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Frank Lewis

PDT Staff Writer

Portsmouth Mayor David Malone says the city will receive official notice today that it has been elevated to “Fiscal Watch” status.

“We got a phone call this afternoon from the State Auditor, and they will be making an official announcement tomorrow that the city will be elevated to a ‘Fiscal Watch’ status, and it’s due to lack of sufficient progress in the terminology of the letter that we received in November or December last year - lack of significant progress in becoming compliant with Ohio budgetary laws, and, of course, with some of the funds being in a negative balance,” Malone told Portsmouth City Council Monday night. “And those funds that have grant issues, delays in monies being received, we just have to answer that somehow to the state to their satisfaction. But at this point we have not.”

In December in a damning overview of Portsmouth’s lack of progress in overcoming it’s “fiscal caution” status, The Auditor of State’s Office said Portsmouth is doing little about some issues and nothing about others.

Representatives from the Local Government Section (LGS) of the Auditor of State’s office had been monitoring the progress of the items the city included in their fiscal caution plan to correct or eliminate the fiscal practices or budgetary conditions that prompted the declaration in the first place on Nov. 22, 2011.

Based on the third quarter financial reports provided to LGS for review, along with attending the city’s Finance Committee meeting, Robert R. Hinkle, Chief Deputy Auditor, said at the time the progress made to date was “disappointing in the treatment of these important matters.”

“Are we at ‘Fiscal Watch” because we didn’t address the issues?” President of Council Steve Sturgill said.

“It’s not that we didn’t address them, I guess it’s just that we didn’t address them in the way they were satisfied with,” Malone responded.

Portsmouth City Auditor Trent Williams said the elevation came as a result of seven issues raised by the state in it’s report in December.

“Primarily, I think it’s probably the lack of progress on the health insurance fund,” Williams said. “And I gave the state a plan for the next two years that would solidify our health insurance problems. We have been working with our insurance company to identify the…What we haven’t done is allocate all the claims back to the funds that incurred the expense. We have been allocating the premiums, but not all the claims, and we ran a surplus for several years in the health insurance fund.”

Now, Williams said, the city is having more problems with bigger claims. He said the fund has run $900,000 in the red for the last two years.

According to the Auditor of State, Dave Yost, to determine if an entity qualifies for fiscal watch or emergency, the Auditor of State would conduct an initial review of entity finances. This analysis would commence upon the written request of the entity or at the initiation of the Auditor of State. If an entity is under “fiscal watch” the Auditor of State may provide technical and support services to the entity. Costs for this support would be borne by the State.

Once the Auditor of State has issued a written declaration of the existence of fiscal watch to the governing body of the entity, the entity has 120 days to submit a financial recovery plan to the Auditor of State that identifies actions to be taken to eliminate all of the fiscal watch conditions. The plan is subject to review and approval by the Auditor of State. If a feasible financial recovery plan is not submitted within the time period prescribed, the Auditor of State shall declare that a fiscal emergency condition exists.

The fiscal watch shall be in effect until the Auditor of State determines that none of the fiscal watch conditions are any longer present and cancels the watch.

Frank Lewis may be reached at 740-353-3101, ext. 252, or at flewis@civitasmedia.com. For breaking news, follow Frank on Twitter @FrankLewisPDT.