Chapter 3316: FISCAL WATCHES, EMERGENCIES

3316.01 Fiscal watch - fiscal emergency definitions.

As used in this chapter:

(A) "Fiscal watch" means the existence of a fiscal watch declared under division (A) of section 3316.03 of the Revised Code.

(B) "Fiscal emergency" means the existence of a fiscal emergency declared under division (B) of section 3316.03 of the Revised Code.

(C) "Fiscal emergency period" means the period of time commencing on the day when the auditor of state declares that a school district is in a state of fiscal emergency under division (B) of section 3316.03 of the Revised Code and ending on the day on which the school district financial planning and supervision commission ceases to exist under section 3316.16 of the Revised Code.

Cite as R.C. § 3316.01

Effective Date: 06-20-1996

3316.02 Solvency assistance fund - shared resource account - catastrophic expenditures account.

(A) Pursuant to the authority of the general assembly to provide for the public health, safety, and welfare, it is hereby declared to be the public policy and a public purpose of the state to require fiscal integrity of school districts so that they can educate children, 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 school district to so act is hereby determined to affect adversely the health, safety, and welfare not only of the people of the school district but also of other people of the state.

(B) The intention of the general assembly, under this chapter, is to enact procedures, provide powers, and impose restrictions to assure fiscal integrity of school districts as set out in division (A) of this section.

(C) Unless otherwise indicated, the provisions of this chapter are supplemental to other provisions of law, including Chapters 133. and 5705. of the Revised Code, and to the resolutions of the school district board of education, consistent with this chapter. Any provisions of Chapters 133. and 5705. of the Revised Code and the resolutions of the school district may be utilized in the issuance of debt obligations. However, provisions of this chapter prevail over provisions of Chapters 133. and 5705. of the Revised Code and the resolutions of the school district to the extent of any conflict or inconsistency between this chapter and such other chapters or resolutions.

Cite as R.C. § 3316.02

Effective Date: 06-20-1996

3316.03 Auditor of state to declare fiscal watch or fiscal emergency.

(A) The existence of a fiscal watch shall be declared by the auditor of state. The auditor of state may make a determination on the auditor of state's initiative, or upon receipt of a written request for such a determination, which may be filed by the governor, the superintendent of public instruction, or a majority of the members of the board of education of the school district.

(1) The auditor of state shall declare a school district to be in a state of fiscal watch if the auditor of state determines that both of the following conditions are satisfied with respect to the school district:

(a) An operating deficit has been certified for the current fiscal year by the auditor of state, and the certified operating deficit exceeds eight per cent of the school district's general fund revenue for the preceding fiscal year;

(b) A majority of the voting electors have not voted in favor of levying a tax under section 5705.194 , 5705.199 , or 5705.21 or Chapter 5748. of the Revised Code that the auditor of state expects will raise enough additional revenue in the next succeeding fiscal year that division (A)(1)(a) of this section will not apply to the district in such next succeeding fiscal year.

(2) The auditor of state shall declare a school district to be in a state of fiscal watch if the auditor of state determines that the school district has outstanding securities issued under division (A)(4) of section 3316.06 of the Revised Code, and its financial planning and supervision commission has been terminated under section 3316.16 of the Revised Code.

(3) The auditor of state shall declare a school district to be in a state of fiscal watch if both of the following conditions are satisfied:

(a) The superintendent of public instruction has reported to the auditor of state that the superintendent has declared the district under section 3316.031 of the Revised Code to be under a fiscal caution, has found that the district has not acted reasonably to eliminate or correct practices or conditions that prompted the declaration, and has determined the declaration of a state of fiscal watch necessary to prevent further fiscal decline;

(b) The auditor of state determines that the decision of the superintendent is reasonable. If the auditor of state determines that the decision of the superintendent is not reasonable, the auditor of state shall provide the superintendent with a written explanation of that determination.

(4) The auditor of state may declare a school district to be in a state of fiscal watch if all of the following conditions are satisfied:

(a) An operating deficit has been certified for the current fiscal year by the auditor of state, and the certified operating deficit exceeds two per cent, but does not exceed eight per cent, of the school district's general fund revenue for the preceding fiscal year;

(b) A majority of the voting electors have not voted in favor of levying a tax under section 5705.194 , 5705.199 , or 5705.21 or Chapter 5748. of the Revised Code that the auditor of state expects will raise enough additional revenue in the next succeeding fiscal year that division (A)(4)(a) of this section will not apply to the district in the next succeeding fiscal year;

(c) The auditor of state determines that there is no reasonable cause for the deficit or that the declaration of fiscal watch is necessary to prevent further fiscal decline in the district.

(B)

(1) The auditor of state shall issue an order declaring a school district to be in a state of fiscal emergency if the auditor of state determines that both of the following conditions are satisfied with respect to the school district:

(a) An operating deficit has been certified for the current fiscal year by the auditor of state, and the certified operating deficit exceeds fifteen per cent of the school district's general fund revenue for the preceding fiscal year. In determining the amount of an operating deficit under division (B)(1)(a) of this section, the auditor of state shall credit toward the amount of that deficit only the amount that may be borrowed from the spending reserve balance as determined under section 133.301 and division (F) of section 5705.29 of the Revised Code.

(b) A majority of the voting electors have not voted in favor of levying a tax under section 5705.194 , 5705.199 , or 5705.21 or Chapter 5748. of the Revised Code that the auditor of state expects will raise enough additional revenue in the next succeeding fiscal year that division (B)(1)(a) of this section will not apply to the district in such next succeeding fiscal year.

(2) The auditor of state shall issue an order declaring a school district to be in a state of fiscal emergency if the school district board fails, pursuant to section 3316.04 of the Revised Code, to submit a plan acceptable to the state superintendent of public instruction within one hundred twenty days of the auditor of state's declaration under division (A) of this section or an updated plan when one is required by division (C) of section 3316.04 of the Revised Code;

(3) The auditor of state shall issue an order declaring a school district to be in a state of fiscal emergency if both of the following conditions are satisfied:

(a) The superintendent of public instruction has reported to the auditor of state that the district is not materially complying with the provisions of an original or updated plan as approved by the state superintendent under section 3316.04 of the Revised Code, and that the state superintendent has determined the declaration of a state of fiscal emergency necessary to prevent further fiscal decline;

(b) The auditor of state finds that the determination of the superintendent is reasonable. If the auditor of state determines that the decision of the superintendent is not reasonable, the auditor of state shall provide the superintendent a written explanation of that determination.

(4) The auditor of state shall issue an order declaring a school district to be in a state of fiscal emergency if a declaration of fiscal emergency is required by division (D) of section 3316.04 of the Revised Code.

(5) The auditor of state may issue an order declaring a school district to be in a state of fiscal emergency if all of the following conditions are satisfied:

(a) An operating deficit has been certified for the current fiscal year by the auditor of state, and the certified operating deficit exceeds ten per cent, but does not exceed fifteen per cent, of the school district's general fund revenue for the preceding fiscal year;

(b) A majority of the voting electors have not voted in favor of levying a tax under section 5705.194 , 5705.199 , or 5705.21 or Chapter 5748. of the Revised Code that the auditor of state expects will raise enough additional revenue in the next succeeding fiscal year that division (B)(5)(a) of this section will not apply to the district in the next succeeding fiscal year;

(c) The auditor of state determines that a declaration of fiscal emergency is necessary to correct the district's fiscal problems and to prevent further fiscal decline.

(C) In making the determinations under this section, the auditor of state may use financial reports required under section 117.43 of the Revised Code; tax budgets, certificates of estimated resources and amendments thereof, annual appropriating measures and spending plans, and any other documents or information prepared pursuant to Chapter 5705. of the Revised Code; and any other documents, records, or information available to the auditor of state that indicate the conditions described in divisions (A) and (B) of this section.

(D) The auditor of state shall certify the action taken under division (A) or (B) of this section to the board of education of the school district, the director of budget and management, the mayor or county auditor who could be required to act pursuant to division (B)(1) of section 3316.05 of the Revised Code, and to the superintendent of public instruction.

(E) 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 board of education of the school district affected by such a determination may appeal the determination of the existence of a fiscal emergency condition to the court of appeals having territorial jurisdiction over the school district. 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 board of education of the school district provided for in division (D) of this section. In such appeal, determinations of the auditor of state shall be presumed to be valid and the board of education 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 this section was in error. If the board of education 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 board of education and the auditor of state may introduce any evidence relevant to the existence or nonexistence of such fiscal emergency conditions. 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.

Cite as R.C. § 3316.03

Effective Date: 04-10-2001; 2008 HB562 09-22-2008

3316.031 Identifying unsafe fiscal practices and budgetary conditions.

(A) The state superintendent of public instruction, in consultation with the auditor of state, shall develop guidelines for identifying fiscal practices and budgetary conditions that, if uncorrected, could result in a future declaration of a fiscal watch or fiscal emergency within a school district. The guidelines shall not include a requirement that a school district submit financial statements according to generally accepted accounting principles.

(B)

(1) If the state superintendent determines from a school district's five-year forecast submitted under section 5705.391 of the Revised Code that a district is engaging in any of those practices or that any of those conditions exist within the district, after consulting with the district board of education concerning the practices or conditions, the state superintendent may declare the district to be under a fiscal caution.

(2) If the auditor of state finds that a district is engaging in any of those practices or that any of those conditions exist within the district, the auditor of state shall report that finding to the state superintendent and, after consulting with the district board of education concerning the practices or conditions, the state superintendent may declare the district to be under a fiscal caution.

(3) Unless the auditor of state has elected to declare a state of fiscal watch under division (A)(4) of section 3316.03 of the Revised Code, the state superintendent shall declare a school district to be under a fiscal caution if the conditions described in divisions (A)(4)(a) and (b) of that section are both satisfied with respect to the school district.

(C) When the state superintendent declares a district to be under fiscal caution, the state superintendent shall promptly notify the district board of education of that declaration and shall request the board to provide written proposals for discontinuing or correcting the fiscal practices or budgetary conditions that prompted the declaration and for preventing the district from experiencing further fiscal difficulties that could result in the district being declared to be in a state of fiscal watch or fiscal emergency.

(D) The state superintendent, or a designee, may visit and inspect any district that is declared to be under a fiscal caution. The department of education shall provide technical assistance to the district board in implementing proposals to eliminate the practices or budgetary conditions that prompted the declaration of fiscal caution and may make recommendations concerning the board's proposals.

(E) If the state superintendent finds that a school district 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 state superintendent considers it necessary to prevent further fiscal decline, the state superintendent may determine that the district should be in a state of fiscal watch. As provided in division (A)(3) of section 3316.03 of the Revised Code, the auditor of state shall declare the district to be in a state of fiscal watch if the auditor of state finds the superintendent's determination to be reasonable.

Cite as R.C. § 3316.031

Effective Date: 06-26-2003

3316.04 Submitting financial plan after declaration of watch.

(A) Within sixty days of the auditor's declaration under division (A) of section 3316.03 of the Revised Code, the board of education of the school district shall prepare and submit to the superintendent of public instruction a financial plan delineating the steps the board will take to eliminate the district's current operating deficit and avoid incurring operating deficits in ensuing years, including the implementation of spending reductions. The financial 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 superintendent of public instruction shall evaluate the initial financial plan, and either approve or disapprove it within thirty calendar days from the date of its submission. If the initial financial plan is disapproved, the state superintendent shall recommend modifications that will render the financial plan acceptable. No school district board shall implement a financial plan submitted to the superintendent of public instruction under this section unless the superintendent has approved the plan.

(B) Upon request of the board of education of a school district declared to be in a state of fiscal watch, the auditor of state and superintendent of public instruction shall provide technical assistance to the board in resolving the fiscal problems that gave rise to the declaration, including assistance in drafting the board's financial plan.

(C) A financial plan adopted under this section may be amended at any time with the approval of the superintendent. The board of education of the school district shall submit an updated financial plan to the superintendent, for the superintendent's approval, every year that the district is in a state of fiscal watch. The updated plan shall be submitted in a form acceptable to the superintendent. The superintendent shall approve or disapprove each updated plan no later than the anniversary of the date on which the first such plan was approved.

(D) A school district that has restructured or refinanced a loan under section 3316.041 of the Revised Code shall be declared to be in a state of fiscal emergency if any of the following occurs:

(1) An operating deficit is certified for the district under section 3313.483 of the Revised Code for any year prior to the repayment of the restructured or refinanced loan;

(2) The superintendent determines, in consultation with the auditor of state, that the school district is not satisfactorily complying with the terms of the financial plan required by this section;

(3) The board of education of the school district fails to submit an updated plan that is acceptable to the superintendent under division (C) of this section.

Cite as R.C. § 3316.04

Amended by 129th General AssemblyFile No.141, HB 509, §1, eff. 9/28/2012.

Effective Date: 06-30-1997

3316.041 Restructuring or refinancing loans.

(A) Notwithstanding any provision of Chapter 133. or sections 3313.483 to 3313.4810 of the Revised Code, and subject to the approval of the superintendent of public instruction, a school district that is in a state of fiscal watch declared under section 3316.03 of the Revised Code may restructure or refinance loans obtained or in the process of being obtained under section 3313.483 of the Revised Code if all of the following requirements are met:

(1) The operating deficit certified for the school district for the current or preceding fiscal year under section 3313.483 of the Revised Code exceeds fifteen per cent of the district's general revenue fund for the fiscal year preceding the year for which the certification of the operating deficit is made.

(2) The school district voters have, during the period of the fiscal watch, approved the levy of a tax under section 718.09, 718.10, 5705.194, 5705.21, 5748.02, or 5748.09 of the Revised Code that is not a renewal or replacement levy, or a levy under section 5705.199 of the Revised Code, and that will provide new operating revenue.

(3) The board of education of the school district has adopted or amended the financial plan required by section 3316.04 of the Revised Code to reflect the restructured or refinanced loans, and sets forth the means by which the district will bring projected operating revenues and expenditures, and projected debt service obligations, into balance for the life of any such loan.

(B) Subject to the approval of the superintendent of public instruction, the school district may issue securities to evidence the restructuring or refinancing authorized by this section. Such securities may extend the original period for repayment not to exceed ten years, and may alter the frequency and amount of repayments, interest or other financing charges, and other terms or agreements under which the loans were originally contracted, provided the loans received under sections 3313.483 of the Revised Code are repaid from funds the district would otherwise receive under Chapter 3317. of the Revised Code, as required under division (E)(3) of section 3313.483 of the Revised Code. Securities issued for the purpose of restructuring or refinancing under this section shall be repaid in equal payments and at equal intervals over the term of the debt and are not eligible to be included in any subsequent proposal to restructure or refinance.

(C) Unless the district is declared to be in a state of fiscal emergency under division (D) of section 3316.04 of the Revised Code, a school district shall remain in a state of fiscal watch for the duration of the repayment period of any loan restructured or refinanced under this section.

Cite as R.C. § 3316.041

Amended by 130th General Assembly File No. 25, HB 59, §101.01, eff. 9/29/2013.

Amended by 129th General AssemblyFile No.28, HB 153, §101.01, eff. 6/30/2011.

Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 7/17/2009.

Effective Date: 06-30-1997; 2008 HB562 09-22-2008

3316.042 Performance audits of school district.

The auditor of state, on the auditor of state's initiative, may conduct a performance audit of a school district that is under a fiscal caution under section 3316.031 of the Revised Code, in a state of fiscal watch, or in a state of fiscal emergency, in which the auditor of state reviews any programs or areas of operation in which the auditor of state believes that greater operational efficiencies or enhanced program results can be achieved. The auditor of state shall conduct a performance audit of a school district that is under a fiscal caution, in a state of fiscal watch, or in a state of fiscal emergency if requested by the state superintendent of public instruction. The cost of a performance audit conducted under this section shall be paid by the department of education. A performance audit under this section shall not include review or evaluation of school district academic performance.

Cite as R.C. § 3316.042

Effective Date: 04-10-2001

3316.043 Revision of five-year projection to conform to financial plan.

Upon the approval by the superintendent of public instruction of an initial financial plan under section 3316.04 of the Revised Code or a financial recovery plan under section 3316.06 of the Revised Code, the board of education of the school district for which the plan was approved shall revise the district's five-year projection of revenues and expenditures in accordance with rules adopted under section 5705.391 of the Revised Code so that the five-year projection is consistent with the financial plan or financial recovery plan. In the case of a school district declared to be in a state of fiscal emergency, the five-year projection shall be revised by the financial planning and supervision commission for that district.

Cite as R.C. § 3316.043

Effective Date: 06-30-2005

3316.05 Financial planning and supervision commission.

(A) Pursuant to the powers of the general assembly and for the purposes of this chapter, upon the declaration of a fiscal emergency in any school district pursuant to division (B) of section 3316.03 of the Revised Code, there is established, with respect to that school district, 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 school district)," which, in that name, may exercise all authority vested in such a commission by this chapter. A separate commission is established with respect to each school district as to which there is a fiscal emergency as determined under this chapter.

(B) A commission appointed after July 1, 1999, shall consist of five voting members, including women and at least one Hispanic or African American if Hispanic and African Americans together constitute at least twenty per cent of the student population of the district, as follows:

(1) Two ex officio members: the director of budget and management, or a designee of the director, and the superintendent of public instruction, or a designee of the superintendent. 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 member 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) Three appointed members, who shall be appointed within fifteen days after the declaration of the fiscal emergency, one by the governor, one by the superintendent of public instruction, and one by the mayor of the municipal corporation with the largest number of residents living within the school district, except that if more than fifty per cent of the residents of the district reside outside the municipal corporation containing the greatest number of district residents or if there is no municipal corporation located in the school district, the county auditor of the county with the largest number of residents living within the school district shall make the appointment in lieu of a mayor. All of the appointed members shall serve at the pleasure of the appointing authority during the life of the commission. In the event of the death, resignation, incapacity, removal, or ineligibility to serve of an appointed member, the appointing authority shall appoint a successor within fifteen days after the vacancy occurs.

(a) The member appointed by the governor and the member appointed by the mayor or county auditor shall be an individual:

(i) Who has knowledge and experience in financial matters, financial management, or business organization or operations, including at least five years of experience in the public or private sector in the management of business or financial enterprise, or in management consulting, public accounting, or other similar professional activity;

(ii) Whose residency, office, or principal place of professional or business activity is situated within the school district.

(b) The member appointed by the superintendent of public instruction shall be a parent of a child currently enrolled in a public school within the district.

(C) Immediately after appointment of the initial appointed members of the commission, the superintendent of public instruction 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 superintendent of public instruction shall serve as the commission's chairperson and the commission shall elect one of its members as vice-chairperson and may appoint a secretary and any other officers, who need not be members of the commission, as it considers necessary.

(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) Three members of the commission constitute a quorum of the commission. The affirmative vote of three 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 school district, its officers, or the commission.

(G) The auditor of state shall act as the financial supervisor for the school district under contract with the commission unless the auditor of state elects to contract for that service. 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 to coordinate the work of the auditor of state's office. Upon the declaration of a fiscal emergency in any school district, the school district shall provide the commission with such reasonable office space in the principal building housing the administrative offices of the school district, where feasible, as the commission determines is necessary to carry out its duties under this chapter. The attorney general shall serve as the legal counsel for the commission.

(H) The members of the commission, the superintendent of public instruction, 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 superintendent of public instruction, the auditor of state, and such other persons shall be subject to mandamus proceedings to compel performance of their duties under this chapter.

(I) 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 in its duties.

(J) The appointed members of the commission 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 school district 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.

(K) Meetings of the commission shall be subject to section 121.22 of the Revised Code except that division (C) of such section requiring members to be physically present to be part of a quorum or vote does not apply if the commission holds a meeting by teleconference and if provisions are made for public attendance at any location involved in such teleconference.

Cite as R.C. § 3316.05

Effective Date: 06-29-1999

3316.06 Commission to adopt financial recovery plan.

(A) Within one hundred twenty days after the first meeting of a school district financial planning and supervision commission, the commission shall adopt a financial recovery plan regarding the school district for which the commission was created. During the formulation of the plan, the commission shall seek appropriate input from the school district board and from the community. This plan shall contain the following:

(1) Actions to be taken to:

(a) Eliminate all fiscal emergency conditions declared to exist pursuant to division (B) of section 3316.03 of the Revised Code;

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

(c) Eliminate the deficits in all deficit funds, except that any prior year deficits in the capital and maintenance fund established pursuant to section 3315.18 of the Revised Code shall be forgiven;

(d) Restore to special funds any moneys from such funds that were used for purposes not within the purposes of such funds, or borrowed from such funds by the purchase of debt obligations of the school district with the moneys of such funds, or missing from the special funds and not accounted for, if any;

(e) Balance the budget, avoid future deficits in any funds, and maintain on a current basis payments of payroll, fringe benefits, and all accounts;

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

(g) Restore the ability of the school district to market long-term general obligation bonds under provisions of law applicable to school districts generally.

(2) The management structure that will enable the school district to take the actions enumerated in division (A)(1) of this section. The plan shall specify the level of fiscal and management control that the commission will exercise within the school district during the period of fiscal emergency, and shall enumerate respectively, the powers and duties of the commission and the powers and duties of the school board during that period. The commission may elect to assume any of the powers and duties of the school board it considers necessary, including all powers related to personnel, curriculum, and legal issues in order to successfully implement the actions described in division (A)(1) of this section.

(3) The target dates for the commencement, progress upon, and completion of the actions enumerated in division (A)(1) of this section and a reasonable period of time expected to be required to implement the plan. The commission shall prepare a reasonable time schedule for progress toward and achievement of the requirements for the plan, and the plan shall be consistent with that time schedule.

(4) 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 school district and the county auditor. Debt obligations issued pursuant to section 133.301 of the Revised Code shall include assurances that such debt shall be in an amount not to exceed the amount certified under division (B) of such section. If the commission considers it necessary in order to maintain or improve educational opportunities of pupils in the school district, the plan may include a proposal to restructure or refinance outstanding debt obligations incurred by the board under section 3313.483 of the Revised Code contingent upon the approval, during the period of the fiscal emergency, by district voters of a tax levied under section 718.09, 718.10, 5705.194, 5705.21, 5748.02, 5748.08, or 5748.09 of the Revised Code that is not a renewal or replacement levy, or a levy under section 5705.199 of the Revised Code, and that will provide new operating revenue. Notwithstanding any provision of Chapter 133. or sections 3313.483 to 3313.4810 of the Revised Code, following the required approval of the district voters and with the approval of the commission, the school district may issue securities to evidence the restructuring or refinancing. Those securities may extend the original period for repayment, not to exceed ten years, and may alter the frequency and amount of repayments, interest or other financing charges, and other terms of agreements under which the debt originally was contracted, at the discretion of the commission, provided that any loans received pursuant to section 3313.483 of the Revised Code shall be paid from funds the district would otherwise receive under Chapter 3317. of the Revised Code, as required under division (E)(3) of section 3313.483 of the Revised Code. The securities issued for the purpose of restructuring or refinancing the debt shall be repaid in equal payments and at equal intervals over the term of the debt and are not eligible to be included in any subsequent proposal for the purpose of restructuring or refinancing debt under this section.

(5) 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.

(B) Any financial recovery plan may be amended subsequent to its adoption. Each financial recovery plan shall be updated annually.

(C) Each school district financial planning and supervision commission shall submit the financial recovery plan it adopts or updates under this section to the state superintendent of public instruction for approval immediately following its adoption or updating. The state superintendent shall evaluate the plan and either approve or disapprove it within thirty calendar days from the date of its submission. If the plan is disapproved, the state superintendent shall recommend modifications that will render it acceptable. No financial planning and supervision commission shall implement a financial recovery plan that is adopted or updated on or after April 10, 2001, unless the state superintendent has approved it.

Cite as R.C. § 3316.06

Amended by 130th General Assembly File No. 25, HB 59, §101.01, eff. 9/29/2013.

Amended by 129th General AssemblyFile No.141, HB 509, §1, eff. 9/28/2012.

Amended by 129th General AssemblyFile No.8, HB 30, §1, eff. 7/1/2011.

Amended by 129th General AssemblyFile No.28, HB 153, §101.01, eff. 6/30/2011.

Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 7/17/2009.

Effective Date: 04-10-2001; 09-29-2005; 2008 HB562 09-22-2008

3316.061 Dissolution of commission for failure to comply and appointment of fiscal arbitrator.

If any school district financial planning and supervision commission fails to submit to the state superintendent of public instruction under section 3316.06 of the Revised Code a financial recovery plan that is acceptable to the state superintendent, or if the state superintendent and the director of budget and management find that a commission is not materially complying with the provisions of its financial recovery plan, the state superintendent and the director may jointly dissolve the financial planning and supervision commission and jointly appoint an individual to act as the fiscal arbitrator of the district. When a financial planning and supervision commission is dissolved under this section, the commission ceases to exist and the appointed fiscal arbitrator becomes the successor to the commission. A fiscal arbitrator appointed under this section has all of the rights, powers, and duties given by this chapter to the commission that the arbitrator succeeds. A reference in any statute, rule, contract, or other document to a school district financial planning and supervision commission is deemed to refer to a fiscal arbitrator appointed under this section. Business commenced but not completed by a commission when it is dissolved under this section shall be completed by the appointed fiscal arbitrator with the same effect as if completed by the commission. No validation, cure, right, privilege, remedy, obligation, or liability is lost or impaired by reason of the dissolution of the commission and appointment of a fiscal arbitrator, but shall be administered by the arbitrator. The superintendent of public instruction shall issue guidelines establishing the criteria that the superintendent will utilize in selecting qualified fiscal arbitrators under this section.

Cite as R.C. § 3316.061

Effective Date: 04-10-2001

3316.07 Commission - powers, duties and functions.

(A) A school district financial planning and supervision commission has the following powers, duties, and functions:

(1) To review or to assume responsibility for the development of all tax budgets, tax levy and bond and note resolutions, appropriation measures, and certificates of estimated resources of the school district in order to ensure that such are consistent with the financial recovery plan and a balanced appropriation budget for the current fiscal year, and to request and review any supporting information upon which the financial recovery plan and balanced appropriation budget may be 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, resolution, or instrument pertaining to the effective financial accounting and reporting system, debt obligations, debt limits, financial recovery plan, balanced appropriation budgets, appropriation measures, report of audit, statement or invoice, or other worksheet or record of the school district;

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

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

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

(6) After consultation with the officials of the school district and the auditor of state, to implement or require implementation of any necessary or appropriate steps to bring the books of account, accounting systems, and financial procedures and reports of the school district into compliance with requirements prescribed by the auditor of state, and to assume responsibility for achieving such compliance and for making any desirable modifications and supplementary systems and procedures pertinent to the school district;

(7) To assist or provide assistance to the school district or to assume the total responsibility for the structuring or the terms of, and the placement for sale of, debt obligations of the school district;

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

(9) 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;

(10) To consult with officials of the school district and make recommendations or assume the responsibility for implementing cost reductions and revenue increases to achieve balanced budgets and carry out the financial recovery plan in accordance with this chapter;

(11) To make reductions in force to bring the school district's budget into balance, notwithstanding division (A) of section 3311.83 , section 3319.081 , and divisions (A) and (B) of section 3319.17 of the Revised Code, notwithstanding any provision of a policy adopted under section 3319.171 of the Revised Code, and notwithstanding any provision to the contrary in section 4117.08 or 4117.10 of the Revised Code or in any collective bargaining agreement entered into on or after November 21, 1997.

In making reductions in force, the commission shall first consider reasonable reductions among the administrative and nonteaching employees of the school district giving due regard to ensuring the district's ability to maintain the personnel, programs, and services essential to the provision of an adequate educational program.

In making these reductions in nonteaching employees in districts where Chapter 124. of the Revised Code controls such reductions, the reductions shall be made in accordance with sections 124.321 to 124.327 of the Revised Code. In making these reductions in nonteaching employees in districts where Chapter 124. of the Revised Code does not control these reductions, within each category of nonteaching employees, the commission shall give preference to those employees with continuing contracts or non-probationary status and who have greater seniority.

If revenues and expenditures cannot be balanced by reasonable reductions in administrative and nonteaching employees, the commission may also make reasonable reductions in the number of teaching contracts. If the commission finds it necessary to suspend teaching contracts, it shall suspend them in accordance with divisions (B) to (D) of section 3311.83 or division (C) of section 3319.17 of the Revised Code but shall consider a reduction in non-classroom teachers before classroom teachers.

(B) During the fiscal emergency period, the commission 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 school district if that 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 school district board or superintendent 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 receiving the appropriation measure for the next fiscal year, issue a public report regarding its review pursuant to division (B)(1) of this section.

(2) Require the school district board, by resolution, to establish monthly levels of expenditures and encumbrances consistent with the financial recovery plan and the commission's review pursuant to divisions (B)(1)(a) and (b) of this section, or establish such levels itself. If the commission permits the district board to make expenditures, the commission shall monitor the monthly levels of expenditures and encumbrances and require justification documents to substantiate any departure from any approved level. No district board shall make any expenditure apart from the approved level without the written approval of the commission.

(C) In making any determination pursuant to division (B) of this section, the commission 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 the school district may have adopted or received from any other governmental agency.

(D) County, state, and school district officers or employees shall assist the commission diligently and promptly in the prosecution of its duties, including the furnishing of any materials, including justification documents, required.

(E) Annually on or before the first day of April during the fiscal emergency period, the commission shall make reports and recommendations to the speaker of the house of representatives and the president of the senate concerning progress of the school district to eliminate fiscal emergency conditions, failures of the school district to comply with this chapter, and recommendations for further actions to attain the objectives of this chapter, including any legislative action needed to make provisions of law more effective for their purposes, or to enhance revenue raising or financing capabilities of school districts. The commission may make such interim reports as it considers appropriate for such purposes and shall make such additional reports as may be requested by either house of the general assembly.

Cite as R.C. § 3316.07

Amended by 129th General AssemblyFile No.143, HB 525, §1, eff. 10/1/2012.

Effective Date: 06-30-2000

3316.08 Annual determination of operating deficit - tax levy proposal.

During a school district's fiscal emergency period, the auditor of state shall determine annually, or at any other time upon request of the financial planning and supervision commission, whether the school district will incur an operating deficit. If the auditor of state determines that a school district will incur an operating deficit, the auditor of state shall certify that determination to the superintendent of public instruction, the financial planning and supervision commission, and the board of education of the school district. Upon receiving the auditor of state's certification, the commission shall adopt a resolution requesting that the board of education work with the county auditor or tax commissioner to estimate the amount and rate of a tax levy that is needed under section 5705.194 , 5709.199, or 5705.21 or Chapter 5748. of the Revised Code to produce a positive fund balance not later than the fifth year of the five-year forecast submitted under section 5705.391 of the Revised Code.

The board of education shall recommend to the commission whether the board supports or opposes a tax levy under section 5705.194 , 5709.199, or 5705.21 or Chapter 5748. of the Revised Code and shall provide supporting documentation to the commission of its recommendation.

After considering the board of education's recommendation and supporting documentation, the commission shall adopt a resolution to either submit a ballot question proposing a tax levy or not to submit such a question.

Except as otherwise provided in this division, the tax shall be levied in the manner prescribed for a tax levied under section 5705.194 , 5709.199, or 5705.21 or under Chapter 5748. of the Revised Code. If the commission decides that a tax should be levied, the tax shall be levied for the purpose of paying current operating expenses of the school district. The rate of a property tax levied under section 5705.194 , 5709.199, 5705.21, or 5748.09 of the Revised Code shall be determined by the county auditor, and the rate of an income tax levied under section 5748.02 , 5748.08 , or 5748.09 of the Revised Code shall be determined by the tax commissioner, upon the request of the commission. The commission, in consultation with the board of education, shall determine the election at which the question of the tax shall appear on the ballot, and the commission shall submit a copy of its resolution to the board of elections not later than ninety days prior to the day of that election. The board of elections conducting the election shall certify the results of the election to the board of education and to the financial planning and supervision commission.

Cite as R.C. § 3316.08

Amended by 129th General AssemblyFile No.28, HB 153, §101.01, eff. 9/29/2011.

Amended by 128th General AssemblyFile No.29, HB 48, §1, eff. 7/2/2010.

Effective Date: 06-26-2003; 2008 HB562 09-22-2008

3316.09 Expenses of commission and members of commission to be paid.

(A) The members of a school district 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) Any expense or obligation incurred by a commission under this chapter shall be payable solely from appropriations made by the general assembly.

Cite as R.C. § 3316.09

Effective Date: 06-20-1996

3316.10 School district board to develop financial accounting and reporting system.

A school district board that is instructed to do so by the school district financial planning and supervision commission for that district shall develop an effective financial accounting and reporting system by:

(A) Promptly bringing its existing system of financial accounting and reporting into compliance with section 117.43 of the Revised Code. Within ninety days after the declaration of the existence of a fiscal emergency condition pursuant to division (B) of section 3316.03 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 school district. This report shall state whether section 117.43 of the Revised Code and the requirements of the auditor of state have been complied with, and shall be certified to the school district financial planning and supervision commission and the board of education of the school district.

(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 school district, and to assist in refining and improving the restructuring plan and amendments of it, facilitate the monitoring of compliance with and the implementation of the 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 section 117.43 of the Revised Code shall first be approved by the auditor of state.

Cite as R.C. § 3316.10

Effective Date: 06-20-1996

3316.11 Board, officers and employees to provide commission with fiscal information.

A school district board and all its officers and employees having possession of fiscal information or having the responsibility for developing that information, shall at all times cooperate in assisting the functions of the school district financial planning and supervision commission by providing to the commission, on a continuing basis, all fiscal information requested, ordered, or needed by the commission to formulate judgments regarding revenue and expenditure estimates, the financial recovery plan or any modification of it, the monitoring of the implementation of the plan, and consideration of any amendments of the financial recovery plan. All information and reports by the school district board and its officers and employees shall be in such form and detail as requested from time to time by the commission.

Cite as R.C. § 3316.11

Effective Date: 06-20-1996

3316.12 Effect of financial recovery plan.

(A) No appropriation measure may be adopted nor any expenditure made contrary to the financial recovery plan adopted by a school district financial planning and supervision commission. Any existing appropriation measure inconsistent with the adopted financial recovery plan is ineffective for purposes of any expenditures to the extent that it authorizes expenditures in excess of the revenues available after adoption of the financial recovery plan, and, if not amended by the commission, shall be amended promptly by the board of education of the school district to be consistent with the plan. Any appropriation measure prior to approval by the board of education of the school district shall be submitted to the commission for review to determine whether the measure is consistent with the financial recovery plan. The school district, through the appropriate representatives of the board of education and the fiscal officer, shall cooperate with the commission in this review. The commission shall report any modifications in the appropriation measure considered necessary to conform to the financial recovery plan.

(B) Prior to giving a certificate of estimated resources or amendment of it to the school district, the county budget commission shall consult with the commission, and the commission shall revise the certificate or amended certificate in any respect in which the certificate or amended certificate is, in its judgment, inconsistent with the financial recovery plan.

(C) Any tax budget of the school district shall be consistent with the financial recovery plan approved by the commission. Before submitting a tax budget to the county auditor, the school district board of education shall submit the tax budget to the commission for amendments. The commission shall make such modifications in the tax budget as the commission determines to be necessary to conform to the financial recovery plan. This division does not apply to a school district 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) For purposes of the financial recovery 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 school district 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 that 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 school district, increases in or implementation of fees or other charges, or imposition of or increases in taxes, and shall be accompanied by documentation showing that the officials with authority to act to achieve realization of such conditional revenues have 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 that in the judgment of the commission is uncertain of realization to form a proper basis for financial planning or budgeting.

Cite as R.C. § 3316.12

Effective Date: 06-03-2002

3316.13 Duty to act pursuant to certification, notification, order or request of commission.

A school district financial planning and supervision commission may direct its certifications, notifications, orders, or requests to particular officers of the county, school district, or state, or to the school district board of education 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 considers appropriate. Any such certification, notification, order, or request, including preparation and submission of a financial recovery plan in accordance therewith and with this chapter, shall be effective and binding upon the officer, county budget commission, school district board of education, and 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 school district board, county, 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.

Cite as R.C. § 3316.13

Effective Date: 06-20-1996

3316.14 Prior approval of commission required for debt obligation.

(A) No debt obligation, including any debt incurred pursuant to section 3313.483 of the Revised Code, may be issued or incurred by the school district, whether purchased by the school district or by others, except with the prior approval of the school district 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 recovery plan under this chapter or be inconsistent with this chapter or the plan.

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

(1) The resolution authorizing their issuance, the resolution providing for their award, and every document forming part of the contract with the purchasers of such debt obligations from the school district is approved by the commission.

(2) The resolution authorizing the debt obligations contains a covenant to the effect that the school district 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 recovery plan. The commission may prescribe the form of the covenant.

(3) The school district, 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 the issuance would cause the school district to exceed debt limits.

(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 school district, but for no other purposes of this chapter, such approval shall be conclusive as to compliance with this section, unless the approval is withdrawn by the commission prior to the delivery and payment.

Cite as R.C. § 3316.14

Effective Date: 06-20-1996

3316.16 Criteria for termination of commission.

(A) A school district financial planning and supervision commission, with respect to its functions under this chapter, shall continue in existence until such time as a determination is made under division (B) of this section that all of the following have occurred:

(1) An effective financial accounting and reporting system in accordance with section 3316.10 of the Revised Code is in the process of being implemented, and it is reasonably expected that this implementation will be completed within two years.

(2) All of the fiscal emergency conditions determined pursuant to division (B) of section 3316.03 of the Revised Code have been corrected or eliminated, and no new fiscal emergency conditions have occurred.

(3) The objectives of the financial recovery plan described in section 3316.06 of the Revised Code are being met.

(4) The school district board has prepared a financial forecast for a five-year period in accordance with the standards issued by the auditor of state and an opinion has been rendered by the auditor of state that the financial forecast is considered to be nonadverse. The forecast shall display the district's projected compliance with section 3315.18 of the Revised Code beginning in the year the commission is proposed for termination.

(B) The determination that all conditions listed in division (A) of this section 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, the director of budget and management, and the budget commission, whereupon such commission and its functions under this chapter shall terminate. This determination shall be made by the auditor of state upon the filing with the auditor of state of a written request for such a determination by the school district board, 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 at the time of 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 of budget and management 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 this section and Chapter 117. of the Revised Code to secure full implementation at the earliest time feasible but within two years after such termination.

Cite as R.C. § 3316.16

Amended by 129th General AssemblyFile No.8, HB 30, §1, eff. 7/1/2011.

Effective Date: 06-20-1996; 09-29-2005

3316.17 Commission may remove superintendent or treasurer of school district.

A financial planning and supervision commission may remove the superintendent or the treasurer of a school district for failing to comply with the commission's orders concerning the preparation or implementation of the financial recovery plan.

Cite as R.C. § 3316.17

Effective Date: 06-20-1996

3316.18 Severability.

(A) Subject to division (B) of this section, if any section or provision of this chapter, including any condition or prerequisite to any action or determination thereunder, or if 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, this 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 this 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 considered 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 school district board authorized to be taken under this chapter only with the consent or approval of the school district financial planning and supervision commission 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 under this chapter is for any reason held to be illegal or invalid, the authorization of the action that 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 school district 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 recovery plan, or as to consent to or approval by the commission of any such act of the school district, if for any reason such condition or prerequisite is held to be illegal or invalid, such act by the school district shall be deemed to be and is hereby restricted, so that it may not be taken or done by the school district until and unless the auditor of state, upon request of the board of education of the school district, determines in writing that none of the fiscal emergency conditions determined to exist pursuant to division (B) of section 3316.03 of the Revised Code continues to exist.

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

(C) The provisions of this chapter granting authority to the commission are intended to provide a thorough and efficient system of education throughout the state and are further intended to provide better security for holders of debt obligations of the school district. These provisions 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 under this chapter relating to debt obligations issued or incurred by a school district 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 the act could have been sustained under the law and that the commission's act was grossly arbitrary; provided that no such action may affect the reliability and conclusiveness of certifications and approvals by the commission as provided in section 3316.14 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 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.

Cite as R.C. § 3316.18

Effective Date: 06-20-1996

3316.19 Prohibited acts during fiscal emergency.

(A) During a fiscal emergency period for a school district, no school board member, officer, or employee of the school district shall do any of the following:

(1) Knowingly enter into any contract, financial obligation, or other liability of the school district involving an expenditure, or make any expenditure in excess of the amount permitted by the commission pursuant to this chapter;

(2) Knowingly enter into any contract, financial obligation, or other liability of the school district, or knowingly execute or deliver debt obligations, or transfer, advance, or borrow moneys from one fund of the school district to or for any other fund of the school district where any of such actions are required to be approved by the school district financial planning and supervision commission unless such actions have been so 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 recovery 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 that 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 fund for purposes other than the lawful purposes of the fund, or knowingly use or cause to be used moneys of a fund created 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 fund.

(B) The prohibitions set forth in division (A) of this section are in addition to any other prohibitions provided by law for a school district officer or employee.

(C) In addition to any other penalty or liability provided by law for a school district board member, officer, or employee, 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 school district for any violation under division (A)(1), (2), (3), or (4) of this section, such officer or employee shall forfeit office or employment.

Cite as R.C. § 3316.19

Effective Date: 06-20-1996

3316.20 School district solvency assistance fund - shared resource account - catastrophic expenditures account.

(A)

(1) The school district solvency assistance fund is hereby created in the state treasury, to consist of such amounts designated for the purposes of the fund by the general assembly. The fund shall be used to provide assistance and grants to school districts to enable them to remain solvent and to pay unforeseeable expenses of a temporary or emergency nature that they are unable to pay from existing resources.

(2) There is hereby created within the fund an account known as the school district shared resource account, which shall consist of money appropriated to it by the general assembly. The money in the account shall be used solely for solvency assistance to school districts that have been declared under division (B) of section 3316.03 of the Revised Code to be in a state of fiscal emergency.

(3) There is hereby created within the fund an account known as the catastrophic expenditures account, which shall consist of money appropriated to the account by the general assembly plus all investment earnings of the fund. Money in the account shall be used solely for the following:

(a) Solvency assistance to school districts that have been declared under division (B) of section 3316.03 of the Revised Code to be in a state of fiscal emergency, in the event that all money in the shared resource account is utilized for solvency assistance;

(b) Grants to school districts under division (C) of this section.

(B) Solvency assistance payments under division (A)(2) or (3)(a) of this section shall be made from the fund by the superintendent of public instruction in accordance with rules adopted by the director of budget and management, after consulting with the superintendent, specifying approval criteria and procedures necessary for administering the fund.

The fund shall be reimbursed for any solvency assistance amounts paid under division (A)(2) or (3)(a) of this section not later than the end of the second fiscal year following the fiscal year in which the solvency assistance payment was made, except that, upon the approval of the director of budget and management and the superintendent of public instruction, the fund may be reimbursed in another fiscal year designated by the director and superintendent that is not later than the end of the tenth fiscal year following the fiscal year in which the solvency assistance payment was made. If not made directly by the school district, such reimbursement shall be made by the director of budget and management from the amounts the school district would otherwise receive pursuant to Chapter 3317. of the Revised Code, or from any other funds appropriated for the district by the general assembly. Reimbursements shall be credited to the respective account from which the solvency assistance paid to the district was deducted.

(C) The superintendent of public instruction may make recommendations, and the controlling board may grant money from the catastrophic expenditures account to any school district that suffers an unforeseen catastrophic event that severely depletes the district's financial resources. The superintendent shall make recommendations for the grants in accordance with rules adopted by the director of budget and management, after consulting with the superintendent. A school district shall not be required to repay any grant awarded to the district under this division, unless the district receives money from this state or a third party, including an agency of the government of the United States, specifically for the purpose of compensating the district for revenue lost or expenses incurred as a result of the unforeseen catastrophic event. If a school district receives a grant from the catastrophic expenditures account on the basis of the same circumstances for which an adjustment or recomputation is authorized under section 3317.025 , 3317.026 , 3317.027 , 3317.028 , 3317.0210 , or 3317.0211 of the Revised Code, the department of education shall reduce the adjustment or recomputation by an amount not to exceed the total amount of the grant, and an amount equal to the reduction shall be transferred, from the funding source from which the adjustment or recomputation would be paid, to the catastrophic expenditures account. Any adjustment or recomputation under such sections that is in excess of the total amount of the grant shall be paid to the school district.

Cite as R.C. § 3316.20

Amended by 129th General AssemblyFile No.28, HB 153, §101.01, eff. 6/30/2011.

Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 7/17/2009.

Effective Date: 06-03-2002