As Passed by the House 1
123rd General Assembly 4
Regular Session Am. Sub. S. B. No. 345 5
1999-2000 6
SENATORS GARDNER-CUPP-HOTTINGER-RAY-FINAN-HARRIS-WACHTMANN- 7
DRAKE-OELSLAGER-MUMPER-BLESSING-NEIN 8
REPRESENTATIVES JACOBSON-CORBIN-CAREY-O'BRIEN-WOMER BENJAMIN- 10
HOOPS-METZGER-EVANS-DAMSCHRODER-D. MILLER-PERRY-BRADING-HOLLISTER- 11
GOODMAN-CALLENDER-ASLANIDES-WIDENER-AUSTRIA-TRAKAS-WILLIAMS- 12
YOUNG-WINKLER-GARDNER-METTLER-OLMAN-CATES-CALVERT- 13
MYERS-BUEHRER-SYKES 14
_________________________________________________________________ 16
A B I L L
To amend sections 3315.17, 3315.18, 3316.03, 18
3316.042, 3316.06, 3316.20, 5705.13, 5705.29, and 19
5705.38 and to enact sections 3315.19, 3316.031,
3316.061, and 3318.053 of the Revised Code to 21
address certain school district mandates and to
establish additional procedures for avoiding 22
fiscal problems in school districts. 23
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 24
Section 1. That sections 3315.17, 3315.18, 3316.03, 26
3316.042, 3316.06, 3316.20, 5705.13, 5705.29, and 5705.38 be 28
amended and sections 3315.19, 3316.031, 3316.061, and 3318.053 of 29
the Revised Code be enacted to read as follows: 30
Sec. 3315.17. (A) The board of education of each city, 40
exempted village, local, and joint vocational school district 41
shall establish a textbook and instructional materials fund and. 42
EACH BOARD ANNUALLY shall deposit into that fund four per cent, 44
or another percentage if established in rules adopted under 45
division (C) of this section, of all AN AMOUNT DERIVED FROM 46
revenues received by the district for operating expenses THAT IS 49
2
EQUAL TO THREE PER CENT OF THE FORMULA AMOUNT FOR THE PRECEDING 50
FISCAL YEAR, AS DEFINED IN SECTION 3317.02 OF THE REVISED CODE,
OR ANOTHER PERCENTAGE IF ESTABLISHED BY THE AUDITOR OF STATE 51
UNDER DIVISION (C) OF THIS SECTION, MULTIPLIED BY THE DISTRICT'S 53
STUDENT POPULATION FOR THE PRECEDING FISCAL YEAR. Money in the 54
fund shall be used solely for textbooks, instructional software, 55
and instructional materials, supplies, and equipment. Any money 56
in the fund that is not used in any fiscal year shall carry 57
forward to the next fiscal year. 58
(B) Notwithstanding division (A) of this section, if in a 60
fiscal year a district board deposits in the textbook and 62
instructional materials fund an amount of money greater than the 63
amount required to be deposited by this section or the rules 64
adopted under division (C) of this section, the board may deduct 65
the excess amount of money from the amount of money required to 66
be deposited in succeeding fiscal years. 67
(C) The state superintendent of public instruction and the 70
auditor of state jointly shall adopt rules in accordance with 71
Chapter 119. of the Revised Code defining what constitutes 73
textbooks, instructional software, and instructional materials, 74
supplies, and equipment for which money in a school district's 75
textbook and instructional materials fund may be used. The 76
jointly adopted rules AUDITOR OF STATE also may designate a 77
percentage, other than four THREE per cent, of district operating 79
revenues THE FORMULA AMOUNT MULTIPLIED BY THE DISTRICT'S STUDENT 80
POPULATION that must be deposited into the fund. The auditor of 82
state shall adopt rules under section 117.20 of the Revised Code 84
authorizing up to a three-year phase-in period for district 85
boards to meet the percentage requirements of division (A) of 86
this section, and specifying the manner in which district boards 87
may deduct from a required deposit an excess amount deposited 88
into the textbook and instructional materials fund in a prior 89
fiscal year.
(D) Notwithstanding division (A) of this section, a 92
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district board of education in any fiscal year may appropriate 93
money in the district textbook and instructional materials fund 94
for purposes other than those permitted by that division if both 95
of the following occur during that fiscal year: 96
(1) All of the following certify to the district board in 98
writing that the district has sufficient textbooks, instructional 99
software, and instructional materials, supplies, and equipment to 101
ensure a thorough and efficient education within the district: 102
(a) The district superintendent; 104
(b) In districts required to have a business advisory 106
council, a person designated by vote of the business advisory 107
council;
(c) If the district teachers are represented by an 109
exclusive bargaining representative for purposes of Chapter 4117. 111
of the Revised Code, the president of that organization or the 114
president's designee.
(2) The district board adopts, by unanimous vote of all 116
members of the board, a resolution stating that the district has 117
sufficient textbooks, instructional software, and instructional 118
materials, supplies, and equipment to ensure a thorough and 119
efficient education within the district. 120
(E) Notwithstanding any provision to the contrary in 122
Chapter 4117. of the Revised Code, the requirements of this 123
section prevail over any conflicting provisions of agreements 125
between employee organizations and public employers entered into 126
on or after November 21, 1997. 127
(F) AS USED IN THIS SECTION AND IN SECTION 3315.18 OF THE 129
REVISED CODE, "STUDENT POPULATION" MEANS THE AVERAGE, DAILY, 131
FULL-TIME-EQUIVALENT NUMBER OF STUDENTS IN KINDERGARTEN THROUGH 133
TWELFTH GRADE RECEIVING ANY EDUCATIONAL SERVICES FROM THE SCHOOL 134
DISTRICT DURING THE FIRST FULL SCHOOL WEEK IN OCTOBER, EXCLUDING 135
STUDENTS ENROLLED IN ADULT EDUCATION CLASSES, BUT INCLUDING ALL 137
OF THE FOLLOWING:
(1) ADJACENT OR OTHER DISTRICT STUDENTS ENROLLED IN THE 139
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DISTRICT UNDER AN OPEN ENROLLMENT POLICY PURSUANT TO SECTION 140
3313.98 OF THE REVISED CODE; 141
(2) STUDENTS RECEIVING SERVICES IN THE DISTRICT PURSUANT 143
TO A COMPACT, COOPERATIVE EDUCATION AGREEMENT, OR A CONTRACT, BUT 144
WHO ARE ENTITLED TO ATTEND SCHOOL IN ANOTHER DISTRICT PURSUANT TO 145
SECTION 3313.64 OR 3313.65 OF THE REVISED CODE; 146
(3) STUDENTS FOR WHOM TUITION IS PAYABLE PURSUANT TO 148
SECTIONS 3317.081 AND 3323.141 OF THE REVISED CODE. 149
THE DEPARTMENT OF EDUCATION SHALL DETERMINE A DISTRICT'S 151
STUDENT POPULATION USING DATA REPORTED TO IT UNDER SECTION 152
3317.03 OF THE REVISED CODE FOR THE APPLICABLE FISCAL YEAR. 153
Sec. 3315.18. (A) The board of education of each city, 162
exempted village, local, and joint vocational school district 163
shall establish a capital and maintenance fund and. EACH BOARD 165
ANNUALLY shall deposit into that fund four per cent, or another 166
percentage if established in rules adopted under division (B) of 167
this section, of all AN AMOUNT DERIVED FROM revenues received by 168
the district that would otherwise have been deposited in the 170
general fund THAT IS EQUAL TO THREE PER CENT OF THE FORMULA 171
AMOUNT FOR THE PRECEDING FISCAL YEAR, AS DEFINED IN SECTION 172
3317.02 OF THE REVISED CODE, OR ANOTHER PERCENTAGE IF ESTABLISHED 173
BY THE AUDITOR OF STATE UNDER DIVISION (B) OF THIS SECTION, 174
MULTIPLIED BY THE DISTRICT'S STUDENT POPULATION FOR THE PRECEDING 175
FISCAL YEAR, except that money received from a permanent 177
improvement levy authorized by section 5705.21 of the Revised 178
Code may replace general revenue moneys in meeting the 179
requirements of this section. Money in the fund shall be used 180
solely for acquisition, replacement, enhancement, maintenance, or 181
repair of permanent improvements, as that term is defined in
section 5705.01 of the Revised Code. Any money in the fund that 182
is not used in any fiscal year shall carry forward to the next 183
fiscal year. 184
(B) The state superintendent of public instruction and the 187
auditor of state jointly shall adopt rules in accordance with 188
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Chapter 119. of the Revised Code defining what constitutes
expenditures permitted by division (A) of this section and. THE 190
AUDITOR OF STATE may designate a percentage, other than four 191
THREE per cent, of district operating revenues THE FORMULA AMOUNT 193
MULTIPLIED BY THE DISTRICT'S STUDENT POPULATION that must be 194
deposited into the fund. The auditor of state shall adopt rules 195
under section 117.20 of the Revised Code authorizing up to a 197
three-year phase-in period for district boards to meet the
percentage requirements of division (A) of this section. 199
(C) WITHIN ITS CAPITAL AND MAINTENANCE FUND, A SCHOOL 201
DISTRICT BOARD OF EDUCATION MAY ESTABLISH A SEPARATE ACCOUNT 202
SOLELY FOR THE PURPOSE OF DEPOSITING FUNDS TRANSFERRED FROM THE 203
DISTRICT'S RESERVE BALANCE ACCOUNT ESTABLISHED UNDER FORMER 204
DIVISION (H) OF SECTION 5705.29 OF THE REVISED CODE. AFTER THE 205
EFFECTIVE DATE OF THIS AMENDMENT, A BOARD MAY DEPOSIT ALL OR PART 206
OF THE FUNDS FORMERLY INCLUDED IN SUCH RESERVE BALANCE ACCOUNT IN 207
THE SEPARATE ACCOUNT ESTABLISHED UNDER THIS SECTION. FUNDS 208
DEPOSITED IN THIS SEPARATE ACCOUNT AND INTEREST ON SUCH FUNDS 210
SHALL BE UTILIZED SOLELY FOR THE PURPOSE OF PROVIDING THE
DISTRICT'S PORTION OF THE BASIC PROJECT COSTS OF ANY PROJECT 211
UNDERTAKEN IN ACCORDANCE WITH CHAPTER 3318. OF THE REVISED CODE. 213
(D) Notwithstanding any provision to the contrary in 215
Chapter 4117. of the Revised Code, the requirements of this 216
section prevail over any conflicting provisions of agreements 217
between employee organizations and public employers entered into 218
after the effective date of this section NOVEMBER 21, 1997. 219
Sec. 3315.19. NOTWITHSTANDING THE PROVISIONS OF SECTIONS 221
3315.17 AND 3315.18 OF THE REVISED CODE AS THEY EXIST AFTER THE 222
EFFECTIVE DATE OF THIS SECTION, THE BOARD OF EDUCATION OF ANY 223
SCHOOL DISTRICT ANNUALLY MAY ELECT TO SET ASIDE FUNDS FOR 225
TEXTBOOKS AND INSTRUCTIONAL MATERIALS OR FOR CAPITAL AND
MAINTENANCE IN ACCORDANCE WITH THE PROVISIONS OF THOSE SECTIONS 226
AS THEY EXISTED PRIOR TO THE EFFECTIVE DATE OF THIS SECTION AND 227
THE RULES ADOPTED UNDER THOSE SECTIONS. ANY DISTRICT BOARD 228
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MAKING SUCH AN ELECTION UNDER THIS SECTION SHALL NOTIFY THE 229
AUDITOR OF STATE WITHIN NINETY DAYS AFTER THE BEGINNING OF THE 230
FISCAL YEAR WHETHER THE DISTRICT INTENDS TO COMPLY WITH THE 231
PROVISIONS OF ONE OR BOTH FORMER SECTIONS. A SCHOOL DISTRICT 233
MAKING AN ELECTION UNDER THIS SECTION SHALL NOT BE REQUIRED TO 234
COMPLY, DURING THE FISCAL YEAR OF THE ELECTION, WITH THE
PROVISIONS OF THE APPLICABLE SECTIONS AS THEY EXIST AFTER THE 235
EFFECTIVE DATE OF THIS SECTION. 236
Sec. 3316.03. (A) The existence of a fiscal watch shall 246
be determined DECLARED by the auditor of state. The auditor of 248
state may make the A determination on the auditor of state's 249
initiative, or upon receipt of a written request for such a 250
determination, which may be filed by the governor, the 251
superintendent of public instruction, or a majority of the 252
members of the board of education of the school district. The 254
(1) THE auditor of state shall declare a school district 256
to be in a state of fiscal watch if the auditor of state 257
determines that division (A)(1), (2), or (3) of this section 259
applies to the school district:
(1) All BOTH of the following conditions are satisfied 261
with respect to the school district: 263
(a) An operating deficit has been certified for the 265
current fiscal year by the auditor of state, and the certified 266
operating deficit exceeds eight per cent of the school district's 268
general fund revenue for the preceding fiscal year; 269
(b) The unencumbered cash balance in the school district's 272
general fund at the close of the preceding fiscal year, less any 273
advances of property taxes, was less than eight per cent of the 274
expenditures made from the general fund for the preceding fiscal 276
year;
(c) A majority of the voting electors have not voted in 278
favor of levying a tax under section 5705.194 or 5705.21 or 280
Chapter 5748. of the Revised Code that the auditor of state 281
expects will raise enough additional revenue in the next 282
7
succeeding fiscal year that divisions DIVISION (A)(1)(a) and (b) 283
of this section will not apply to the district in such next 284
succeeding fiscal year.
(2) The AUDITOR OF STATE SHALL DECLARE A SCHOOL DISTRICT 286
TO BE IN A STATE OF FISCAL WATCH IF THE AUDITOR OF STATE 287
DETERMINES THAT THE school district has outstanding securities 288
issued under division (A)(4) of section 3316.06 of the Revised 289
Code, and its financial planning and supervision commission has 291
been terminated under section 3316.16 of the Revised Code. 292
(3) The school district has received an advancement under 294
section 3316.20 of the Revised Code AUDITOR OF STATE SHALL 295
DECLARE A SCHOOL DISTRICT TO BE IN A STATE OF FISCAL WATCH IF 296
BOTH OF THE FOLLOWING CONDITIONS ARE SATISFIED: 298
(a) THE SUPERINTENDENT OF PUBLIC INSTRUCTION HAS REPORTED 300
TO THE AUDITOR OF STATE THAT THE SUPERINTENDENT HAS DECLARED THE 301
DISTRICT UNDER SECTION 3316.031 OF THE REVISED CODE TO BE UNDER A 302
FISCAL CAUTION, HAS FOUND THAT THE DISTRICT HAS NOT ACTED 303
REASONABLY TO ELIMINATE OR CORRECT PRACTICES OR CONDITIONS THAT 304
PROMPTED THE DECLARATION, AND HAS DETERMINED THE DECLARATION OF A 305
STATE OF FISCAL WATCH NECESSARY TO PREVENT FURTHER FISCAL 306
DECLINE;
(b) THE AUDITOR OF STATE DETERMINES THAT THE DECISION OF 309
THE SUPERINTENDENT IS REASONABLE.
IF THE AUDITOR OF STATE DETERMINES THAT THE DECISION OF THE 311
SUPERINTENDENT IS NOT REASONABLE, THE AUDITOR OF STATE SHALL 312
PROVIDE THE SUPERINTENDENT WITH A WRITTEN EXPLANATION OF THAT 313
DETERMINATION.
(4) THE AUDITOR OF STATE MAY DECLARE A SCHOOL DISTRICT TO 315
BE IN A STATE OF FISCAL WATCH IF ALL OF THE FOLLOWING CONDITIONS 316
ARE SATISFIED: 317
(a) AN OPERATING DEFICIT HAS BEEN CERTIFIED FOR THE 319
CURRENT FISCAL YEAR BY THE AUDITOR OF STATE, AND THE CERTIFIED 320
OPERATING DEFICIT EXCEEDS TWO PER CENT, BUT DOES NOT EXCEED EIGHT 322
PER CENT, OF THE SCHOOL DISTRICT'S GENERAL FUND REVENUE FOR THE
8
PRECEDING FISCAL YEAR; 323
(b) A MAJORITY OF THE VOTING ELECTORS HAVE NOT VOTED IN 325
FAVOR OF LEVYING A TAX UNDER SECTION 5705.194 OR 5705.21 OR 326
CHAPTER 5748. OF THE REVISED CODE THAT THE AUDITOR OF STATE 327
EXPECTS WILL RAISE ENOUGH ADDITIONAL REVENUE IN THE NEXT 329
SUCCEEDING FISCAL YEAR THAT DIVISION (A)(4)(a) OF THIS SECTION 330
WILL NOT APPLY TO THE DISTRICT IN THE NEXT SUCCEEDING FISCAL 332
YEAR;
(c) THE AUDITOR OF STATE DETERMINES THAT THERE IS NO 334
REASONABLE CAUSE FOR THE DEFICIT OR THAT THE DECLARATION OF 335
FISCAL WATCH IS NECESSARY TO PREVENT FURTHER FISCAL DECLINE IN 336
THE DISTRICT.
(B)(1) The auditor of state, after consulting with the 338
superintendent of public instruction, shall issue an order 340
declaring a school district to be in a state of fiscal emergency 342
if the auditor of state determines that division (B)(1), (2), 343
(3), or (4) of this section applies to the school district: 344
(1) All BOTH of the following conditions are satisfied 346
with respect to the school district: 348
(a) The board of education of the school district is not 350
able to demonstrate, to the auditor of state's satisfaction, the 351
district's ability to repay outstanding loans received pursuant 352
to section 3313.483 of the Revised Code or to repay securities 353
issued pursuant to section 133.301 of the Revised Code in 354
accordance with applicable repayment schedules unless the board 355
requests additional loans under section 133.301 of the Revised 357
Code in an aggregate principal amount exceeding fifty per cent of 358
the sum of the following: 359
(i) The aggregate original principal amount of loans 362
received in the preceding fiscal year under section 3313.483 of 363
the Revised Code;
(ii) The aggregate amount borrowed by the district under 365
section 133.301 of the Revised Code, excluding any additional 367
amount borrowed as authorized under division (C) of that section. 368
9
(b) An operating deficit has been certified for the 370
current fiscal year by the auditor of state, and the certified 371
operating deficit exceeds fifteen per cent of the school 372
district's general fund revenue for the preceding fiscal year. 373
In determining the amount of an operating deficit under division 374
(B)(1)(b)(a) of this section, the auditor of state shall credit 376
toward the amount of that deficit only the amount that may be 377
borrowed from the spending reserve balance as determined under 378
section 133.301 and division (F) of section 5705.29 of the 379
Revised Code.
(c)(b) A majority of the voting electors have not voted in 381
favor of levying a tax under section 5705.194 or 5705.21 or 383
Chapter 5748. of the Revised Code that the auditor of state 384
expects will raise enough additional revenue in the next 385
succeeding fiscal year that divisions DIVISION (A)(B)(1)(a) and 386
(b) of this section will not apply to the district in such next 387
succeeding fiscal year.
(d) The school district is one that, at the time of the 389
auditor of state's determination under this section, had a total 391
student count of more than ten thousand students as most recently 392
determined by the department of education pursuant to section 394
3317.03 of the Revised Code. 395
(2) The AUDITOR OF STATE SHALL ISSUE AN ORDER DECLARING A 397
SCHOOL DISTRICT TO BE IN A STATE OF FISCAL EMERGENCY IF THE 398
school district board fails, pursuant to section 3316.04 of the 400
Revised Code, to submit a plan acceptable to the state 401
superintendent of public instruction within one hundred twenty 402
days of the auditor of state's declaration under division (A) of 403
this section OR AN UPDATED PLAN WHEN ONE IS REQUIRED BY DIVISION 404
(C) OF SECTION 3316.04 OF THE REVISED CODE; 405
(3) A THE AUDITOR OF STATE SHALL ISSUE AN ORDER DECLARING 407
A SCHOOL DISTRICT TO BE IN A STATE OF FISCAL EMERGENCY IF BOTH OF 409
THE FOLLOWING CONDITIONS ARE SATISFIED:
(a) THE SUPERINTENDENT OF PUBLIC INSTRUCTION HAS REPORTED 412
10
TO THE AUDITOR OF STATE THAT THE DISTRICT IS NOT MATERIALLY 414
COMPLYING WITH THE PROVISIONS OF AN ORIGINAL OR UPDATED PLAN AS 415
APPROVED BY THE STATE SUPERINTENDENT UNDER SECTION 3316.04 OF THE 416
REVISED CODE, AND THAT THE STATE SUPERINTENDENT HAS DETERMINED 417
THE DECLARATION OF A STATE OF FISCAL EMERGENCY NECESSARY TO
PREVENT FURTHER FISCAL DECLINE; 418
(b) THE AUDITOR OF STATE FINDS THAT THE DETERMINATION OF 421
THE SUPERINTENDENT IS REASONABLE. 422
IF THE AUDITOR OF STATE DETERMINES THAT THE DECISION OF THE 424
SUPERINTENDENT IS NOT REASONABLE, THE AUDITOR OF STATE SHALL 425
PROVIDE THE SUPERINTENDENT A WRITTEN EXPLANATION OF THAT 426
DETERMINATION.
(4) THE AUDITOR OF STATE SHALL ISSUE AN ORDER DECLARING A 428
SCHOOL DISTRICT TO BE IN A STATE OF FISCAL EMERGENCY IF A 429
declaration of fiscal emergency is required by division (D) of 432
section 3316.04 of the Revised Code;.
(4) The school district has received more than one 434
advancement under section 3316.20 of the Revised Code within a 437
two-year period, or has received only one such advancement but 438
also has an operating deficit as described in division (B)(1)(b) 439
of this section (5) THE AUDITOR OF STATE MAY ISSUE AN ORDER 440
DECLARING A SCHOOL DISTRICT TO BE IN A STATE OF FISCAL EMERGENCY 441
IF ALL OF THE FOLLOWING CONDITIONS ARE SATISFIED: 442
(a) AN OPERATING DEFICIT HAS BEEN CERTIFIED FOR THE 444
CURRENT FISCAL YEAR BY THE AUDITOR OF STATE, AND THE CERTIFIED 445
OPERATING DEFICIT EXCEEDS TEN PER CENT, BUT DOES NOT EXCEED 446
FIFTEEN PER CENT, OF THE SCHOOL DISTRICT'S GENERAL FUND REVENUE 447
FOR THE PRECEDING FISCAL YEAR; 448
(b) A MAJORITY OF THE VOTING ELECTORS HAVE NOT VOTED IN 450
FAVOR OF LEVYING A TAX UNDER SECTION 5705.194 OR 5705.21 OR 451
CHAPTER 5748. OF THE REVISED CODE THAT THE AUDITOR OF STATE 452
EXPECTS WILL RAISE ENOUGH ADDITIONAL REVENUE IN THE NEXT 454
SUCCEEDING FISCAL YEAR THAT DIVISION (B)(5)(a) OF THIS SECTION 455
WILL NOT APPLY TO THE DISTRICT IN THE NEXT SUCCEEDING FISCAL 457
11
YEAR;
(c) THE AUDITOR OF STATE DETERMINES THAT A DECLARATION OF 459
FISCAL EMERGENCY IS NECESSARY TO CORRECT THE DISTRICT'S FISCAL 460
PROBLEMS AND TO PREVENT FURTHER FISCAL DECLINE. 461
(C) In making the determinations under this section, the 463
auditor of state may use financial reports required under section 464
117.43 of the Revised Code; tax budgets, certificates of 466
estimated resources and amendments thereof, annual appropriating 467
measures and spending plans, and any other documents or 468
information prepared pursuant to Chapter 5705. of the Revised 469
Code; and any other documents, records, or information available 470
to the auditor of state that indicate the conditions described in 471
divisions (A) and (B) of this section.
(D) The auditor of state shall certify the action taken 473
under division (A) or (B) of this section to the board of 474
education of the school district, the director of budget and 475
management, the mayor or county auditor who could be required to 476
act pursuant to division (B)(1) of section 3316.05 of the Revised
Code, and to the superintendent of public instruction. 477
(E) A determination by the auditor of state under this 479
section that a fiscal emergency condition does not exist is final 480
and conclusive and not appealable. A determination by the 481
auditor of state under this section that a fiscal emergency 482
exists is final, except that the board of education of the school 483
district affected by such a determination may appeal the
determination of the existence of a fiscal emergency condition to 484
the court of appeals having territorial jurisdiction over the 485
school district. The appeal shall be heard expeditiously by the 486
court of appeals and for good cause shown shall take precedence 487
over all other civil matters except earlier matters of the same 488
character. Notice of such appeal must be filed with the auditor
of state and such court within thirty days after certification by 489
the auditor of state to the board of education of the school 490
district provided for in division (D) of this section. In such 491
12
appeal, determinations of the auditor of state shall be presumed 492
to be valid and the board of education shall have the burden of 493
proving, by clear and convincing evidence, that each of the 494
determinations made by the auditor of state as to the existence
of a fiscal emergency condition under this section was in error. 495
If the board of education fails, upon presentation of its case, 496
to prove by clear and convincing evidence that each such 497
determination by the auditor of state was in error, the court 498
shall dismiss the appeal. The board of education and the auditor 499
of state may introduce any evidence relevant to the existence or
nonexistence of such fiscal emergency conditions. The pendency 500
of any such appeal shall not affect or impede the operations of 501
this chapter; no restraining order, temporary injunction, or 502
other similar restraint upon actions consistent with this chapter 503
shall be imposed by the court or any court pending determination 504
of such appeal; and all things may be done under this chapter 505
that may be done regardless of the pendency of any such appeal.
Any action taken or contract executed pursuant to this chapter 506
during the pendency of such appeal is valid and enforceable among 507
all parties, notwithstanding the decision in such appeal. If the 508
court of appeals reverses the determination of the existence of a 509
fiscal emergency condition by the auditor of state, the 510
determination no longer has any effect, and any procedures 511
undertaken as a result of the determination shall be terminated. 512
Sec. 3316.031. (A) THE STATE SUPERINTENDENT OF PUBLIC 514
INSTRUCTION, IN CONSULTATION WITH THE AUDITOR OF STATE, SHALL 516
DEVELOP GUIDELINES FOR IDENTIFYING FISCAL PRACTICES AND BUDGETARY 517
CONDITIONS THAT, IF UNCORRECTED, COULD RESULT IN A FUTURE 519
DECLARATION OF A FISCAL WATCH OR FISCAL EMERGENCY WITHIN A SCHOOL 520
DISTRICT.
(B)(1) IF THE STATE SUPERINTENDENT DETERMINES FROM A 522
SCHOOL DISTRICT'S FIVE-YEAR FORECAST SUBMITTED UNDER SECTION 524
5705.391 OF THE REVISED CODE THAT A DISTRICT IS ENGAGING IN ANY 525
OF THOSE PRACTICES OR THAT ANY OF THOSE CONDITIONS EXIST WITHIN 526
13
THE DISTRICT, AFTER CONSULTING WITH THE DISTRICT BOARD OF 527
EDUCATION CONCERNING THE PRACTICES OR CONDITIONS, THE STATE 528
SUPERINTENDENT MAY DECLARE THE DISTRICT TO BE UNDER A FISCAL 529
CAUTION.
(2) IF THE AUDITOR OF STATE FINDS THAT A DISTRICT IS 532
ENGAGING IN ANY OF THOSE PRACTICES OR THAT ANY OF THOSE 533
CONDITIONS EXIST WITHIN THE DISTRICT, THE AUDITOR OF STATE SHALL 534
REPORT THAT FINDING TO THE STATE SUPERINTENDENT AND, AFTER 536
CONSULTING WITH THE DISTRICT BOARD OF EDUCATION CONCERNING THE 537
PRACTICES OR CONDITIONS, THE STATE SUPERINTENDENT MAY DECLARE THE 538
DISTRICT TO BE UNDER A FISCAL CAUTION. 539
(3) UNLESS THE AUDITOR OF STATE HAS ELECTED TO DECLARE A 541
STATE OF FISCAL WATCH UNDER DIVISION (A)(4) OF SECTION 3316.03 OF 542
THE REVISED CODE, THE STATE SUPERINTENDENT SHALL DECLARE A SCHOOL 544
DISTRICT TO BE UNDER A FISCAL CAUTION IF THE CONDITIONS DESCRIBED 546
IN DIVISIONS (A)(4)(a) AND (b) OF THAT SECTION ARE BOTH SATISFIED 548
WITH RESPECT TO THE SCHOOL DISTRICT.
(C) WHEN THE STATE SUPERINTENDENT DECLARES A DISTRICT TO 550
BE UNDER FISCAL CAUTION, THE STATE SUPERINTENDENT SHALL PROMPTLY 552
NOTIFY THE DISTRICT BOARD OF EDUCATION OF THAT DECLARATION AND 553
SHALL REQUEST THE BOARD TO PROVIDE WRITTEN PROPOSALS FOR 554
DISCONTINUING OR CORRECTING THE FISCAL PRACTICES OR BUDGETARY 555
CONDITIONS THAT PROMPTED THE DECLARATION AND FOR PREVENTING THE 556
DISTRICT FROM EXPERIENCING FURTHER FISCAL DIFFICULTIES THAT COULD 557
RESULT IN THE DISTRICT BEING DECLARED TO BE IN A STATE OF FISCAL 558
WATCH OR FISCAL EMERGENCY.
(D) THE STATE SUPERINTENDENT, OR A DESIGNEE, MAY VISIT AND 561
INSPECT ANY DISTRICT THAT IS DECLARED TO BE UNDER A FISCAL
CAUTION. THE DEPARTMENT OF EDUCATION SHALL PROVIDE TECHNICAL 562
ASSISTANCE TO THE DISTRICT BOARD IN IMPLEMENTING PROPOSALS TO 563
ELIMINATE THE PRACTICES OR BUDGETARY CONDITIONS THAT PROMPTED THE 564
DECLARATION OF FISCAL CAUTION AND MAY MAKE RECOMMENDATIONS 565
CONCERNING THE BOARD'S PROPOSALS.
(E) IF THE STATE SUPERINTENDENT FINDS THAT A SCHOOL 567
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DISTRICT DECLARED TO BE UNDER A FISCAL CAUTION HAS NOT MADE 569
REASONABLE PROPOSALS OR OTHERWISE TAKEN ACTION TO DISCONTINUE OR 571
CORRECT THE FISCAL PRACTICES OR BUDGETARY CONDITIONS THAT 572
PROMPTED THE DECLARATION OF FISCAL CAUTION, AND IF THE STATE 573
SUPERINTENDENT CONSIDERS IT NECESSARY TO PREVENT FURTHER FISCAL 574
DECLINE, THE STATE SUPERINTENDENT MAY DETERMINE THAT THE DISTRICT 576
SHOULD BE IN A STATE OF FISCAL WATCH. AS PROVIDED IN DIVISION 577
(A)(3) OF SECTION 3316.03 OF THE REVISED CODE, THE AUDITOR OF 578
STATE SHALL DECLARE THE DISTRICT TO BE IN A STATE OF FISCAL WATCH 579
IF THE AUDITOR OF STATE FINDS THE SUPERINTENDENT'S DETERMINATION 580
TO BE REASONABLE.
Sec. 3316.042. The auditor of state, ON THE AUDITOR OF 589
STATE'S INITIATIVE, may conduct a performance audit of a school 591
district THAT IS UNDER A FISCAL CAUTION UNDER SECTION 3316.031 OF 592
THE REVISED CODE, in a state of fiscal watch, or in a state of
fiscal emergency, in which the auditor of state reviews any 594
programs or areas of operation in which the auditor of state 595
believes that greater operational efficiencies or enhanced 596
program results can be achieved. A
THE AUDITOR OF STATE SHALL CONDUCT A PERFORMANCE AUDIT OF A 598
SCHOOL DISTRICT THAT IS UNDER A FISCAL CAUTION, IN A STATE OF 599
FISCAL WATCH, OR IN A STATE OF FISCAL EMERGENCY IF REQUESTED BY 600
THE STATE SUPERINTENDENT OF PUBLIC INSTRUCTION. 601
THE COST OF A PERFORMANCE AUDIT CONDUCTED UNDER THIS 603
SECTION SHALL BE PAID BY THE DEPARTMENT OF EDUCATION. 604
A performance audit under this section shall not include 607
review or evaluation of school district academic performance. 608
Sec. 3316.06. (A) Within one hundred twenty days after 617
the first meeting of a school district financial planning and 618
supervision commission, the commission shall adopt a financial 619
recovery plan regarding the school district for which the 620
commission was created. During the formulation of the plan, the 621
commission shall seek appropriate input from the school district 622
board and from the community. This plan shall contain the
15
following:
(1) Actions to be taken to: 624
(a) Eliminate all fiscal emergency conditions declared to 627
exist pursuant to division (B) of section 3316.03 of the Revised
Code;
(b) Satisfy any judgments, past-due accounts payable, and 629
all past-due and payable payroll and fringe benefits; 630
(c) Eliminate the deficits in all deficit funds; 632
(d) Restore to special funds any moneys from such funds 634
that were used for purposes not within the purposes of such 636
funds, or borrowed from such funds by the purchase of debt 637
obligations of the school district with the moneys of such funds, 638
or missing from the special funds and not accounted for, if any; 639
(e) Balance the budget, avoid future deficits in any 641
funds, and maintain on a current basis payments of payroll, 642
fringe benefits, and all accounts; 643
(f) Avoid any fiscal emergency condition in the future; 645
(g) Restore the ability of the school district to market 647
long-term general obligation bonds under provisions of law 648
applicable to school districts generally. 649
(2) The management structure that will enable the school 651
district to take the actions enumerated in division (A)(1) of 652
this section. The plan shall specify the level of fiscal and 653
management control that the commission will exercise within the 654
school district during the period of fiscal emergency, and shall 655
enumerate respectively, the powers and duties of the commission 656
and the powers and duties of the school board during that period. 657
The commission may elect to assume any of the powers and duties
of the school board it considers necessary, including all powers 658
related to personnel, curriculum, and legal issues in order to 659
successfully implement the actions described in division (A)(1) 660
of this section.
(3) The target dates for the commencement, progress upon, 663
and completion of the actions enumerated in division (A)(1) of 664
16
this section and a reasonable period of time expected to be 665
required to implement the plan. The commission shall prepare a
reasonable time schedule for progress toward and achievement of 667
the requirements for the plan, and the plan shall be consistent 668
with that time schedule.
(4) The amount and purpose of any issue of debt 670
obligations that will be issued, together with assurances that 671
any such debt obligations that will be issued will not exceed 672
debt limits supported by appropriate certifications by the fiscal 673
officer of the school district and the county auditor. Debt 674
obligations issued pursuant to section 133.301 of the Revised 675
Code shall include assurances that such debt shall be in an 676
amount not to exceed the amount certified under division (B) of 677
such section. If the commission considers it necessary in order 680
to maintain or improve educational opportunities of pupils in the 681
school district, the plan may include a proposal to restructure
or refinance outstanding debt obligations incurred by the board 682
under section 3313.483 of the Revised Code contingent upon the 684
approval, during the period of the fiscal emergency, by district
voters of a tax levied under section 718.09, 718.10, 5705.194, 685
5705.21, 5748.02, or 5748.08 of the Revised Code, that is not a 687
renewal or replacement levy and that will provide new operating 688
revenue. Notwithstanding any provision of Chapter 133. or 690
sections 3313.483 to 3313.4811 of the Revised Code, following the 691
required approval of the district voters and with the approval of 692
the commission, the school district may issue securities to 693
evidence the restructuring or refinancing. Those securities may 694
extend the original period for repayment, not to exceed ten 695
years, and may alter the frequency and amount of repayments, 697
interest or other financing charges, and other terms of 698
agreements under which the debt originally was contracted, at the 699
discretion of the commission, provided that any loans received 700
pursuant to section 3313.483 of the Revised Code shall be paid 701
from funds the district would otherwise receive under sections
17
3317.022 to 3317.025 of the Revised Code, as required under 702
division (E)(3) of section 3313.483 of the Revised Code. The 703
securities issued for the purpose of restructuring or refinancing 704
the debt shall be repaid in equal payments and at equal intervals 705
over the term of the debt and are not eligible to be included in 706
any subsequent proposal for the purpose of restructuring or
refinancing debt under this section. 707
(B) Any financial recovery plan may be amended subsequent 709
to its adoption. Each financial recovery plan shall be updated 710
annually.
(C) EACH SCHOOL DISTRICT FINANCIAL PLANNING AND 712
SUPERVISION COMMISSION SHALL SUBMIT THE FINANCIAL RECOVERY PLAN 713
IT ADOPTS OR UPDATES UNDER THIS SECTION TO THE STATE 714
SUPERINTENDENT OF PUBLIC INSTRUCTION FOR APPROVAL IMMEDIATELY 715
FOLLOWING ITS ADOPTION OR UPDATING. THE STATE SUPERINTENDENT 716
SHALL EVALUATE THE PLAN AND EITHER APPROVE OR DISAPPROVE IT 717
WITHIN THIRTY CALENDAR DAYS FROM THE DATE OF ITS SUBMISSION. IF 718
THE PLAN IS DISAPPROVED, THE STATE SUPERINTENDENT SHALL RECOMMEND 719
MODIFICATIONS THAT WILL RENDER IT ACCEPTABLE. NO FINANCIAL 720
PLANNING AND SUPERVISION COMMISSION SHALL IMPLEMENT A FINANCIAL 721
RECOVERY PLAN THAT IS ADOPTED OR UPDATED ON OR AFTER THE 722
EFFECTIVE DATE OF THIS AMENDMENT UNLESS THE STATE SUPERINTENDENT 723
HAS APPROVED IT. 724
Sec. 3316.061. IF ANY SCHOOL DISTRICT FINANCIAL PLANNING 726
AND SUPERVISION COMMISSION FAILS TO SUBMIT TO THE STATE 727
SUPERINTENDENT OF PUBLIC INSTRUCTION UNDER SECTION 3316.06 OF THE 728
REVISED CODE A FINANCIAL RECOVERY PLAN THAT IS ACCEPTABLE TO THE 730
STATE SUPERINTENDENT, OR IF THE STATE SUPERINTENDENT AND THE 731
DIRECTOR OF BUDGET AND MANAGEMENT FIND THAT A COMMISSION IS NOT 734
MATERIALLY COMPLYING WITH THE PROVISIONS OF ITS FINANCIAL 735
RECOVERY PLAN, THE STATE SUPERINTENDENT AND THE DIRECTOR MAY 737
JOINTLY DISSOLVE THE FINANCIAL PLANNING AND SUPERVISION 738
COMMISSION AND JOINTLY APPOINT AN INDIVIDUAL TO ACT AS THE FISCAL 739
ARBITRATOR OF THE DISTRICT.
18
WHEN A FINANCIAL PLANNING AND SUPERVISION COMMISSION IS 742
DISSOLVED UNDER THIS SECTION, THE COMMISSION CEASES TO EXIST AND 743
THE APPOINTED FISCAL ARBITRATOR BECOMES THE SUCCESSOR TO THE 744
COMMISSION. A FISCAL ARBITRATOR APPOINTED UNDER THIS SECTION HAS 745
ALL OF THE RIGHTS, POWERS, AND DUTIES GIVEN BY THIS CHAPTER TO 746
THE COMMISSION THAT THE ARBITRATOR SUCCEEDS. A REFERENCE IN ANY 747
STATUTE, RULE, CONTRACT, OR OTHER DOCUMENT TO A SCHOOL DISTRICT 748
FINANCIAL PLANNING AND SUPERVISION COMMISSION IS DEEMED TO REFER 749
TO A FISCAL ARBITRATOR APPOINTED UNDER THIS SECTION. 750
BUSINESS COMMENCED BUT NOT COMPLETED BY A COMMISSION WHEN 752
IT IS DISSOLVED UNDER THIS SECTION SHALL BE COMPLETED BY THE 753
APPOINTED FISCAL ARBITRATOR WITH THE SAME EFFECT AS IF COMPLETED 754
BY THE COMMISSION. NO VALIDATION, CURE, RIGHT, PRIVILEGE, 755
REMEDY, OBLIGATION, OR LIABILITY IS LOST OR IMPAIRED BY REASON OF 756
THE DISSOLUTION OF THE COMMISSION AND APPOINTMENT OF A FISCAL 757
ARBITRATOR, BUT SHALL BE ADMINISTERED BY THE ARBITRATOR. 758
THE SUPERINTENDENT OF PUBLIC INSTRUCTION SHALL ISSUE 760
GUIDELINES ESTABLISHING THE CRITERIA THAT THE SUPERINTENDENT WILL 761
UTILIZE IN SELECTING QUALIFIED FISCAL ARBITRATORS UNDER THIS 762
SECTION.
Sec. 3316.20. (A)(1) The school district solvency 771
assistance fund is hereby created in the state treasury, to 772
consist of such amounts designated for the purposes of the fund 773
by the general assembly. The fund shall be used to make 774
advancements PROVIDE ASSISTANCE AND GRANTS to school districts to 775
enable them to remain solvent and to pay unforseeable expenses of 777
a temporary or emergency nature that they are unable to pay from 778
existing resources.
Advancements (2) THERE IS HEREBY CREATED WITHIN THE FUND 780
AN ACCOUNT KNOWN AS THE SCHOOL DISTRICT SHARED RESOURCE ACCOUNT, 782
WHICH SHALL CONSIST OF MONEY APPROPRIATED TO IT BY THE GENERAL 783
ASSEMBLY. THE MONEY IN THE ACCOUNT SHALL BE USED SOLELY FOR 784
SOLVENCY ASSISTANCE TO SCHOOL DISTRICTS THAT HAVE BEEN DECLARED 785
UNDER DIVISION (B) (1) OR (5) OF SECTION 3316.03 OF THE REVISED 787
19
CODE TO BE IN A STATE OF FISCAL EMERGENCY BECAUSE OF A CERTIFIED 788
OPERATING DEFICIT EXCEEDING TEN PER CENT. 789
(3) THERE IS HEREBY CREATED WITHIN THE FUND AN ACCOUNT 791
KNOWN AS THE CATASTROPHIC EXPENDITURES ACCOUNT, WHICH SHALL 792
CONSIST OF MONEY APPROPRIATED TO THE ACCOUNT BY THE GENERAL 793
ASSEMBLY PLUS ALL INVESTMENT EARNINGS OF THE FUND. MONEY IN THE 794
ACCOUNT SHALL BE USED SOLELY FOR THE FOLLOWING: 795
(a) SOLVENCY ASSISTANCE TO SCHOOL DISTRICTS THAT HAVE BEEN 797
DECLARED UNDER DIVISION (B) (1) OR (5) OF SECTION 3316.03 OF THE 798
REVISED CODE TO BE IN A STATE OF FISCAL EMERGENCY BECAUSE OF A 799
CERTIFIED OPERATING DEFICIT EXCEEDING TEN PER CENT, IN THE EVENT 801
THAT ALL MONEY IN THE SHARED RESOURCE ACCOUNT IS UTILIZED FOR 802
SOLVENCY ASSISTANCE;
(b) GRANTS TO SCHOOL DISTRICTS UNDER DIVISION (C) OF THIS 805
SECTION.
(B) SOLVENCY ASSISTANCE PAYMENTS UNDER DIVISION (A)(2) OR 808
(3)(a) OF THIS SECTION shall be made from the fund by the 810
superintendent of public instruction in accordance with rules 812
jointly adopted by the superintendent and the auditor DIRECTOR of 813
state BUDGET AND MANAGEMENT, AFTER CONSULTING WITH THE 814
SUPERINTENDENT, specifying advancement approval criteria and 816
procedures necessary for administering the fund. 818
The fund shall be reimbursed for any SOLVENCY ASSISTANCE 820
amounts advanced PAID UNDER DIVISION (A)(2) OR (3)(a) OF THIS 822
SECTION not later than the end of the second fiscal year 825
following the fiscal year in which the advancement SOLVENCY 826
ASSISTANCE PAYMENT was made. If not made directly by the school 829
district, such reimbursement shall be made by the director of
budget and management from the amounts the school district would 831
otherwise receive pursuant to sections 3317.022 to 3317.025 of 832
the Revised Code, or from any other funds appropriated for the 834
district by the general assembly. REIMBURSEMENTS SHALL BE 835
CREDITED TO THE RESPECTIVE ACCOUNT FROM WHICH THE SOLVENCY 836
ASSISTANCE PAID TO THE DISTRICT WAS DEDUCTED.
20
(C) THE SUPERINTENDENT OF PUBLIC INSTRUCTION MAY MAKE 838
RECOMMENDATIONS, AND THE CONTROLLING BOARD MAY GRANT MONEY FROM 840
THE CATASTROPHIC EXPENDITURES ACCOUNT TO ANY SCHOOL DISTRICT THAT 841
SUFFERS AN UNFORESEEN CATASTROPHIC EVENT THAT SEVERELY DEPLETES 842
THE DISTRICT'S FINANCIAL RESOURCES. A SCHOOL DISTRICT SHALL NOT 843
BE REQUIRED TO REPAY ANY GRANT AWARDED TO THE DISTRICT UNDER THIS 844
DIVISION UNLESS THE DISTRICT RECEIVES MONEY FROM A THIRD PARTY, 845
INCLUDING AN AGENCY OF THE GOVERNMENT OF THE UNITED STATES, 846
SPECIFICALLY FOR THE PURPOSE OF COMPENSATING THE DISTRICT FOR 847
EXPENSES INCURRED AS A RESULT OF THE UNFORESEEN CATASTROPHIC 848
EVENT.
Sec. 3318.053. NOTWITHSTANDING ANY PROVISION OF THIS 850
CHAPTER TO THE CONTRARY, A SCHOOL DISTRICT BOARD MAY USE PROCEEDS 851
FROM THE TAX DESCRIBED IN DIVISION (B) OR (C) OF SECTION 3318.05 852
OF THE REVISED CODE FOR INFRASTRUCTURE IMPROVEMENTS ON AND 854
LEADING TO THE PROJECT SITES THAT ARE NOT INCLUDED IN THE BASIC 855
PROJECT COST. THE BOARD MAY USE PROCEEDS OF THE TAX IN THIS 857
MANNER ONLY DURING THE THREE-YEAR PERIOD FOLLOWING THE EXECUTION 858
OF THE AGREEMENT UNDER SECTION 3318.08 OF THE REVISED CODE. IF 859
THE BOARD INTENDS TO USE THE PROCEEDS OF THE TAX IN THIS MANNER, 860
IT SHALL INCLUDE THAT FACT AS PART OF THE PURPOSE OF THE LEVY IN
THE BALLOT LANGUAGE PROPOSING IT. 861
Sec. 5705.13. (A) Except as otherwise provided for a 870
board of education under division (H) of section 5705.29 of the 871
Revised Code, a A taxing authority of a subdivision, by 873
resolution or ordinance, may establish a reserve balance account 875
to accumulate currently available resources for any of the 876
following purposes:
(1) To stabilize subdivision budgets against cyclical 878
changes in revenues and expenditures; 879
(2) Except as otherwise provided by this section, to 881
provide for the payment of claims under a self-insurance program 882
for the subdivision, if the subdivision is permitted by law to 883
establish such a program;
21
(3) To provide for the payment of claims under a 885
retrospective ratings plan for workers' compensation. 886
The ordinance or resolution establishing a reserve balance 888
account shall state the purpose for which the reserve balance 889
account is established, the fund in which the account is to be 890
established, and the total amount of money to be reserved in the 891
account.
A subdivision that participates in a risk-sharing pool, by 893
which governments pool risks and funds and share in the costs of 894
losses, shall not establish a reserve balance account to provide 895
self-insurance for the subdivision. 896
A taxing authority of a subdivision shall not have more 898
than three reserve balance accounts at any time. Not more than 900
one reserve balance account may be established for each of the 901
purposes permitted under this section. Money to the credit of a 902
reserve balance account may be expended only for the purpose for 903
which the account was established.
A reserve balance account established for the purpose 905
described in division (A)(1) of this section shall be established 906
in the general fund of the subdivision, and the amount of money 907
to be reserved in that account in any fiscal year shall not 908
exceed five per cent of the general fund revenue for the 909
preceding fiscal year. Subject to division (G) of section 910
5705.29 of the Revised Code, any reserve balance in an account 911
established under division (A)(1) of this section shall not be 912
considered part of the unencumbered balance or revenue of the 913
subdivision under division (A) of section 5705.35 or division 914
(A)(1) of section 5705.36 of the Revised Code. 915
At any time, a taxing authority of a subdivision, by 917
resolution or ordinance, may reduce or eliminate the reserve 919
balance in a reserve balance account established for the purpose 920
described in division (A)(1) of this section. 921
A reserve balance account established for the purpose 923
described in division (A)(2) or (3) of this section shall be 924
22
established in the general fund of the subdivision or by the 926
establishment of a separate internal service fund established to 927
account for the operation of the self-insurance or retrospective 928
ratings plan program, and shall be based on sound actuarial 929
principles. The total amount of money in a reserve balance 930
account for self-insurance may be expressed in dollars or as the 931
amount determined to represent an adequate reserve according to 932
sound actuarial principles. 933
A taxing authority of a subdivision, by resolution or 935
ordinance, may rescind a reserve balance account established 936
under this division. If a reserve balance account is rescinded, 937
money that has accumulated in the account shall be transferred to 938
the fund or funds from which the money originally was 939
transferred.
(B) A taxing authority of a subdivision, by resolution or 941
ordinance, may establish a special revenue fund for the purpose 942
of accumulating resources for the payment of accumulated sick 943
leave and vacation leave, and for payments in lieu of taking 944
compensatory time off, upon the termination of employment or the 945
retirement of officers and employees of the subdivision. The 946
special revenue fund may also accumulate resources for payment of 947
salaries during any fiscal year when the number of pay periods
exceeds the usual and customary number of pay periods. 948
Notwithstanding sections 5705.14, 5705.15, and 5705.16 of the 949
Revised Code, the taxing authority, by resolution or ordinance, 950
may transfer money to the special revenue fund from any other 952
fund of the subdivision from which such payments may lawfully be 953
made. The taxing authority, by resolution or ordinance, may 954
rescind a special revenue fund established under this division.
If a special revenue fund is rescinded, money that has 955
accumulated in the fund shall be transferred to the fund or funds 956
from which the money originally was transferred. 957
(C) A taxing authority of a subdivision, by resolution or 959
ordinance, may establish a capital projects fund for the purpose 960
23
of accumulating resources for the acquisition, construction, or 961
improvement of fixed assets of the subdivision. For the purposes 962
of this section, "fixed assets" includes motor vehicles. More 963
than one capital projects fund may be established and may exist 964
at any time. The ordinance or resolution shall identify the 965
source of the money to be used to acquire, construct, or improve
the fixed assets identified in the resolution or ordinance, the 966
amount of money to be accumulated for that purpose, the period of 967
time over which that amount is to be accumulated, and the fixed 968
assets that the taxing authority intends to acquire, construct, 969
or improve with the money to be accumulated in the fund. 970
A taxing authority of a subdivision shall not accumulate 972
money in a capital projects fund for more than five years after 974
the resolution or ordinance establishing the fund is adopted. If 975
the subdivision has not entered into a contract for the 976
acquisition, construction, or improvement of fixed assets for 977
which money was accumulated in such a fund before the end of that 978
five-year period, the fiscal officer of the subdivision shall 979
transfer all money in the fund to the fund or funds from which
that money originally was transferred or the fund that originally 980
was intended to receive the money. 981
A taxing authority of a subdivision, by resolution or 983
ordinance, may rescind a capital projects fund. If a capital 985
projects fund is rescinded, money that has accumulated in the 986
fund shall be transferred to the fund or funds from which the 987
money originally was transferred.
Notwithstanding sections 5705.14, 5705.15, and 5705.16 of 989
the Revised Code, the taxing authority of a subdivision, by 990
resolution or ordinance, may transfer money to the capital 992
projects fund from any other fund of the subdivision that may
lawfully be used for the purpose of acquiring, constructing, or 994
improving the fixed assets identified in the resolution or 995
ordinance.
Sec. 5705.29. The tax budget shall present the following 1,004
24
information in such detail as is prescribed by the auditor of 1,005
state, unless an alternative form of the budget is permitted 1,006
under section 5705.281 of the Revised Code: 1,007
(A)(1) A statement of the necessary current operating 1,009
expenses for the ensuing fiscal year for each department and 1,010
division of the subdivision, classified as to personal services 1,011
and other expenses, and the fund from which such expenditures are 1,012
to be made. Except in the case of a school district, this 1,013
estimate may include a contingent expense not designated for any 1,014
particular purpose, and not to exceed three per cent of the total 1,015
amount of appropriations for current expenses. In the case of a 1,016
school district, this estimate may include a contingent expense 1,017
not designated for any particular purpose and not to exceed 1,018
thirteen per cent of the total amount of appropriations for 1,019
current expenses. 1,020
(2) A statement of the expenditures for the ensuing fiscal 1,022
year necessary for permanent improvements, exclusive of any 1,023
expense to be paid from bond issues, classified as to the 1,024
improvements contemplated by the subdivision and the fund from 1,025
which such expenditures are to be made; 1,026
(3) The amounts required for the payment of final 1,028
judgments; 1,029
(4) A statement of expenditures for the ensuing fiscal 1,031
year necessary for any purpose for which a special levy is 1,032
authorized, and the fund from which such expenditures are to be 1,033
made; 1,034
(5) Comparative statements, so far as possible, in 1,036
parallel columns of corresponding items of expenditures for the 1,037
current fiscal year and the two preceding fiscal years. 1,038
(B)(1) An estimate of receipts from other sources than the 1,040
general property tax during the ensuing fiscal year, which shall 1,041
include an estimate of unencumbered balances at the end of the 1,042
current fiscal year, and the funds to which such estimated 1,043
receipts are credited; 1,044
25
(2) The amount each fund requires from the general 1,046
property tax, which shall be the difference between the 1,047
contemplated expenditure from the fund and the estimated 1,048
receipts, as provided in this section. The section of the 1,049
Revised Code under which the tax is authorized shall be set 1,050
forth. 1,051
(3) Comparative statements, so far as possible, in 1,053
parallel columns of taxes and other revenues for the current 1,054
fiscal year and the two preceding fiscal years. 1,055
(C)(1) The amount required for debt charges; 1,057
(2) The estimated receipts from sources other than the tax 1,059
levy for payment of such debt charges, including the proceeds of 1,060
refunding bonds to be issued to refund bonds maturing in the next 1,061
succeeding fiscal year; 1,062
(3) The net amount for which a tax levy shall be made, 1,064
classified as to bonds authorized and issued prior to January 1, 1,065
1922, and those authorized and issued subsequent to such date, 1,066
and as to what portion of the levy will be within and what in 1,067
excess of the ten-mill limitation. 1,068
(D) An estimate of amounts from taxes authorized to be 1,070
levied in excess of the ten-mill limitation on the tax rate, and 1,071
the fund to which such amounts will be credited, together with 1,072
the sections of the Revised Code under which each such tax is 1,073
exempted from all limitations on the tax rate. 1,074
(E)(1) A board of education may include in its budget for 1,076
the fiscal year in which a levy proposed under section 5705.194, 1,077
5705.21, or 5705.213, or the original levy under section 5705.212 1,078
of the Revised Code is first extended on the tax list and 1,079
duplicate an estimate of expenditures to be known as a voluntary 1,080
contingency reserve balance, which shall not be greater than 1,081
twenty-five per cent of the total amount of the levy estimated to 1,082
be available for appropriation in such year. 1,083
(2) A board of education may include in its budget for the 1,085
fiscal year following the year in which a levy proposed under 1,086
26
section 5705.194, 5705.21, or 5705.213, or the original levy 1,087
under section 5705.212 of the Revised Code is first extended on 1,088
the tax list and duplicate an estimate of expenditures to be 1,089
known as a voluntary contingency reserve balance, which shall not 1,090
be greater than twenty per cent of the amount of the levy 1,091
estimated to be available for appropriation in such year. 1,092
(3) Except as provided in division (E)(4) of this section, 1,094
the full amount of any reserve balance the board includes in its 1,095
budget shall be retained by the county auditor and county 1,096
treasurer out of the first semiannual settlement of taxes until 1,097
the beginning of the next succeeding fiscal year, and thereupon, 1,098
with the depository interest apportioned thereto, it shall be 1,099
turned over to the board of education, to be used for the 1,100
purposes of such fiscal year. 1,101
(4) A board of education, by a two-thirds vote of all 1,103
members of the board, may appropriate any amount withheld as a 1,104
voluntary contingency reserve balance during the fiscal year for 1,105
any lawful purpose, provided that prior to such appropriation the 1,106
board of education has authorized the expenditure of all amounts 1,107
appropriated for contingencies under section 5705.40 of the 1,108
Revised Code. Upon request by the board of education, the county 1,109
auditor shall draw a warrant on the district's account in the 1,110
county treasury payable to the district in the amount requested. 1,111
(F)(1) A board of education may include a spending reserve 1,113
in its budget for fiscal years ending on or before June 30, 2002. 1,115
The spending reserve shall consist of an estimate of expenditures 1,116
not to exceed the district's spending reserve balance. A 1,117
district's spending reserve balance is the amount by which the 1,118
designated percentage of the district's estimated personal 1,119
property taxes to be settled during the calendar year in which 1,120
the fiscal year ends exceeds the estimated amount of personal 1,121
property taxes to be so settled and received by the district 1,122
during that fiscal year. Moneys from a spending reserve shall be 1,123
appropriated in accordance with section 133.301 of the Revised 1,124
27
Code. 1,125
(2) For the purposes of computing a school district's 1,127
spending reserve balance for a fiscal year, the designated 1,128
percentage shall be as follows: 1,129
Fiscal year ending in: Designated percentage 1,132
1998 50% 1,134
1999 40% 1,135
2000 30% 1,136
2001 20% 1,137
2002 10% 1,138
(G) Except as otherwise provided in this division, the 1,141
county budget commission shall not reduce the taxing authority of 1,142
a subdivision as a result of the creation of a reserve balance 1,143
account. Except as otherwise provided in this division, the 1,144
county budget commission shall not consider the amount in a 1,145
reserve balance account of a township, county, or municipal 1,146
corporation as an unencumbered balance or as revenue for the 1,147
purposes of division (E)(3) or (4) of section 5747.51 or division 1,148
(E)(3) or (4) of section 5747.62 of the Revised Code. The county 1,149
budget commission may require documentation of the reasonableness 1,150
of the reserve balance held in any reserve balance account. The 1,151
commission shall consider any amount in a reserve balance account 1,152
that it determines to be unreasonable as unencumbered and as 1,153
revenue for the purposes of sections 5747.51 and 5747.62 of the
Revised Code and may take such amounts into consideration when 1,155
determining whether to reduce the taxing authority of a
subdivision.
(H)(1) Each board of education shall include in its tax 1,157
budget and shall establish a reserve balance account to 1,159
accumulate currently available resources to stabilize the school
district's budget against cyclical changes in revenues and 1,160
expenditures. The balance in the reserve balance account shall 1,161
not at any time be less than five per cent of general fund 1,163
revenues for the most recently concluded fiscal year, except as 1,164
28
provided in division (H)(2) or (3) of this section, and except 1,165
for deficiencies arising from the appropriation of money from the 1,166
account for unanticipated deficiencies in revenue or other 1,168
emergencies pursuant to a resolution adopted by two-thirds of the 1,169
membership of the board of education specifying the reason for 1,170
the appropriation. The auditor of state and the superintendent
of public instruction jointly shall adopt rules governing 1,171
conditions that constitute unanticipated deficiencies in revenue 1,172
or emergencies for which appropriations may be made from a 1,173
reserve balance account. The rules also shall provide that a 1,174
board of education that borrows against its spending reserve 1,176
established in its tax budget for a fiscal year under division 1,177
(F) of this section is not subject to division (H)(2) of this 1,178
section for that fiscal year. A board of education shall not 1,179
appropriate money from a reserve balance account without filing a 1,181
schedule for replenishing the account with the superintendent of 1,182
public instruction and receiving approval of the schedule from 1,183
the superintendent of public instruction. 1,184
(2)(a) Beginning with the fiscal year ending in 1999 and 1,186
continuing each fiscal year until the balance in the reserve 1,187
balance account equals five per cent of the district's revenues 1,189
received for current expenses for the preceding fiscal year, if 1,190
the growth in a district's total revenues received for current
expenses from one fiscal year to the next is at least three per 1,191
cent, the board of education shall credit to its reserve balance 1,193
account, from the general fund or from other sources that may 1,195
lawfully be credited to the general fund, an amount that, when 1,196
added to the account balance, is not less than: 1,197
(i) One per cent of revenues received for current expenses 1,199
for the prior fiscal year; plus 1,200
(ii) The sum of the amounts credited under this section 1,202
for all fiscal years that amounts were required to be credited 1,203
under this section.
Each board shall maintain the balance in the district's 1,205
29
reserve balance account at not less than five per cent of the 1,206
district's revenues received for current expenses for the 1,207
preceding fiscal year, except as otherwise authorized under 1,208
division (H) of this section.
(b) Notwithstanding division (H)(2)(a) of this section, in 1,211
no year shall a board be required to credit to its reserve 1,212
balance account more than one per cent of revenues received for
current expenses for the prior fiscal year. 1,213
(3) The balance in the reserve balance account of a school 1,216
district may be less than five per cent of the general fund 1,217
revenue for the most recently concluded fiscal year in any fiscal 1,218
year in which the school district is in a state of fiscal watch 1,219
or fiscal emergency pursuant to section 3316.03 of the Revised 1,220
Code.
(4) Notwithstanding any provision to the contrary in 1,222
Chapter 4117. of the Revised Code, the requirements of division 1,223
(H) of this section prevail over any conflicting provisions of 1,225
agreements between employee organizations and public employers 1,226
entered into after November 21, 1997. 1,227
(5) Notwithstanding division (H)(2) of this section, a 1,229
school district may, pursuant to rules adopted by the auditor of 1,230
state, credit less than one per cent of its prior year's revenue 1,231
received for current expenses into its reserve balance account. 1,232
(6) A school district board may apply to the state 1,234
superintendent of public instruction for a one-time waiver of the 1,235
deposit requirements of division (H)(2) of this section when it 1,237
determines that meeting the requirements in the current or next 1,238
fiscal year would cause the district to significantly reduce or 1,239
eliminate important educational services. The district shall 1,240
apply in the form and manner required by the state 1,241
superintendent, and the application may request a waiver of all 1,242
or part of the deposit required for the current or next fiscal 1,243
year. The state superintendent may grant a waiver if the state 1,244
superintendent and the auditor of state determine that meeting 1,245
30
the requirement in the current or next fiscal year would cause
the school district to significantly reduce or eliminate 1,247
important educational services. A waiver may entirely exempt the
district from making any deposit into its reserve balance account 1,249
during the current or next fiscal year or, regardless of whether 1,250
the district board applied for a waiver of the entire deposit, 1,251
may simply reduce the amount of the deposit otherwise required
during the current or next fiscal year by division (H)(2) of this 1,252
section. A waiver is valid for one fiscal year: either the 1,253
fiscal year in which the district board applied for it or the 1,254
immediately following fiscal year. A district board may receive 1,255
only one waiver under division (H)(6) of this section. 1,256
(I) Notwithstanding division (H)(2) of this section, 1,258
whenever a city, local, exempted village, or joint vocational 1,259
school district receives from the bureau of workers' compensation 1,260
a refund or other reimbursement of money that the district 1,261
previously paid to the bureau, the district shall deposit the 1,262
full amount of the refund or other reimbursement into the 1,263
district's reserve balance account, unless the account already 1,264
contains five per cent of the district's revenues received for 1,265
current expenses for the preceding year as prescribed in division 1,266
(H)(2)(a) of this section. A district may credit any amount it 1,267
deposits into that account under this division toward any minimum 1,268
deposit required for the account in that fiscal year. 1,269
Sec. 5705.38. (A) This division does not apply to school 1,279
district appropriation measures. On or about the first day of 1,280
each year, the taxing authority of each subdivision or other 1,281
taxing unit shall pass an appropriation measure, and thereafter 1,282
during the year it may pass any supplemental appropriation 1,283
measures as it finds necessary, based on the revised tax budget 1,284
and the official certificate of estimated resources or amendments 1,285
of the certificate. If adoption of a tax budget was waived under 1,286
section 5705.281 of the Revised Code, appropriation measures 1,287
shall be based on the official certificate of estimated 1,288
31
resources. If it desires to postpone the passage of the annual 1,289
appropriation measure until an amended certificate is received 1,290
based on the actual balances, it may pass a temporary
appropriation measure for meeting the ordinary expenses of the 1,291
taxing unit until no later than the first day of April of the 1,292
current year, and the appropriations made in the temporary 1,293
measure shall be chargeable to the appropriations in the annual 1,294
appropriation measure for that fiscal year when passed. 1,295
(B) A board of education shall pass its annual 1,297
appropriation measure by the first day of October. If, by the 1,298
first day of October, a board has not received either the amended 1,299
certificates of estimated resources required by division (B) of 1,300
section 5705.36 of the Revised Code or certifications that no 1,301
amended certificates need be issued, the adoption of the annual 1,302
appropriation measure shall be delayed until the amended 1,303
certificates or certifications are received. Prior to the 1,304
passage of the annual appropriation measure, the board may pass a 1,305
temporary appropriation measure for meeting the ordinary expenses 1,306
of the district until it passes an annual appropriation measure, 1,307
and appropriations made in the temporary measure shall be 1,308
chargeable to the appropriations in the annual appropriation 1,309
measure for that fiscal year when passed. During the fiscal year 1,310
and after the passage of the annual appropriation measure, a 1,311
district may pass any supplemental appropriation measures as it 1,312
finds necessary, based on the revised tax budget and the official 1,313
certificate of estimated resources or amendments of the 1,314
certificate. The annual appropriation measure, and any temporary 1,315
or supplemental appropriation measure, shall provide for the 1,316
reservation of a sufficient amount of money for the budget 1,317
reserve fund as required under division (H) of section 5705.29 of 1,318
the Revised Code. School district appropriation measures shall be 1,319
in the form as the auditor of state, after consultation with the 1,320
tax commissioner, prescribes. 1,321
(C) Appropriation measures shall be classified so as to 1,323
32
set forth separately the amounts appropriated for each office, 1,324
department, and division, and, within each, the amount 1,325
appropriated for personal services. In the case of a municipal 1,326
university, the board of directors of which have assumed, in the 1,327
manner provided by law, custody and control of the funds of the 1,328
university, funds shall be appropriated as a lump sum for the use 1,329
of the university. 1,330
Section 2. That existing sections 3315.17, 3315.18, 1,332
3316.03, 3316.042, 3316.06, 3316.20, 5705.13, 5705.29, and 1,334
5705.38 of the Revised Code are hereby repealed. 1,335
Section 3. Section 3315.17 of the Revised Code, as amended 1,337
by this act, and section 3315.19 of the Revised Code, as enacted 1,338
by this act, shall take effect July 1, 2001. The amendments by 1,339
this act to divisions (A) and (B) of section 3315.18 of the 1,340
Revised Code shall take effect July 1, 2001.
Section 4. After the effective date of this section, no 1,341
board of education of any school district shall be required to 1,342
establish and maintain a budget reserve account as previously 1,343
required under divisions (H) and (I) of section 5705.29 of the 1,344
Revised Code as that section existed prior to the effective date 1,345
of this section. Any money on hand in a school district's budget 1,346
reserve account established and maintained under those divisions 1,347
on the effective date of this section may at the discretion of 1,348
the district board of education be returned to the district's 1,349
general fund or may be left in the account and may be used by the 1,350
district board to offset any budget deficit the district may 1,351
experience in future fiscal years. However, any portion of that 1,352
money consisting of refunds or rebates from the Bureau of 1,353
Workers' Compensation that was required to be deposited in the 1,354
fund under Section 39 of Am. Sub. H.B. 770 of the 122nd General 1,355
Assembly or division (I) of section 5705.29 of the Revised Code 1,356
as it existed prior to the effective date of this section may be 1,357
used solely to offset a budget deficit or for school facility
construction, renovation, or repair; textbooks or instructional 1,359
33
materials, including science equipment or laboratories; purchase 1,360
of school buses; or professional development of teachers. 1,362
This section does not affect a district board's authority 1,364
to establish a reserve balance account under section 5705.13 of 1,365
the Revised Code as that section exists after the effective date 1,366
of this section. 1,367
Section 5. The amendment by this act of section 3316.03 of 1,369
the Revised Code does not nullify a declaration by the Auditor of 1,370
State made prior to the effective date of this section, under 1,371
former division (A)(3) or (B)(4) of that section, that a district 1,372
is in a state of fiscal watch or fiscal emergency because the 1,373
district received one or more advancements from the Solvency
Assistance Fund. A school district declared to be in a state of 1,374
fiscal watch or fiscal emergency prior to that date remains in 1,375
that state and remains subject to Chapter 3316. of the Revised 1,376
Code, including the sections as amended by this act, for as long 1,377
as required by that chapter.
Section 6. Sections 3315.17 and 3315.18 of the Revised 1,379
Code, which were enacted by Sub. H.B. 412 of the 122nd General 1,380
Assembly, required school districts to set aside percentages of 1,381
their general operating funds for textbooks and instructional 1,382
materials and for capital and maintenance costs. Section 1,383
3313.603 of the Revised Code, enacted by Am. Sub. S.B. 55 of the 1,384
122nd General Assembly, increased from eighteen to twenty-one the 1,385
minimum number of academic units required for students graduating 1,386
from high school in this state after September 15, 2001. The 1,387
Ohio Supreme Court, in DeRolph v. State (2000), 89 Ohio St. 3d 1, 1,388
concluded that all of these requirements impermissibly imposed 1,390
unfunded mandates upon school districts.
The General Assembly finds that the costs of the set-aside 1,392
requirements of sections 3315.17 and 3315.18 are not unfunded to 1,393
the extent the required set-asides are percentages of the base 1,394
cost formula amount. Since fiscal year 1999, these set-asides 1,395
have been included within the base cost formula amounts 1,396
34
prescribed by section 3317.012 of the Revised Code, which was 1,397
enacted by Am. Sub. H.B. 650 of the 122nd General Assembly. The 1,398
General Assembly has reanalyzed fiscal year 1996 fiscal data of 1,399
the one hundred three model effective school districts, described 1,400
in section 3317.012 of the Revised Code, which served as the 1,401
basis for the fiscal policies contained in Am. Sub. H.B. 650. 1,402
This analysis is based on testimony and evidence presented in 1,403
2000 before the Joint Committee to Examine the Base Cost of an 1,404
Adequate Education, which clearly demonstrated that in fiscal 1,405
year 1996, the model school districts spent at least the 1,406
percentages prescribed in sections 3315.17 and 3315.18 of the 1,407
Revised Code for textbooks and instructional materials and 1,408
capital and maintenance costs as those percentages were adjusted 1,409
by the auditor of state under those sections. The base cost 1,411
formula amount enacted in Am. Sub. H.B. 650 was derived from 1,412
these districts' costs, which include their expenditures for
textbooks and instructional materials and capital and maintenance 1,413
costs. The base cost formula amount therefore includes an amount 1,414
adequate for school districts to meet the requirements of 1,415
sections 3315.17 and 3315.18 provided that the required 1,416
set-asides are percentages of the base cost amount and not of 1,417
school district total revenues. Accordingly, this act amends the 1,419
set-aside requirements to reflect this finding.
Other evidence submitted to the Joint Committee 1,421
demonstrated that in fiscal year 1996 the average minimum number 1,422
of academic units required to graduate from high school in the 1,423
model school districts was nineteen and six-tenths, but that many 1,424
students in those districts graduated with credits exceeding the 1,425
minimum. The General Assembly therefore finds that the base cost 1,426
formula amount reflects the cost of providing nineteen and 1,427
six-tenths high school academic units. The General Assembly 1,428
intends to increase the base cost formula amount in future 1,429
education funding legislation to close the gap between the model 1,430
districts' average of nineteen and six-tenths units and the 1,431
35
required minimum of twenty-one units imposed by section 3313.603 1,432
of the Revised Code.