Chapter 118 | Local Fiscal Emergencies

Section 118.01 | Local fiscal emergency definitions.

• Effective: June 30, 1999
• Latest Legislation: House Bill 283 - 123rd General Assembly

As used in this chapter:

(A) Advance tax payment notes means the notes authorized by section 118.24 of the Revised Code.

(B) Appropriation measure means any appropriation measure, amendment of an appropriation measure, or supplement to an appropriation measure of a municipal corporation, county, or township referred to in sections 5705.38 and 5705.40 of the Revised Code and any other action of a municipal corporation, county, or township authorizing expenditure of money not previously included in any appropriation measure.

(C) Bond anticipation notes means notes issued in anticipation of the issuance of bonds.

(D) Certificate of estimated resources means the official certificate of estimated resources of the county budget commission and amendments of the certificate certified to the municipal corporation, county, or township as provided for in Chapter 5705. of the Revised Code.

(E) Commission means a financial planning and supervision commission created by section 118.05 of the Revised Code with respect to a municipal corporation, county, or township.

(F) Construction funds means proceeds from the sale of debt obligations restricted by law or pursuant to the proceedings for the issuance of such debt obligations to use for permanent improvements as defined in division (E) of section 5705.01 of the Revised Code, including acquisition, construction, or extension of public utilities, and moneys from any other sources restricted to such purpose.

(G) County auditor means the county auditor with whom tax budgets of the municipal corporation, county, or township are to be filed in accordance with section 5705.30 of the Revised Code.

(H) County budget commission means the county budget commission to which the tax budget of the municipal corporation, county, or township is to be submitted in accordance with section 5705.31 of the Revised Code.

(I) Current revenue notes means debt obligations described in section 133.10 or Chapter 5705. of the Revised Code or any other debt obligations issued to obtain funds for current operating expenses.

(J) Debt limits means the limitations on net indebtedness provided in sections 133.05, 133.07, and 133.09 of the Revised Code, and also includes the limitation, known as the indirect debt limit, upon the issuance of unvoted bonds, notes, or certificates of indebtedness resulting from the ten-mill limitation provided for in section 5705.02 of the Revised Code.

(K) Debt obligations means bonds, notes, certificates of indebtedness, bond anticipation notes, current revenue notes, local government fund notes, or other obligations issued or incurred in borrowing money, or to renew, refund, fund, or refinance, or issued in exchange for, such obligations, and any interest coupons pertaining thereto other than bonds or other obligations issued under authority of Section 13 of Article VIII, Ohio Constitution.

(L) Default means failure to pay the principal of or the interest on a debt obligation, or failure to make other payment to be made to the holder or owner of a debt obligation, in the full amount and at the time provided for in the contractual commitment with respect thereto, unless the time for such payment has been extended by the owner or holder of the debt obligation without penalty or premium and without the effect of subjecting the municipal corporation, county, or township to the initiation of remedies pertaining to such debt obligation or other debt obligations.

(M) Deficit fund means the general fund or any special fund that, as at the time indicated, has a deficit balance or a balance that is less than the amount required to be in such fund pursuant to law or pursuant to contractual requirements, demonstrating that over a period of time expenditures charged or chargeable to the fund have exceeded moneys credited to the fund, or that moneys credited to the fund have not been in the amounts required by law or contractual requirements.

(N) Effective financial accounting and reporting system means an accounting and reporting system fully in compliance with the requirements prescribed by and pursuant to Chapter 117. of the Revised Code, with such modifications and supplements as are to be provided pursuant to this chapter in order to meet and deal with the fiscal emergency, provide to the auditor of state, the commission, the financial supervisor, and the county budget commission the information needed to carry out their functions, and better ensure the implementation of the financial plan.

(O) Financial plan means the financial plan approved by the commission in accordance with section 118.06 of the Revised Code, as it may from time to time be amended in accordance with this chapter.

(P) Financial supervisor means the auditor of state.

(Q) Fiscal emergency means the existence of fiscal emergency conditions determined as provided in section 118.04 of the Revised Code.

(R) Fiscal emergency conditions means any of the events or occurrences described in section 118.03 of the Revised Code.

(S) Fiscal emergency period means the period of time commencing on the date when the determination of a fiscal emergency is made by the auditor of state pursuant to section 118.04 of the Revised Code and ending when the determination of termination is made and certified pursuant to section 118.27 of the Revised Code.

(T) Fiscal watch means the existence of fiscal watch conditions as determined in accordance with section 118.022 of the Revised Code.

(U) Fiscal officer means the fiscal officer of the municipal corporation, county, or township as defined in division (D) of section 5705.01 of the Revised Code.

(V) Fringe benefits means expenditures for goods and services furnished to municipal, county, or township officers or employees by the municipal corporation, county, or township, including, but not limited to, such benefits as food, temporary housing, and clothing, and the provision of pension, retirement, disability, hospitalization, health care, insurance, or other benefits to employees requiring the advance payment of money other than directly to employees or other beneficiaries, or the deposit or reservation of money for such purpose.

(W) General fund means the fund referred to in division (A) of section 5705.09 of the Revised Code.

(X) General fund budget means aggregate revenues available in the general fund during the applicable fiscal year as shown by the certificate of estimated resources.

(Y) Mayor means the officer of the municipal corporation designated as such by law or the chief executive officer under the charter of the municipal corporation.

(Z) Payroll means compensation due and payable to employees of the municipal corporation, county, or township, other than fringe benefits.

(AA) Revenue estimates means the estimates of revenue receipts to the credit of the general fund and special funds as estimated and supplemented, modified, or amended by the municipal corporation, county, or township, or the county budget commission.

(BB) Special funds means any of the funds, other than the general fund, referred to in sections 5705.09 and 5705.12 of the Revised Code, and includes any fund created from the issuance of debt obligations pursuant to Section 3 or 12 of Article XVIII, Ohio Constitution, and any fund created in connection with the issuance of debt obligations to provide moneys for the payment of principal or interest, reserves therefor, or reserves or funds for repair, maintenance, or improvements.

(CC) Tax budget means the tax budget provided for in section 5705.28 of the Revised Code.

Section 118.02 | Requiring fiscal integrity of municipal corporations, counties, and townships.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

(A) Pursuant to the authority of the general assembly to provide for the public health, safety, and welfare and to limit and restrict the powers of municipal corporations, counties, and townships to borrow money, contract debts, and levy taxes to prevent the abuse of such powers and to require reports and examination of their financial condition, transactions, operations, and undertakings, it is hereby declared to be the public policy and a public purpose of the state to require fiscal integrity of municipal corporations, counties, and townships so that they may provide for the health, safety, and welfare of their citizens, pay when due principal and interest on their debt obligations, meet financial obligations to their employees, vendors, and suppliers, and provide for proper financial accounting procedures, budgeting, and taxing practices. The failure of a municipal corporation, county, or township to so act is hereby determined to affect adversely the health, safety, and welfare not only of the people of the municipal corporation, county, or township but also of other people of the state. It is further determined that the fiscal emergency conditions described in division (A) of section 118.03 of the Revised Code result from and constitute abuses of the powers of a municipal corporation, county, or township to borrow money, contract debts, and levy taxes, and that such conditions impair and threaten the health, safety, and welfare of the people of the state within and beyond the municipal corporation, county, or township.

(B) The intention of the general assembly, under this chapter, is to enact procedures, provide powers, and impose restrictions to assure fiscal integrity of municipal corporations, counties, and townships, as set out in division (A) of this section, while leaving principal responsibility for the conduct of the affairs of a municipal corporation, county, or township in the charge of its duly elected officials and leaving to their discretion the choices for and manner of expenditures of available revenues, consistent with the requirements for satisfying the public policy and purpose herein set forth.

(C) Unless otherwise indicated, the provisions of this chapter are supplemental to other provisions of law, including Chapters 133. and 5705., sections 717.15 and 717.16, and other provisions of the Revised Code, and to the charter, ordinances, and resolutions of the municipal corporation, county, or township, consistent with this chapter. Any provisions of Chapters 133. and 5705., sections 717.15 and 717.16, or other provisions of the Revised Code, and the charter, ordinances, or resolutions of the municipal corporation, county, or township may be utilized in the issuance of debt obligations under this chapter. The provisions of this chapter prevail over such other provisions of law and the charter, ordinances, or resolutions of the municipal corporation, county, or township to the extent of any conflict or inconsistency between this chapter and such other laws, charter, ordinances, or resolutions.

Section 118.021 | Initiating fiscal watch review.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

A municipal corporation, county, or township may undergo a fiscal watch review to determine whether it is approaching a state of fiscal emergency. A fiscal watch review shall be initiated by a written request to the auditor of state from the mayor of the municipal corporation, or the presiding officer of the legislative authority of the municipal corporation when authorized by a majority of the members of the legislative authority; from a board of county commissioners, or the county executive of a county formed under Chapter 302. of the Revised Code; or from a board of township trustees; or may be initiated by the auditor of state. The auditor of state shall acknowledge receipt of a written request for a fiscal watch review by sending a copy of it, stamped with the date received by the auditor of state's office, to the public official or board requesting a review.

Section 118.022 | Conditions constituting grounds for fiscal watch.

• Effective: May 16, 2002
• Latest Legislation: House Bill 365 - 124th General Assembly

(A) Any one of the following conditions constitutes grounds for a fiscal watch:

(1) The existence of either of the following situations:

(a) All accounts that were due and payable from the general fund of a municipal corporation, county, or township at the end of the preceding fiscal year that had been due and payable for at least thirty days at the end of the fiscal year or to which a penalty was added for failure to pay by the end of the fiscal year, less the year-end balance in the general fund, exceeded one-twelfth of the general fund budget for that year.

(b) All accounts that were due and payable at the end of the preceding fiscal year from all funds of the municipal corporation, county, or township and that had been due and payable for at least thirty days at the end of the fiscal year or to which a penalty was added for failure to pay by the end of the fiscal year, less the year-end balance in the general fund and in the respective special funds available to pay those accounts, exceeded one-twelfth of the available revenues during the preceding fiscal year, excluding nonrecurring receipts, of the general fund and of all special funds from which those accounts are payable.

(2) The aggregate of deficit amounts of all deficit funds at the end of the preceding fiscal year, less the total of any year-end balance in the general fund and in any special fund that may be transferred as provided in section 5705.14 of the Revised Code to meet that deficit, exceeded one-twelfth of the total of the general fund budget for that year and the receipts to those deficit funds during that year other than from transfers from the general fund.

(3) At the end of the preceding fiscal year, moneys and marketable investments in or held for the unsegregated treasury of the municipal corporation, county, or township, minus outstanding checks and warrants, were less in amount than the aggregate of the positive balances of the general fund and those special funds, the purposes of which the unsegregated treasury is held to meet, and that deficiency exceeded one-twelfth of the total amount received into the unsegregated treasury during the preceding fiscal year.

(4) Based on an examination of the financial forecast approved by the legislative authority of a municipal corporation, county, or township, the auditor of state certifies that the general fund deficit at the end of the current fiscal year will exceed one-twelfth of the general fund revenue from the preceding fiscal year.

(B) As used in this section, "accounts" includes, but is not limited to, final judgments, fringe benefits payments due and payable, amounts due and payable to persons and other governmental entities, and any interest and penalties on those judgments, payments, or amounts. Accounts that are due and payable do not include any account, or portion of any account, that is being contested in good faith.

Section 118.023 | Declaring existence of fiscal watch; financial recovery plan.

• Effective: September 29, 2015
• Latest Legislation: House Bill 64 - 131st General Assembly

(A) Upon determining that one or more of the conditions described in section 118.022 of the Revised Code are present, the auditor of state shall issue a written declaration of the existence of a fiscal watch to the municipal corporation, county, or township and the county budget commission. The fiscal watch shall be in effect until the auditor of state determines that none of the conditions are any longer present and cancels the watch, or until the auditor of state determines that a state of fiscal emergency exists. The auditor of state, or a designee, shall provide such technical and support services to the municipal corporation, county, or township after a fiscal watch has been declared to exist as the auditor of state considers necessary.

(B) Within ninety days after the day a written declaration of the existence of a fiscal watch is issued under division (A) of this section, the mayor of the municipal corporation, the board of county commissioners of the county, or the board of township trustees of the township for which a fiscal watch was declared shall submit to the auditor of state a financial recovery plan that shall identify actions to be taken to eliminate all of the conditions described in section 118.022 of the Revised Code, and shall include a schedule detailing the approximate dates for beginning and completing the actions and a five-year forecast reflecting the effects of the actions. The financial recovery plan also shall evaluate the feasibility of entering into shared services agreements with other political subdivisions for the joint exercise of any power, performance of any function, or rendering of any service, if so authorized by statute. The financial recovery plan is subject to review and approval by the auditor of state. The auditor of state may extend the amount of time by which a financial recovery plan is required to be filed, for good cause shown.

(C) The auditor of state shall declare that a fiscal emergency condition exists under section 118.04 of the Revised Code in the municipal corporation, county, or township if either of the following applies:

(1) A feasible financial recovery plan for a municipal corporation, county, or township for which a fiscal watch was declared is not submitted within the time period prescribed by division (B) of this section, or within any extension of time thereof; or

(2) The auditor of state finds that a municipal corporation, county, or township for which a fiscal watch has been declared has not made reasonable proposals or otherwise taken action to discontinue or correct the fiscal practices or budgetary conditions that prompted the declaration of fiscal watch, and the auditor determines a fiscal emergency declaration is necessary to prevent further decline.

Section 118.025 | Guidelines for identifying potential for declarations of fiscal watch or fiscal emergency; declaration of fiscal caution.

• Effective: September 29, 2011
• Latest Legislation: House Bill 153 - 129th General Assembly

(A) The auditor of state shall develop guidelines for identifying fiscal practices and budgetary conditions of municipal corporations, counties, and townships that, if uncorrected, could result in a future declaration of a fiscal watch or fiscal emergency.

(B) If the auditor of state determines that a municipal corporation, county, or township is engaging in any of those practices or that any of those conditions exist, the auditor of state may declare the municipal corporation, county, or township to be under a fiscal caution.

(C) When the auditor of state declares a fiscal caution, the auditor of state shall promptly notify the municipal corporation, county, or township of that declaration and shall request the municipal corporation, county, or township to provide written proposals for discontinuing or correcting the fiscal practices or budgetary conditions that prompted the declaration and for preventing the municipal corporation, county, or township from experiencing further fiscal difficulties that could result in a declaration of fiscal watch or fiscal emergency.

(D) The auditor of state, or a designee, may visit and inspect any municipal corporation, county, or township that is declared to be under a fiscal caution. The auditor of state may provide technical assistance to the municipal corporation, county, or township in implementing proposals to eliminate the practices or budgetary conditions that prompted the declaration of fiscal caution and may make recommendations concerning those proposals.

(E) If the auditor of state finds that a municipal corporation, county, or township declared to be under a fiscal caution has not made reasonable proposals or otherwise taken action to discontinue or correct the fiscal practices or budgetary conditions that prompted the declaration of fiscal caution, and if the auditor of state considers it necessary to prevent further fiscal decline, the auditor of state may determine that the municipal corporation, county, or township should be in a state of fiscal watch.

Section 118.03 | Fiscal emergency conditions.

• Effective: October 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

(A) Any one of the following constitutes a fiscal emergency condition of a municipal corporation, county, or township:

(1) The existence, at the time of the determination by the auditor of state under section 118.04 of the Revised Code, of a default on any debt obligation for more than thirty days.

(2) The existence, at the time of the determination by the auditor of state under section 118.04 of the Revised Code, of a failure for lack of cash in the funds to make payment of all payroll to employees of the municipal corporation, county, or township in the amounts and at the times required by law, ordinances, resolutions, or agreements, which failure of payment has continued:

(a) For more than thirty days after such time for payment, or

(b) Beyond a period of extension, or beyond the expiration of ninety days from the original time for payment, whichever first occurs, if the time for payment has been extended for more than thirty days by the written consent of at least two-thirds of the employees affected by such failure to pay, acting individually or by their duly authorized representatives. The failure of one county office, board, or commission to meet payroll does not in itself constitute a fiscal emergency.

(3) An increase, by action of the county budget commission pursuant to division (D) of section 5705.31 of the Revised Code, in the minimum levy of the municipal corporation, county, or township for the current or next fiscal year which results in a reduction in the minimum levies for one or more other subdivisions or taxing districts.

(4) The existence of a condition in which all accounts that, at the end of its preceding fiscal year, were due and payable from the general fund and that either had been due and payable for at least thirty days at the end of the fiscal year or to which a penalty has been added for failure to pay by the end of the fiscal year, including, but not limited to, final judgments, fringe benefits payments due and payable, and amounts due and payable to persons and other governmental entities and including any interest and penalties thereon, less the year-end balance in the general fund, exceeded one-sixth of the general fund budget for that year, or in which all accounts that, at the end of its preceding fiscal year, were due and payable from all funds of the municipal corporation, county, or township and that either had been due and payable for at least thirty days as at the end of the fiscal year or to which a penalty has been added for failure to pay by the end of the fiscal year, less the year-end balance in the general fund and in the respective special funds lawfully available to pay such accounts, exceeded one-sixth of the available revenues during the preceding fiscal year, excluding nonrecurring receipts, of the general fund and of all special funds from which such accounts lawfully are payable. Accounts due and payable shall not include any account, or portion thereof, that is being contested in good faith.

(5) The existence of a condition in which the aggregate of deficit amounts of all deficit funds at the end of its preceding fiscal year, less the total of any year-end balance in the general fund and in any special fund that may be transferred as provided in section 5705.14 of the Revised Code to meet such deficit, exceeded one-sixth of the total of the general fund budget for that year and the receipts to those deficit funds during that year other than from transfers from the general fund.

(6) The existence of a condition in which, at the end of the preceding fiscal year, moneys and marketable investments in or held for the unsegregated treasury of the municipal corporation, county, or township, minus outstanding checks and warrants, were less in amount than the aggregate of the positive balances of the general fund and those special funds the purposes of which the unsegregated treasury is held to meet, and such deficiency exceeded one-sixth of the total amount received into the unsegregated treasury during the preceding fiscal year.

(B) Any year-end condition described in division (A)(4), (5), or (6) of this section shall not constitute a fiscal emergency condition if the municipal corporation, county, or township clearly demonstrates to the satisfaction of the auditor of state prior to the time of the auditor of state's determination that such condition no longer exists at the time of the determination pursuant to section 118.04 of the Revised Code. For the purpose of such demonstration, there shall be taken into account all accounts payable past due for sixty days or subject to penalty, deficit amounts of deficit funds, and positive balances as at the time of such demonstration, rather than at the end of the fiscal year, and there shall be taken into account the moneys and marketable securities in the treasury of the municipal corporation, county, or township at the time of such demonstration that are, in the case of division (A)(4) of this section, held for the general fund and those respective special funds that are lawfully available to pay such accounts, in the case of division (A)(5) of this section, held for the general fund or any special fund that may be transferred as provided in section 5705.14 of the Revised Code to meet such deficit, and in the case of division (A)(6) of this section, held to meet such positive balances, but in each case, that are not encumbered or held for other than such respective purposes; provided that changes from the year end condition resulting from transfers not authorized pursuant to Chapter 5705. of the Revised Code, borrowings or advances between funds, segregation of treasury moneys or investments, and similar adjustments, shall not be taken into account to demonstrate improvement in any fiscal emergency condition. Unless the determination by the auditor of state occurs more than four months following the end of such fiscal year, upon the request by and substantial showing of the municipal corporation, county, or township that it has taken steps to remove such condition within four months, the auditor shall postpone a determination as to a condition under division (A)(4), (5), or (6) of this section as to which such substantial showing is made until the expiration of four months following the end of such fiscal year, but the auditor of state shall not postpone the determination as to division (A)(1), (2), or (3) of this section.

(C) Neither the time periods nor the amounts used in division (A) of this section to determine what constitutes a fiscal emergency condition of a municipal corporation, county, or township for purposes of this chapter authorize actions otherwise contrary to law or any agreement of the municipal corporation, county, or township.

Section 118.04 | Determining existence of fiscal emergency condition.

• Effective: September 29, 2015
• Latest Legislation: House Bill 64 - 131st General Assembly

(A) The existence of a fiscal emergency condition constitutes a fiscal emergency. The existence of fiscal emergency conditions shall be determined by the auditor of state. Such determination, for purposes of this chapter, may be made only upon the filing with the auditor of state of a written request for such a determination by the governor, by the county budget commission, by the mayor of the municipal corporation, or by the presiding officer of the legislative authority of the municipal corporation when authorized by a majority of the members of such legislative authority, by the board of county commissioners, or by the board of township trustees, or upon initiation by the auditor of state. The request may designate in general or specific terms, but without thereby limiting the determination thereto, the condition or conditions to be examined to determine whether they constitute fiscal emergency conditions. Promptly upon receipt of such written request, or upon initiation by the auditor of state, the auditor of state shall transmit copies of such request or a written notice of such initiation to the mayor and the presiding officer of the legislative authority of the municipal corporation or to the board of county commissioners or the board of township trustees by personal service or certified mail. Such determinations shall be set forth in written reports and supplemental reports, which shall be filed with the mayor, fiscal officer, and presiding officer of the legislative authority of the municipal corporation, or with the board of county commissioners or the board of township trustees, and with the treasurer of state, secretary of state, governor, director of budget and management, and county budget commission, within thirty days after the request. The auditor of state shall so file an initial report immediately upon determining the existence of any fiscal emergency condition.

(B) In making such determination, the auditor of state may rely on reports or other information filed or otherwise made available by the municipal corporation, county, or township, accountants' reports, or other sources and data the auditor of state considers reliable for such purpose. As to the status of funds or accounts, a determination that the amounts stated in section 118.03 of the Revised Code are exceeded may be made without need for determination of the specific amount of the excess. The auditor of state may engage the services of independent certified or registered public accountants, including public accountants engaged or previously engaged by the municipal corporation, county, or township, to conduct audits or make reports or render such opinions as the auditor of state considers desirable with respect to any aspect of the determinations to be made by the auditor of state.

(C) A determination by the auditor of state under this section that a fiscal emergency condition does not exist is final and conclusive and not appealable. A determination by the auditor of state under this section that a fiscal emergency exists is final, except that the mayor of any municipal corporation affected by a determination of the existence of a fiscal emergency condition under this section, when authorized by a majority of the members of the legislative authority, or the board of county commissioners or board of township trustees, may appeal the determination of the existence of a fiscal emergency condition to the court of appeals having territorial jurisdiction over the municipal corporation, county, or township. The appeal shall be heard expeditiously by the court of appeals and for good cause shown shall take precedence over all other civil matters except earlier matters of the same character. Notice of such appeal must be filed with the auditor of state and such court within thirty days after certification by the auditor of state to the mayor and presiding officer of the legislative authority of the municipal corporation or to the board of county commissioners or board of township trustees as provided for in division (A) of this section. In such appeal, determinations of the auditor of state shall be presumed to be valid and the municipal corporation, county, or township shall have the burden of proving, by clear and convincing evidence, that each of the determinations made by the auditor of state as to the existence of a fiscal emergency condition under section 118.03 of the Revised Code was in error. If the municipal corporation, county, or township fails, upon presentation of its case, to prove by clear and convincing evidence that each such determination by the auditor of state was in error, the court shall dismiss the appeal. The municipal corporation, county, or township and the auditor of state may introduce any evidence relevant to the existence or nonexistence of such fiscal emergency conditions at the times indicated in the applicable provisions of divisions (A) and (B) of section 118.03 of the Revised Code. The pendency of any such appeal shall not affect or impede the operations of this chapter; no restraining order, temporary injunction, or other similar restraint upon actions consistent with this chapter shall be imposed by the court or any court pending determination of such appeal; and all things may be done under this chapter that may be done regardless of the pendency of any such appeal. Any action taken or contract executed pursuant to this chapter during the pendency of such appeal is valid and enforceable among all parties, notwithstanding the decision in such appeal. If the court of appeals reverses the determination of the existence of a fiscal emergency condition by the auditor of state, the determination no longer has any effect, and any procedures undertaken as a result of the determination shall be terminated.

(D) All expenses incurred by the auditor of state relating to a determination or termination of a fiscal emergency under this section, a fiscal watch under section 118.021 of the Revised Code, or a fiscal caution under section 118.025 of the Revised Code, including providing technical and support services, or for conducting a performance audit under section 118.041 of the Revised Code, shall be reimbursed from an appropriation for that purpose. If necessary, the controlling board may provide sufficient funds for these purposes.

Section 118.041 | Performance audit of municipal corporations.

• Effective: September 29, 2015
• Latest Legislation: House Bill 64 - 131st General Assembly

The auditor of state, on the auditor of state's initiative, may conduct a performance audit of a municipal corporation, county, or township that is under a fiscal caution, a fiscal watch, or a fiscal emergency.

Section 118.05 | Financial planning and supervision commission.

• Effective: November 2, 2018
• Latest Legislation: House Bill 312 - 132nd General Assembly

(A) Pursuant to the powers of the general assembly and for the purposes of this chapter, upon the occurrence of a fiscal emergency in any municipal corporation, county, or township, as determined pursuant to section 118.04 of the Revised Code, there is established, with respect to that municipal corporation, county, or township, a body both corporate and politic constituting an agency and instrumentality of the state and performing essential governmental functions of the state to be known as the "financial planning and supervision commission for _______________ (name of municipal corporation, county, or township)," which, in that name, may exercise all authority vested in such a commission by this chapter. Except as otherwise provided in division (L) of this section, a separate commission is established with respect to each municipal corporation, county, or township as to which there is a fiscal emergency as determined under this chapter.

(B) A commission shall consist of the following voting members:

(1) Four ex officio members: the treasurer of state; the director of budget and management; in the case of a municipal corporation, the mayor of the municipal corporation and the presiding officer of the legislative authority of the municipal corporation; in the case of a county, a member of the board of county commissioners and the county auditor; in the case of a county that has adopted a charter under Article X, Ohio Constitution, and under that charter has both a county executive and a county fiscal officer, the county executive and the county fiscal officer; and in the case of a township, a member of the board of township trustees and the county auditor.

The treasurer of state may designate a deputy treasurer or director within the office of the treasurer of state or any other appropriate person who is not an employee of the treasurer of state's office; the director of budget and management may designate an individual within the office of budget and management or any other appropriate person who is not an employee of the office of budget and management; the presiding officer of the legislative authority of the municipal corporation may designate any other member of the legislative authority; the board of county commissioners may designate any other member of the board or the fiscal officer of the county; the fiscal officer of a county that has adopted a charter under Article X, Ohio Constitution, may designate an individual within the county fiscal office; the county auditor may designate an individual within the county auditor's office; and the board of township trustees may designate any other member of the board or the fiscal officer of the township to attend the meetings of the commission when the ex officio member is absent or unable for any reason to attend. A designee, when present, shall be counted in determining whether a quorum is present at any meeting of the commission and may vote and participate in all proceedings and actions of the commission. The designations shall be in writing, executed by the ex officio member or entity making the designation, and filed with the secretary of the commission. The designations may be changed from time to time in like manner, but due regard shall be given to the need for continuity.

(2) If a municipal corporation, county, or township has a population of at least one thousand, three additional members appointed not later than fifteen days after the auditor of state determines that a fiscal emergency exists as follows:

For a municipal corporation, the governor shall appoint one member; the mayor shall appoint one member confirmed by the legislative authority of the municipal corporation; and the county auditor of the county in which the largest portion of the territory of the municipal corporation is located shall appoint one member. The county auditor may appoint the county auditor to the commission.

For a county, the governor shall appoint one member and the board of county commissioners shall appoint two members. In the case of a county that has adopted a charter under Article X, Ohio Constitution, and under that charter has both a county executive and a county council, the governor shall appoint one member, the county executive shall appoint one member, and the county council shall appoint one member. A member of the board of county commissioners, a county executive, or a member of the county council is ineligible for appointment to the commission under this paragraph.

For a township, the governor shall appoint one member and the board of township trustees shall appoint two members. A member of the board of township trustees is ineligible for appointment to the commission under this paragraph.

Each of the three appointed members shall serve during the life of the commission, subject to removal by the appointing authority for misfeasance, nonfeasance, or malfeasance in office. In the event of the death, resignation, incapacity, removal, or ineligibility to serve of an appointed member, the appointing authority that appointed the member shall appoint a successor, except as otherwise provided in division (M) of this section.

Each appointed member shall be an individual:

Who has knowledge and experience in financial matters, financial management, or business organization or operations;

Whose residency, office, or principal place of professional or business activity is situated within the municipal corporation, county, or township, except that a county auditor who serves on the commission of a municipal corporation is not required to reside or have an office or principal place of professional or business activity in the municipal corporation;

Who shall not become a candidate for elected public office while serving as a member of the commission, except a county auditor who serves on the commission of a municipal corporation may be a candidate for reelection to the county auditor's office.

(C) Immediately after appointment of the initial appointed members of the commission, the governor shall call the first meeting of the commission and shall cause written notice of the time, date, and place of the first meeting to be given to each member of the commission at least forty-eight hours in advance of the meeting.

(D) The director of budget and management shall serve as chairperson of the commission. The commission shall elect one of its members to serve as vice-chairperson and may appoint a secretary and any other officers, who need not be members of the commission, it considers necessary. The chairperson may remove an appointed member if that member fails to attend three meetings. In that event, the appointing authority shall fill the vacancy in the same manner as the original appointment, except as otherwise provided in division (M) of this section.

(E) The commission may adopt and alter bylaws and rules, which shall not be subject to section 111.15 or Chapter 119. of the Revised Code, for the conduct of its affairs and for the manner, subject to this chapter, in which its powers and functions shall be exercised and embodied.

(F) Four members of a commission established pursuant to divisions (B)(1) and (2) of this section constitute a quorum of the commission. The affirmative vote of a majority of the members of the commission is necessary for any action taken by vote of the commission. No vacancy in the membership of the commission shall impair the rights of a quorum by such vote to exercise all the rights and perform all the duties of the commission. Members of the commission, and their designees, are not disqualified from voting by reason of the functions of the other office they hold and are not disqualified from exercising the functions of the other office with respect to the municipal corporation, county, or township, its officers, or the commission.

(G) The auditor of state shall serve as the "financial supervisor" to the commission unless the auditor of state elects to contract for that service. As used in this chapter, "financial supervisor" means the auditor of state.

(H) At the request of the commission, the auditor of state shall designate employees of the auditor of state's office to assist the commission and the financial supervisor and to coordinate the work of the auditor of state's office and the financial supervisor. Upon the determination of a fiscal emergency in any municipal corporation, county, or township, the municipal corporation, county, or township shall provide the commission with such reasonable office space in the principal building housing city, county, or township government, where feasible, as it determines is necessary to carry out its duties under this chapter.

(I) The financial supervisor, the members of the commission, the auditor of state, and any person authorized to act on behalf of or assist them shall not be personally liable or subject to any suit, judgment, or claim for damages resulting from the exercise of or failure to exercise the powers, duties, and functions granted to them in regard to their functioning under this chapter, but the commission, the financial supervisor, the auditor of state, and those other persons shall be subject to mandamus proceedings to compel performance of their duties under this chapter and with respect to any debt obligations issued pursuant or subject to this chapter.

(J) At the request of the commission, the administrative head of any state agency shall temporarily assign personnel skilled in accounting and budgeting procedures to assist the commission or the financial supervisor in its duties as financial supervisor.

(K) The appointed members of the commission who are members of the board of township trustees or are not elected officials are not subject to section 102.02 of the Revised Code. Each appointed member of the commission shall file with the commission a signed written statement setting forth the general nature of sales of goods, property, or services or of loans to the municipal corporation, county, or township with respect to which that commission is established, in which the appointed member has a pecuniary interest or in which any member of the appointed member's immediate family, as defined in section 102.01 of the Revised Code, or any corporation, partnership, or enterprise of which the appointed member is an officer, director, or partner, or of which the appointed member or a member of the appointed member's immediate family, as so defined, owns more than a five per cent interest, has a pecuniary interest, and of which sale, loan, or interest such member has knowledge. The statement shall be supplemented from time to time to reflect changes in the general nature of any such sales or loans.

(L) A commission is not established with respect to any village or township with a population of less than one thousand as of the most recent federal decennial census. Upon the occurrence of a fiscal emergency in such a village or township, the auditor of state shall serve as the financial supervisor of the village or township and shall have all the powers and responsibilities of a commission, including the powers and responsibilities described in section 118.07 of the Revised Code.

(M)(1) Notwithstanding any contrary provision of division (B)(2) or (D) of this section, if one or more appointed seats on a commission that was established before October 17, 2017, are or become vacant, division (M) of this section applies concerning the commission.

(2) In the case of a commission established with respect to a municipal corporation:

(a) If one such vacancy exists on the commission, the county auditor of the county in which the largest portion of the territory of the municipal corporation is located shall appoint a member to fill the vacancy. The county auditor may appoint the county auditor to the commission. Of the two remaining appointed members of the commission, the mayor shall determine, not later than the fifteenth day after the effective date of this amendment or the fifteenth day after the vacancy occurs, whichever is later, which of those members shall be considered the member appointed by the mayor for purposes of divisions (B)(2) and (D) of this section, and the other appointed member shall be considered the member appointed by the governor for purposes of divisions (B)(2) and (D) of this section.

(b) If two such vacancies exist on the commission, the county auditor of the county in which the largest portion of the territory of the municipal corporation is located shall appoint a member to fill one vacancy, and the mayor shall appoint a member confirmed by the legislative authority of the municipal corporation to fill the other vacancy. The county auditor may appoint the county auditor to the commission. The remaining appointed member of the commission shall be considered the member appointed by the governor for purposes of divisions (B)(2) and (D) of this section.

(c) If three such vacancies exist on the commission, the members shall be appointed in accordance with division (B)(2) of this section.

(3) In the case of a commission established with respect to a township:

(a) If one such vacancy exists on the commission, the board of township trustees shall appoint a member to fill the vacancy, who shall not be a member of the board of township trustees. Of the two remaining appointed members of the commission, the board of township trustees shall determine, not later than the fifteenth day after the effective date of this amendment or the fifteenth day after the vacancy occurs, whichever is later, which of those members shall be considered the member appointed by the board of township trustees for purposes of divisions (B)(2) and (D) of this section, and the other appointed member shall be considered the member appointed by the governor for purposes of divisions (B)(2) and (D) of this section.

(b) If two such vacancies exist on the commission, the board of township trustees shall appoint two members to fill the vacancies, who shall not be members of the board of township trustees. The remaining appointed member of the commission shall be considered the member appointed by the governor for purposes of divisions (B)(2) and (D) of this section.

(c) If three such vacancies exist on the commission, the members shall be appointed in accordance with division (B)(2) of this section.

(4) After one or more vacancies in appointed seats on a commission have been filled under division (M) of this section, any subsequent vacancy or vacancies shall be filled under division (B)(2) or (D) of this section, as applicable.

Section 118.06 | Submission of detailed financial plan.

• Effective: October 17, 2017
• Latest Legislation: House Bill 103 - 132nd General Assembly

(A)(1) Within one hundred twenty days after the first meeting of the commission, the mayor of the municipal corporation or the board of county commissioners or board of township trustees shall submit to the commission a detailed financial plan, as approved or amended and approved by ordinance or resolution of the legislative authority, containing the following:

(a) Actions to be taken by the municipal corporation, county, or township to:

(i) Eliminate all fiscal emergency conditions determined to exist pursuant to section 118.04 of the Revised Code;

(ii) Satisfy any judgments, past due accounts payable, and all past due and payable payroll and fringe benefits;

(iii) Eliminate the deficits in all deficit funds;

(iv) Restore to construction funds and other special funds moneys from such funds that were used for purposes not within the purposes of such funds, or borrowed from such construction funds by the purchase of debt obligations of the municipal corporation, county, or township with the moneys of such funds, or missing from the construction funds or such special funds and not accounted for;

(v) Balance the budgets, avoid future deficits in any funds, and maintain current payments of payroll, fringe benefits, and all accounts;

(vi) Avoid any fiscal emergency condition in the future;

(vii) Restore the ability of the municipal corporation, county, or township to market long-term general obligation bonds under provisions of law applicable to municipal corporations, counties, or townships generally.

(b) The legal authorities permitting the municipal corporation, county, or township to take the actions enumerated pursuant to division (A)(1)(a) of this sectio n ;

(c) A description of the source and amount of all funds available to the municipal corporation, county, or township, including funds upon which the municipal corporation, county, or township previously has placed restrictions;

(d) The approximate dates of the commencement, progress upon, and completion of the actions enumerated pursuant to division (A)(1)(a) of this section, a five-year forecast reflecting the effects of those actions, and a reasonable period of time expected to be required to implement the plan. The municipal corporation, county, or township, in consultation with the commission and the financial supervisor, shall prepare a reasonable time schedule for progress toward and achievement of the requirements for the financial plan and the financial plan shall be consistent with that time schedule.

(e) The amount and purpose of any issue of debt obligations that will be issued, together with assurances that any such debt obligations that will be issued will not exceed debt limits supported by appropriate certifications by the fiscal officer of the municipal corporation, county, or township and the county auditor;

(f) Assurances that the municipal corporation, county, or township will establish monthly levels of expenditures and encumbrances pursuant to division (B)(2) of section 118.07 of the Revised Code;

(g) Assurances that the municipal corporation, county, or township will conform to statutes with respect to tax budgets and appropriation measures;

(h) The detail, the form, and the supporting information that the commission may direct;

(i) An evaluation of the feasibility of entering into shared services agreements with other political subdivisions for the joint exercise of any power, performance of any function, or rendering of any service, if so authorized by statute.

(2) The financial plan developed under division (A) of this section shall provide for the use of all funds available to the municipal corporation, county, or township, including funds upon which restrictions previously had been placed by the municipal corporation, county, or township, but shall not include funds upon which such restrictions have been placed by other sections of the Revised Code or the Ohio Constitution.

(B) The financial plan developed pursuant to division (A) of this section shall be filed with the financial supervisor and the financial planning and supervision commission and shall be updated annually. After consultation with the financial supervisor, the commission shall either approve or reject any initial or subsequent financial plan. If the commission rejects the initial or any subsequent financial plan, it shall forthwith inform the mayor and legislative authority of the municipal corporation or the board of county commissioners or board of township trustees of the reasons for its rejection. Within thirty days after the rejection of any plan, the mayor with the approval of the legislative authority by the passage of an ordinance or resolution, or the board of county commissioners or board of township trustees, shall submit another plan meeting the requirements of division (A) of this section to the commission and the financial supervisor for approval or rejection by the commission.

(C) Any initial or subsequent financial plan passed by the municipal corporation, county, or township shall be approved by the commission if it complies with division (A) of this section, and if the commission finds that the plan is bona fide and can reasonably be expected to be implemented within the period specified in the plan.

(D) Any financial plan may be amended subsequent to its adoption in the same manner as the passage and approval of the initial or subsequent plan pursuant to divisions (A) to (C) of this section.

(E) If the commission finds that the financial plan submitted by the municipal corporation, county, or township fails to include a description of the source and amount of all funds available to the municipal corporation, county, or township or fails to provide for the use of all such funds in implementing the plan, the commission may prohibit expenditures from the general fund and all funds of the municipal corporation, county, or township in any month from exceeding eighty-five per cent of expenditures from the general fund and all funds for that month in the preceding fiscal year. The commission may authorize a higher per cent for any month upon justification of need by the municipal corporation, county, or township. If the commission considers it prudent, the commission also may limit expenditures from any other fund of the municipal corporation, county, or township. Any limitations imposed under this division remain in effect until the commission approves an amended financial plan that includes a description of the source and amount of all funds available to the municipal corporation, county, or township and that provides for the use of all such funds in implementing the plan.

(F) If a municipal corporation, county, or township fails to submit a financial plan as required by this section, or fails to substantially comply with an approved financial plan, upon certification of the commission, the commission shall notify the office of budget and management and all state funding for that municipal corporation, county, or township other than benefit assistance to individuals shall be withheld until subsequent notification from the commission to the office of budget and management that a feasible plan has been submitted and approved or substantial compliance with the plan has been achieved, as the case may be. Upon receipt of the subsequent notification, the office of budget and management shall release all funds withheld from the political subdivision under this section.

Section 118.07 | Commission or financial supervisor - powers and duties.

• Effective: November 2, 2018
• Latest Legislation: House Bill 312 - 132nd General Assembly

(A) The financial planning and supervision commission, or when authorized by the commission, the financial supervisor, shall have the following powers, duties, and functions:

(1) To review all tax budgets, tax levy ordinances, bond and note ordinances or resolutions, appropriation measures of the municipal corporation, county, or township, and certificates of estimated resources to require that such are consistent with the financial plan and a balanced appropriation budget for the current fiscal year, and any supporting information upon which the financial plan and balanced appropriation budget has been developed and based, and to determine whether revenue estimates and estimates of expenditures and appropriations will result in a balanced budget;

(2) To inspect and secure copies of any document, ordinance, resolution, or instrument pertaining to the effective financial accounting and reporting system, debt obligations, debt limits, financial plan, balanced appropriation budgets, appropriation measures, report of audit, statement or invoice, or other worksheet or record of the municipal corporation, county, or township; provided that any attorney-client privilege shall remain inviolate;

(3) To inspect and secure copies of any document, instrument, certification, records of proceedings, or other worksheet or records of the bureau, county budget commission, county auditor, or other official or employee of the municipal corporation, county, or township or other political subdivision, unit, or agency of government of the state;

(4) To review, revise, and approve determinations and certifications affecting the municipal corporation, county, or township made by the county budget commission or county auditor pursuant to Chapter 5705. of the Revised Code to ensure such determinations and certifications are consistent with the laws of the state;

(5) To bring civil actions, including mandamus, to enforce this chapter;

(6) To approve the amount and purpose of any issue of debt obligations;

(7) To authenticate and assist the appropriate officers of the municipal corporation, county, or township in the delivery of debt obligations of the municipal corporation, county, or township;

(8) To consult with the officials of the municipal corporation, county, or township and the auditor of state regarding any necessary or appropriate steps to bring the books of account, accounting systems, and financial procedures and reports of the municipal corporation, county, or township into compliance with requirements prescribed by the auditor of state, and regarding desirable modifications and supplementary systems and procedures pertinent to the municipal corporation, county, or township;

(9) To assist or provide assistance to the municipal corporation, county, or township in the structuring or the terms of, and the placement of sale of, debt obligations of the municipal corporation, county, or township;

(10) To perform all other powers, duties, and functions as provided under this chapter;

(11) To make and enter into all contracts and agreements necessary or incidental to the performance of its duties and the exercise of its powers under this chapter;

(12) To consult with officials of the municipal corporation, county, or township and make recommendations for cost reductions or revenue increases to achieve balanced budgets and carry out the financial plan.

(B) During the fiscal emergency period, the commission or, when authorized by the commission, the financial supervisor, shall, in addition to other powers:

(1) With respect to the appropriation measure in effect at the commencement of the fiscal emergency period of the municipal corporation, county, or township if such period commenced more than three months prior to the end of the current fiscal year, and otherwise with respect to the appropriation measure for the next fiscal year:

(a) Review and determine the adequacy of all revenues to meet all expenditures for such fiscal year;

(b) Review and determine the extent of any deficiency of revenues to meet such expenditures;

(c) Require the municipal corporation, county, or township to provide justification documents to substantiate, to the extent and in the manner considered necessary, any item of revenue or appropriation;

(d) Not later than sixty days after taking office or after receipt of such appropriation measure for the next fiscal year, report to the municipal corporation, county, or township on such determination.

(2) Require the municipal corporation, county, or township, by ordinance or resolution, to establish monthly levels of expenditures and encumbrances consistent with the financial plan and the commission's or, when authorized by the commission, the financial supervisor's review pursuant to divisions (B)(1)(a) and (1)(b) of this section. The commission or, when authorized by the commission, the financial supervisor, shall approve and monitor the monthly levels of expenditures and encumbrances and require justification documents to substantiate any departure from any approved level.

(C) In making any determination pursuant to division (B) of this section, the commission and the financial supervisor may rely on any information considered in its judgment reliable or material and shall not be restricted by any tax budget or certificate or any other document which the municipal corporation, county, or township may have adopted or received from any other governmental agency.

(D) The municipal corporation, county, state, and township officers or employees thereof, are hereby authorized and directed to assist diligently and promptly the commission and the financial supervisor in the prosecution of their duties, including the furnishing of any materials, including justification documents, required.

(E) Annually on or before the first day of April, the director of budget and management, as chairperson of a commission, or the auditor of state, as financial supervisor as provided in division (L) of section 118.05 of the Revised Code, shall make reports and recommendations to the speaker of the house of representatives and the president of the senate concerning progress of the municipal corporation, county, or township to eliminate fiscal emergency conditions, failures of the municipal corporation, county, or township to comply with this chapter, and recommendations for further actions to attain the objectives of this chapter, including legislative action to make provisions of law more effective for their purposes, or to enhance revenue raising or financing capabilities of municipal corporations, counties, or townships. The director or the auditor of state may make such interim reports as the director or the auditor of state may determine to be appropriate for such purposes and shall make such additional reports as may be requested by either house of the general assembly.

Section 118.08 | Powers, duties, and functions of financial planning and supervision commission.

• Effective: September 5, 2001
• Latest Legislation: House Bill 94 - 124th General Assembly

(A) The members of the financial planning and supervision commission shall serve without compensation, but shall be paid by the commission their necessary and actual expenses incurred while engaged in the business of the commission.

(B) All expenses incurred for services rendered by the financial supervisor for a period of twenty-four months shall be paid by the commission pursuant to an appropriation made by the general assembly for this purpose. Expenses incurred for services rendered by the financial supervisor beyond this period shall be borne by the municipal corporation, county, or township unless the director of budget and management waives the costs and allows payment in accordance with the following:

(1) If the continued performance of the financial supervisor is required for a period of twenty-five to thirty months, the municipal corporation, county, or township is responsible for twenty per cent of the compensation due.

(2) If the continued performance of the financial supervisor is required for a period of thirty-one to thirty-six months, the municipal corporation, county, or township is responsible for fifty per cent of the compensation due.

(3) If the continued performance of the financial supervisor is required for a period of thirty-seven months or more, the municipal corporation, county, or township is responsible for one hundred per cent of the compensation due except as otherwise provided in division (B)(4) of this section.

(4) If the continued performance of the financial supervisor has been required longer than eight fiscal years for any municipal corporation, county, or township declared to be in a fiscal emergency prior to fiscal year 1996, that municipal corporation, county, or township is responsible for fifty per cent of the compensation due in its ninth fiscal year while in fiscal emergency and one hundred per cent of the compensation due in its tenth fiscal year and every fiscal year thereafter while in fiscal emergency.

(C) If the municipal corporation, county, or township fails to make any payment to the financial supervisor as required by this chapter, the financial supervisor may certify to the county auditor the amount due, and that amount shall be withheld from the municipal corporation, county, or township from any fund or funds in the custody of the county auditor for distribution to the municipal corporation, county, or township, except for those reserved for payment of local government fund notes. Upon receiving the certification from the financial supervisor, the county auditor shall draw a voucher for the amount against those fund or funds in favor of the financial supervisor.

Section 118.09 | Paying expenses and obligations.

• Effective: July 1, 1983
• Latest Legislation: House Bill 291 - 115th General Assembly

Any expense or obligation incurred by the financial planning and supervision commission under this chapter shall be payable solely from appropriations made by the general assembly.

Section 118.10 | Developing effective financial accounting and reporting system.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

The municipal corporation, county, or township shall develop an effective financial accounting and reporting system by:

(A) Promptly bringing its existing system of financial accounting and reporting into compliance with Chapter 117. of the Revised Code. Within ninety days of the determination of the existence of a fiscal emergency condition pursuant to section 118.04 of the Revised Code, the auditor of state shall issue a preliminary report with respect to the methods, accuracy, and legality of the accounts, records, files, and reports of the municipal corporation, county, or township. Such report shall state whether Chapter 117. of the Revised Code and the requirements of the auditor of state have been complied with, and shall be certified to the financial planning and supervision commission and the mayor and presiding officer of the legislative authority of the municipal corporation or to the board of county commissioners or the board of township trustees.

(B) Modifying and supplementing the system of financial accounting and reporting to record and report its fiscal activities on an accurate, current, and continuous basis in order to facilitate the effective management of the affairs of the municipal corporation, county, or township, and to assist in refining and improving the financial plan and amendments thereof, facilitate the monitoring of compliance with and the implementation of the financial plan, and otherwise assist the financial planning and supervision commission, the auditor of state, and the county budget commission in the performance of their functions; provided, that any changes that would result in data not being available that would otherwise be available pursuant to Chapter 117. of the Revised Code shall first be approved by the auditor of state.

The auditor of state may order the municipal corporation, county, or township and the mayor, fiscal officer, and other appropriate officers of the municipal corporation, county, or township to take specific actions to achieve the objectives stated in this section, and the municipal corporation, county, or township and such officers shall take such actions.

Section 118.11 | Cooperation in furnishing information; review and approval of information and reports.

• Effective: October 17, 2017
• Latest Legislation: House Bill 103 - 132nd General Assembly

(A) The municipal corporation, county, or township and all its officers and employees having possession of the required information or the responsibility for developing such information, shall at all times cooperate in assisting the functions of the financial planning and supervision commission by providing to the commission or, when authorized by the commission, the financial supervisor, on a continuing basis, all information requested, ordered, or needed by the commission or the financial supervisor to formulate judgments regarding revenue and expenditure estimates, the financial plan or any modification thereof submitted by the municipal corporation, county, or township, the monitoring of the implementation of the financial plan, and consideration of any amendments of the financial plan initiated by the commission or the municipal corporation, county, or township. The municipal corporation, county, or township and its officers and employees shall provide accurate information and reports to the commission and the financial supervisor in such form and detail as requested from time to time by the commission or the financial supervisor. The municipal corporation, county, or township and its officers and employees shall provide the requested information and reports within thirty days after the commission or financial supervisor requests the information or reports.

(B) The commission shall review and approve the information and reports submitted to it or to the financial supervisor by the municipal corporation, county, or township under division (A) of this section. If the commission determines that a municipal corporation, county, or township has not promptly provided accurate information and reports under that division, the commission may prohibit expenditures from the general fund and all funds of the municipal corporation, county, or township in any month from exceeding eighty-five per cent of expenditures from the general fund and all funds for that month in the preceding fiscal year. The commission may authorize a higher per cent for any month upon justification of need by the municipal corporation, county, or township. If the commission considers it prudent, the commission also may limit expenditures from any other fund of the municipal corporation, county, or township. Any limitations imposed under this division remain in effect until the commission determines that the municipal corporation, county, or township has provided the accurate information and reports requested by the commission or the financial supervisor.

Section 118.12 | Failure to submit plan.

• Effective: October 17, 2017
• Latest Legislation: House Bill 103 - 132nd General Assembly

(A) After the date by which the municipal corporation, county, or township is required to submit a financial plan or segment of a financial plan to the financial planning and supervision commission, if the municipal corporation, county, or township has failed to submit a financial plan or segment as required by this chapter, expenditures from the general fund and all funds of the municipal corporation, county, or township in any month may not exceed eighty-five per cent of expenditures from the general fund and all funds for such month in the preceding fiscal year, except the commission may authorize a higher per cent for any month upon justification of need by the municipal corporation, county, or township. If considered prudent by the commission, expenditures from any other fund of the municipal corporation, county, or township also may be limited.

(B) After submission of a proposed financial plan by the municipal corporation, county, or township to the commission, until approval or disapproval no expenditure may be made contrary to such proposed financial plan.

(C) After disapproval by the commission of a proposed financial plan, no expenditure may be made by the municipal corporation, county, or township inconsistent with the reasons for disapproval given pursuant to division (B) of section 118.06 of the Revised Code; and if the municipal corporation, county, or township fails to submit a revised financial plan within the time required, the expenditure limits of division (A) of this section are applicable.

(D) After approval of a financial plan, or any amendment thereof, no expenditure may be made contrary to the approved financial plan, or amendment thereof, without the advance approval of the financial supervisor. The commission, by a majority vote, may overrule the decision of the financial supervisor.

Section 118.13 | Appropriations may not be contrary to financial plan.

• Effective: October 17, 2017
• Latest Legislation: House Bill 103 - 132nd General Assembly

(A) No appropriation measure may be adopted contrary to the financial plan approved by the financial planning and supervision commission. Any existing appropriation measure inconsistent with the approved financial plan is ineffective for purposes of any expenditures to the extent it authorizes expenditures in excess of the revenues available after approval of the financial plan, and shall be amended promptly by the legislative authority of the municipal corporation, county, or township to be consistent with the financial plan. Any appropriation measure prior to approval by the legislative authority of the municipal corporation, county, or township shall be submitted to the commission or, when authorized by the commission, the financial supervisor for review to determine whether the measure is consistent with the financial plan. The municipal corporation, county, or township, through the appropriate representatives of the legislative authority and the fiscal officer, shall cooperate with the commission or the financial supervisor in such review. The commission or the financial supervisor shall advise of any modifications in such appropriation measure deemed necessary to conform to the financial plan.

(B) Prior to giving a certificate of estimated resources or amendment thereof to the municipal corporation, county, or township, the county budget commission shall consult with the commission, and the commission shall revise such certificate or amended certificate in any respect in which the certificate or amended certificate is, in its judgment, inconsistent with the financial plan.

(C) Any tax budget of the municipal corporation, county, or township shall be consistent with the financial plan approved by the commission. Before submitting the tax budget to the county auditor, the municipal corporation, county, or township shall submit such tax budget to the commission and shall cooperate with the commission in its review of such tax budget. The municipal corporation, county, or township shall make such modifications in the tax budget as the commission determines to be necessary to conform to the financial plan. If the municipal corporation, county, or township fails to make such modifications, the commission shall certify to the budget commission the modifications necessary to conform to the financial plan, and the budget commission shall make such modifications. This division does not apply to a county, township, or municipal corporation for which the county budget commission has waived the requirement to adopt a tax budget pursuant to section 5705.281 of the Revised Code.

(D) Nothing in this section, and no delay or failure or refusal to act under or comply with the provisions of this section, delays, modifies, or affects the expenditure restrictions contained in division (E) of section 118.06 or division (B) of section 118.11 or in section 118.12 of the Revised Code.

(E) For purposes of the financial plan, tax budgets, and certificates of estimated resources, the revenue estimates shall not include revenues conditioned upon future favorable action by the electorate of the municipal corporation, county, or township or by the general assembly or congress, other than appropriations of moneys for existing and continuing programs at current levels. The estimate of revenues for any month shall separately state and designate as conditional those revenues which are conditioned upon the future issuance of debt obligations, transfers of funds, advances from funds, payments or reimbursements from the sale of debt obligations, sale of capital assets of the municipal corporation, county, or township, increases in utility rates and other charges, or imposition or increase in taxes, and shall be accompanied by documentation showing that the council or official with authority to act to achieve realization of such conditional revenues has acted in time for realization of such revenues in the month or months indicated. In any event, there shall not be included any source or amount which in the judgment of the commission, or when authorized by the commission, the financial supervisor, is uncertain of realization to form a proper basis for financial planning or budgeting.

Section 118.14 | Commission communications.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

The financial planning and supervision commission may direct its certifications, notifications, orders, or requests to particular officers of the municipal corporation, county, township, or state, or to the municipal corporation, county, or township or county budget commission and cause the same to be mailed or delivered to appropriate officials as designated by this chapter or, where not so designated, as it may deem appropriate. Any such certification, notification, order, or request, including preparation and submission of a financial plan in accordance therewith and with this chapter, shall be effective and binding upon the officer, county budget commission, municipal corporation, county, or township, and upon officials and employees who have the responsibility to act in the matter, have within their control the authority to perform consistent therewith, or have in their possession the information required or requested; and the duty to act pursuant to any such certification, notification, order, or request is hereby established as a duty of the municipal corporation, county, township, or state, and of each such officer and employee, specifically enjoined by the law resulting from an office, trust, or station within the meaning of section 2731.01 of the Revised Code, and may be enforced by writ of mandamus petitioned for by the commission on behalf of the state.

Section 118.15 | Prior approval of debt obligations.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

(A) No debt obligation may be issued or incurred by the municipal corporation, county, or township, whether purchased by the municipal corporation, county, or township or others, except with the prior approval of the financial planning and supervision commission.

(B) The commission shall disapprove the issuance of debt obligations upon a determination that, in its judgment, such action would impede the purposes of a financial plan under this chapter or be inconsistent with this chapter or the financial plan.

(C) The commission shall not approve the issuance of debt obligations unless:

(1) The ordinance authorizing their issuance, the ordinance or resolution providing for their award, and every document forming part of the contract with the purchasers of such debt obligations from the municipal corporation, county, or township is first submitted to the commission. The commission may adopt procedures for giving preliminary or conditional approval upon review of the ordinance authorizing such debt obligations and such other documents or information as it requires, and giving final approval upon review of the remaining documents, and for methods of evidencing such approvals.

(2) The ordinance authorizing the debt obligations contains a covenant to the effect that the municipal corporation, county, or township will comply with all provisions of this chapter, with the orders, directions, and requests of the commission and the auditor of state under this chapter, and with the financial plan. The commission may prescribe the form of such covenant.

(3) The municipal corporation, county, or township, at the time of such approval, is in compliance with this chapter.

(D) The commission shall not approve the issuance of a debt obligation if such issuance:

(1) Would cause the municipal corporation, county, or township to exceed debt limits;

(2) Would impair the ability of overlapping subdivisions to issue unvoted faith and credit debt obligations for necessary permanent improvements, as defined in section 133.01 of the Revised Code;

(3) Would, in the judgment of the commission, be likely to lead to the reallocation of minimum levies as described in division (A)(3) of section 118.03 of the Revised Code.

(E) For purposes of the validity of debt obligations approved by the commission and delivered to and paid for by a purchaser other than the municipal corporation, county, or township, but for no other purposes of this chapter, such approval shall be conclusive as to compliance with this section, unless such approval is withdrawn by the commission prior to such delivery and payment.

Section 118.16 | Bond anticipation notes.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

Bond anticipation notes of a municipal corporation, county, or township issued during a fiscal emergency period may mature at the later of the time otherwise permitted by law or any time approved by the commission and estimated by it to be not more than one year following termination of the fiscal emergency period and, notwithstanding that such maturity exceeds one year, may be sold by competitive bids or by negotiation. Bonds or notes may be issued by a municipal corporation, county, or township during a fiscal emergency period to retire bond anticipation notes for the stated purposes of such bond anticipation notes notwithstanding that the proceeds of such bond anticipation notes or the original indebtedness were used for other purposes.

Section 118.17 | Issuing local government fund notes.

• Effective: September 29, 2011
• Latest Legislation: House Bill 153 - 129th General Assembly

(A) During a fiscal emergency period and with the approval of the financial planning and supervision commission, a municipal corporation, county, or township may issue local government fund notes, in anticipation of amounts to be allocated to it pursuant to division (B) of section 5747.50 of the Revised Code or to be apportioned to it under section 5747.51 or 5747.53 of the Revised Code in a future year or years, for a period of no more than eight calendar years. The principal amount of the notes and interest on the notes due and payable in any year shall not exceed fifty per cent of the total amount of local government fund moneys so allocated or apportioned to the municipal corporation, county, or township for the year preceding the year in which the notes are issued. The notes may mature in semiannual or annual installments in such amounts as may be fixed by the commission, and need not mature in substantially equal semiannual or annual installments. The notes of a municipal corporation may be authorized and issued, subject to the approval of the commission, in the manner provided in sections 717.15 and 717.16 of the Revised Code, except that, notwithstanding division (A)(2) of section 717.16 of the Revised Code, the rate or rates of interest payable on the notes shall be the prevailing market rate or rates as determined and approved by the commission, and except that they shall not be issued in anticipation of bonds, shall not constitute general obligations of the municipal corporation, and shall not pledge the full faith and credit of the municipal corporation.

(B) The principal and interest on the notes provided for in this section shall be payable, as provided in this section, solely from the portion of the local government fund that would otherwise be apportioned to the municipal corporation, county, or township and shall not be payable from or constitute a pledge of or claim upon, or require the levy, collection, or application of, any unvoted ad valorem property taxes or other taxes, or in any manner occupy any portion of the indirect debt limit.

(C) Local government fund notes may be issued only to the extent needed to achieve one or more of the following objectives of the financial plan:

(1) Satisfying any contractual or noncontractual judgments, past due accounts payable, and all past due and payable payroll and fringe benefits to be taken into account under section 118.03 of the Revised Code;

(2) Restoring to construction funds or other restricted funds any money applied from such funds to uses not within the purposes of such funds and which could not be transferred to such use under section 5705.14 of the Revised Code;

(3) Eliminating deficit balances in all deficit funds, including funds that may be used to pay operating expenses.

In addition to the objectives set forth in divisions (C)(1) to (3) of this section, local government fund notes may be issued and the proceeds of those notes may be used for the purpose of retiring or replacing other moneys used to retire current revenue notes issued pursuant to section 118.23 of the Revised Code to the extent that the proceeds of the current revenue notes have been or are to be used directly or to replace other moneys used to achieve one or more of the objectives of the financial plan specified in divisions (C)(1) to (3) of this section. Upon authorization of the local government fund notes by the legislative authority of the municipal corporation, county, or township, the proceeds of the local government fund notes and the proceeds of any such current revenue notes shall be deemed to be appropriated, to the extent that the proceeds have been or are to be so used, for the purposes for which the revenues anticipated by any such current revenue notes are collected and appropriated within the meaning of section 133.10 of the Revised Code.

(D) The need for an issue of local government fund notes for such purposes shall be determined by taking into consideration other money and sources of moneys available therefor under this chapter or other provisions of law, and calculating the respective amounts needed therefor in accordance with section 118.03 of the Revised Code, including the deductions or offsets therein provided, for determining that a fiscal emergency condition exists, and by eliminating any duplication of amounts thereunder. The respective amounts needed to achieve such objectives and the resulting aggregate net amount shall be determined initially by a certification of the fiscal officer as and to the extent approved by the financial supervisor. The principal amount of such notes shall not exceed the aggregate net amount needed for such purposes. The aggregate amount of all issues of such notes shall not exceed three times the average of the allocation or apportionment to the municipal corporation, county, or township of moneys from the local government fund in each of the three fiscal years preceding the fiscal year in which the notes are issued.

(E) The proceeds of the sale of local government fund notes shall be appropriated by the municipal corporation, county, or township for and shall be applied only to the purposes, and in the respective amounts for those purposes, set forth in the certification given pursuant to division (D) of this section, as the purposes and amounts may be modified in the approval by the commission provided for in this section. The proceeds shall be deposited in separate accounts with a fiscal agent designated in the resolution referred to in division (F) of this section and released only for such respective purposes in accordance with the procedures set forth in division (D) of section 118.20 of the Revised Code. Any amounts not needed for such purposes shall be deposited with the fiscal agent designated to receive deposits for payment of the principal of and interest due on the notes.

(F) An application for approval by the financial planning and supervision commission of an issue of local government fund notes shall be authorized by a preliminary resolution adopted by the legislative authority. The resolution may authorize the application as a part of the initial submission of the financial plan for approval or as a part of any proposed amendment to an approved financial plan or at any time after the approval of a financial plan, or amendment to a financial plan, that proposes the issue of such notes. The preliminary resolution shall designate a fiscal agent for the deposit of the proceeds of the sale of the notes, and shall contain a covenant of the municipal corporation, county, or township to comply with this chapter and the financial plan.

The commission shall review and evaluate the application and supporting certification and financial supervisor action, and shall thereupon certify its approval or disapproval, or modification and approval, of the application.

The commission shall certify the amounts, maturities, interest rates, and terms of issue of the local government fund notes approved by the commission and the purposes to which the proceeds of the sale of the notes will be applied in respective amounts.

The commission shall certify a copy of its approval, of the preliminary resolution, and of the related certification and action of the financial supervisor to the fiscal officer, the financial supervisor, the county budget commission, the county auditor, the county treasurer, and the fiscal agent designated to receive and disburse the proceeds of the sale of the notes.

(G) Upon the sale of any local government fund notes issued under this section, the commission shall determine a schedule for the deposit of local government fund distributions that are pledged for the payment of the principal of and interest on the notes with the fiscal agent or trustee designated in the agreement between the municipal corporation, county, or township and the holders of the notes to receive and disburse the distributions. The amounts to be deposited shall be adequate to provide for the payment of principal and interest on the notes when due and to pay all other proper charges, costs, or expenses pertaining thereto.

The amount of the local government fund moneys apportioned to the municipal corporation, county, or township that is to be so deposited in each year shall not be included in the tax budget and appropriation measures of the municipal corporation, county, or township, or in certificates of estimated revenues, for that year.

The commission shall certify the schedule to the officers designated in division (F) of this section.

(H) Deposit of amounts with the fiscal agent or trustee pursuant to the schedule determined by the commission shall be made from local government fund distributions to or apportioned to the municipal corporation, county, or township as provided in this division. The apportionment of local government fund moneys to the municipal corporation, county, or township for any year from the undivided local government fund shall be determined as to the municipal corporation, county, or township without regard to the amounts to be deposited with the fiscal agent or trustee in that year in accordance with division (G) of this section. After the amount of the undivided local government fund apportioned to the municipal corporation, county, or township for a calendar year is determined, the county auditor and the county treasurer shall withhold from each monthly amount to be distributed to the municipal corporation, county, or township from the undivided local government fund, and transmit to the fiscal agent or trustee for deposit, one-twelfth of the amount scheduled for deposit in that year pursuant to division (G) of this section.

(I) If the commission approves the application, the municipal corporation, county, or township may proceed with the issuance of the notes as approved by the commission.

All notes issued under authority of this section are lawful investments for the entities enumerated in division (A)(1) of section 133.03 of the Revised Code and are eligible as security for the repayment of the deposit of public moneys.

Upon the issuance of any notes under this section, the fiscal officer of the municipal corporation, county, or township shall certify the fact of the issuance to the county auditor and shall also certify to the county auditor the last calendar year in which any of the notes are scheduled to mature.

(J) After the legislative authority of the municipal corporation, county, or township has passed an ordinance or resolution authorizing the issuance of local government fund notes and subsequent to the commission's preliminary or final approval of the ordinance or resolution, the director of law, prosecuting attorney, or other chief legal officer of the municipal corporation, county, or township shall certify a sample of the form and content of a note to be used to issue the local government fund notes to the commission. The commission shall determine whether the sample note is consistent with this section and the ordinance or resolution authorizing the issuance of the local government fund notes, and if the sample note is found to be consistent with this section and the ordinance, the commission shall approve the sample note for use by the municipal corporation, county, or township. The form and content of the notes to be used by the municipal corporation, county, or township in issuing the local government fund notes may be modified at any time subsequent to the commission's approval of the sample note upon the approval of the commission and the director of law, prosecuting attorney, or other chief legal officer of the municipal corporation, county, or township. The failure of the director of law, prosecuting attorney, or other chief legal officer of the municipal corporation, county, or township to make the certification required by this division shall not subject that legal officer to removal pursuant to the Revised Code or the charter of a municipal corporation. If the director of law, prosecuting attorney, or other chief legal officer fails or refuses to make the certification required by this division, or if any officer of the municipal corporation, county, or township fails or refuses to take any action required by this section or the ordinance or resolution authorizing the issuance or sale of local government fund notes, the mayor of the municipal corporation or the board of county commissioners or board of township trustees may cause the commencement of a mandamus action in the supreme court against the director of law, prosecuting attorney, or other chief legal officer to secure the certification required by this division or other action required by this section or the ordinance or resolution. If an adjudication of the matters that could be adjudicated in validation proceedings under section 133.70 of the Revised Code is necessary to a determination of the mandamus action, the mayor, the board of county commissioners, or the board of township trustees or the mayor's or board's legal counsel shall name and cause to be served as defendants to the mandamus action all of the following:

(1) The director of law, prosecuting attorney, or other chief legal officer, or other official of the municipal corporation, county, or township, whose failure or refusal to act necessitated the action;

(2) The municipal corporation, through its mayor, or the board of county commissioners or board of township trustees;

(3) The financial planning and supervision commission, through its chairperson;

(4) The prosecuting attorney and auditor of each county in which the municipal corporation, county, or township is located, in whole or in part;

(5) The auditor of state;

(6) The property owners, taxpayers, citizens of the municipal corporation, county, or township and others having or claiming any right, title, or interest in any property or funds to be affected by the issuance of the local government fund notes by the municipal corporation, county, or township, or otherwise affected in any way thereby.

Service upon all defendants described in division (J)(6) of this section shall be either by publication three times, with at least six days between each publication, in a newspaper of general circulation in Franklin county and a newspaper of general circulation in the county or counties where the municipal corporation, county, or township is located, or by publication in both such newspapers as provided in section 7.16 of the Revised Code. The publication and the notice shall indicate that the nature of the action is in mandamus, the name of the parties to the action, and that the action may result in the validation of the subject local government fund notes. Authorization to commence such an action by the legislative authority of the municipal corporation, county, or township is not required.

A copy of the complaint in the mandamus action shall be served personally or by certified mail upon the attorney general. If the attorney general has reason to believe that the complaint is defective, insufficient, or untrue, or if in the attorney general's opinion the issuance of the local government fund notes is not lawful or has not been duly authorized, defense shall be made to the complaint as the attorney general considers proper.

(K) The action in mandamus authorized by division (J) of this section shall take priority over all other civil cases pending in the court, except habeas corpus, and shall be determined with the least possible delay. The supreme court may determine that the local government fund notes will be consistent with the purpose and effects, including not occupying the indirect debt limit, provided for in this section and will be validly issued and acquired. Such a determination shall include a finding of validation of the subject local government fund notes if the court specifically finds that:

(1) The complaint in mandamus, or subsequent pleadings, include appropriate allegations required by division (C) of section 133.70 of the Revised Code, and that the proceeding is in lieu of an action to validate under section 133.70 of the Revised Code;

(2) All parties described in divisions (J)(1) to (6) of this section have been duly served with notice or are otherwise properly before the court;

(3) Notice of the action has been published as required by division (J) of this section;

(4) The effect of validation is required to provide a complete review and determination of the controversy in mandamus, and to avoid duplication of litigation, danger of inconsistent results, or inordinate delay in light of the fiscal emergency, or that a disposition in the mandamus action would, as a practical matter, be dispositive of any subsequent validation proceedings under section 133.70 of the Revised Code.

(L) Any decision that includes a finding of validation has the same effect as a validation order established by an action under section 133.70 of the Revised Code.

(M) Divisions (J) and (K) of this section do not prevent a municipal corporation, county, or township from using section 133.70 of the Revised Code to validate local government fund notes by the filing of a petition for validation in the court of common pleas of the county in which the municipal corporation, county, or township is located, in whole or in part.

(N) It is hereby determined by the general assembly that a validation action authorized by section 133.70 of the Revised Code is not an adequate remedy at law with respect to a municipal corporation, county, or township that is a party to a mandamus action pursuant to divisions (J) and (K) of this section and in which a fiscal emergency condition has been determined to exist pursuant to section 118.04 of the Revised Code because of, but not limited to, the following reasons:

(1) It is urgently necessary for such a municipal corporation, county, or township to take prompt action to issue local government fund notes for the purposes provided in division (C) of this section;

(2) The potentially ruinous effect upon the fiscal condition of a municipal corporation, county, or township by the passage of the time required to adjudicate such a separate validation action and any appeals thereof;

(3) The reasons stated in division (K)(4) of this section.

Section 118.18 | Debt obligation definitions.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

As used in sections 118.19 to 118.25 of the Revised Code:

(A) "Debt service" means the principal of and interest and any call premium on debt obligations payable or required to be deposited for such payment at various times.

(B) "Fiscal agent" means any one or more of the treasurer of state, county auditor, banks, trust companies, or other financial institutions authorized to exercise trust powers in the state, designated as such by the ordinance or resolution authorizing the debt obligations or by other ordinance or resolution of the legislative authority of the municipal corporation, county, or township, and any similarly qualified successor so designated. Fiscal agents may be designated only with their consent and upon agreed compensation, except that the county auditor shall serve as fiscal agent for debt obligations described in division (B) of section 118.23 of the Revised Code and without added compensation. The fiscal agent may be a purchaser or holder of the debt obligations to which the fiscal agency pertains or other debt obligations of the municipal corporation, county, or township.

(C) "Ordinance authorizing the debt obligations" or "ordinance" means an ordinance, resolution, indenture, trust agreement, contract, agreement, or other document prescribing the terms of, source of payment of, security for, or covenants pertaining to, or other customary or special provisions forming part of the contract between the municipal corporation, county, or township and original purchasers or holders of the debt obligations.

(D) "Outstanding", as used in connection with debt obligations, means issued and not retired or redeemed, excluding any debt obligations that have become payable, by call for redemption or otherwise, and for which full provision for payment of the debt service thereon has been made consistent with the provisions pertaining thereto or, in the absence of such provisions, by deposit with a fiscal agent as described in division (A) of section 118.22 of the Revised Code.

(E) "Pledged receipts" means receipts pledged to an issue of debt obligations in accordance with division (A) of section 118.20 of the Revised Code, and, with reference to debt obligations issued pursuant to section 118.23 of the Revised Code, means the receipts described in those sections for the payment of such debt obligations and any additional anticipated taxes and revenues pledged in accordance with division (A) of section 118.20 of the Revised Code.

Section 118.19 | Using special provisions for debt obligations.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

In connection with the issuance of debt obligations by a municipal corporation, county, or township approved by the financial planning and supervision commission, the municipal corporation may utilize the special provisions of sections 717.15 and 717.16 of the Revised Code, and the municipal corporation, county, or township may utilize any of the special provisions for securing the debt obligations, deposit and application of funds, special covenants, and remedies of holders of the debt obligations, as provided for in sections 118.20 to 118.22 of the Revised Code, upon approval of such utilization by the commission, and shall utilize the provisions of division (D) of section 118.20 of the Revised Code. Such approval shall be granted if the commission determines that the utilization of the special provisions as proposed by the municipal corporation, county, or township is necessary or desirable to enhance the sale of the debt obligations and will be consistent with the financial plan.

Section 118.20 | Authorizing debt obligations.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

Pursuant to section 118.19 of the Revised Code:

(A) The ordinance or resolution authorizing the debt obligations may provide for the pledge of, and covenants to levy, charge, collect, deposit, and apply ad valorem property taxes, income taxes, excises, utility revenues, local government fund receipts, permit and license fees, and any other receipts from taxes, permits, licenses, fines, or other sources of revenue of the municipal corporation, county, or township; accrued and capitalized interest and premium from the proceeds of the sale of the debt obligations, lawfully available for the purpose, to the payment of the debt service and costs of issuing, carrying, redeeming, and retiring such debt obligations; covenants in respect of the establishment, investment, segregation, and maintenance of any funds or reserves in connection with the debt obligations and any other funds of the municipal corporation, county, or township. No pledge may be made in a manner which impairs the contract rights of the holders of any outstanding debt obligations.

(B) The ordinance or resolution authorizing the debt obligations may designate a fiscal agent for the debt obligations, or the fiscal agent may be designated by other ordinance or resolution of the legislative authority of the municipal corporation, county, or township. The fiscal agent may be a purchaser of such debt obligations or other debt obligations of the municipal corporation, county, or township.

(C) The ordinance or resolution authorizing the debt obligations may provide for immediate or periodic deposit of pledged receipts or a portion thereof in one or more separate bank accounts, funds, or other accounts established with the fiscal agent. Provision may be made therein for pledged receipts that are collected by the state, the county, the township, or any agency for the municipal corporation, county, or township to be transferred by the appropriate officer of the state or county or agency having charge of the collection or distribution of such pledged receipts directly to the fiscal agent for deposit under the ordinance or resolution. Such officers of the state and county or agent shall transfer such pledged receipts in accordance with this section and the ordinance. The fiscal agent shall disburse funds so held for payments when due in accordance with the ordinance or resolution, including the transfer of funds to paying agents for the debt obligations at the times and in the amounts required. Until needed for such purposes, the fiscal agent shall invest the funds on behalf of the municipal corporation, county, or township in obligations that are lawful for the investment of public funds of the municipal corporation, county, or township, including provisions for such investments in a municipal charter, in the manner provided for in the ordinance or resolution. Funds held by the fiscal agent and all moneys and securities therein and pledged receipts payable thereto in accordance with the ordinance or resolution are hereby declared to be property of the municipal corporation, county, or township devoted to essential governmental purposes and accordingly shall not be applied to any purpose other than as provided herein and shall not be subject to any order, judgment, lien, execution, attachment, setoff, or counterclaim by any creditor of the municipal corporation, county, or township other than a creditor for whose benefit such fund is established and maintained and who is entitled thereto under and pursuant to this section.

(D) The ordinance or resolution authorizing the debt obligations shall provide that proceeds of the debt obligations shall be deposited with a fiscal agent in a special and separate bank account and held in trust and expended only for the object or purpose for which such debt obligations were issued. A copy of the ordinance or resolution authorizing the debt obligations shall be filed with such fiscal agent at or prior to the time the proceeds are made available to the municipal corporation, county, or township. No moneys shall be withdrawn from such account unless there is filed with such fiscal agent a written requisition of the fiscal officer of the municipal corporation, county, or township or the fiscal officer's authorized deputy, setting forth the item number of the requisition or the account to be charged, the name of the person to whom payment is due, the amount to be paid, a statement to the effect that the obligation in the stated amount has been incurred by the municipal corporation, county, or township and is a proper charge against such account, and such other information as may be required by the ordinance or resolution. Pending such withdrawals, the moneys shall be invested for and on behalf of the municipal corporation, county, or township by the fiscal agent in obligations which are lawful for the investment of public funds of the municipal corporation, county, or township, including provisions for such investments in a municipal charter, in the manner as provided for in the ordinance or resolution.

(E) Amounts held by fiscal agents shall be accounted for in the appropriate special funds of the municipal corporation, county, or township as if held in the treasury of the municipal corporation, county, or township, and the fiscal agents shall provide such information to the municipal corporation, county, or township as is necessary for the purpose.

(F) The ordinance or resolution authorizing the debt obligations may contain covenants of the municipal corporation, county, or township to protect and safeguard the security and rights of the holders of such debt obligations, and without limiting the generality of the foregoing, such ordinance or resolution may contain covenants as to:

(1) Establishment and maintenance of the funds to be held by fiscal agents as provided in this section and section 118.23 of the Revised Code, the times, amounts, and levels for deposits to such funds, and the obligations in which the proceeds of such funds may be invested pending their use, subject to such limitations on investment of public funds otherwise provided for by law or pursuant to the charter of a municipal corporation;

(2) The appointment, rights, powers, and duties of the fiscal agent, including limiting or abrogating the right of the holders to appoint a trustee pursuant to section 118.21 of the Revised Code and vesting in the fiscal agent all or any of such rights, powers, and duties, in trust;

(3) The execution of a credit agreement with the fiscal agent for the benefit of holders of such debt obligations and for the benefit of any other holders of other debt obligations of the municipal corporation, county, or township then outstanding, provided, however, that such benefit conferred on such holders of such outstanding debt obligations shall not be deemed to restrict, preclude, or otherwise impair any rights that such holders otherwise may assert;

(4) Filings, review, and correction of tax budgets, appropriation measures, annual reports, audits, and other matters of financial record;

(5) Compliance with the provisions of this chapter and the financial plan and other laws applicable to the municipal corporation, county, or township including Chapters 133. and 5705. of the Revised Code, and with further restrictions on the powers, rights, and duties of the municipal corporation, county, or township necessary, appropriate, or desirable for the proper, provident, and efficient management of financial affairs that the municipal corporation, county, or township, with the approval of the commission or, when authorized by the commission, the financial supervisor, determines will assure prompt payment when due of its debt obligations;

(6) Conditions that would give rise to an event of default under the terms of such ordinance and actions and remedies that the fiscal agent may take or assert on behalf of the holders of such debt obligations;

(7) Restrictions on the issuance of other debt obligations.

Section 118.21 | Rights and remedies of the holders of debt obligations.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

Pursuant to section 118.19 of the Revised Code, the ordinance or resolution authorizing debt obligations may provide for the following rights and remedies of the holders of debt obligations, in addition to any other rights and remedies under law, but subject to the terms of such ordinance or resolution;

(A) If the municipal corporation, county, or township defaults in the payment of debt service on an issue of debt obligations, whether at maturity or upon call for redemption, and such default continues for a period of thirty days, or if the municipal corporation, county, or township fails or refuses to comply with this chapter, or defaults in any contract made with the holders of an issue of debt obligations, the holders of twenty-five per cent in principal amount of the debt obligations of such issue then outstanding may appoint a trustee to represent the holders of such debt obligations for the purposes herein provided.

(B) Such trustee may, and upon written request of the holders of twenty-five per cent in principal amount of such debt obligations then outstanding shall, in the trustee's own name exercise all or any of the powers of any such holders under division (D) of this section and in addition may:

(1) Bring action for payment of any debt service then due with respect to such debt obligations;

(2) By mandamus or other action or proceeding enforce all rights of the holders of such debt obligations, including any right to require the municipal corporation, county, or township to assess, levy, charge, collect, and apply pledged receipts adequate to carry out the provisions of any agreement with the holders of such debt obligations and to perform its duties under this chapter;

(3) Bring action upon such debt obligations;

(4) By action, require the municipal corporation, county, or township to account as if it were the trustee of an express trust for the holders of such debt obligations;

(5) By action, enjoin any acts or things that may be unlawful or in violation of the rights of the holders of such debt obligations;

(6) Declare all such debt obligations of such issue due and payable, and if all defaults shall be made good, then, with the consent of the holders of twenty-five per cent of the principal amount of such debt obligations then outstanding, annul such declaration and its consequences.

(C) Such trustee shall, in addition to the foregoing, have and possess all of the powers necessary or appropriate for the exercise of any functions specifically set forth in this section or the ordinance or resolution or incident to the general representation of the holders of the debt obligations of such issue in the enforcement and protection of their rights.

(D) Any holder of any such debt obligations at any time outstanding, whether or not then due and payable or reduced to judgment and either on the holder's own behalf or on behalf of all persons similarly situated, may:

(1) By mandamus, mandatory or other injunction, or any other order, writ, process, or decree, or by any other action or proceeding, enforce all contractual or other rights of such holder or holders, including any right to require the municipal corporation, county, or township to assess, levy, charge, collect, and apply the pledged receipts to carry out the provisions of any agreement with such holder or holders and perform its duties under this chapter;

(2) By action, require the municipal corporation, county, or township to account as if it were the trustee of an express trust for such holder or holders;

(3) By action, enjoin any acts or things that may be unlawful or in violation of the rights of such holder or holders.

Section 118.22 | Pledge and agreement of state with and for benefit of holders of debt obligations.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

(A) If such pledge is included in the ordinance or resolution authorizing the debt obligations as provided in division (B) of this section, the state pledges to and agrees with the holders of debt obligations of the municipal corporation, county, or township issued pursuant to the approval of the financial planning and supervision commission or, when authorized by the commission, the financial supervisor under section 118.19 of the Revised Code that the state will not, by enacting any law or adopting any rule, repeal, revoke, repudiate, limit, alter, stay, suspend, or otherwise reduce, rescind, or impair the power or duty of the municipal corporation, county, or township to exercise, perform, carry out and fulfill its responsibilities under this chapter to the extent that the municipal corporation, county, or township incorporates in such ordinance or resolution, or in a credit agreement, covenants and agreements to so exercise, perform, carry out, and fulfill such responsibilities, or repeal, revoke, repudiate, limit, alter, stay, suspend, or otherwise reduce, rescind, or impair the rights and remedies of any such holders fully to enforce such covenants and agreements so incorporated in the ordinance, resolution, or credit agreement or to enforce the pledge and agreement of the state contained in this section or otherwise exercise any sovereign power contrary to or inconsistent with the provisions of such ordinance, resolution, or credit agreement; it being hereby determined and declared that the provisions of this chapter and the powers and duties of the municipal corporation, county, or township authorized and imposed hereunder are proper, reasonable, and appropriate means by which the state can and should exercise and has exercised its duty under the constitution to prevent abuses by the municipal corporation, county, or township of its powers of taxation, borrowing money, and contracting debts, and that the provisions hereof are necessary and in the public interest and a proper means to improve market reception for the purchase of debt obligations of the municipal corporation, county, or township and to protect the safety and health of the people of the state; provided, however, the foregoing pledge and agreement shall be of no further force and effect if at any time there is on deposit in a separate trust account with the fiscal agent sufficient moneys or direct obligations of the United States or the state the principal of and interest on which will provide moneys to pay punctually when due at maturity or prior to maturity by redemption in accordance with their terms all principal of and interest and any call premium on such debt obligations, irrevocable instructions from the municipal corporation, county, or township have been given to the fiscal agent for such payment of such principal and interest and any call premium with such moneys, and notice to the holders of such debt obligations as provided in the ordinance, resolution, or credit agreement has been given, and provided further that such pledge and agreement by the state may be temporarily suspended upon the declaration or martial law in the municipal corporation, county, or township in the event of circumstances in the municipal corporation, county, or township deriving directly out of a natural disaster, such as an earthquake or major conflagration or flood but not a snowstorm, or civil disturbance, such as military invasions or civil insurrections but not strikes or crises created by financial abuses or economic events. Nothing in this section shall preclude the state from authorizing the municipal corporation, county, or township to exercise, or the municipal corporation, county, or township from exercising, subject to approval of the commission and the auditor of state, any power provided by law to seek application of laws then in effect under the bankruptcy provisions of the United States Constitution or to preclude the state from further exercise of its powers under Section 6 of Article XIII and Section 13 of Article XVIII, Ohio Constitution.

(B) The municipal corporation, county, or township may, with the approval of the commission or, when authorized by the commission, the financial supervisor, include a recital of the pledge and agreement of the state set forth in this section in any ordinance or resolution authorizing the issuance of its debt obligations approved by the commission or, when authorized by the commission, the financial supervisor under section 118.15 of the Revised Code or any credit agreement with respect thereto as and for a pledge and agreement of the state with and for the benefit of the holders of all such debt obligations, and upon payment for such obligations by the original and all subsequent holders such inclusion shall be deemed conclusive evidence of valuable consideration received by the state and municipal corporation, county, or township for such pledge and agreement and of reliance upon such pledge and agreement by any such holder, and any action by the state contrary to or inconsistent with this section shall be void as applied to this section. The state hereby grants any such benefited holder the right to sue the state and enforce this covenant and agreement and waives all rights of defense based on sovereign immunity or sovereign power in such an action or suit, it being expressly determined and declared that the continued integrity of the contract of any such holder is essential to the continued right of the municipal corporation, county, or township to operate independently as a municipal corporation, county, or township of the state.

Section 118.23 | Current revenue notes issued during fiscal emergency period.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

(A) This section shall be applicable to current revenue notes approved by the financial planning and supervision commission or, when authorized by the commission, the financial supervisor pursuant to section 118.15 of the Revised Code and issued by a municipal corporation, county, or township pursuant to section 133.10 of the Revised Code and this section during a fiscal emergency period.

(B) In the case of the issuance of such current revenue notes in anticipation of ad valorem property taxes, the county auditors of the counties in which the municipal corporation, county, or township is located, at the time of and from each distribution to the municipality of the proceeds of the anticipated taxes, including any payments from the state pursuant to sections 321.24 and 323.156 of the Revised Code, whether such distribution be in the form of an advance or settlement that would otherwise have been paid to a fund or funds of the municipal corporation, county, or township, shall draw a separate warrant for payment to the county auditor for deposit in a special account to be held and applied pursuant to this section by the county auditor as fiscal agent and entitled "_______ (insert name of municipal corporation, county, or township) current tax revenue note retirement account," that portion of such distribution as provided for in the ordinance or resolution authorizing such notes pursuant to this section.

(C) In the case of the issuance of such current revenue notes in anticipation of revenues other than ad valorem property taxes, the ordinance or resolution authorizing such notes shall provide for the times and amounts of deposits with the fiscal agent by the municipal corporation, county, or township of moneys from the revenues anticipated that shall be deposited in a special account to be held and applied by the fiscal agent pursuant to this section and entitled "__________ (insert name of municipal corporation, county, or township) current revenue note retirement account." Such ordinance or resolution may provide for the direct deposit to such account by the auditor of state and the county auditor or county auditors of the receiving counties, as appropriate, of such portions as therein specified of local government fund distribution to be made to the municipal corporation, county, or township.

(D) The moneys in the accounts provided for in divisions (B) and (C) of this section are pledged and shall be used, so long as any portion of the debt service on such notes payable from the respective account is unpaid, solely for the purpose of paying such debt service, and for any reserves for debt service provided for in the ordinance or resolution authorizing such debt obligations. If accumulated payments into either account produce an amount less than that needed to make a timely payment of debt service or to such reserves, the full amount needed to make up any such deficiency shall be paid, in the case of the current tax revenue note retirement account, by the county auditor into such account from the last distribution or distributions to the municipal corporation, county, or township of the proceeds of the anticipated taxes to be received prior to the date of such payment, and in the case of the current revenue note retirement account, by the fiscal officer from the anticipated revenues received prior to the date of such payment.

(E) The amounts to be deposited in each respective account pursuant to divisions (B), (C), and (D) of this section must be sufficient, in time and amount, to pay the principal of and interest on current notes payable from such account at their stated payment dates and to develop and maintain the required amounts in any such reserves.

(F) The municipal corporation, county, or township shall not be entitled to receive from the fiscal agent any moneys held in the current tax revenue note retirement account or current revenue note retirement account, except that any surplus moneys remaining in either such account after the payment in full of the debt service on the notes payable therefrom shall be paid to the municipal corporation, county, or township, to be used for any lawful purpose of the municipal corporation, county, or township for which the anticipated revenues themselves might have been used.

(G) Current revenue notes of a municipal corporation, county, or township issued during a fiscal emergency period may mature on or before the thirty-first day of December of the calendar year in which issued, may, when issued in anticipation of the collection of current tax revenues, anticipate one-half of the amount that the budget commission estimates the subdivision will receive from all property taxes that are to be distributed to the subdivision from all settlements of taxes that are to be made in the remainder of that year, other than taxes to be received for the payment of debt charges, and less all advances, and may, if issued during the last two months of the calendar year in which the fiscal emergency period commenced, anticipate one-half the estimated amount of ad valorem property taxes levied in that year for the tax budget of the following year which were authorized to be levied by the municipal charter or otherwise authorized by vote of the electorate of the municipal corporation, county, or township and may mature not later than the thirty-first day of December of the year following the year in which such notes are issued, notwithstanding section 133.10 of the Revised Code.

(H) Pursuant to section 118.19 of the Revised Code, the municipal corporation, county, or township may utilize any of the special provisions of sections 118.20 to 118.22 of the Revised Code in connection with such current revenue notes.

(I) Before any such current revenue notes may be authorized, the municipal corporation, county, or township shall submit to the commission and the commission or, when authorized by the commission, the financial supervisor shall approve:

(1) A schedule of projected revenues and expenses of the municipal corporation, county, or township during the period in which such notes would be outstanding, demonstrating an anticipated cash flow deficit during such period, the amount of such anticipated cash flow deficit, and the necessity for the issuance of such current revenue notes to avoid the occurrence of such a cash flow deficit;

(2) The terms of the proposed notes, including the interest rate or rates to be paid thereon;

(3) The schedule, showing times, amounts, and sources of payment, for deposits into the account from which such notes are to be paid;

(4) Other documents and data required under section 118.15 of the Revised Code.

Section 118.24 | Issuing advance tax payment notes.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

(A) Subject to approvals by the financial planning and supervision commission or, when authorized by the commission, the financial supervisor under section 118.15 of the Revised Code and this section, a municipal corporation, county, or township may issue advance tax payment notes as provided in this section.

(B) As used in this section "advance tax payment" or "payment" means payment by or on behalf of any taxpayer prior to the last day on which such taxes are payable without penalty to the fiscal officer of the municipal corporation, county, or township of an amount of ad valorem taxes levied by the municipal corporation, county, or township upon the taxable property of the taxpayer not exceeding the unpaid amount of such property taxes allocable to the general fund of the municipal corporation, county, or township and payable for the tax year. Moneys received from such advance tax payments are to be treated by the municipal corporation, county, or township as an advance or settlement of such taxes.

(C) Upon receipt and acceptance by the fiscal officer of such advance tax payment, the municipal corporation, county, or township, by the fiscal officer, may issue to such taxpayer advance tax payment notes in the aggregate face amount equaling the amount of the advance tax payment plus the amount of simple interest thereon from the date of advance tax payment to the date or dates upon which such taxes represented by the amount of the payment are last payable without penalty computed by applying the rate prescribed for the interest factor as provided for in division (H) of this section. Such advance tax payment notes shall state that they are issued pursuant to this section and that they may be surrendered to the designated county treasurer for credit against taxes as provided in division (E) of this section, shall be dated their date of issuance, shall be signed by the fiscal officer of the municipal corporation, county, or township, and shall be validated by the county treasurer to whom they may be surrendered under division (E) of this section upon determination by the county treasurer that the amount is consistent with this section and the tax duplicate. Chapter 133. of the Revised Code shall not apply to such notes, and such notes shall not be considered in determining net indebtedness.

(D) The fiscal officer of the municipal corporation, county, or township may solicit subscriptions for the purchase of such advance tax payment notes and prescribe minimum amounts for subscriptions and note denominations, as approved by the county treasurer, and forms, procedures, and time schedules for such subscriptions and for delivery of and payment for such notes. The commission, the financial supervisor, and the county auditors and county treasurers of the counties in which the municipal corporation, county, or township is located, as appropriate, shall cooperate with the fiscal officer in such efforts.

(E) The validating county treasurer to whom taxes represented by such a note are payable shall, upon submission to him of an advance tax payment note, accept it as payment against those property taxes then payable by the presenting taxpayer which are to be allocated to the municipal corporation, county, or township and cancel such note. The amount to be so accepted and credited is the face amount of the note. The county treasurer shall include such amount in the receipt for payment of taxes delivered to such taxpayer. The county treasurer shall deliver the canceled advance tax payment note to the municipal corporation, county, or township in lieu of distribution to the municipal corporation, county, or township of the amount credited for taxes pursuant to this section.

(F) Advance tax payment notes are not negotiable instruments but may be assigned in writing on a form provided thereon, but only if and to the extent therein authorized with the approval of the county treasurer.

(G) The use of advance tax payment notes by the taxpayer as provided in division (E) of this section constitutes a discharge of the obligation of the municipal corporation, county, or township to the taxpayer holding such certificate to the extent of the property taxes credited on them.

(H) As used in this section "interest factor" means the amount calculated based on an interest rate, as determined by the fiscal officer as of the date of such note, that would have been paid by the municipal corporation, county, or township on current tax revenue notes, maturing in six months, issued on that date pursuant to section 133.10 of the Revised Code. The face amount of the note less the amount of the advance tax payment made in the purchase of such note, shall be and shall be deemed to be interest paid and received on such note.

(I) The aggregate principal amount of advance tax payment notes, together with the aggregate principal amount of any current revenue notes issued under section 133.10 of the Revised Code in anticipation of ad valorem property taxes for the same year that are outstanding at the time of issuance, shall not exceed one-half of the amount that the budget commission estimates the municipal corporation, county, or township will receive from all property taxes that are to be distributed to the municipality from all settlements of taxes that are to be made in the remainder of that year, after subtracting from such amount advances thereon and property taxes to be received for the payment of debt service on debt obligations or to be deposited with a fiscal agent as provided in section 118.20 of the Revised Code.

(J) Before any advance tax payment notes of the municipal corporation, county, or township may be authorized, the municipal corporation, county, or township shall submit to the commission an ordinance or resolution of the legislative authority authorizing such notes, a schedule of projected revenues and expenses of the municipal corporation, county, or township during the period while such notes would be outstanding demonstrating that a cash flow deficit would exist during such period, the amount of such anticipated cash flow deficit, the amount and terms of current revenue notes issued or proposed to be issued against property tax receipts, the necessity for the issuance of advance tax payment notes to avoid the occurrence of such a cash flow deficit, and such other information as the commission or the financial supervisor may request. No such notes shall be issued unless the commission or, when authorized by the commission, the financial supervisor shall have reviewed and approved such schedule or modification thereof and the terms of such proposed notes, including the proposed interest rate or rates to be borne by such notes.

(K) This section does not prohibit any advance payment of property taxes otherwise permitted by law.

Section 118.25 | Invest in current revenue notes.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

(A) In order to assist the municipal corporation, county, or township to meet current expenses pending receipt of increased revenues or pending the reduction of operating expenses, or otherwise to meet short-term cash requirements for current expenses of the municipal corporation, county, or township, the treasurer of state may invest moneys in the state treasury by purchasing current revenue notes of the municipal corporation, county, or township issued pursuant to sections 118.23 and 133.10 of the Revised Code.

(B) The purchase of notes of a municipal corporation, county, or township under this section may be made not later than the one hundred eightieth day following the first meeting of the financial planning and supervision commission. The notes and the applicable data shall first be approved by the commission pursuant to sections 118.15 and 118.23 of the Revised Code. The purchase is complete upon the execution of a contract of purchase by the treasurer of state and the appropriate representative of the municipal corporation, county, or township. Additional actions by the municipal corporation, county, or township and the treasurer of state with respect to the issuance and delivery of the notes, and revisions, amendments, or waivers with respect to the contract of purchase, may be taken or made subsequent to the one-hundred-eighty-day period.

(C) Upon the written request of the commission and the municipality filed with the treasurer of state and the state board of deposit, and determination by the state board of deposit that such investment is consistent with this section, the treasurer of state may invest in such notes under division (A) of this section, subject to the following limitations:

(1) The principal amount of the notes of any one municipal corporation, county, or township to be purchased by the treasurer of state shall not be such as would result in the holding by the state of an aggregate principal amount of notes of that municipal corporation, county, or township purchased under this section exceeding, at any one time, the lesser of one-fifth of the general fund budget of that municipal corporation, county, or township for the then preceding fiscal year of the municipal corporation, county, or township or twenty million dollars.

(2) The principal amount of the notes of a municipal corporation, county, or township to be purchased by the treasurer of state shall not be such as would result in the holding by the state of an aggregate principal amount of notes of all municipal corporations, counties, or townships purchased under this section exceeding, at any one time, fifty million dollars.

(3) The amount of each such investment shall not exceed the amount certified by the director of budget and management to the treasurer of state, prior to each such investment, as the estimated moneys of the state treasury referred to in division (A) of this section which will not be needed for expenditure by the state at any time during a period commencing with such investment and ending as of the stated date of maturity of the notes in which such investment is to be made. If such amount of available state treasury moneys, in the estimation of the director, exceeds the unused portion of the limitations of divisions (C)(1) and (2) of this section, it shall be sufficient that his certification so state, in which event division (C)(1) or (2) of this section shall constitute the effective limitation as determined under this division.

(4) Notes purchased by the treasurer of state under this division shall bear interest at the rate currently prevailing for short-term loans as determined and certified by the treasurer of state.

(D) The request under division (C) of this section submitted to the treasurer of state and state board of deposit shall be accompanied by the documentation submitted to the commission pursuant to section 118.23 of the Revised Code, including the proposed schedule of deposits for retirement of and payment of interest on such notes and schedules showing the need for the issuance of such notes, the certificates of estimated resources showing the general fund budget of the municipal corporation, county, or township for its preceding fiscal year, and also information as to whether commercial lenders or others are willing to purchase such notes from the treasurer of state by agreement pursuant to division (E) of this section.

(E) The treasurer of state, in purchasing such notes, may enter into agreements with banks, financial institutions, or others, to purchase such notes from the state upon terms and conditions agreed to by the treasurer of state and such other parties that, among other terms and conditions, may condition the obligation to purchase upon the compliance of the municipal corporation, county, or township with this chapter, including development by the municipal corporation, county, or township and approval by the commission of a financial plan under section 118.06 of the Revised Code.

(F) Subject to agreements under division (E) of this section, the treasurer of state may sell the notes at any time and to any others upon those terms and conditions as the treasurer of state determines.

(G) The notes that are purchased by the treasurer of state from a municipal corporation, county, or township under this section are lawful investments for entities enumerated in division (A)(1) of section 133.03 of the Revised Code and are eligible as security for the repayment of the deposit of public moneys.

Section 118.26 | Debt obligations.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

(A) Debt obligations issued by a municipal corporation, county, or township during a fiscal emergency period with the approval of the financial planning and supervision commission and for which the municipal corporation, county, or township has been paid in accordance with the contract for sale, shall in any action or proceeding involving their validity be conclusively deemed to have been issued, sold, executed, and delivered in conformity with law and shall be incontestable unless such action or proceeding is begun prior to the delivery of such bonds or notes, and all such debt obligations shall be lawful investments for banks, savings banks, societies for savings, building and loan associations, trust companies, or other financial institutions, trustees, fiduciaries, and insurance companies, including domestic for life and domestic not for life, the state, and sinking and bond retirement funds or other funds or investment accounts of municipal corporations, counties, townships, or other subdivisions of the state, notwithstanding any other provisions of the Revised Code or rule thereunder with respect to their investments and notwithstanding any prior default by the municipal corporation, county, or township.

(B) During a fiscal emergency period, none of the moneys received by a municipal corporation, county, or township from advance tax payments under section 118.24 of the Revised Code or from the sale of debt obligations, and no other moneys of the municipal corporation, county, or township, may be invested in, or used to acquire, or retain, debt obligations of such municipal corporation, county, or township. The municipal corporation, county, or township may, with the approval of the commission, accept renewal bond anticipation notes in exchange for bond anticipation notes of the municipal corporation, county, or township held by the municipal corporation, county, or township at the commencement of the fiscal emergency period or any renewals thereof.

Section 118.27 | Continued existence of commission.

• Effective: April 30, 2024
• Latest Legislation: House Bill 101 - 135th General Assembly

(A) A financial planning and supervision commission with respect to a municipal corporation, county, or township, and its functions under this chapter, shall continue in existence until such time as a determination is made pursuant to division (B) of this section of one of the following:

(1) In the case of a village, the date a dissolution is effective as defined under section 703.31 of the Revised Code.

(2) In the case of a township, the township has dissolved under section 118.31 of the Revised Code.

(3) In the case of a municipal corporation, county, or township, the municipal corporation, county, or township has done all of the following:

(a) Planned, and is in the process of good faith implementation of, an effective financial accounting and reporting system in accordance with section 118.10 of the Revised Code, and it is reasonably expected that such implementation will be completed within two years;

(b) Corrected and eliminated or has planned and is in the process of good faith implementation of correcting and eliminating all of the fiscal emergency conditions determined pursuant to section 118.04 of the Revised Code, and no new fiscal emergency conditions have occurred. The auditor of state shall monitor the progress of the municipal corporation, county, or township in its plan of good faith implementation of correcting and eliminating all the fiscal emergency conditions. This monitoring is to secure full implementation at the earliest time feasible but within two years from such termination. If after a two-year period, the municipal corporation, county, or township has failed to secure full implementation, the auditor of state may redeclare the municipal corporation, county, or township to be in a fiscal emergency.

(c) Met the objectives of the financial plan described in section 118.06 of the Revised Code;

(d) The municipal corporation, county, or township prepares a financial forecast for a five-year period in accordance with the standards issued by the auditor of state. An opinion must be rendered by the auditor of state that the financial forecast is considered to be nonadverse.

(B) The determination that the conditions for the termination of the existence of the commission and its functions exist may be made either by the auditor of state or by the commission and shall be certified to the commission, the auditor of state, the governor, and the budget commission, whereupon such commission and its functions under this chapter shall terminate. Such determination shall be made by the auditor of state upon the filing with the auditor of state of a written request for such determination by the municipal corporation, county, or township, the governor, or the commission, or may be made by the auditor of state upon the auditor of state's own initiative.

(C) The commission shall prepare and submit with such certification a final report of its activities, in such form as is appropriate for the purpose of providing a record of its activities and assisting other commissions created under this chapter in the conduct of their functions. All of the books and records of the commission shall be delivered to the auditor of state for retention and safekeeping.

(D) Upon receipt of the certification provided for in division (B) of this section, the director shall follow the procedures set forth in section 126.29 of the Revised Code.

(E) If, at the time of termination of the commission, an effective financial accounting and reporting system has not been fully implemented, the auditor of state shall monitor the progress of implementation and shall exercise authority under Chapter 117. and section 118.10 of the Revised Code to secure full implementation at the earliest time feasible but within two years from such termination.

Last updated February 7, 2024 at 10:07 AM

Section 118.271 | Issuing general obligation, special obligation, or revenue bonds and notes in anticipation of bonds.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

A municipal corporation, county, or township may issue general obligation, special obligation, or revenue bonds and notes in anticipation of the bonds for the purpose of eliminating fiscal emergency conditions set forth in section 118.03 of the Revised Code, the cost of the issuance of the bonds and notes, and the capitalization of interest for not more than three years. Bonds issued under this section shall have a maximum maturity of twenty years and notes issued in anticipation of the issuance of bonds under this section shall have a maximum maturity of five years. Provisions of the Revised Code applicable to the issuance of bonds and notes by municipal corporations, counties, and townships, except as they may be in conflict with this section, are applicable under this section.

Section 118.28 | Severability - construction.

• Effective: September 3, 1996
• Latest Legislation: House Bill 462 - 121st General Assembly

(A) Subject to division (B) of this section, in case any section or provision of this chapter, including any condition or prerequisite to any action or determination thereunder, or in case any act or action, or part thereof, made or taken under this chapter, or any application thereof, is for any reason held to be illegal or invalid, such illegality or invalidity shall not affect the remainder thereof or any other section or provision of this chapter, including any condition or prerequisite to any action or determination thereunder, or any agreement, act or action, or part thereof, made, entered into, or taken under such chapter, which shall be construed and enforced and applied as if such illegal or invalid portion were not contained therein, nor shall such illegality or invalidity or any application thereof affect any legal and valid application thereof, and each such section, provision, agreement, act, or action, or part thereof, shall be deemed to be effective, operative, made, and entered into or taken in the manner and to the full extent permitted by law.

(B) Division (A) of this section and section 1.50 of the Revised Code are subject to the following exceptions:

(1) It is the intention of the general assembly that any act of the municipal corporation, county, or township authorized to be taken under this chapter only with the consent or approval of the financial planning and supervision commission or, when authorized by the commission, the financial supervisor would not have been authorized in the absence of and is inseparable from such provision for consent or approval so that if a provision for consent or approval by the commission or financial supervisor under this chapter is for any reason held to be illegal or invalid, the authorization of the action which is subject to such consent or approval shall likewise be deemed illegal or invalid and not to exist under this chapter.

(2) To the extent that any act of the municipal corporation, county, or township which is authorized by law, other than this chapter, is conditioned by this chapter upon, or is subjected to a prerequisite by this chapter as to, the preparation, submission, or approval of, or consistency with, a financial plan, or as to consent to or approval by the commission or financial supervisor of any such act of the municipal corporation, county, or township, if for any reason such condition or prerequisite is held to be illegal or invalid, such act by the municipal corporation, county, or township shall be deemed to be and is hereby restricted, to the extent that the general assembly has authority under the constitution to restrict such act, so that it may not be taken or done by the municipal corporation, county, or township until and unless the auditor of state, upon request of the mayor or presiding officer of the legislative authority of the municipal corporation, county, or township, determines in writing that none of the fiscal emergency conditions determined to exist pursuant to section 118.04 of the Revised Code continues to exist.

(3) Divisions (B)(1) and (2) of this section apply only to acts of the municipal corporation, county, or township occurring after a court has determined such illegality or invalidity and any act of the municipal corporation, county, or township prior thereto, and its binding effect prior or subsequent to such determination, are not affected by such determination.

(C) The provisions of this chapter granting authority to the commission or the financial supervisor and providing for better security for and remedies of holders of debt obligations of the municipal corporation, county, or township shall be liberally construed to achieve the state public policy and the purposes stated and provided for by this chapter.

(D) Any act of the commission or the financial supervisor under this chapter shall be presumed to be valid and for all purposes shall be conclusively valid unless in an appropriate court action in which the commission is duly made a party it is shown by clear and convincing evidence that no basis existed upon which such act could have been sustained under the law and that the commission's or financial supervisor's act was grossly arbitrary; provided that no such action may affect the reliability and conclusiveness of certifications and approvals by the commission or the financial supervisor as provided in section 118.15 of the Revised Code.

(E) Any action or proceeding bringing into question the interpretation, legality, or validity of any provision of this chapter, the existence or authority, or the legality or validity of any act, of the commission or the financial supervisor, or of any action taken under this chapter, is a matter of great public interest to the state and shall be advanced on the docket of the court and expedited to final determination.

Section 118.31 | Legal action to dissolve a municipal corporation or township.

• Effective: April 30, 2024
• Latest Legislation: House Bill 101 - 135th General Assembly

(A) Upon petition of the financial supervisor and approval of the financial planning and supervision commission, if any, the attorney general shall file a legal action in the court of common pleas on behalf of the state to dissolve a municipal corporation or township if all of the following conditions apply:

(1) The municipal corporation or township has a population of less than five thousand as of the most recent federal decennial census.

(2) The municipal corporation or township has been under a fiscal emergency for at least four consecutive years.

(3) Implementation of the financial plan of the municipal corporation or township required under this chapter cannot reasonably be expected to correct and eliminate all fiscal emergency conditions within five years.

(B) The court of common pleas shall hold a hearing within ninety days after the date on which the attorney general files the legal action with the court. Notice of the hearing shall be filed with the attorney general, the clerk of the village or the fiscal officer of the township that is the subject of the action, and each fiscal officer of a township located wholly or partly within the village subject to dissolution.

(C) If the court finds that all of the conditions described in division (A) of this section apply to the municipal corporation, the court shall order the dissolution of the municipal corporation in accordance with the process in sections 703.31 to 703.39 of the Revised Code. The attorney general shall file a certified copy of the court's order of dissolution with the secretary of state, the auditor of state, and the county recorder of the county in which the village is situated, who shall record the certified copy of the order in their respective offices. The auditor of state may record the certified copy of the order in the auditor's work papers for the village's final audit. The auditor of state shall notify the townships into which the village will dissolve of the court's order of dissolution.

(D) If the court finds that all of the conditions described in division (A) of this section apply to the township, the court shall appoint a receiver-trustee. The receiver-trustee, under court supervision, shall work with executive and legislative officers of the township to wind up the affairs of and dissolve the township in accordance with the process in section 503.02 and sections 503.17 to 503.21 of the Revised Code.

Last updated February 7, 2024 at 10:08 AM

Section 118.99 | Penalty.

• Effective: October 17, 2017
• Latest Legislation: House Bill 103 - 132nd General Assembly

(A) During the fiscal emergency period, no officer or employee of the municipal corporation, county, or township shall do any of the following:

(1) Knowingly enter into any contract, financial obligation, or other liability of the municipal corporation, county, or township involving an expenditure, or make any expenditure in excess of the amount permitted by division (E) of section 118.06 or division (B) of section 118.11 or by section 118.12 of the Revised Code;

(2) Knowingly enter into any contract, financial obligation, or other liability of the municipal corporation, county, or township, or knowingly execute or deliver debt obligations, or transfer, advance, or borrow moneys from one fund of the municipal corporation, county, or township to or for any other fund of the municipal corporation, county, or township where any of such actions are required to be approved by the financial planning and supervision commission unless such actions have been so approved or deemed to be approved as provided in or pursuant to this chapter;

(3) Knowingly fail or refuse to take any of the actions required by this chapter for the preparation or amendment of the financial plan, or knowingly prepare, present, or certify any information or report for the commission or any of its employees, advisory committees, task forces, or agents that is false or misleading or which is recklessly prepared or presented without due care for its accuracy, or, upon learning that any such information is false or misleading, or was recklessly prepared or presented, knowingly fail promptly to advise the commission, or the employee, advisory committee, task force, or agent to whom such information was given, of that fact;

(4) Knowingly use or cause to be used moneys of a construction fund for purposes other than the lawful purposes of the construction fund, or knowingly use or cause to be used moneys of a fund created under this chapter for the payment of principal and interest on debt obligations, or a bond retirement fund, or sinking fund for other than the payment of the principal of and interest on debt obligations or other authorized costs or payments from such funds, or knowingly fail to perform the duty of such officer or employee to cause the prompt deposit of moneys to any of the funds referred to in this division.

(B) The prohibitions set forth in division (A) of this section are in addition to any other prohibitions provided by law for a municipal corporation, county, or township, or by or pursuant to a municipal charter.

(C) In addition to any other penalty or liability provided by law for a municipal corporation, county, or township, or by or pursuant to a municipal charter, a violation of division (A)(1), (2), (3), or (4) of this section is a misdemeanor of the second degree. Upon conviction of any officer or employee of a municipal corporation, county, or township for any violation under division (A)(1), (2), (3), or (4) of this section, such officer or employee shall forfeit office or employment. For the seven-year period immediately following the date of conviction, such officer shall also be ineligible to hold any public office or other position of trust in this state or be employed by any public entity in this state.