Reporting requirements for state universities and colleges; fiscal watch and governance authority procedures.


Published: 2015-12-20

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(A) State university or college reporting requirements

(1) For the purposes of this rule:

(a) "State university or college" shall have the same meaning as in section 3345.71 of the Revised Code.

(b) "Expendable fund balances" shall include the sum of all reported fund balances (positive and negative, restricted and unrestricted, allocated and unallocated) in the current funds, quasi endowments, and balances in the unexpended plant funds, funds for renewal and replacement, and funds for the retirement of plant indebtedness.

(c) "Plant debt" means any liability for which the corresponding asset is investment in plant.

(d) "Total revenues" mean total current fund revenues, both restricted and unrestricted.

(e) "Net total revenues" are total current fund revenues, restricted and unrestricted, minus total current fund expenditures and mandatory transfers, both restricted and unrestricted.

(2) Fiscal year financial statements

(a) Requirements and submission deadline; extension of submission deadline

No later than October thirty-first of each year, each state university and college shall prepare and submit to the auditor of state fiscal year financial statements for the fiscal year ending the preceding June thirtieth. The fiscal year financial statements shall be prepared in accordance with generally accepted accounting principles and shall be accompanied by required notes and other supplemental information as may be required by the chancellor of higher education.

The chairperson of the board of trustees of a state university or college may make a request to the auditor of state for an extension of the October thirty-first submission deadline. A request for an extension must be in writing delivered by the state university or college to the auditor of state no later than the preceding September thirtieth. The chairperson must deliver in writing a copy of the request for an extension to the chancellor and each member of the board of trustees of the state university or college. The request for an extension must include the reason the state university or college is unable to submit the financial statements by the submission deadline and the date that the state university or college proposes to submit the financial statements to the auditor of state. If the auditor determines that the request for an extension establishes extraordinary circumstances that prevent the state university or college from filing its fiscal year financial statements, the auditor of state may grant an extension of the submission deadline of no more than two months.

(b) Notification by auditor of state

If a state university or college does not submit the fiscal year financial statements by the submission deadline, the auditor of state shall send written notice within thirty days after the submission deadline to the governor, the chancellor, the director of budget and management, the legislative service commission, and the chairpersons and ranking minority members of the finance committees of the house of representatives and the senate.

(c) Written statement upon failure to file fiscal year financial statement

Upon receipt of the notice from the auditor of state that a state university or college did not submit the fiscal year financial statements by the submission deadline, the chancellor shall require the state university or college to provide a written statement identifying the reasons for failing to file the fiscal year financial statements by the submission deadline and a date on which the state university or college expects to submit the financial statements to the auditor of state. The written statement required under this paragraph shall not constitute an extension of the submission deadline for the fiscal year financial statement.

(3) Audited year-end report

(a) Each state university or college shall cooperate with the auditor of state to cause to be performed no later than December thirty-first succeeding the end of the fiscal year an annual audit of the financial records of the state university or college in accordance with generally accepted governmental auditing standards and OMB circular A-133. The auditor of state may grant an extension for the completion of the audit of no more than two months if the auditor of state determines that extraordinary circumstances justify the extension. Upon completion, the state university or college shall deliver a copy of the annual audit to the auditor of state and the auditor shall send a copy to the chancellor.

(b) If the annual audit of a state university or college by the auditor of state discloses substantive audit findings, the auditor of state shall send written notice of the substantive audit findings to the governor, the chancellor, the director of budget and management, the legislative service commission, and the chairpersons and ranking minority members of the finance committees of the house of representatives and the senate.

Substantive audit findings include but are not limited to:

(i) The inability to make timely payments to vendors, delays in making pension retirement contributions or requests for advanced state funding;

(ii) A significant negative variance between budgeted and actual spending for a fiscal year;

(iii) A significant operating deficit in the restricted and unrestricted funds that could have a negative impact on the financial condition of the state university or college for the fiscal year;

(iv) Reportable conditions, material weaknesses, direct and material legal noncompliance or management letter comments which, in the opinion of the auditor of state, the aggregate effect of all such reported issues has a significant effect on the financial condition of the state university or college for the current and future years; or,

(v) A qualified opinion on financial statements or grant compliance which, in the opinion of the auditor of state, has significant impact on the financial condition of the state university or college.

(4) Ratio analysis

Upon receipt of the annual audit, the chancellor shall perform a ratio analysis of the financial condition of the state university or college as follows:

(a) Calculate ratios:

(i) Viability ratio: expendable fund balance divided by plant debt;

(ii) Primary reserve ratio: expendable fund balance divided by total current funds expenditures and mandatory transfers;

(iii) Net income ratio: net total revenues divided by total revenues.

(b) Assign threshold factors:

THRESHOLD FACTORS
012345
Viability ratio2.50
Primary reserve ratio