Financial Health Indicators are a proactive approach to monitoring or assisting cities, counties, and school districts that show early signs of fiscal stress.
We all know that if we eat right and exercise, it will be reflected in our key health indicators: our bad cholesterol, good cholesterol, blood sugar level, etc. If we keep those numbers in order, the chances are pretty good that we’ll live long, healthy lives and will avoid visits to the emergency room.
The same goes for government: If expenses are kept in line with revenues, there’s a cushion of reserves in the bank, and the debt isn’t too high, chances are that entity won’t end up in fiscal emergency.
Before 2016, there was no easy-to-understand, readily accessible "vitals" sheet showing the relative health of Ohio cities and counties. So, the Auditor's office developed a series of indicators to help communities identify signs of heightened fiscal stress. This assessment tool serves as a “fiscal physical” for cities and counties, alerting officials to areas of concern in their communities. In 2024, an assessment tool was created for school districts.
Staff studied historical data for entities that had been declared in fiscal distress and identified key indicators of fiscal stress. Using that data, the Auditor’s office developed a set of Financial Health Indicators to recognize early signs of fiscal stress for cities and counties.
The indicators — 17 for cities/counties and 16 for school districts that report financial statements using the Generally Accepted Accounting Principles (GAAP) and 15 for those that use a cash or modified cash basis of accounting — are a collection of financial 15 (14 for school districts) information, percentages, and ratios gathered from annual financial statements filed by local governments with the Auditor’s office in addition to their audit reports. The indicators are useful in predicting both financial stability and stress.
The indicators are explained in detail in the accompanying documents, including how they are measured, their individual importance, and how each is a sign of fiscal stability or stress.
It is important to note that no single indicator is a sign of fiscal stress, as they all should be viewed collectively to gain a more accurate picture of the fiscal health of a city, county, or school district. The vast majority of cities, counties, and school districts have at least one indicator in a “critical” or “cautionary” category. Citizens, government leaders, and policy makers can gain great insights into the fiscal trends of an entity from reviewing the indicators.
Collectively, the indicators provide meaningful information about the state of our state’s largest governmental units through heat maps, which pull together results for all 88 counties, 253 cities*, and 660 school districts.
* Six municipalities were reclassified from villages to cities as a result of the 2020 census. Seven years of data under the same classification and basis of accounting is required to generate an FHI report; therefore, FHI reports cannot be currently generated for the newly reclassified cities.