was nineteen and six-tenths, but that many 1,258
students in those districts graduated with credits exceeding the 1,259
minimum. The General Assembly therefore finds that the base cost 1,260
formula amount reflects the cost of providing nineteen and 1,261
six-tenths high school academic units. The General Assembly 1,262
intends to increase the base cost formula amount in future 1,263
education funding legislation to close the gap between the model 1,264
districts' average of nineteen and six-tenths units and the 1,265
required minimum of twenty-one units imposed by section 3313.603 1,266
of the Revised Code.