Receivership Overview

A: Fiscal distress means a local government is having serious money problems. It’s like when someone keeps spending more than they earn, can’t pay their bills, and starts falling behind. The state of Ohio has a system to step in and help before things get worse.

Three Levels of Fiscal Distress in Ohio:

• 🟡 Fiscal Caution
  • What it means: Early warning signs of financial trouble.
  • Why it happens: The entity was declared unauditable, had significant material weaknesses or violations of Ohio laws, deficit or low year-end balance in general fund or failure to reconcile.
  • What the state does: Sends a warning and asks the entity to fix the problems before they get worse.
• 🟠 Fiscal Watch
  • What it means: The financial problems are more serious.
  • Why it happens: May be caused by accounts payable more than 30 days past due or more significant deficit funds.
  • What the state does: Requires a financial plan and watches closely to see if the entity can recover on its own.
• 🔴Fiscal Emergency
  • What it means: The entity is in deep financial trouble and can’t fix it alone.
  • Why it happens: Significant deficit funds, unpaid bills, defaulting on debt or payroll/benefit payments.
  • What the state does: Responsible for the formation of a financial and supervision commission. The commission provides oversight to ensure that the entity prepares a financial recovery plan and that appropriations and spending are consistent with the plan.

In summary:

• Fiscal Caution = “You’re starting to slip — fix it now.”
• Fiscal Watch = “You’re in trouble — we’re watching closely.”
• Fiscal Emergency = “You’re in crisis — we’re stepping in to help.”

Commission Membership

The composition of the Commission depends on the type of local government involved, but generally includes seven members representing both state and local interests.

A: Court‑approved receiver costs are covered by the Ohio Office of Budget and Management or as otherwise authorized by the court.

A: The receiver must provide regular financial reports, budget updates, and progress reports to the court and oversight commission and typically must make key documents and decisions publicly available to ensure transparency and public oversight.

A: Enforcement tools include monitoring and approving budgets, requiring corrective actions from local officials, withholding approval for unauthorized expenditures, and reporting noncompliance to the court or oversight bodies.

A: Duration varies; receivership lasts until fiscal stability is demonstrably restored and the court determines the receiver's duties are complete.

A: Elected officials retain their titles and representative roles but must cooperate with the receiver, provide requested information and documentation, and participate in required meetings and sessions.

A: Local officials retain policymaking and representative responsibilities but lose direct fiscal control and budgeting authority for actions covered by the recovery plan; financial decisions tied to recovery require receiver approval.

A: Yes. Local officials must attend meetings, participate in executive sessions as required, and work with the receiver and the Financial Planning & Supervision Commission to implement the recovery plan and provide transparency.

A: Local officials retain statutory and constitutional rights not expressly transferred to the receiver, including representative duties, the ability to hold public meetings, propose ordinances, and advocate for constituents.

Fiscal actions will be under the direction and approval of the receiver; however, the elected officials will have the opportunity to provide input on fiscal recommendations from the receiver.

A: The receiver and oversight bodies use the recovery plan to prioritize statutory obligations and essential services; priorities often include payroll, pensions, public safety, and maintenance of core services, with discretionary programs evaluated based on available resources.

A: Attend public hearings and oversight commission meetings, review receiver and commission reports, contact elected officials and the receiver with questions.