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Overpayments Highlight Need to Monitor Compensation Rates

By the Auditor of State’s Office

Thursday, December 8, 2016

The Auditor of State’s office identified thousands of dollars in overpayments this past year to township fiscal officers and trustees whose pay exceeded the rates permitted by state law.

The Ohio Revised Code (ORC) sections 507.09 and 505.24 list the rates at which township fiscal officers and trustees may be paid based on their township’s annual budget. However, findings from several recent audits suggest some townships do not properly recalculate compensation for officials when budget adjustments are made.

“The amount of financial resources available to local governments fluctuates,” Auditor Yost said. “It’s never been more important for townships to monitor changes to their budgets and adjust pay accordingly.”

Auditors say the error is typically accidental and stems from unfamiliarity with the rules regulating township budgets. The Auditor’s “Ohio Township Handbook” defines a budget, in this sense, as “the amount of money that the budget commission certifies that the trustees of a township would have available for expenditures during the fiscal year, as shown on its latest amended official certificate of estimated resources.”

When a township experiences an increase or decrease to its budget, the fiscal officer and trustees submit an amended certificate of estimated resources to their county budget commission for certification of the updated amount. 

Following certification, township officials should check whether the new budget amount shifts their compensation rates to an increased or decreased level on the township compensation charts, which are available on the Ohio Township Association website. Any potential pay changes are effective on the date of certification by the county budget commission.

It is important to note that compensation changes are only effective moving forward and are not retroactive. This means administrators may not recoup the amount they would have received had the new rate been in place beforehand. Additionally, the ORC compensation levels in place when fiscal officers and trustees take office apply throughout the duration of their terms.  

As a result of House Bill 64, township officials elected or appointed after Sept. 29, 2015 are entitled to a five percent pay increase effective Jan. 1, 2017. Townships should take care to ensure the correct adjustments are made to eligible officials’ compensation. 

The Auditor of State’s office recommends townships stay up-to-date on other legislative changes affecting budgets and compensation. Township administrators can receive annual updates at the Local Government Officials’ Conference, scheduled this year for April 12-13 in Downtown Columbus. Many related questions also are addressed in the “Ohio Township Handbook,” available for free at www.ohioauditor.gov

“Efficient government can’t exist without a complete understanding of the rules surrounding public spending,” Auditor Yost said. “Eliminating costly errors like this will enable township leaders to devote more dollars to improving the communities they serve.”