Ohio's State Auditor has finished an audit of the city of Akron's finances, and has declared the city in a state of " fiscal caution."

It marks the first-ever use of a new state law that took effect September 29th governiing fiscal caution for cities and other local governments.

Auditor David Yost says the state audit revealed Akron ended its 2010 fiscal year with a fund deficit totallng more than $87-million. The audit reveals that deficit was $116-million in 2009.

Yost says  the audit also reveals Akron has failed to properly certify estimated resources, all of which constitute significant deficiences, and material non-compliance with Ohio law.

Yost says he beleives the city of Akron can correct its budget and funding deficiencies. The city has 60 days to submit a plan to correct its budgeting procedures to the state auditor.

News Release From The Ohio Auditor Of State

In the first-ever use of a new state law governing fiscal caution for municipalities and other political subdivisions, Auditor of State Dave Yost today announced that he has declared the City of Akron to be in a state of fiscal caution.

“Akron has a lot going for it, and I am confident the city will be able to take the steps necessary to shore up its fiscal house,” Yost said. “But make no mistake, these are tough times, for Akron and many other Ohio governments, and the city will be making some tough decisions.”

The financial and accounting conditions that led to the declaration include deficit fund balances at December 31, 2010 and 2009 in the amount of $87,820,000 and $116,981,000, respectively. The city also has negative cash fund balances, appropriations exceeding available resources, and has failed to properly certify estimated resources -- all of which constitute significant deficiencies, material weaknesses and material noncompliance with Ohio law as established by audit.

Under the declaration and under Revised Code 118.025, the city has 60 days to submit to the Auditor of State a plan to correct the budgetary conditions that led to the declaration of fiscal caution, including eliminating deficit fund balances.

The authority to declare fiscal caution was established earlier this year in the course of changes made during the budget debates to Ohio’s laws governing local government finances. Auditor Yost had argued that cities, counties, villages and townships should not be faced with sudden declarations of fiscal watch and fiscal emergency. Instead, these political subdivisions should have access to the same tool provided for school districts, allowing a declaration of fiscal caution. Under fiscal caution, the subdivision is given earlier notice of financial concerns and an opportunity to make adjustments to avoid a declaration of fiscal watch or emergency.