As Reported by the Senate Finance and Financial 2
Institutions Committee 2
123rd General Assembly 5
Regular Session Sub. S. B. No. 345 6
1999-2000 7
SENATORS GARDNER-CUPP-HOTTINGER-RAY 9
_________________________________________________________________ 11
A B I L L
To amend sections 3315.17, 3315.18, 3316.03, 13
3316.04, 3316.06, 3316.20, 5705.13, 5705.29, and 14
5705.38 and to enact sections 3316.031 and
3316.061 of the Revised Code to address certain 15
school district mandates and to establish
additional procedures for avoiding fiscal 16
problems in school districts. 17
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 18
Section 1. That sections 3315.17, 3315.18, 3316.03, 20
3316.04, 3316.06, 3316.20, 5705.13, 5705.29, and 5705.38 be 21
amended and sections 3316.031 and 3316.061 of the Revised Code be 22
enacted to read as follows:
Sec. 3315.17. (A) The board of education of each city, 32
exempted village, local, and joint vocational school district 33
shall establish a textbook and instructional materials fund and. 34
EACH BOARD ANNUALLY shall deposit into that fund four per cent, 36
or another percentage if established in rules adopted under 37
division (C) of this section, of all AN AMOUNT DERIVED FROM 38
revenues received by the district for operating expenses THAT IS 41
EQUAL TO THREE PER CENT OF THE FORMULA AMOUNT FOR THE CURRENT 42
FISCAL YEAR, AS DEFINED IN SECTION 3317.02 OF THE REVISED CODE,
OR ANOTHER PERCENTAGE IF ESTABLISHED BY THE AUDITOR OF STATE 43
UNDER DIVISION (C) OF THIS SECTION, MULTIPLIED BY THE DISTRICT'S 45
STUDENT POPULATION FOR THAT FISCAL YEAR. Money in the fund shall 46
be used solely for textbooks, instructional software, and 47
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instructional materials, supplies, and equipment. Any money in 48
the fund that is not used in any fiscal year shall carry forward 49
to the next fiscal year. 50
(B) Notwithstanding division (A) of this section, if in a 52
fiscal year a district board deposits in the textbook and 54
instructional materials fund an amount of money greater than the 55
amount required to be deposited by this section or the rules 56
adopted under division (C) of this section, the board may deduct 57
the excess amount of money from the amount of money required to 58
be deposited in succeeding fiscal years. 59
(C) The state superintendent of public instruction and the 62
auditor of state jointly shall adopt rules in accordance with 63
Chapter 119. of the Revised Code defining what constitutes 65
textbooks, instructional software, and instructional materials, 66
supplies, and equipment for which money in a school district's 67
textbook and instructional materials fund may be used. The 68
jointly adopted rules AUDITOR OF STATE also may designate a 69
percentage, other than four THREE per cent, of district operating 71
revenues THE FORMULA AMOUNT MULTIPLIED BY THE DISTRICT'S STUDENT 72
POPULATION that must be deposited into the fund. The auditor of 74
state shall adopt rules under section 117.20 of the Revised Code 76
authorizing up to a three-year phase-in period for district 77
boards to meet the percentage requirements of division (A) of 78
this section, and specifying the manner in which district boards 79
may deduct from a required deposit an excess amount deposited 80
into the textbook and instructional materials fund in a prior 81
fiscal year.
(D) Notwithstanding division (A) of this section, a 84
district board of education in any fiscal year may appropriate 85
money in the district textbook and instructional materials fund 86
for purposes other than those permitted by that division if both 87
of the following occur during that fiscal year: 88
(1) All of the following certify to the district board in 90
writing that the district has sufficient textbooks, instructional 91
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software, and instructional materials, supplies, and equipment to 93
ensure a thorough and efficient education within the district: 94
(a) The district superintendent; 96
(b) In districts required to have a business advisory 98
council, a person designated by vote of the business advisory 99
council;
(c) If the district teachers are represented by an 101
exclusive bargaining representative for purposes of Chapter 4117. 103
of the Revised Code, the president of that organization or the 106
president's designee.
(2) The district board adopts, by unanimous vote of all 108
members of the board, a resolution stating that the district has 109
sufficient textbooks, instructional software, and instructional 110
materials, supplies, and equipment to ensure a thorough and 111
efficient education within the district. 112
(E) Notwithstanding any provision to the contrary in 114
Chapter 4117. of the Revised Code, the requirements of this 115
section prevail over any conflicting provisions of agreements 117
between employee organizations and public employers entered into 118
on or after November 21, 1997. 119
(F) AS USED IN THIS SECTION AND IN SECTION 3315.18 OF THE 121
REVISED CODE, "STUDENT POPULATION" MEANS THE FULL-TIME-EQUIVALENT 123
NUMBER OF STUDENTS IN KINDERGARTEN THROUGH TWELFTH GRADE 124
RECEIVING ANY EDUCATIONAL SERVICES FROM THE SCHOOL DISTRICT, 125
EXCLUDING STUDENTS ENROLLED IN ADULT EDUCATION CLASSES, BUT 127
INCLUDING ALL OF THE FOLLOWING:
(1) ADJACENT OR OTHER DISTRICT STUDENTS ENROLLED IN THE 129
DISTRICT UNDER AN OPEN ENROLLMENT POLICY PURSUANT TO SECTION 130
3313.98 OF THE REVISED CODE; 131
(2) STUDENTS RECEIVING SERVICES IN THE DISTRICT PURSUANT 133
TO A COMPACT, COOPERATIVE EDUCATION AGREEMENT, OR A CONTRACT, BUT 134
WHO ARE ENTITLED TO ATTEND SCHOOL IN ANOTHER DISTRICT PURSUANT TO 135
SECTION 3313.64 OR 3313.65 OF THE REVISED CODE; 136
(3) STUDENTS FOR WHOM TUITION IS PAYABLE PURSUANT TO 138
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SECTIONS 3317.081 AND 3323.141 OF THE REVISED CODE. 139
Sec. 3315.18. (A) The board of education of each city, 148
exempted village, local, and joint vocational school district 149
shall establish a capital and maintenance fund and. EACH BOARD 151
ANNUALLY shall deposit into that fund four per cent, or another 152
percentage if established in rules adopted under division (B) of 153
this section, of all AN AMOUNT DERIVED FROM revenues received by 154
the district that would otherwise have been deposited in the 156
general fund THAT IS EQUAL TO THREE PER CENT OF THE FORMULA 157
AMOUNT FOR THE CURRENT FISCAL YEAR, AS DEFINED IN SECTION 3317.02 158
OF THE REVISED CODE, OR ANOTHER PERCENTAGE IF ESTABLISHED BY THE 159
AUDITOR OF STATE UNDER DIVISION (B) OF THIS SECTION MULTIPLIED BY 160
THE DISTRICT'S STUDENT POPULATION FOR THAT FISCAL YEAR, except 162
that money received from a permanent improvement levy authorized 163
by section 5705.21 of the Revised Code may replace general 164
revenue moneys in meeting the requirements of this section. 165
Money in the fund shall be used solely for acquisition, 166
replacement, enhancement, maintenance, or repair of permanent 167
improvements, as that term is defined in section 5705.01 of the 168
Revised Code. Any money in the fund that is not used in any 169
fiscal year shall carry forward to the next fiscal year. 170
(B) The state superintendent of public instruction and the 173
auditor of state jointly shall adopt rules in accordance with 174
Chapter 119. of the Revised Code defining what constitutes
expenditures permitted by division (A) of this section and. THE 176
AUDITOR OF STATE may designate a percentage, other than four 177
THREE per cent, of district operating revenues THE FORMULA AMOUNT 179
MULTIPLIED BY THE DISTRICT'S STUDENT POPULATION that must be 180
deposited into the fund. The auditor of state shall adopt rules 181
under section 117.20 of the Revised Code authorizing up to a 183
three-year phase-in period for district boards to meet the
percentage requirements of division (A) of this section. 185
(C) Notwithstanding any provision to the contrary in 187
Chapter 4117. of the Revised Code, the requirements of this 188
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section prevail over any conflicting provisions of agreements 189
between employee organizations and public employers entered into 190
after the effective date of this section NOVEMBER 21, 1997. 191
Sec. 3316.03. (A) The existence of a fiscal watch shall 201
be determined DECLARED by the auditor of state. The auditor of 203
state may make the A determination on the auditor of state's 204
initiative, or upon receipt of a written request for such a 205
determination, which may be filed by the governor, the 206
superintendent of public instruction, or a majority of the 207
members of the board of education of the school district. The 209
auditor of state shall declare a school district to be in a state 210
of fiscal watch if the auditor of state determines that division 211
(A)(1), (2), or (3) of this section applies to the school 212
district:
(1) All BOTH of the following conditions are satisfied 214
with respect to the school district: 216
(a) An operating deficit has been certified for the 218
current fiscal year by the auditor of state, and the certified 219
operating deficit exceeds eight TWO per cent of the school 220
district's general fund revenue for the preceding fiscal year, 222
UNLESS THE AUDITOR OF STATE, IN CONSULTATION WITH THE
SUPERINTENDENT OF PUBLIC INSTRUCTION, FINDS THAT THERE IS 223
REASONABLE CAUSE FOR THE DEFICIT BUT IN NO CASE MAY THE AUDITOR 224
OF STATE EXCUSE ANY DEFICIT OF FIVE PER CENT OR GREATER; 225
(b) The unencumbered cash balance in the school district's 228
general fund at the close of the preceding fiscal year, less any 229
advances of property taxes, was less than eight per cent of the 230
expenditures made from the general fund for the preceding fiscal 232
year;
(c) A majority of the voting electors have not voted in 234
favor of levying a tax under section 5705.194 or 5705.21 or 236
Chapter 5748. of the Revised Code that the auditor of state 237
expects will raise enough additional revenue in the next 238
succeeding fiscal year that divisions DIVISION (A)(1)(a) and (b) 239
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of this section will not apply to the district in such next 240
succeeding fiscal year.
(2) The school district has outstanding securities issued 242
under division (A)(4) of section 3316.06 of the Revised Code, and 243
its financial planning and supervision commission has been 245
terminated under section 3316.16 of the Revised Code. 246
(3) The school district has received an advancement under 248
section 3316.20 of the Revised Code. BOTH OF THE FOLLOWING 249
CONDITIONS ARE SATISFIED: 250
(a) THE SUPERINTENDENT OF PUBLIC INSTRUCTION HAS DECLARED 252
THE DISTRICT UNDER SECTION 3316.031 OF THE REVISED CODE TO BE 253
UNDER A FISCAL CAUTION, HAS FOUND THAT THE DISTRICT HAS NOT OR 254
WILL NOT COMPLY WITH THE RECOMMENDATIONS THE SUPERINTENDENT 255
PROVIDED UNDER THAT SECTION, AND HAS NOTIFIED THE AUDITOR OF 256
STATE TO DECLARE A STATE OF FISCAL WATCH FOR THE DISTRICT.
(b) THE AUDITOR OF STATE DETERMINES THAT THE DECISION OF 259
THE SUPERINTENDENT IS NOT ARBITRARY OR CAPRICIOUS.
(B) The auditor of state, after consulting with the 261
superintendent of public instruction, shall issue an order 262
declaring a school district to be in a state of fiscal emergency 264
if the auditor of state determines that division (B)(1), (2), 265
(3), or (4), OR (5) of this section applies to the school 266
district:
(1) All BOTH of the following conditions are satisfied 268
with respect to the school district: 270
(a) The board of education of the school district is not 272
able to demonstrate, to the auditor of state's satisfaction, the 273
district's ability to repay outstanding loans received pursuant 274
to section 3313.483 of the Revised Code or to repay securities 275
issued pursuant to section 133.301 of the Revised Code in 276
accordance with applicable repayment schedules unless the board 277
requests additional loans under section 133.301 of the Revised 279
Code in an aggregate principal amount exceeding fifty per cent of 280
the sum of the following: 281
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(i) The aggregate original principal amount of loans 284
received in the preceding fiscal year under section 3313.483 of 285
the Revised Code;
(ii) The aggregate amount borrowed by the district under 287
section 133.301 of the Revised Code, excluding any additional 289
amount borrowed as authorized under division (C) of that section. 290
(b) An operating deficit has been certified for the 292
current fiscal year by the auditor of state, and the certified 293
operating deficit exceeds fifteen FIVE per cent of the school 294
district's general fund revenue for the preceding fiscal year, 295
UNLESS THE AUDITOR OF STATE, IN CONSULTATION WITH THE 296
SUPERINTENDENT OF PUBLIC INSTRUCTION FINDS THAT THERE IS 297
REASONABLE CAUSE FOR THE DEFICIT BUT IN NO CASE MAY THE AUDITOR 298
OF STATE EXCUSE ANY DEFICIT OF EIGHT PER CENT OR GREATER. In 300
determining the amount of an operating deficit under division
(B)(1)(b) of this section, the auditor of state shall credit 302
toward the amount of that deficit only the amount that may be 303
borrowed from the spending reserve balance as determined under 304
section 133.301 and division (F) of section 5705.29 of the 305
Revised Code.
(c)(b) A majority of the voting electors have not voted in 307
favor of levying a tax under section 5705.194 or 5705.21 or 309
Chapter 5748. of the Revised Code that the auditor of state 310
expects will raise enough additional revenue in the next 311
succeeding fiscal year that divisions DIVISION (A)(B)(1)(a) and 312
(b) of this section will not apply to the district in such next 313
succeeding fiscal year.
(d) The school district is one that, at the time of the 315
auditor of state's determination under this section, had a total 317
student count of more than ten thousand students as most recently 318
determined by the department of education pursuant to section 320
3317.03 of the Revised Code. 321
(2) The school district board fails, pursuant to section 324
3316.04 of the Revised Code, to submit a plan acceptable to the 325
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state superintendent of public instruction within one hundred 326
twenty days of the auditor of state's declaration under division 327
(A) of this section; 328
(3) BOTH OF THE FOLLOWING CONDITIONS ARE SATISFIED: 331
(a) THE SUPERINTENDENT OF PUBLIC INSTRUCTION HAS 333
DETERMINED AND REPORTED TO THE AUDITOR OF STATE THAT THE DISTRICT 335
HAS NOT SUBMITTED UNDER SECTION 3316.04 OF THE REVISED CODE A 336
FINANCIAL PLAN THAT IS ACCEPTABLE TO THE SUPERINTENDENT OR IS NOT 337
MATERIALLY COMPLYING WITH THE PROVISIONS OF THE PLAN AS APPROVED 338
BY THE STATE SUPERINTENDENT UNDER THAT SECTION. 339
(b) THE AUDITOR OF STATE FINDS THAT THE DETERMINATION OF 342
THE SUPERINTENDENT IS NOT ARBITRARY OR CAPRICIOUS. 343
(4) A declaration of fiscal emergency is required by 346
division (D) of section 3316.04 of the Revised Code; 347
(4)(5) The school district has received more than one 349
advancement SOLVENCY ASSISTANCE THAT REQUIRES REPAYMENT under 350
DIVISION (A)(4) OF section 3316.20 of the Revised Code within a 352
two-year period, or has received only one such advancement but 353
also has an operating deficit as described in division (B)(1)(b) 354
of this section.
(C) In making the determinations under this section, the 356
auditor of state may use financial reports required under section 357
117.43 of the Revised Code; tax budgets, certificates of 359
estimated resources and amendments thereof, annual appropriating 360
measures and spending plans, and any other documents or 361
information prepared pursuant to Chapter 5705. of the Revised 362
Code; and any other documents, records, or information available 363
to the auditor of state that indicate the conditions described in 364
divisions (A) and (B) of this section.
(D) The auditor of state shall certify the action taken 366
under division (A) or (B) of this section to the board of 367
education of the school district, the director of budget and 368
management, the mayor or county auditor who could be required to 369
act pursuant to division (B)(1) of section 3316.05 of the Revised
9
Code, and to the superintendent of public instruction. 370
(E) A determination by the auditor of state under this 372
section that a fiscal emergency condition does not exist is final 373
and conclusive and not appealable. A determination by the 374
auditor of state under this section that a fiscal emergency 375
exists is final, except that the board of education of the school 376
district affected by such a determination may appeal the
determination of the existence of a fiscal emergency condition to 377
the court of appeals having territorial jurisdiction over the 378
school district. The appeal shall be heard expeditiously by the 379
court of appeals and for good cause shown shall take precedence 380
over all other civil matters except earlier matters of the same 381
character. Notice of such appeal must be filed with the auditor
of state and such court within thirty days after certification by 382
the auditor of state to the board of education of the school 383
district provided for in division (D) of this section. In such 384
appeal, determinations of the auditor of state shall be presumed 385
to be valid and the board of education shall have the burden of 386
proving, by clear and convincing evidence, that each of the 387
determinations made by the auditor of state as to the existence
of a fiscal emergency condition under this section was in error. 388
If the board of education fails, upon presentation of its case, 389
to prove by clear and convincing evidence that each such 390
determination by the auditor of state was in error, the court 391
shall dismiss the appeal. The board of education and the auditor 392
of state may introduce any evidence relevant to the existence or
nonexistence of such fiscal emergency conditions. The pendency 393
of any such appeal shall not affect or impede the operations of 394
this chapter; no restraining order, temporary injunction, or 395
other similar restraint upon actions consistent with this chapter 396
shall be imposed by the court or any court pending determination 397
of such appeal; and all things may be done under this chapter 398
that may be done regardless of the pendency of any such appeal.
Any action taken or contract executed pursuant to this chapter 399
10
during the pendency of such appeal is valid and enforceable among 400
all parties, notwithstanding the decision in such appeal. If the 401
court of appeals reverses the determination of the existence of a 402
fiscal emergency condition by the auditor of state, the 403
determination no longer has any effect, and any procedures 404
undertaken as a result of the determination shall be terminated. 405
Sec. 3316.031. THE STATE SUPERINTENDENT OF PUBLIC 407
INSTRUCTION, IN CONSULTATION WITH THE AUDITOR OF STATE, SHALL 408
DEVELOP GUIDELINES FOR IDENTIFYING FISCAL PRACTICES AND BUDGETARY 409
CONDITIONS THAT, IF UNCORRECTED, COULD RESULT IN A FUTURE 411
DECLARATION OF A FISCAL WATCH OR FISCAL EMERGENCY WITHIN A SCHOOL 412
DISTRICT.
IF THE STATE SUPERINTENDENT DETERMINES FROM A SCHOOL 414
DISTRICT'S FIVE YEAR FORECAST SUBMITTED UNDER SECTION 5705.391 OF 415
THE REVISED CODE THAT A DISTRICT IS ENGAGING IN ANY OF THOSE 416
PRACTICES OR THAT ANY OF THOSE CONDITIONS EXIST WITHIN THE 417
DISTRICT, THE STATE SUPERINTENDENT MAY DECLARE THE DISTRICT TO BE 418
UNDER A FISCAL CAUTION. IF THE AUDITOR OF STATE FINDS THAT A 419
DISTRICT IS ENGAGING IN ANY OF THOSE PRACTICES OR THAT ANY OF 420
THOSE CONDITIONS EXIST WITHIN THE DISTRICT, THE AUDITOR OF STATE 421
SHALL REPORT THAT FINDING TO THE STATE SUPERINTENDENT AND THE 422
STATE SUPERINTENDENT MAY DECLARE THE DISTRICT TO BE UNDER A 423
FISCAL CAUTION.
WHEN THE STATE SUPERINTENDENT DECLARES A DISTRICT TO BE 425
UNDER FISCAL CAUTION, THE STATE SUPERINTENDENT SHALL PROMPTLY 426
NOTIFY THE DISTRICT BOARD OF EDUCATION OF THAT DECLARATION AND 427
SHALL PROVIDE THE BOARD WITH WRITTEN RECOMMENDATIONS FOR 428
DISCONTINUING OR CORRECTING THE FISCAL PRACTICES OR BUDGETARY 429
CONDITIONS THAT PROMPTED THE DECLARATION AND FOR PREVENTING THE 430
DISTRICT FROM EXPERIENCING FURTHER FISCAL DIFFICULTIES THAT COULD 431
RESULT IN THE DISTRICT BEING DECLARED TO BE IN A STATE OF FISCAL 432
WATCH OR FISCAL EMERGENCY.
THE STATE SUPERINTENDENT MAY APPOINT A MONITOR TO INSPECT 434
AND VISIT ANY DISTRICT THAT IS DECLARED TO BE UNDER A FISCAL 435
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CAUTION. THE MONITOR SHALL REVIEW THE RECOMMENDATIONS PROVIDED 436
TO THE DISTRICT BOARD TO DISCONTINUE OR CORRECT THE FISCAL 437
PRACTICES OR BUDGETARY CONDITIONS, SHALL PROVIDE ASSISTANCE TO 438
THE BOARD IN COMPLYING WITH THE RECOMMENDATIONS, SHALL MONITOR 439
THE DISTRICT'S PROGRESS IN COMPLYING WITH THE RECOMMENDATIONS, 440
AND SHALL REPORT THE DISTRICT'S PROGRESS TO THE STATE 441
SUPERINTENDENT.
IF THE STATE SUPERINTENDENT FINDS THAT A SCHOOL DISTRICT 443
DECLARED TO BE UNDER A FISCAL CAUTION HAS NOT OR WILL NOT COMPLY 444
WITH THE STATE SUPERINTENDENT'S RECOMMENDATIONS FOR DISCONTINUING 445
OR CORRECTING THE FISCAL PRACTICES OR BUDGETARY CONDITIONS, AND 446
IF THE STATE SUPERINTENDENT CONSIDERS IT NECESSARY TO AVOID 447
FURTHER FISCAL DECLINE, THE STATE SUPERINTENDENT MAY DETERMINE 449
THAT THE DISTRICT SHOULD BE IN A STATE OF FISCAL WATCH. THE 450
AUDITOR OF STATE SHALL DECLARE THE DISTRICT IN A STATE OF FISCAL 451
WATCH UNLESS THE AUDITOR FINDS THE SUPERINTENDENT'S DETERMINATION 452
TO BE ARBITRARY AND CAPRICIOUS.
Sec. 3316.04. (A) Within sixty days of the auditor's 461
declaration under division (A) of section 3316.03 of the Revised 463
Code, the board of education of the school district shall prepare 464
and submit to the superintendent of public instruction a 465
financial plan delineating the steps the board will take to
eliminate the district's current operating deficit and avoid 466
incurring operating deficits in ensuing years, including the 467
implementation of spending reductions. The superintendent of 468
public instruction shall evaluate the initial financial plan, and 469
either approve or disapprove it within thirty calendar days from 470
the date of its submission. If the initial financial plan is 471
disapproved, the state superintendent shall recommend
modifications that will render the financial plan acceptable. No 472
school district board shall implement a financial plan submitted 473
to the superintendent of public instruction under this section 474
unless the superintendent has approved the plan. 475
IF A DISTRICT FAILS TO SUBMIT A FINANCIAL PLAN UNDER THIS 477
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SECTION THAT IS ACCEPTABLE TO THE STATE SUPERINTENDENT OR IF THE 478
STATE SUPERINTENDENT FINDS THAT THE DISTRICT IS NOT MATERIALLY 479
COMPLYING WITH THE PROVISIONS OF THE PLAN AS APPROVED BY THE 480
STATE SUPERINTENDENT, AND IF THE STATE SUPERINTENDENT CONSIDERS 481
IT APPROPRIATE, THE STATE SUPERINTENDENT MAY DETERMINE THAT THE 483
DISTRICT SHOULD BE DECLARED TO BE IN A STATE OF FISCAL EMERGENCY. 484
THE AUDITOR OF STATE SHALL DECLARE THE DISTRICT IN A STATE OF
FISCAL EMERGENCY UNLESS THE AUDITOR FINDS THE SUPERINTENDENT'S 485
DECISION TO BE ARBITRARY AND CAPRICIOUS. 486
(B) Upon request of the board of education of a school 488
district declared to be in a state of fiscal watch, the auditor 490
of state and superintendent of public instruction shall provide 491
technical assistance to the board in resolving the fiscal 492
problems that gave rise to the declaration, including assistance
in drafting the board's financial plan. 493
(C) A financial plan adopted under this section may be 495
amended at any time with the approval of the superintendent. The 497
board of education of the school district shall submit an updated 498
financial plan to the superintendent, for the superintendent's 499
approval, every year that the district is in a state of fiscal 500
watch. The updated plan shall be submitted in a form acceptable 501
to the superintendent. The superintendent shall approve or
disapprove each updated plan no later than the anniversary of the 502
date on which the first such plan was approved. 504
(D) A school district that has restructured or refinanced 507
a loan under section 3316.041 of the Revised Code shall be 509
declared to be in a state of fiscal emergency if any of the 510
following occurs: 511
(1) An operating deficit is certified for the district 513
under section 3313.483 of the Revised Code for any year prior to 516
the repayment of the restructured or refinanced loan; 517
(2) The superintendent determines, in consultation with 520
the auditor of state, that the school district is not
satisfactorily complying with the terms of the financial plan 521
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required by this section; 522
(3) The board of education of the school district fails to 525
submit an updated plan that is acceptable to the superintendent 526
under division (C) of this section. 527
Sec. 3316.06. (A) Within one hundred twenty days after 536
the first meeting of a school district financial planning and 537
supervision commission, the commission shall adopt a financial 538
recovery plan regarding the school district for which the 539
commission was created. During the formulation of the plan, the 540
commission shall seek appropriate input from the school district 541
board and from the community. This plan shall contain the
following:
(1) Actions to be taken to: 543
(a) Eliminate all fiscal emergency conditions declared to 546
exist pursuant to division (B) of section 3316.03 of the Revised
Code;
(b) Satisfy any judgments, past-due accounts payable, and 548
all past-due and payable payroll and fringe benefits; 549
(c) Eliminate the deficits in all deficit funds; 551
(d) Restore to special funds any moneys from such funds 553
that were used for purposes not within the purposes of such 555
funds, or borrowed from such funds by the purchase of debt 556
obligations of the school district with the moneys of such funds, 557
or missing from the special funds and not accounted for, if any; 558
(e) Balance the budget, avoid future deficits in any 560
funds, and maintain on a current basis payments of payroll, 561
fringe benefits, and all accounts; 562
(f) Avoid any fiscal emergency condition in the future; 564
(g) Restore the ability of the school district to market 566
long-term general obligation bonds under provisions of law 567
applicable to school districts generally. 568
(2) The management structure that will enable the school 570
district to take the actions enumerated in division (A)(1) of 571
this section. The plan shall specify the level of fiscal and 572
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management control that the commission will exercise within the 573
school district during the period of fiscal emergency, and shall 574
enumerate respectively, the powers and duties of the commission 575
and the powers and duties of the school board during that period. 576
The commission may elect to assume any of the powers and duties
of the school board it considers necessary, including all powers 577
related to personnel, curriculum, and legal issues in order to 578
successfully implement the actions described in division (A)(1) 579
of this section.
(3) The target dates for the commencement, progress upon, 582
and completion of the actions enumerated in division (A)(1) of 583
this section and a reasonable period of time expected to be 584
required to implement the plan. The commission shall prepare a
reasonable time schedule for progress toward and achievement of 586
the requirements for the plan, and the plan shall be consistent 587
with that time schedule.
(4) The amount and purpose of any issue of debt 589
obligations that will be issued, together with assurances that 590
any such debt obligations that will be issued will not exceed 591
debt limits supported by appropriate certifications by the fiscal 592
officer of the school district and the county auditor. Debt 593
obligations issued pursuant to section 133.301 of the Revised 594
Code shall include assurances that such debt shall be in an 595
amount not to exceed the amount certified under division (B) of 596
such section. If the commission considers it necessary in order 599
to maintain or improve educational opportunities of pupils in the 600
school district, the plan may include a proposal to restructure
or refinance outstanding debt obligations incurred by the board 601
under section 3313.483 of the Revised Code contingent upon the 603
approval, during the period of the fiscal emergency, by district
voters of a tax levied under section 718.09, 718.10, 5705.194, 604
5705.21, 5748.02, or 5748.08 of the Revised Code, that is not a 606
renewal or replacement levy and that will provide new operating 607
revenue. Notwithstanding any provision of Chapter 133. or 609
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sections 3313.483 to 3313.4811 of the Revised Code, following the 610
required approval of the district voters and with the approval of 611
the commission, the school district may issue securities to 612
evidence the restructuring or refinancing. Those securities may 613
extend the original period for repayment, not to exceed ten 614
years, and may alter the frequency and amount of repayments, 616
interest or other financing charges, and other terms of 617
agreements under which the debt originally was contracted, at the 618
discretion of the commission, provided that any loans received 619
pursuant to section 3313.483 of the Revised Code shall be paid 620
from funds the district would otherwise receive under sections
3317.022 to 3317.025 of the Revised Code, as required under 621
division (E)(3) of section 3313.483 of the Revised Code. The 622
securities issued for the purpose of restructuring or refinancing 623
the debt shall be repaid in equal payments and at equal intervals 624
over the term of the debt and are not eligible to be included in 625
any subsequent proposal for the purpose of restructuring or
refinancing debt under this section. 626
(B) Any financial recovery plan may be amended subsequent 628
to its adoption. Each financial recovery plan shall be updated 629
annually.
(C) EACH SCHOOL DISTRICT FINANCIAL PLANNING AND 631
SUPERVISION COMMISSION SHALL SUBMIT THE FINANCIAL RECOVERY PLAN 632
IT ADOPTS OR UPDATES UNDER THIS SECTION TO THE STATE 633
SUPERINTENDENT OF PUBLIC INSTRUCTION FOR APPROVAL IMMEDIATELY 634
FOLLOWING ITS ADOPTION OR UPDATING. THE STATE SUPERINTENDENT 635
SHALL EVALUATE THE PLAN AND EITHER APPROVE OR DISAPPROVE IT 636
WITHIN THIRTY CALENDAR DAYS FROM THE DATE OF ITS SUBMISSION. IF 637
THE PLAN IS DISAPPROVED, THE STATE SUPERINTENDENT SHALL RECOMMEND 638
MODIFICATIONS THAT WILL RENDER IT ACCEPTABLE. NO FINANCIAL 639
PLANNING AND SUPERVISION COMMISSION SHALL IMPLEMENT A FINANCIAL 640
RECOVERY PLAN THAT IS ADOPTED OR UPDATED ON OR AFTER THE 641
EFFECTIVE DATE OF THIS AMENDMENT UNLESS THE STATE SUPERINTENDENT 642
HAS APPROVED IT. 643
16
Sec. 3316.061. IF ANY SCHOOL DISTRICT FINANCIAL PLANNING 645
AND SUPERVISION COMMISSION FAILS TO SUBMIT TO THE STATE 646
SUPERINTENDENT OF PUBLIC INSTRUCTION UNDER SECTION 3316.06 OF THE 647
REVISED CODE A FINANCIAL RECOVERY PLAN THAT IS ACCEPTABLE TO THE 649
STATE SUPERINTENDENT OR IF THE STATE SUPERINTENDENT AND THE 650
AUDITOR OF STATE FIND THAT A COMMISSION IS NOT MATERIALLY 652
COMPLYING WITH THE PROVISIONS OF ITS FINANCIAL RECOVERY PLAN, THE 653
STATE SUPERINTENDENT AND THE AUDITOR OF STATE MAY JOINTLY 655
DISSOLVE THE FINANCIAL PLANNING AND SUPERVISION COMMISSION AND 656
JOINTLY APPOINT AN INDIVIDUAL TO ACT AS THE FISCAL ARBITRATOR OF 657
THE DISTRICT.
WHEN A FINANCIAL PLANNING AND SUPERVISION COMMISSION IS 660
DISSOLVED UNDER THIS SECTION, THE COMMISSION CEASES TO EXIST AND 661
THE APPOINTED FISCAL ARBITRATOR BECOMES THE SUCCESSOR TO THE 662
COMMISSION. A FISCAL ARBITRATOR APPOINTED UNDER THIS SECTION HAS 663
ALL OF THE RIGHTS, POWERS, AND DUTIES GIVEN BY THIS CHAPTER TO 664
THE COMMISSION THAT THE ARBITRATOR SUCCEEDS. A REFERENCE IN ANY 665
STATUTE, RULE, CONTRACT, OR OTHER DOCUMENT TO A SCHOOL DISTRICT 666
FINANCIAL PLANNING AND SUPERVISION COMMISSION IS DEEMED TO REFER 667
TO A FISCAL ARBITRATOR APPOINTED UNDER THIS SECTION. 668
BUSINESS COMMENCED BUT NOT COMPLETED BY A COMMISSION WHEN 670
IT IS DISSOLVED UNDER THIS SECTION SHALL BE COMPLETED BY THE 671
APPOINTED FISCAL ARBITRATOR WITH THE SAME EFFECT AS IF COMPLETED 672
BY THE COMMISSION. NO VALIDATION, CURE, RIGHT, PRIVILEGE, 673
REMEDY, OBLIGATION, OR LIABILITY IS LOST OR IMPAIRED BY REASON OF 674
THE DISSOLUTION OF THE COMMISSION AND APPOINTMENT OF A FISCAL 675
ARBITRATOR, BUT SHALL BE ADMINISTERED BY THE ARBITRATOR. 676
Sec. 3316.20. (A)(1) The school district solvency 685
assistance fund is hereby created in the state treasury, to 686
consist of such amounts designated for the purposes of the fund 687
by the general assembly. The fund shall be used to make 688
advancements PROVIDE ASSISTANCE AND GRANTS to school districts to 689
enable them to remain solvent and to pay unforseeable expenses of 691
a temporary or emergency nature that they are unable to pay from 692
17
existing resources.
Advancements SOLVENCY ASSISTANCE AND GRANTS shall be made 694
from the fund by the superintendent of public instruction in 697
accordance with rules jointly adopted by the superintendent and
the auditor of state specifying advancement approval criteria and 698
procedures necessary for administering the fund. 700
(2) THERE IS HEREBY CREATED WITHIN THE FUND AN ACCOUNT 702
KNOWN AS THE SCHOOL DISTRICT SHARED RESOURCE ACCOUNT, WHICH SHALL 703
CONSIST OF MONEY APPROPRIATED TO IT BY THE GENERAL ASSEMBLY. THE 704
MONEY IN THE ACCOUNT SHALL BE USED SOLELY FOR SOLVENCY ASSISTANCE 705
TO SCHOOL DISTRICTS. 706
(3) THERE IS HEREBY CREATED WITHIN THE FUND AN ACCOUNT 708
KNOWN AS THE CATASTROPHIC EXPENDITURES ACCOUNT, WHICH SHALL 709
CONSIST OF MONEY APPROPRIATED TO THE ACCOUNT BY THE GENERAL 710
ASSEMBLY PLUS ALL INVESTMENT EARNINGS OF THE FUND. MONEY IN THE 711
ACCOUNT SHALL BE USED SOLELY FOR SOLVENCY ASSISTANCE TO SCHOOL 712
DISTRICTS IN THE EVENT THAT ALL MONEY IN THE SHARED RESOURCE 713
ACCOUNT IS UTILIZED FOR SOLVENCY ASSISTANCE OR FOR GRANTS TO 714
SCHOOL DISTRICTS UNDER DIVISION (B) OF THIS SECTION. 715
(4) The fund shall be reimbursed for any SOLVENCY 717
ASSISTANCE amounts advanced PAID UNDER DIVISION (A)(2) OR (3) OF 718
THIS SECTION not later than the end of the second fiscal year 721
following the fiscal year in which the advancement SOLVENCY 722
ASSISTANCE PAYMENT was made. If not made directly by the school 725
district, such reimbursement shall be made by the director of
budget and management from the amounts the school district would 727
otherwise receive pursuant to sections 3317.022 to 3317.025 of 728
the Revised Code, or from any other funds appropriated for the 730
district by the general assembly. REIMBURSEMENTS SHALL BE 731
CREDITED TO THE RESPECTIVE ACCOUNT FROM WHICH THE SOLVENCY 732
ASSISTANCE PAID TO THE DISTRICT WAS DEDUCTED.
(B) THE SUPERINTENDENT OF PUBLIC INSTRUCTION AND THE 734
DIRECTOR OF BUDGET AND MANAGEMENT, WITH THE APPROVAL OF THE 735
CONTROLLING BOARD, JOINTLY MAY GRANT MONEY FROM THE CATASTROPHIC 736
18
EXPENDITURES ACCOUNT TO ANY SCHOOL DISTRICT THAT SUFFERS AN 737
UNPLANNED CATASTROPHIC EVENT THAT SEVERELY DEPLETES THE 738
DISTRICT'S FINANCIAL RESOURCES AS DETERMINED BY THE 739
SUPERINTENDENT AND DIRECTOR. A SCHOOL DISTRICT SHALL NOT BE 740
REQUIRED TO REPAY ANY GRANT AWARDED TO THE DISTRICT UNDER THIS 741
DIVISION UNLESS THE DISTRICT RECEIVES MONEY FROM A THIRD PARTY, 742
INCLUDING AN AGENCY OF THE GOVERNMENT OF THE UNITED STATES, 743
SPECIFICALLY FOR THE PURPOSE OF COMPENSATING THE DISTRICT FOR 744
EXPENSES INCURRED AS A RESULT OF THE UNPLANNED CATASTROPHIC 745
EVENT.
Sec. 5705.13. (A) Except as otherwise provided for a 754
board of education under division (H) of section 5705.29 of the 755
Revised Code, a A taxing authority of a subdivision, by 757
resolution or ordinance, may establish a reserve balance account 759
to accumulate currently available resources for any of the 760
following purposes:
(1) To stabilize subdivision budgets against cyclical 762
changes in revenues and expenditures; 763
(2) Except as otherwise provided by this section, to 765
provide for the payment of claims under a self-insurance program 766
for the subdivision, if the subdivision is permitted by law to 767
establish such a program;
(3) To provide for the payment of claims under a 769
retrospective ratings plan for workers' compensation. 770
The ordinance or resolution establishing a reserve balance 772
account shall state the purpose for which the reserve balance 773
account is established, the fund in which the account is to be 774
established, and the total amount of money to be reserved in the 775
account.
A subdivision that participates in a risk-sharing pool, by 777
which governments pool risks and funds and share in the costs of 778
losses, shall not establish a reserve balance account to provide 779
self-insurance for the subdivision. 780
A taxing authority of a subdivision shall not have more 782
19
than three reserve balance accounts at any time. Not more than 784
one reserve balance account may be established for each of the 785
purposes permitted under this section. Money to the credit of a 786
reserve balance account may be expended only for the purpose for 787
which the account was established.
A reserve balance account established for the purpose 789
described in division (A)(1) of this section shall be established 790
in the general fund of the subdivision, and the amount of money 791
to be reserved in that account in any fiscal year shall not 792
exceed five per cent of the general fund revenue for the 793
preceding fiscal year. Subject to division (G) of section 794
5705.29 of the Revised Code, any reserve balance in an account 795
established under division (A)(1) of this section shall not be 796
considered part of the unencumbered balance or revenue of the 797
subdivision under division (A) of section 5705.35 or division 798
(A)(1) of section 5705.36 of the Revised Code. 799
At any time, a taxing authority of a subdivision, by 801
resolution or ordinance, may reduce or eliminate the reserve 803
balance in a reserve balance account established for the purpose 804
described in division (A)(1) of this section. 805
A reserve balance account established for the purpose 807
described in division (A)(2) or (3) of this section shall be 808
established in the general fund of the subdivision or by the 810
establishment of a separate internal service fund established to 811
account for the operation of the self-insurance or retrospective 812
ratings plan program, and shall be based on sound actuarial 813
principles. The total amount of money in a reserve balance 814
account for self-insurance may be expressed in dollars or as the 815
amount determined to represent an adequate reserve according to 816
sound actuarial principles. 817
A taxing authority of a subdivision, by resolution or 819
ordinance, may rescind a reserve balance account established 820
under this division. If a reserve balance account is rescinded, 821
money that has accumulated in the account shall be transferred to 822
20
the fund or funds from which the money originally was 823
transferred.
(B) A taxing authority of a subdivision, by resolution or 825
ordinance, may establish a special revenue fund for the purpose 826
of accumulating resources for the payment of accumulated sick 827
leave and vacation leave, and for payments in lieu of taking 828
compensatory time off, upon the termination of employment or the 829
retirement of officers and employees of the subdivision. The 830
special revenue fund may also accumulate resources for payment of 831
salaries during any fiscal year when the number of pay periods
exceeds the usual and customary number of pay periods. 832
Notwithstanding sections 5705.14, 5705.15, and 5705.16 of the 833
Revised Code, the taxing authority, by resolution or ordinance, 834
may transfer money to the special revenue fund from any other 836
fund of the subdivision from which such payments may lawfully be 837
made. The taxing authority, by resolution or ordinance, may 838
rescind a special revenue fund established under this division.
If a special revenue fund is rescinded, money that has 839
accumulated in the fund shall be transferred to the fund or funds 840
from which the money originally was transferred. 841
(C) A taxing authority of a subdivision, by resolution or 843
ordinance, may establish a capital projects fund for the purpose 844
of accumulating resources for the acquisition, construction, or 845
improvement of fixed assets of the subdivision. For the purposes 846
of this section, "fixed assets" includes motor vehicles. More 847
than one capital projects fund may be established and may exist 848
at any time. The ordinance or resolution shall identify the 849
source of the money to be used to acquire, construct, or improve
the fixed assets identified in the resolution or ordinance, the 850
amount of money to be accumulated for that purpose, the period of 851
time over which that amount is to be accumulated, and the fixed 852
assets that the taxing authority intends to acquire, construct, 853
or improve with the money to be accumulated in the fund. 854
A taxing authority of a subdivision shall not accumulate 856
21
money in a capital projects fund for more than five years after 858
the resolution or ordinance establishing the fund is adopted. If 859
the subdivision has not entered into a contract for the 860
acquisition, construction, or improvement of fixed assets for 861
which money was accumulated in such a fund before the end of that 862
five-year period, the fiscal officer of the subdivision shall 863
transfer all money in the fund to the fund or funds from which
that money originally was transferred or the fund that originally 864
was intended to receive the money. 865
A taxing authority of a subdivision, by resolution or 867
ordinance, may rescind a capital projects fund. If a capital 869
projects fund is rescinded, money that has accumulated in the 870
fund shall be transferred to the fund or funds from which the 871
money originally was transferred.
Notwithstanding sections 5705.14, 5705.15, and 5705.16 of 873
the Revised Code, the taxing authority of a subdivision, by 874
resolution or ordinance, may transfer money to the capital 876
projects fund from any other fund of the subdivision that may
lawfully be used for the purpose of acquiring, constructing, or 878
improving the fixed assets identified in the resolution or 879
ordinance.
Sec. 5705.29. The tax budget shall present the following 888
information in such detail as is prescribed by the auditor of 889
state, unless an alternative form of the budget is permitted 890
under section 5705.281 of the Revised Code: 891
(A)(1) A statement of the necessary current operating 893
expenses for the ensuing fiscal year for each department and 894
division of the subdivision, classified as to personal services 895
and other expenses, and the fund from which such expenditures are 896
to be made. Except in the case of a school district, this 897
estimate may include a contingent expense not designated for any 898
particular purpose, and not to exceed three per cent of the total 899
amount of appropriations for current expenses. In the case of a 900
school district, this estimate may include a contingent expense 901
22
not designated for any particular purpose and not to exceed 902
thirteen per cent of the total amount of appropriations for 903
current expenses. 904
(2) A statement of the expenditures for the ensuing fiscal 906
year necessary for permanent improvements, exclusive of any 907
expense to be paid from bond issues, classified as to the 908
improvements contemplated by the subdivision and the fund from 909
which such expenditures are to be made; 910
(3) The amounts required for the payment of final 912
judgments; 913
(4) A statement of expenditures for the ensuing fiscal 915
year necessary for any purpose for which a special levy is 916
authorized, and the fund from which such expenditures are to be 917
made; 918
(5) Comparative statements, so far as possible, in 920
parallel columns of corresponding items of expenditures for the 921
current fiscal year and the two preceding fiscal years. 922
(B)(1) An estimate of receipts from other sources than the 924
general property tax during the ensuing fiscal year, which shall 925
include an estimate of unencumbered balances at the end of the 926
current fiscal year, and the funds to which such estimated 927
receipts are credited; 928
(2) The amount each fund requires from the general 930
property tax, which shall be the difference between the 931
contemplated expenditure from the fund and the estimated 932
receipts, as provided in this section. The section of the 933
Revised Code under which the tax is authorized shall be set 934
forth. 935
(3) Comparative statements, so far as possible, in 937
parallel columns of taxes and other revenues for the current 938
fiscal year and the two preceding fiscal years. 939
(C)(1) The amount required for debt charges; 941
(2) The estimated receipts from sources other than the tax 943
levy for payment of such debt charges, including the proceeds of 944
23
refunding bonds to be issued to refund bonds maturing in the next 945
succeeding fiscal year; 946
(3) The net amount for which a tax levy shall be made, 948
classified as to bonds authorized and issued prior to January 1, 949
1922, and those authorized and issued subsequent to such date, 950
and as to what portion of the levy will be within and what in 951
excess of the ten-mill limitation. 952
(D) An estimate of amounts from taxes authorized to be 954
levied in excess of the ten-mill limitation on the tax rate, and 955
the fund to which such amounts will be credited, together with 956
the sections of the Revised Code under which each such tax is 957
exempted from all limitations on the tax rate. 958
(E)(1) A board of education may include in its budget for 960
the fiscal year in which a levy proposed under section 5705.194, 961
5705.21, or 5705.213, or the original levy under section 5705.212 962
of the Revised Code is first extended on the tax list and 963
duplicate an estimate of expenditures to be known as a voluntary 964
contingency reserve balance, which shall not be greater than 965
twenty-five per cent of the total amount of the levy estimated to 966
be available for appropriation in such year. 967
(2) A board of education may include in its budget for the 969
fiscal year following the year in which a levy proposed under 970
section 5705.194, 5705.21, or 5705.213, or the original levy 971
under section 5705.212 of the Revised Code is first extended on 972
the tax list and duplicate an estimate of expenditures to be 973
known as a voluntary contingency reserve balance, which shall not 974
be greater than twenty per cent of the amount of the levy 975
estimated to be available for appropriation in such year. 976
(3) Except as provided in division (E)(4) of this section, 978
the full amount of any reserve balance the board includes in its 979
budget shall be retained by the county auditor and county 980
treasurer out of the first semiannual settlement of taxes until 981
the beginning of the next succeeding fiscal year, and thereupon, 982
with the depository interest apportioned thereto, it shall be 983
24
turned over to the board of education, to be used for the 984
purposes of such fiscal year. 985
(4) A board of education, by a two-thirds vote of all 987
members of the board, may appropriate any amount withheld as a 988
voluntary contingency reserve balance during the fiscal year for 989
any lawful purpose, provided that prior to such appropriation the 990
board of education has authorized the expenditure of all amounts 991
appropriated for contingencies under section 5705.40 of the 992
Revised Code. Upon request by the board of education, the county 993
auditor shall draw a warrant on the district's account in the 994
county treasury payable to the district in the amount requested. 995
(F)(1) A board of education may include a spending reserve 997
in its budget for fiscal years ending on or before June 30, 2002. 999
The spending reserve shall consist of an estimate of expenditures 1,000
not to exceed the district's spending reserve balance. A 1,001
district's spending reserve balance is the amount by which the 1,002
designated percentage of the district's estimated personal 1,003
property taxes to be settled during the calendar year in which 1,004
the fiscal year ends exceeds the estimated amount of personal 1,005
property taxes to be so settled and received by the district 1,006
during that fiscal year. Moneys from a spending reserve shall be 1,007
appropriated in accordance with section 133.301 of the Revised 1,008
Code. 1,009
(2) For the purposes of computing a school district's 1,011
spending reserve balance for a fiscal year, the designated 1,012
percentage shall be as follows: 1,013
Fiscal year ending in: Designated percentage 1,016
1998 50% 1,018
1999 40% 1,019
2000 30% 1,020
2001 20% 1,021
2002 10% 1,022
(G) Except as otherwise provided in this division, the 1,025
county budget commission shall not reduce the taxing authority of 1,026
25
a subdivision as a result of the creation of a reserve balance 1,027
account. Except as otherwise provided in this division, the 1,028
county budget commission shall not consider the amount in a 1,029
reserve balance account of a township, county, or municipal 1,030
corporation as an unencumbered balance or as revenue for the 1,031
purposes of division (E)(3) or (4) of section 5747.51 or division 1,032
(E)(3) or (4) of section 5747.62 of the Revised Code. The county 1,033
budget commission may require documentation of the reasonableness 1,034
of the reserve balance held in any reserve balance account. The 1,035
commission shall consider any amount in a reserve balance account 1,036
that it determines to be unreasonable as unencumbered and as 1,037
revenue for the purposes of sections 5747.51 and 5747.62 of the
Revised Code and may take such amounts into consideration when 1,039
determining whether to reduce the taxing authority of a
subdivision.
(H)(1) Each board of education shall include in its tax 1,041
budget and shall establish a reserve balance account to 1,043
accumulate currently available resources to stabilize the school
district's budget against cyclical changes in revenues and 1,044
expenditures. The balance in the reserve balance account shall 1,045
not at any time be less than five per cent of general fund 1,047
revenues for the most recently concluded fiscal year, except as 1,048
provided in division (H)(2) or (3) of this section, and except 1,049
for deficiencies arising from the appropriation of money from the 1,050
account for unanticipated deficiencies in revenue or other 1,052
emergencies pursuant to a resolution adopted by two-thirds of the 1,053
membership of the board of education specifying the reason for 1,054
the appropriation. The auditor of state and the superintendent
of public instruction jointly shall adopt rules governing 1,055
conditions that constitute unanticipated deficiencies in revenue 1,056
or emergencies for which appropriations may be made from a 1,057
reserve balance account. The rules also shall provide that a 1,058
board of education that borrows against its spending reserve 1,060
established in its tax budget for a fiscal year under division 1,061
26
(F) of this section is not subject to division (H)(2) of this 1,062
section for that fiscal year. A board of education shall not 1,063
appropriate money from a reserve balance account without filing a 1,065
schedule for replenishing the account with the superintendent of 1,066
public instruction and receiving approval of the schedule from 1,067
the superintendent of public instruction. 1,068
(2)(a) Beginning with the fiscal year ending in 1999 and 1,070
continuing each fiscal year until the balance in the reserve 1,071
balance account equals five per cent of the district's revenues 1,073
received for current expenses for the preceding fiscal year, if 1,074
the growth in a district's total revenues received for current
expenses from one fiscal year to the next is at least three per 1,075
cent, the board of education shall credit to its reserve balance 1,077
account, from the general fund or from other sources that may 1,079
lawfully be credited to the general fund, an amount that, when 1,080
added to the account balance, is not less than: 1,081
(i) One per cent of revenues received for current expenses 1,083
for the prior fiscal year; plus 1,084
(ii) The sum of the amounts credited under this section 1,086
for all fiscal years that amounts were required to be credited 1,087
under this section.
Each board shall maintain the balance in the district's 1,089
reserve balance account at not less than five per cent of the 1,090
district's revenues received for current expenses for the 1,091
preceding fiscal year, except as otherwise authorized under 1,092
division (H) of this section.
(b) Notwithstanding division (H)(2)(a) of this section, in 1,095
no year shall a board be required to credit to its reserve 1,096
balance account more than one per cent of revenues received for
current expenses for the prior fiscal year. 1,097
(3) The balance in the reserve balance account of a school 1,100
district may be less than five per cent of the general fund 1,101
revenue for the most recently concluded fiscal year in any fiscal 1,102
year in which the school district is in a state of fiscal watch 1,103
27
or fiscal emergency pursuant to section 3316.03 of the Revised 1,104
Code.
(4) Notwithstanding any provision to the contrary in 1,106
Chapter 4117. of the Revised Code, the requirements of division 1,107
(H) of this section prevail over any conflicting provisions of 1,109
agreements between employee organizations and public employers 1,110
entered into after November 21, 1997. 1,111
(5) Notwithstanding division (H)(2) of this section, a 1,113
school district may, pursuant to rules adopted by the auditor of 1,114
state, credit less than one per cent of its prior year's revenue 1,115
received for current expenses into its reserve balance account. 1,116
(6) A school district board may apply to the state 1,118
superintendent of public instruction for a one-time waiver of the 1,119
deposit requirements of division (H)(2) of this section when it 1,121
determines that meeting the requirements in the current or next 1,122
fiscal year would cause the district to significantly reduce or 1,123
eliminate important educational services. The district shall 1,124
apply in the form and manner required by the state 1,125
superintendent, and the application may request a waiver of all 1,126
or part of the deposit required for the current or next fiscal 1,127
year. The state superintendent may grant a waiver if the state 1,128
superintendent and the auditor of state determine that meeting 1,129
the requirement in the current or next fiscal year would cause
the school district to significantly reduce or eliminate 1,131
important educational services. A waiver may entirely exempt the
district from making any deposit into its reserve balance account 1,133
during the current or next fiscal year or, regardless of whether 1,134
the district board applied for a waiver of the entire deposit, 1,135
may simply reduce the amount of the deposit otherwise required
during the current or next fiscal year by division (H)(2) of this 1,136
section. A waiver is valid for one fiscal year: either the 1,137
fiscal year in which the district board applied for it or the 1,138
immediately following fiscal year. A district board may receive 1,139
only one waiver under division (H)(6) of this section. 1,140
28
(I) Notwithstanding division (H)(2) of this section, 1,142
whenever a city, local, exempted village, or joint vocational 1,143
school district receives from the bureau of workers' compensation 1,144
a refund or other reimbursement of money that the district 1,145
previously paid to the bureau, the district shall deposit the 1,146
full amount of the refund or other reimbursement into the 1,147
district's reserve balance account, unless the account already 1,148
contains five per cent of the district's revenues received for 1,149
current expenses for the preceding year as prescribed in division 1,150
(H)(2)(a) of this section. A district may credit any amount it 1,151
deposits into that account under this division toward any minimum 1,152
deposit required for the account in that fiscal year. 1,153
Sec. 5705.38. (A) This division does not apply to school 1,163
district appropriation measures. On or about the first day of 1,164
each year, the taxing authority of each subdivision or other 1,165
taxing unit shall pass an appropriation measure, and thereafter 1,166
during the year it may pass any supplemental appropriation 1,167
measures as it finds necessary, based on the revised tax budget 1,168
and the official certificate of estimated resources or amendments 1,169
of the certificate. If adoption of a tax budget was waived under 1,170
section 5705.281 of the Revised Code, appropriation measures 1,171
shall be based on the official certificate of estimated 1,172
resources. If it desires to postpone the passage of the annual 1,173
appropriation measure until an amended certificate is received 1,174
based on the actual balances, it may pass a temporary
appropriation measure for meeting the ordinary expenses of the 1,175
taxing unit until no later than the first day of April of the 1,176
current year, and the appropriations made in the temporary 1,177
measure shall be chargeable to the appropriations in the annual 1,178
appropriation measure for that fiscal year when passed. 1,179
(B) A board of education shall pass its annual 1,181
appropriation measure by the first day of October. If, by the 1,182
first day of October, a board has not received either the amended 1,183
certificates of estimated resources required by division (B) of 1,184
29
section 5705.36 of the Revised Code or certifications that no 1,185
amended certificates need be issued, the adoption of the annual 1,186
appropriation measure shall be delayed until the amended 1,187
certificates or certifications are received. Prior to the 1,188
passage of the annual appropriation measure, the board may pass a 1,189
temporary appropriation measure for meeting the ordinary expenses 1,190
of the district until it passes an annual appropriation measure, 1,191
and appropriations made in the temporary measure shall be 1,192
chargeable to the appropriations in the annual appropriation 1,193
measure for that fiscal year when passed. During the fiscal year 1,194
and after the passage of the annual appropriation measure, a 1,195
district may pass any supplemental appropriation measures as it 1,196
finds necessary, based on the revised tax budget and the official 1,197
certificate of estimated resources or amendments of the 1,198
certificate. The annual appropriation measure, and any temporary 1,199
or supplemental appropriation measure, shall provide for the 1,200
reservation of a sufficient amount of money for the budget 1,201
reserve fund as required under division (H) of section 5705.29 of 1,202
the Revised Code. School district appropriation measures shall be 1,203
in the form as the auditor of state, after consultation with the 1,204
tax commissioner, prescribes. 1,205
(C) Appropriation measures shall be classified so as to 1,207
set forth separately the amounts appropriated for each office, 1,208
department, and division, and, within each, the amount 1,209
appropriated for personal services. In the case of a municipal 1,210
university, the board of directors of which have assumed, in the 1,211
manner provided by law, custody and control of the funds of the 1,212
university, funds shall be appropriated as a lump sum for the use 1,213
of the university. 1,214
Section 2. That existing sections 3315.17, 3315.18, 1,216
3316.03, 3316.04, 3316.06, 3316.20, 5705.13, 5705.29, and 5705.38 1,217
of the Revised Code are hereby repealed. 1,218
Section 3. After the effective date of this section, no 1,220
board of education of any school district shall be required to 1,221
30
establish and maintain a budget reserve account as previously 1,222
required under divisions (H) and (I) of section 5705.29 of the 1,223
Revised Code as that section existed prior to the effective date 1,224
of this section. Any money on hand in a school district's budget 1,225
reserve account established and maintained under those divisions 1,226
on the effective date of this section may at the discretion of 1,227
the district board of education be returned to the district's 1,228
general fund or may be left in the account and may be used by the 1,229
district board to offset any budget deficit the district may 1,230
experience in future fiscal years. However, any portion of that 1,231
money consisting of refunds or rebates from the Bureau of 1,232
Workers' Compensation that was required to be deposited in the 1,233
fund under Section 39 of Am. Sub. H.B. 770 of the 122nd General 1,234
Assembly or division (I) of section 5705.29 of the Revised Code 1,235
as it existed prior to the effective date of this section may be 1,236
used solely to offset a budget deficit or for school facility
construction, renovation, or repair; textbooks or instructional 1,238
materials, including science equipment or laboratories; or 1,239
professional development of teachers. 1,240
This section does not affect a district board's authority 1,242
to establish a reserve balance account under section 5705.13 of 1,243
the Revised Code as that section exists after the effective date 1,244
of this section. 1,245
Section 4. Sections 3315.17 and 3315.18 of the Revised 1,247
Code, which were enacted by Sub. H.B. 412 of the 122nd General 1,248
Assembly, required school districts to set aside percentages of 1,249
their general operating funds for textbooks and instructional 1,250
materials and for capital and maintenance costs. Section 1,251
3313.603 of the Revised Code, enacted by Am. Sub. S.B. 55 of the 1,252
122nd General Assembly, increased from eighteen to twenty-one the 1,253
minimum number of academic units required for students graduating 1,254
from high school in this state after September 15, 2001. The 1,255
Ohio Supreme Court, in DeRolph v. State (2000), 89 Ohio St. 3d 1, 1,256
concluded that all of these requirements impermissibly imposed 1,258
31
unfunded mandates upon school districts.
The General Assembly finds that the costs of the set-aside 1,260
requirements of sections 3315.17 and 3315.18 are not unfunded to 1,261
the extent the required set-asides are percentages of the base 1,262
cost formula amount. Since fiscal year 1999, these set-asides 1,263
have been included within the base cost formula amounts 1,264
prescribed by section 3317.012 of the Revised Code, which was 1,265
enacted by Am. Sub. H.B. 650 of the 122nd General Assembly. The 1,266
General Assembly has reanalyzed fiscal year 1996 fiscal data of 1,267
the one hundred three model effective school districts, described 1,268
in section 3317.012 of the Revised Code, which served as the 1,269
basis for the fiscal policies contained in Am. Sub. H.B. 650. 1,270
This analysis is based on testimony and evidence presented in 1,271
2000 before the Joint Committee to Examine the Base Cost of an 1,272
Adequate Education, which clearly demonstrated that in fiscal 1,273
year 1996, the model school districts spent at least the 1,274
percentages prescribed in sections 3315.17 and 3315.18 of the 1,275
Revised Code for textbooks and instructional materials and 1,276
capital and maintenance costs as those percentages were adjusted 1,277
by the auditor of state under those sections. The base cost 1,279
formula amount enacted in Am. Sub. H.B. 650 was derived from 1,280
these districts' costs, which include their expenditures for
textbooks and instructional materials and capital and maintenance 1,281
costs. The base cost formula amount therefore includes an amount 1,282
adequate for school districts to meet the requirements of 1,283
sections 3315.17 and 3315.18 provided that the required 1,284
set-asides are percentages of the base cost amount and not of 1,285
school district total revenues. Accordingly, this act amends the 1,287
set-aside requirements to reflect this finding.
Other evidence submitted to the Joint Committee 1,289
demonstrated that in fiscal year 1996 the average minimum number 1,290
of academic units required to graduate from high school in the 1,291
model school districts was nineteen and six-tenths, but that many 1,292
students in those districts graduated with credits exceeding the 1,293
32
minimum. The General Assembly therefore finds that the base cost 1,294
formula amount reflects the cost of providing nineteen and 1,295
six-tenths high school academic units. The General Assembly 1,296
intends to increase the base cost formula amount in future 1,297
education funding legislation to close the gap between the model 1,298
districts' average of nineteen and six-tenths units and the 1,299
required minimum of twenty-one units imposed by section 3313.603 1,300
of the Revised Code.