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City of Cuyahoga Falls earns perfect score from auditor

Report part of state's 'fiscal physical' of local governments' financial books

By MARC KOVAC Capital Bureau Chief Published: January 29, 2017 12:00 AM

Columbus -- A report on financial indicators released by the state auditor gave Cuyahoga Falls a perfect score.

Republican state Auditor Dave Yost unveiled what he's calling a "fiscal physical" of local governments' financial books, with hopes that officials will use the information to make changes before they face budgetary crises.

Yost gave the city of Cuyahoga Falls a Perfect Positive Outlook score.

"The Ohio Auditor of State scored Cuyahoga Falls with the highest possible rating in 17 out of 17 categories that measure the financial health of a city," stated Falls Mayor Don Walters. "Only eight percent of all cities in Ohio received the perfect positive outlook score that we received."

The goal of the financial health indicators is to help county and city governments anticipate areas of potential fiscal difficulty before it's too late to address them.

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"The changes you make in a budget and your revenue and your spending, your cost structures, your debt structures, those things are all things where if you have more time to do them, they have much more limited impact on services and citizens," Yost said.

Yost announced the fiscal tool Jan. 25 during a press conference at the Statehouse.

Over the past five years, his office pinpointed 17 indicators, identified as part of local governments' financial books, that could be checked to determine the financial health of a city or county.

Yost's office then ranked those indicators as "critical," "cautionary" or "positive," with a color-coded chart summarizing the findings for Ohio's 88 counties and nearly 250 cities.

General revenue fund balances, declines in tax collections, instances of expenses outpacing revenues and the conditions of capital assets were among the areas considered.

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Falls Finance Director Bryan Hoffman said the city has done well in two areas: fund balances and debt management. "We continue to live within our means, not spending more than we take in," Hoffman said. "We also are not borrowing more than we should. The Auditor of State's report emphasizes the sound financial management of our city finances as we continue to identify and implement best practices through conservative budget practices."

Overview of findings

According to 2015 financials, 16 cities and one county met thresholds to be considered under "high fiscal stress." Thirteen other cities and two counties were close to meeting that threshold. And overall, a majority of counties (82 percent) and cities (92 percent) had at least one cautionary or critical indicator.

"The bottom line is local governments have done, by and large, a pretty good job on some choppy water," Yost said. " The disruptions that we've seen in the economy over 40 years in Ohio, migrations from manufacturing into more of a service and information-based economy, the increases in productivity, all have impacts on those local communities on the revenue streams and demands for service. We also have the impact of policy changes at the federal and state government levels that impact the revenue streams "

The full results are available through the auditor's website, online at OhioAuditor.gov.

Yost cautioned about pulling individual indicators out of context.

"You can't look at just one out of 17," he said. "This is everything. This is all put together. You've got to look at all the factors together. Having one or two lights might mean absolutely nothing It's important to look behind the numbers."

That said, Yost did voice concern about one category -- the condition of capital assets. Many cities and counties were ranked as "cautionary" on that indicator, meaning they have aging vehicles, equipment and facilities that may be in need of repairs or replacement.

"The deferral of capital investments is a tried-and-true strategy when you're in a recession," Yost said. "When the recession comes, revenues shrink, you don't replace the roof at city hall, you patch it and you wait for better times.You don't buy a new fleet of cruisers, you patch them up and keep them on the road and hope that next year revenues are a little bit better and we can replace the cruisers then. So being this far into a recovery and having this number of governments that are still deferring capital investment is troubling to me."

He added, "What it tells me is while local government leaders have done pretty well managing the choppy waters, at the end of the day, they're not really flush. Most governments are not in a position where they can take additional revenue losses or operating cuts."

Marc Kovac is the Dix Capital Bureau Chief. Email him at mkovac@dixcom.com or on Twitter at OhioCapitalBlog.

Reporter Steve Wiandt contributed to this article. Email him at swiandt@recordpub.com or on Twitter at SteveWiandt_RPC.


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