House Bill 459, introduced this week in the Ohio General Assembly, would authorize a board of township trustees to require that interest earned on a special fund be credited to that special fund, rather than to the general fund.

"I would like to give townships the options to exercise local control on how the interest from these funds is distributed, and (HB 459) would allow townships more flexibility in balancing their budgets and meeting the needs of their residents," said Rep. Steve Dyer, D-Talmadge, the bill's sponsor, in his co-sponsorship request for HB 459.

Under HB 459, state townships would be able to keep the interest earned by special accounts in those accounts to help raise money for special projects, rather than move the interest to the local GRF, Dyer said. Special fund designations can include an array of important special projects, including road or bridge maintenance projects, parks or other recreational projects, or fire, emergency or medical facilities' maintenance projects, he explained.

Due to the economic downturn, budget-balancing has become an increasingly difficult process for townships, and many special projects in the state are in dire need of funding, said Dyer.

"These times dictate that we give local governments as much flexibility as possible to meet the needs of their residents," he said.

"This is a smart government change that allows townships the opportunity to better manage their money and provide the highest possible level of service to their residents. ...I don't know how many townships would take advantage of it, but this would give them another tool in their toolbox."

Dyer said he introduced HB 459 after speaking with a local county trustee in Portage County and other township trustees around the state who expressed a need for more flexibility with their funds. He also said he received input about the issue from the Ohio Township Association.

Michael Cochran, executive director for the OTA, said all Ohio townships are affected by the current special funds law, since all townships have special funds from which interest is removed.

Cochran said special fund interest varies widely, depending on a township's size and the amount of money in special funds, but a larger township's interest earned on special funds could be several thousands of dollars. A smaller township's interest might only be in the hundreds of dollars, he said.

If a state township wants to put interest earned on special funds back into those funds, it can currently only do so through a cumbersome, complicated legal procedure, he added.

"We just feel that (HB 459) would be a fairer procedure. ...If money is being earned on money that is in a special fund, then the earned interest should go to the special fund. Money that earns interest in the GRF should go to the GRF," Cochran said.

HB 459 is supported by 11 bipartisan co-sponsors. The bill has been referred to the House Local Government/ Public Administration Committee.