COLUMBUS — State lawmakers Tuesday rolled out a bill that would increase penalties for government and charter school finance officers who mismanage public funds. It also would cut off state funding to entities declared unauditable by the state.

The bill would create a process for the removal of county auditors and city, township and school fiscal officers accused of mishandling public funds.

And it would change dereliction of duty from a misdemeanor to felony for fiscal officers, as well as suspend violators from holding public office for four years and thereafter until restitution is paid.

“When somebody’s got the checkbook with taxpayer money in it, they’re armed and dangerous and it’s important that people have the way to correct the situation ... before another election comes around,” Auditor of State Dave Yost said at a statehouse news conference.

The proposal gives townships and municipalities 90 days to put their books in order, or school districts 45 days to present a plan of action to do so, before state aid is cut off if the state auditor finds finances are in disarray.

Local governments have spent years listed as unauditable, according to auditor’s office data. The New Choices Community School in Dayton was declared unauditable from 2007 through 2009; the Montgomery County Area Workforce Investment Board was considered unauditable for several months in 2009, as was the Carlisle Local School District in Warren County.

The bill also would require charter school treasurers to have a school treasurer’s license. It also would force the suspension of the treasurer if a charter school is declared unauditable and bar the charter’s sponsor from opening new schools until an audit is complete.

“Right now if you want to be a charter school treasurer, you don’t have to have any kind of license,” Yost said.

Yost said that there have been more than 20 audits with significant findings for recovery — allegations of mishandled public funds — against a school or government fiscal officer or treasurer since January 2011.

This includes former charter school treasurer Carl Shye, who Yost singled out after four separate audits in six months accused him of illegally spending more than $600,000 in public funds at three separate schools. This included Nu Bethel Center of Excellence in Dayton.

Shy had a treasurer’s license, though it was not required, and surrendered it in March after it was challenged by the Ohio Department of Education.

The Dayton Daily News reported in March that since the state began tracking findings for recovery in 2001, only $12 million of the $72 million in issued findings had been repaid.

Current rules allow the state to cut off state funding for charter schools if their books are considered unauditable, though Yost said the rule has rarely been used.

When it has been used, “it was amazing how quickly books and papers were produced,” he said.

Rod Adler of the Dayton-based charter advocacy group Ohio Coalition for Quality Education said the bill would “boost accountability for school treasurers (and) improve fiscal oversight and accountability in state government.”

Of the 15 entities across Ohio currently listed as unauditable by the state, seven are charter schools and four are villages.

The bill was sponsored by state Rep. Christina Hagan, R-Alliance, and Sen. Tim Schaffer, R-Lancaster.

The bill would also:

• Require county treasurers and auditors to show up for work once every 30 days; the current rule is 90 days.
• Increase training for township, municipal and school fiscal officers on Ohio public finance law.