Auditor of State declares Norwood to be in state of fiscal emergency

Deficit fund balances put city in crisis
Norwood enters state of fiscal emergency
Norwood enters state of fiscal emergency
Posted at 11:33 AM, Oct 06, 2016
and last updated 2016-10-06 18:43:00-04

NORWOOD, Ohio – After 12 years on the fiscal watch list, the city of Norwood was bumped up to a state of fiscal emergency Thursday as a result of deficit fund balances. 

“They are not as in dire straits as other cities that have been put into a fiscal emergency. They are basically a healthy entity that needs to get squared away on their financials,” Auditor of State Dave Yost said. “That being said, they’ve been on fiscal watch for 12 years, and haven’t fixed it. That’s a problem.”

During a fiscal analysis, the Auditor of State’s Local Government Services Section (LGS) determined that Norwood has deficit fund balances totaling $38,273 and $306,111 as of Dec. 31, 2015, and June 30, 2016, respectively. 

Norwood will now come under the oversight of a financial planning and supervision commission. Within 120 days of its first meeting, the commission must develop a plan to eliminate the fiscal emergency conditions. Yost serves as the “financial supervisor” to the commission.

The fact the deficits in fund balances have increased by a factor of 10 in a six-month period demonstrates the city is going in the wrong direction financially, Yost said.

The Norwood mayor's office had no comment, but this letter was posted on his door. In it,  Mayor Thomas Williams says he's taking responsibility for the deficit  "in an effort to eliminate finger-pointing as much as possible."

The mayor said it "should not be that long" before the city comes out of Fiscal Emergency.

Williams said he wouldn't take questions. Other city officials also refused to go on camera

Norwood police Lt. Ron Murphy said this may be an opportunity for the city to turn things around.

"It could be a positive. Obviously we’ve been struggling, we’ve been struggling for quite a while, and I’m hoping that this will be some direction maybe to get us in the right frame of mind to be solvent again," Murphy said.

A city is placed in fiscal emergency if any one of the six conditions described in the Ohio Revised Code exists. The six conditions are:

  1. Default on a debt obligation;
  2. Failure to make payment of all payroll;
  3. An increase in the minimum levy of the city that results in the reduction in the minimum levy of another subdivision;
  4. Significant past due accounts payable;
  5. Substantial deficit balances in city funds; and
  6. A sizeable deficiency when the city’s treasury balance is compared to the positive cash balances of the city’s funds.

The only condition Norwood was found to have violated in the audit was No. 5: substantial deficit balances in city funds. A full copy of this fiscal emergency declaration is available at the website here.