Chapter 3301-92 | Distribution of State Aid

Rule 3301-92-02 | Capital improvement and maintenance fund.

• Effective: December 1, 2022
• Promulgated Under: 119.03

(A) As used in this rule, "capital improvements and maintenance" means the acquisition, replacement, enhancement, maintenance or repair of permanent improvements as those terms are defined in this rule.

(1) "Permanent improvement" means a permanent improvement as defined under division (E) of section 5705.01 of the Revised Code.

(2) "Acquisition" means addition of or assuming possession of an asset.

(3) "Replacement" means the substitution of one asset for another of substantially similar value or quality.

(4) "Enhancement" means the modification of an existing asset that increases its value, quality or life expectancy.

(5) "Maintenance or repair" means the act of keeping a permanent improvement in normal working condition. "Maintenance or repair" includes preventative maintenance, periodic repairs and replacement of parts, structural components and other activities needed to maintain the asset but does not include routine janitorial and utility costs. Any non-routine janitorial cost shall be substantiated through a work order.

(B) In each fiscal year, except as provided in division (D) of section 3315.18 of the Revised Code, the school district shall set aside for capital improvements and maintenance, the amount required by division (A) of section 3315.18 of the Revised Code unless the board of education elects, by board resolution, to set aside funds for capital improvements and maintenance in accordance with section 3315.19 of the Revised Code.

The required set aside may be reduced in any fiscal year by any amount received during the same fiscal year from a permanent improvement levy as authorized under section 5705.21 of the Revised Code.

(C) If the board of education elects to set aside funds in accordance with section 3315.19 of the Revised Code, the amount of the set aside shall equal three per cent of all revenues received by the district for operating expenses for the prior fiscal year.

For a city, local or exempted village school district, "all revenues received by the district for operating expenses" means the school district's general fund revenue in the prior fiscal year from property taxes as provided for in Chapter 5705. of the Revised Code plus income taxes as provided in Chapter 5748. of the Revised Code after adjusting for payments for students participating in an open enrollment agreement pursuant to section 3313.98 of the Revised Code, students attending a community school pursuant to Chapter 3314. of the Revised Code, or students receiving an educational choice scholarship pursuant to Chapter 3310. of the Revised Code plus any amount of this revenue that would have been allocated to the general fund but was allocated to the debt service fund for payment of tax or revenue anticipation notes.

For a joint vocational school district, "all revenues received by the district for operating expenses" means the school district's general fund revenue in the prior fiscal year from property taxes as provided for in Chapter 5705. of the Revised Code plus income taxes as provided for in Chapter 5748. of the Revised Code plus funds provided to the district pursuant to division (B) of section 3317.16 of the Revised Code plus any amount of this revenue that would have been allocated to the general fund but was allocated to the debt service fund or payment of tax or revenue anticipation notes.

(D) The amount set aside for capital improvements and maintenance shall be accounted for within the school district's general fund using a generally accepted accounting method. The school district shall appropriate from the amount set aside for capital improvements and maintenance and maintain appropriate accounting records for amounts expended. Any unexpended balance shall carry forward to the subsequent fiscal year. Any unexpended balance carried forward to the subsequent fiscal year does not reduce the amount of the set aside required by paragraph (B) of this rule. This requirement to set aside an amount for capital improvements and maintenance applies only to those school districts as defined in division (A) of section 3315.18 of the Revised Code.

(E) As part of each school district's annual financial report, the school district shall prepare a supplemental schedule pursuant to reporting procedures prescribed by the auditor of state to demonstrate compliance with this rule. The supplemental schedule shall include the following:

(1) The balance of the set aside carried forward from the previous fiscal year;

(2) The current fiscal year set aside amount;

(3) Qualifying expenditures;

(4) The amount of funding received from a permanent improvement levy as authorized under section 5705.21 of the Revised Code that may reduce the amount of the set aside.

(5) The balance of the set aside carried forward to the subsequent fiscal year.

(6) If a district did not set aside the funds described in paragraph (B) or (C) of this rule, a statement indicating the statutory authority on which it relied.

(F) Restricted revenue including, but not limited to, funding received from e-tech Ohio, state aid for bus purchases and specific state and federal grants may not be used to meet the amount required to be set aside for capital improvements and maintenance.

(G) Acceptable costs for acquisitions, replacements and enhancements of permanent improvements include, but are not limited to: acquisition price; direct materials, labor and overhead incurred during a qualifying project; professional fees necessary to complete a qualifying project; site preparation; demolition or removal of any existing assets; freight and handling; and principal included as part of the cost of a capital lease. Acquisitions, replacements and enhancements of permanent improvements does not include debt service on a long-term debt whose proceeds were used for capital improvements and maintenance.

Last updated December 1, 2022 at 10:38 AM

Supplemental Information

Authorized By: 3301.07, 3315.18
Amplifies: 3315.18, 3315.19
Five Year Review Date: 12/1/2027
Prior Effective Dates: 4/23/2011

Rule 3301-92-04 | Reporting five-year projections.

• Effective: December 1, 2022
• Promulgated Under: 119.03

The provisions of this rule only apply to city, exempted village, local and joint vocational districts.

(A) Definitions.

(1) The terms "five-year forecast" and "five-year projections" are used interchangeably and refer to the "five-year projections of operational revenues and expenditures" described in section 5705.391 of the Revised Code.

(2) The term "fiscal oversight" refers to the three fiscal declaration categories established under Chapter 3316. of the Revised Code: fiscal caution, fiscal watch, and fiscal emergency.

(3) All references to the "department" refer to the Ohio department of education.

(4) All references to the "auditor" refer to the Ohio auditor of state.

(B) Submission dates.

(1) No later than November thirtieth of each fiscal year, a board of education shall submit to the department a board of education approved five-year projection of operational revenues and expenditures for the current fiscal year and the ensuing four fiscal years. A board of education may approve and submit its five-year projection to the department up to sixty days in advance of this due date.

(2) .By May thirty-first of each fiscal year, a board of education shall submit to the department a board of education approved update of its five-year projection. A board of education may approve and submit the update of its five-year projection up to sixty days in advance of this due date.

(3) Nothing precludes a board of education from filing other updates to its five-year projection at any time in addition to the filings required by paragraphs (B)(1) and (B)(2) of this rule.

(C) Submission requirements.

(1) All five-year forecasts shall:

(a) Use the known operational revenues, expenditures, and resulting cash balance of the district as the basis for projections;

(b) Include accompanying notes for each reported line item that describe the assumptions used to develop the projected amounts;

(c) Ccontain all required information and be in the format prescribed by the department and auditor;

(d) Be approved by the board of education; and

(e) Be submitted to the department through the education management information system (EMIS).

(2) The department of education or auditor of state may require historical financial information.

(D) Examinations.

The department or the auditor shall examine, at no cost to the district, the five-year projections and determine whether any further fiscal analysis is needed to ascertain whether a district has the potential to incur a deficit during the first three years of the five-year period, and may make recommendations to update a five-year forecast submission ased on their examination.

(E) Written plan requirements.

(1) A board of education notified under division (A) of section 5705.391 of the Revised Code shall submit a board of education approved written plan to the department to eliminate any current fiscal year deficits and avoid the projected future deficits.

(2) All written plans are to be in the format prescribed by the department and contain the following information:

(a) A summary narrative describing the district's plan to eliminate the forecasted deficits which demonstrates the board of education's understanding of the fiscal distress reflected in the projections and acknowledges the board of education's responsibility to resolve the forecasted deficits;

(b) A completed written plan workbook using the workbook template provided by the department, unless the board of education requests and the department approves an alternative format; and

(c) An explanation of how the board of education will be kept informed on the status of the written plan implementation including the financial reports to be used to monitor and manage the district's financial status.

(3) The department may request the written plan to be submitted through EMIS.

(4) All written plans are due within forty-five days of the date of the notification letter which required the written plan, unless extended by the department. Prior to the original due date of the written plan, a district board of education may submit, via email, a written request for an extension. The extension request will be approved or disapproved at the discretion of the department.

(5) The department will evaluate written plan submissions and either approve or disapprove the plans. If the initial written plan is disapproved, recommendations to render the written plan acceptable will be provided along with a due date to remedy the identified written plan deficiencies.

(F) Written plan implementation and results monitoring.

(1) If the board of education fails to submit a written plan or does not modify a disapproved plan to render it approvable by the due date established by the department, it may be cause for the district to be subject to fiscal oversight in accordance with Chapter 3316. of the Revised Code.

(2) The department may request the board of education to update the district's five-year forecast, including assumptions, to be consistent with the board of education's written plan approved by the department. If the board of education does not update the forecast as requested, the department may determine the district to be subject to fiscal oversight in accordance with Chapter 3316. of the Revised Code.

(3) The department may request evidence the board of education is monitoring the implementation of the written plan. This evidence may include documentation necessary to identify and evaluate the sufficiency of the actions taken by the board to correct the budgetary conditions which prompted the need for the written plan and to determine if fiscal oversight is necessary to prevent further fiscal decline. If the board does not provide evidence, the department may determine the district to be subject to fiscal oversight in accordance with Chapter 3316. of the Revised Code.

Last updated December 1, 2022 at 10:38 AM

Supplemental Information

Authorized By: 3301.07, 5705.391
Amplifies: 5705.391
Five Year Review Date: 12/1/2027

Rule 3301-92-05 | Certification of adequate revenue.

• Effective: December 1, 2022
• Promulgated Under: 119.03

(A) "Qualifying contract" has the same meaning as in section 5705.412 of the Revised Code. Expenditures that, if they meet the criteria in divisions (A)(1) and (A)(2) of section 5705.412 of the Revised Code, are to be qualifying contracts include, but are not limited to:

(1) Negotiated agreements;

(2) Contracts for benefits; and

(3) Construction contracts, if the source of funds is included in the school district's five-year forecast under section 5705.391 of the Revised Code.

(B) The events for which each school district shall certify the availability of revenue pursuant to section 5705.412 of the Revised Code include, but are not limited to:

(1) Qualifying contracts;

(2) Appropriation measures; and

(3) Increased salary or wage schedules.

(C) For the purpose of certifying revenue pursuant to section 5705.412 of the Revised Code, a school district may use the following guidelines for estimating revenue:

(1) Property taxes;

(a) For current year revenues, estimates may be based on assessed values and effective tax rates.

(b) For future years, revenue growth may be based on historical patterns including, but not limited to, reappraisal, updates, unusual growth or declines in valuation, collection rates and refunds.

(c) Certifications of appropriation measures under section 5705.412 of the Revised Code shall not anticipate the renewal or replacement of existing levies nor anticipate the revenue from a new levy.

(d) All other certifications under section 5705.412 of the Revised Code may anticipate the renewal or replacement of existing levies.

(2) Income taxes;

(a) Income tax estimates may be based on estimates provided by the department of taxation.

(b) Certifications of appropriation measures under section 5705.412 of the Revised Code shall not anticipate the approval to extend a current income tax beyond its expiration nor anticipate the revenue from a new levy.

(c) All other certifications under section 5705.412 of the Revised Code may anticipate the approval to extend a current income tax beyond its expiration.

(3) State aid;

Estimates may be based on the most current annual estimate of state funding and historical patterns and modifications may be made based on changes in average daily membership, valuation, and other factors that may result in significant adjustments to funding levels. These other factors include, but are not limited to, parity aid or other similar programs for which the school district can reasonably assume continued funding.

(4) Property tax allocation; and

Calculate the average percentage of property tax allocation receipts to property tax receipts over the prior three fiscal years. For each year of the certification, multiply estimated property tax receipts by the average percentage of property tax allocation receipts to calculate the estimate.

(5) State and federal grants.

(a) Estimates may include the continuation of existing programs that are reasonably expected to continue.

(b) Estimates shall not include new programs that have not been approved by the granting authority.

(D) A school district may include anticipated proceeds from the issuance of debt as estimated revenue for the purpose of certification.

(E) A school district shall not include:

(1) Advancements made under section 3316.20 of the Revised Code as a revenue source until the advancement has been approved by the superintendent of public instruction; and

(2) As estimated revenue, proceeds from borrowing under division (H) of section 133.10 of the Revised Code for purposes of certifying the current year appropriation measure.

(F) Each school district shall maintain sufficient documentation to justify each certification made under section 5705.412 of the Revised Code and must identify the actual date of certification:

(1) Each school district shall maintain a continuing record of the contracts which have been certified. This record includes, but is not limited to, vendor name, contract amount, contract amount allocated by year, purchase order number and date; and

(2) All information, records and documentation used to estimate available resources or any change made to the five-year projection including, but not limited to, the current annual estimate of state funding, property tax calculations, fee schedules and average daily membership calculations shall be retained by the school district and be made available to the auditor of state or the independent public accountant at the time the school district is audited pursuant to section 117.11 of the Revised Code.

(G) The certification under section 5705.412 of the Revised Code shall be based on the current five-year projection. If the revenue assumptions or the revenue estimates used as a basis for the certificate differ from the current five-year projection, the projection needs to be updated to reflect the new information. If the certificate is associated with a contract or obligation that results in additional costs or changes in the expenditure assumptions in the current five-year projection, the projection must be updated to reflect the new information. Any change to the five-year projection must be approved by the board of education. Each school district shall maintain sufficient documentation to support these changes.

(H) A district declared to be in fiscal emergency is expected to comply with all requirements of certification under section 5705.412 of the Revised Code and all requirements of this rule. Additionally, the financial planning and supervision commission will also review and approve or disapprove all such certifications. In the event a district is not able to make the certification required under section 5705.412 of the Revised Code based on the district's most recent five-year forecast approved by the district board of education and the financial planning and supervision commission, the certification may be approved by the commission if the subject matter conforms to the currently approved financial recovery plan under which the district is operating pursuant to Chapter 3316. of the Revised Code.

Last updated December 1, 2022 at 10:38 AM

Supplemental Information

Authorized By: 3301.07, 5705.412, 3316.02
Amplifies: 5705.412, 3316.03, 3316.04, 3316.05, 3316.19
Five Year Review Date: 12/1/2027
Prior Effective Dates: 6/22/1998