Auditor's Reports Shows More Municipalities Are Under Financial Distress

COLUMBUS, Ohio - 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 1 and 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.


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