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City of East Cleveland's Finances in Continued Disarray
Columbus – The City of East Cleveland’s financial situation continues to spiral downward according to the 2011 and 2012 financial audits released today by Auditor of State Dave Yost.
“To say these audits are deeply troubling is an understatement,” Auditor Yost said. “The city’s lack of fiscal management is both unsustainable and irresponsible.”
The fiscal years 2011 and 2012 audits illustrated the dire financial condition that prompted Auditor Yost to place the city in fiscal emergency more than a year ago. The audits show that as of December 31, 2011, the city had 10 funds with deficit balances, and by the end of 2012 that number bumped to 11.
East Cleveland officials also appropriated more money than what was estimated to be available. In 2011, 11 funds had final appropriations in excess of estimated resources plus carryover balances. In 2012, five funds had final appropriations in excess of estimated resources plus carryover balances. To make matters worse, in both years the city spent more than what was appropriated in numerous accounts, and Ohio law prohibits such expenditures. In 2011, the officials spent more than $1.3 million more than what was appropriated, and in 2012, that number jumped to more than $4.2 million.
On January 5, 2012, Auditor Yost placed the City of East Cleveland in a state of fiscal caution after a review at November 30, 2011 found deficit fund balances of $5,872,222, which exceeds two percent of the funds’ annual revenue. The city was placed in a state of fiscal watch on May 23, 2012 after the city failed to provide an acceptable plan for correcting the deficits. Auditor Yost declared the city in fiscal emergency on October 9, 2012 after officials once again failed to present a feasible financial recovery plan to eliminate the deficits.
The Auditor of State’s office, one of five independently elected statewide offices in Ohio, is responsible for auditing more than 5,800 state and local government agencies. Under the direction of Auditor Dave Yost, the office also provides financial services to local governments, investigates and prevents fraud in public agencies and promotes transparency in government.