The Ohio General Assembly recently enacted House Bill 491, which contains significant legal changes affecting school treasurer and superintendent liability. Traditionally, public officials have been strictly and individually liable for the loss or misuse of public money under their control. This liability rule applied regardless of blame or intent to commit wrongdoing.
However, the new legislation offers treasurers more legal protection, as it provides that they will not be held liable for the loss or misuse of public funds unless they are lost as a result of their negligence or other wrongful act. This legislative change will likely lessen the ability of school districts to recover the costs of improper payments.
House Bill 491 goes into effect on March 19, 2019 and includes other changes as well. It prohibits the Ohio Department of Education from considering the loss of public funds as a violation of a school treasurer’s professional duties, so long as the treasurer has performed all required official duties with reasonable care. And, it protects treasurers and superintendents from the loss of public funds stemming specifically from the payment of a teacher who does not have the proper paperwork (i.e., a valid educator license). That’s unless the loss results from the treasurer’s or superintendent’s negligence or wrongful act.
House Bill 491 changes the procedure for payment of teacher services, which now dictate that a treasurer receive statements from the superintendent. Those statements need to indicate that the teacher has filed the (1) required reports and (2) a valid license with the superintendent to teach the subjects or grades taught with dates of validity. This change may increase the efficiency of processing teacher paperwork. In terms of timing, school district treasurers must implement this procedure before the effective date of the bill, March 19, 2019.
The provisions of House Bill 491 will likely impact findings of recovery issued by the Auditor of State. Generally, when an audit determines that public money has been expended illegally, the Auditor issues a finding of recovery against the liable public official and the official’s bonding company. Nonetheless, the legislation’s limits on school treasurer and superintendent liability will probably prevent the Auditor from issuing a finding for recovery against those individuals when a loss is due to negligence or a wrongful act. Indeed, the Auditor may first need to determine whether the loss of money resulted from negligence or a wrongful act before issuing a finding for recovery. Without a determination of school treasurer negligence and/or wrongful act, the school district will be unable to recover from the bonding company any amounts improperly paid. Though the amount of a district’s unrecovered losses will vary based on the facts of each individual case, it could be more than minimal.
Ohio school districts need to familiarize themselves with the liability and procedural changes associated with House Bill 491 as the law is fast approaching. School districts are encouraged to contact their legal counsel to ensure they comply with the legislation.
James McWeeney is an attorney at Walter | Haverfield who focuses his practice on education law. He can be reached at firstname.lastname@example.org at 216-928-2959.