Financial Health Indicators for Gallia, Meigs released


Staff Report



COLUMBUS — Gallia and Meigs counties have shown increases in a number of cautionary indicators according to Ohio State Auditor Dave Yost’s office.

These indicators function as a way to monitor the financial well being of local governments and provide feedback to better manage budgets.

In 2015 Gallia County had a cautionary indication for condition of capital assets; a marker that indicates the state of material assets owned by the county. According to ohioauditor.gov, an increased percentage in this marker shows an imminent need to replace assets, causing an impending expense that the budget will have to account for. This marker was also present in the 2016 report as cautionary.

In 2016, Gallia also received a cautionary warning for a decline in General Fund Property Tax Revenue. This indicates less income from property taxes, which as a result is less money the local government has to use. A decrease in this area is marked as cautionary when the decrease is greater than one percent and less than 20 percent.

Meigs County only had one cautionary indicator in 2015; indicator 13 which functions along with 14 and 15 to mark the number of days a local government can be sustained on unrestricted net assets. This indicator was changed to positive for the 2016 report.

For 2016, Meigs also had two cautionary indicators. A cautionary indicator in decrease in property tax revenue: Gallia county also had this marker. Meigs also showed a cautionary indicator for Unassigned Fund Balance of the General Fund. This indicator shows when a budget has declining or negative unassigned fund balance. This is used as a financial health indicator because those unassigned funds can be used to manage unexpected expenses.

Nine cities and one county are showing signs of financial stress for fiscal year 2016, with nearly two-thirds of Ohio’s county governments showing an increase in the number of “critical” or “cautionary” warnings, according to the second annual “Financial Health Indicators” report.­

Auditor of State Dave Yost in January unveiled the first Financial Health Indicators (FHI) to gauge the fiscal health of Ohio’s 88 counties and 247 cities and help them avoid a fiscal crisis. The 17 indicators are based on financial data provided by cities and counties in their annual financial statements, providing a snapshot of their fiscal health based on a historical analysis of other local governments that have been declared in fiscal distress.

“The aim is to provide communities and counties with advance warning of looming financial difficulties so that they can take steps to halt and reverse these trends,” Auditor Yost said.

For 2015, no counties triggered enough cautionary or critical indicators to suggest fiscal stress is occurring. For 2016, Morgan County met the threshold for fiscal stress based on historic trends. Three counties (Hocking, Jackson and Vinton) are showing early signs of fiscal stress and may be two to three years away from experiencing fiscal stress based on current conditions. One county (Lawrence) is a single indicator away from facing an elevated state of fiscal stress.

As was the case last year, nine cities have financial indicators showing fiscal stress in 2016: Akron, Canton, East Cleveland, Girard, Lorain, Maple Heights and Norwood, which showed fiscal stress in 2015, and Fostoria and Parma Heights. Six cities (Alliance, Martins Ferry, North College Hill, Upper Sandusky, Warren and Zanesville) are showing early signs of fiscal stress and may be two to three years away from experiencing fiscal stress, based on their current financial data and trends. Thirteen cities — Belpre, Cincinnati, Elyria, Galion, Garfield Heights, Kenton, Lebanon, Lima, New Philadelphia, Riverside, Springdale, Springfield and Youngstown — are a single indicator away from facing an elevated state of fiscal stress.

“Our cities and counties are generally well-managed,” Auditor Yost said. “Unfortunately, those leaders sometimes are challenged by financial factors beyond their control: A major employer downsizing or relocating, or reductions in federal or state funding. They’re working hard to be good financial stewards, but it’s clear there is elevated financial stress in many of our local governments.”

According to county data, 55 of the 88 counties (62.5 percent) had more critical and cautionary indicators in 2016 than in the prior year, while 23 percent (20 of 88) showed improvement. Fiscal stress for 10 counties, or 11 percent, was unchanged, and data for three counties were incomplete because of inconsistent accounting bases in financial statement presentation.

Data show 111 of the 247 cities (45 percent) had more critical and cautionary indicators in 2016 than in the prior year, while 44 percent (108 of 247) showed improvement. Totals for 21 cities were unchanged, and data for seven were incomplete.

There was a change regarding how pension liabilities are reported by the entities in 2016 that could have generated a false “negative” for some cities and counties in Indicator 1and possibly Indicators 3 and 13.

The conditions include “critical outlook,” “cautionary outlook” and “positive outlook.” They are color-coded like a stop light, as red, yellow and green.

Morgan McKinniss contributed to this article.

Staff Report

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