Ohio State Auditor Dave Yost – who last year expressed confidence that a jury would find Hillsboro Mayor Drew Hastings guilty of various felony counts – this month gave the city over which Hastings presides an overall glowing report on a variety of financial health indicators, with the mayor saying Wednesday he is “really proud” of the findings.
A special prosecutor from Yost’s office led the criminal investigation of Hastings last year, and when the mayor was indicted last July on four felony counts, Yost issued a statement saying, “Mr. Hastings has long complained about the length of time a careful, proper investigation takes. That investigation is now complete, and the evidence will be made public appropriately, in a court of law. I am confident the jury of his peers will find that evidence amounts to proof beyond a reasonable doubt.”
Instead, the judge in Hastings’ November trial dismissed two charges, and a jury acquitted the mayor of two remaining charges.
This month, Yost issued reports on financial health indicators (FHI) “in an attempt to help cities and counties avoid being declared in fiscal distress,” according to a statement from Yost’s office. Yost “instructed his team to develop a series of indicators that would help identify those that show signs of heightened fiscal stress,” according to the statement. The reports were issued for 247 cities and all 88 Ohio counties.
In Hillsboro’s color-coded assessments, the city received 15 green “positive outlooks,” one yellow “cautionary outlook,” and no red “critical outlooks.” The report covers the period of 2012 through 2015, meaning in Hillsboro’s case it coincided with Hastings’ first term in office.
By comparison, Highland County government received 10 positive outlooks, three cautionary outlooks and two critical outlooks. County auditor Bill Fawley has questioned some of the findings.
Highland County received critical outlooks in the indicators of debt service expenditures to total revenues, and budgetary non-compliance for each of the four years examined. The county also received cautionary outlooks for a decline in unrestricted net assets, a decline in the unassigned fund balance, and a declining trend of at least three years in the coverage of net expenses by general revenues.
Hillsboro’s only outlook deemed something other than positive was a cautionary outlook for a decline in the unassigned fund balance.
Hastings said Wednesday the healthy indicators described by Yost for Hillsboro are a reflection of sound fiscal decisions.
“I’m really proud of the report,” said Hastings. “We only had one cautionary, and I would even question that one, since I believe it has to do with carryovers, and we have less need for higher carryovers because we’re managed so much better.”
Hastings said planning has been a key to Hillsboro remaining fiscally sound.
“I think our efforts in being aggressive and proactive have made all the difference,” said the mayor. “The cities and counties that take a ‘deal with it as it comes’ approach, that doesn’t get you ahead. You have to look at all revenue and expenses in a new way.”
Dick Donley, chair of Hillsboro City Council’s Finance Committee, said Wednesday that the financial health indicators awarded to Hillsboro represent good fiscal choices.
Donley said the decision to forego Hillsboro’s own fire department in favor of a contract with the Paint Creek Joint EMS/Fire District has reaped savings, as well as the recent decision to revise how multi-unit complexes are billed for water and sewer use, which he said has brought in an extra $70,000 in just six months.
“It’s been making good decisions on a lot of things,” said Donley.
Hillsboro City Auditor Gary Lewis did not return a call seeking comment.
Earlier this month, Fawley, the Highland County auditor, questioned the FHI reports, saying one of Highland County’s indicators was shown as critical because it reflected the county borrowing money to pay off the Justice Center, which it did to secure a new loan at a lower interest rate, but the indicator failed to take into account that the reduced payout saved $30,000. He said that more than 80 percent of Ohio’s counties had “something other than green” in their reports.
Fawley said Wednesday that the non-compliance finding against the county involved the fact that “we do not do GAP accounting,” which would mean a cost-preclusive. He said he recently attended a meeting of county auditors where the FHI reports were a hot topic of conversation.
“I think it could be a good thing, but they need to do more fine tuning,” said Fawley.
Not all cities or counties had the same amount of total indicators, since one or two indicators in various cases were considered not applicable to those particular entities.
According to Yost’s office, the indicators are defined as follows:
• Critical outlook: The more serious of the outcomes of the FHI analysis. An indicator with a critical outlook signals a potential high risk of fiscal stress. The entity should review the cause of the critical outlook indicator and consider steps necessary to alleviate the condition.
• Cautionary outlook: Although not as serious as an FHI with a critical outlook, an indicator with a cautionary outlook signals a situation of which the entity should be aware. The entity should review the cause of the cautionary outlook indicator since, left unchecked, it could develop into a critical outlook indicator.
• Positive outlook: This entity does not meet a critical or cautionary outlook as defined above.
Among the indicators examined were unrestricted net assets, unassigned fund balances, a change in unrestricted net assets or unassigned fund balances, total General Fund balances and revenues, a decline in property tax revenue, the percentage of General Fund revenues that exceed expenditures, the ratio of coverage of net expenses by general revenues, intergovernmental revenues as a percent of total revenues, the condition of capital assets, debt service expenditures compared to total revenues, average daily expenses, total liabilities to net assets and budgetary non-compliance.
The reports only examined cities and counties, not villages or townships. Among nearby cities:
• Washington Court House received nine positive outlooks, four cautionary outlooks and four critical outlooks.
• Wilmington received 15 positive outlooks and two cautionary outlooks.
• Xenia received 12 positive outlooks, two cautionary outlooks and two critical outlooks.
• Chillicothe received 14 positive outlooks, two cautionary outlooks and one critical outlook.
• Portsmouth received 12 positive outlooks, three cautionary outlooks and one critical outlook.
Among nearby counties:
• Clinton County received 16 positive outlooks, and no cautionary or critical outlooks.
• Fayette County received nine positive outlooks, three cautionary outlooks and three critical outlooks.
• Ross County received 16 positive outlooks and one cautionary outlook.
• Adams County received 10 positive outlooks, three cautionary outlooks and two critical outlooks.
• Brown County received 14 positive outlooks and one cautionary outlook.
• Clermont County received 16 positive outlooks and one cautionary outlook.
The financial health indicators reports can be found online at https://ohioauditor.gov/FHI/default.html.
Reach Gary Abernathy at 937-393-3456 or by email at firstname.lastname@example.org.