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CHAPTER III CENTRAL FINANCIAL CONTROL IN OHIO GENERAL VIEW OF THE LEGAL PRONrISIONS Central financial control in Ohio, as in Illinois, has been a gradual evolution culminating in the enactment of the Civil Code in 1921. Central budget control was installed in 1913; central supervision over printing dates back to 1851 although until recent years it was quite nominal; and central purchasing has been in effect since 1912. The audit of expenses in the once of the state auditor has, of course, been coterminous with the life of the state. The legislation of 1921, however, took a long step toward the final completion of this evolution, and a general description of the present code will indicate the now prevailing types of control. In general it is to be noted that the Ohio legislation is essentially the same as in Illinois; in Ohio, however, the process of unification as far as the law is concerned has gone further and in some ways finds a more logical expression than in Illinois. Various illustrations of this point will be noted in the following paragraphs. In the working application of these provisions, however, Ohio has not evolved the degree of control found in Illinois. The key to the Ohio system of control is to be found in the Depart- ment of Finance, presided over by a director appointed by the gov- ernor for a term of two years, and including the superintendent of the budget (formerly the budget commissioner) and the superintendent of purchases and printing. In Illinois, it will be remembered, the superintendent of printing is connected with the Department of Public Works and Buildings which also includes the purchasing agent; but the financial control nevertheless passes through the office of the Department of Finance. The legal powers of the finance department in Ohio are extensive. - They naturally fall into the same divisions found in Illinois account- ing control; budget control; current review of vouchers; centralized purchasing and control of printing. The director of finance is authorized to prescribe uniform accounting forms, financial reports and statements. He prepares and submits to the governor a biennial budget, made up from the estimates of the various departments as revised and altered by him. He may require from each department statements of expenditures proposed for any specified future period and may disapprove all or any part of such proposed expenditures. Orders, vouchers, claims, and payrolls are submitted to the department 42
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IN STATE GOVERNMENTS 43 whenever required by law or by the governor, and the director of finance has power to disapprove such orders and payrolls. He lays down uniform rules governing forms of specifications, making of awards and contracts for purchase of supplies and performance of work. The Department of Finance is further authorized to exercise such control over items of appropriation, with respect to changes and adjustments, as may be committed to it by law. The department succeeds to all the powers of the state purchasing agent, secretary of state, auditor and Board of Administration with respect to the purchase of supplies and equipment, and to the functions of the Printing Commission and the supervisor of public printing. If the orders of the Department of Finance are not complied with, the department is authorized to notify the auditor who "shall not issue any warrants on the treasury in payment" of any questioned expenditure, claim, or voucher. Unlike the Illinois law, the Ohio Code specifically extends the authority of the Department of Finance to the elective and formerly independent state offices by defining the words "departments," "offices" and "institutions" to include every organized body, office and agency established by the constitution and laws of the state for the exercise of any function of the ~ state government and every institution or organization which receives any support from the state. This of course includes the State University. Much the same result seems to be developing in Illinois by interpretation and custom with regard to the elective state officers but not with regard to the university. In addition to this machinery of control, Ohio has an Emergency Board and a Controlling Board, composed of the same officials the governor, treasurer, auditor and the chairmen of the house and of the senate Finance Committee, ex-officio. A majority of four is required to take action. The Emergency Board has a large contin- gency appropriation which it allots during the year as circumstances require. The Controlling Board is authorized to allow transfer of funds from one account to another and to allot lump sums in specified cases. The appropriation to the Controlling Board and to the Emergency Board for 1923-25 reproduced on the following page will illustrate the character of its work. The language of the Ohio law omits that section of the Illinois Civil Code which vests in the director of finance power to question the fair- ness, justness, and reasonableness of expenditures. On the other hand, the language used in authorizing the Ohio Department of Finance to 16 The Universities, Normal Schools and the Archaeological and Historical Society, however, have their own purchasing agents.
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44 FINANCIAL CONTROL OF RESEARCH disapprove orders and payrolls is not limited by the statement of reasons for such action, and until a recent decision of the Supreme Court was open to as broad an interpretation as that which is explicitly - stated in Illinois. TABLE VII. Controlling Board Maintenance F. Contract and open order service F 8 Contingencies. To be allotted to the Dept. of Agriculture for remodeling and constructing new buildings at State Fair grounds. Projects to be determined by the Department of Agriculture, subject to the approval of the Controlling Board... To supplement appropriations to state depart- ments and divisions for print paper and printing, transfers to be made subject to approval of Con- trolling Board............................... To be allotted to the Department of Public Wel- fare for additions and betterments, including remodeling and extending existing buildings, and constructing; and equipping buildings at institu- tions under the control of the Department of Public Welfare, as determined by the Director of Public Welfare, subject to the approval of the Controlling Board . . . . . . . . . . . . . . 1, 310, 000 . 00 Total ma~ntenance.......... Total for biennium......... First yearSecond year 15,000.0015,0CO. 00 .... 400, boo . Do 85 ,000 .0085,000 . 00 , 810, Boo . Do100, ooo . Do ,910,000.00 Emergency Board Maintenance F. Contract and open order service. F 8 Contingencies Uses and purposes To be used only in case the O. N. G. is called into active service in connection with floods, fires and riots 150,000.00 Total maintenance....... Total for biennium........... 250,000.00 250,000 .00 75, 000 . 00 .... 400,000.00 325,000.00 725,000.00 The decision of the Supreme Court was handed down in the spring of 1923~7 and if the dicta in the case can be accepted as the prevailing view of the court it will render impossible any use of the powers of the Department of Finance to control policy of other departments. The case arose on the following statement of facts. Junk, a contractor, t7 State ex ref. Junk vs. Herrick, 107 Ohio St. 611, 140 N. E. 314.
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IN STATE GOVERNMENTS 45 presented to the Department of Highways and Public Works a con- tract in good legal form for the construction of certain state highways. The director of the department forwarded the contract to the director of finance for his approval, acting under section 154-28 of the Ohio Code, which required orders to be submitted when the governor should deem such submission necessary. The governor issued a statement that it was necessary to submit this contract. The director of finance refused to sign the contract on the ground that he did not regard it as an appropriate or desirable contract for the state to enter into. Junk therefore asked for a writ of mandamus to compel the director of high- ways and public works to sign the contract, alleging that the contract was not an order in the sense used in the statute and therefore was not required to be submitted to the finance department. The court sustained this view. In announcing its decision, however, the court used language which is very significant as indicating the probable line of development which will take place in Ohio. The court said: "The issue is as to the power and authority of each of the aforesaid depart- ments of the administrative branch of the government, to what extent each is dependent upon the other, and to what extent, if at all, the finance department is authorized to control the policy of the highway department in the matter of state aid in the construction of highways throughout the state. It is true that the Department of Finance is first named, and it may be conceded that none of the other departments ranks greater in importance, yet it does not follow that its importance is such as to overshadow all the others and to com- pletely reduce them to a state of impotence. If any illustration is necessary to show that such power and authority in the director of finance as claimed in this case, if applied to all the other administrative branches of the state government, would completely submerge the other branches and put it within the power of the director of finance to completely defeat and destroy the usefulness of the other branches, that illustration is found in the facts of the present controversy. "We shall not attempt in this proceeding to define the duties and limitations of the director of finance in his relations to the directors of the other depart- ments, but we do find it necessary and do not hesitate to say that his duties do not reach even in the remotest degree to a control of the policies of the Depart- ment of Highways and Public Works. "While the administrative code has not attempted to define the technical qualifications of the director of finance, it will be readily conceded that the duties devolved upon him by that code require the training of a banker and an accountant. The legislature has, however, clearly recognized the fact that the technical qualifications of the state highway engineer * * * shall be those of a competent civil engineer * * * It would be little short of absurdity to require this skilled knowledge, training, and experience in the highway depart meet, if the policy of the department were entirely subject to the control of the finance department. "Having in mind the vital necessity of maintaining the independence of the several departments in all matters of policy and having in mind that section 154~28 relates to auditing and accounting, there is no difficulty in reaching the
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46 FINANCIAL CONTROL OF RESEARCH conclusion that the contract need not be submitted to the finance department for approval. "We have therefore reached the conclusion that the duties of the director of finance in the relations of that department to the Department of Highways do not begin until a valid obligation has been entered into by the director of highways." The view of the Ohio Court seems to be the view prevalent among the State courts. The precise point involved in this study has natu- rally not been adjudicated widely, owing to the recent enactment of the statutes. No case has been decided in Illinois, Wisconsin, or Massachusetts which bears on the subject, but cases have been heard in the Supreme Courts of Michigan, Indiana, and Idaho which are of sufficient interest to warrant inclusion. The Indiana cased arose on the following statement of fact. Con- tract was made by Licking Township with one Claude to construct a highway. An investigation of the work by the State Examiner of the State Board of Accounts revealed a failure to comply with the terms of the contract, thus entailing a loss to the Township of over $7000.00. On the basis of this investigation action was instituted by the attorney general to recover. The case turns on the question, Did the State Examiner of the State Board of Accounts have power to inspect the highway and raise a question of the adequacy of the work, or as it was stated on the other side, was the responsibility for high- way construction vested completely in officers other than those of the State Board of Accounts and the State Examiner? The powers of the State Board of Accounts, which was established by legislation of 1909, included authority to prescribe and install uniform systems of book- keeping, accounting and reporting, to make statements and reports, and to employ the necessary assistants. The Department of Inspec- tion and Supervision in charge of the State Examiner was authorized to require annual financial reports from every municipality and insti- tution and to conduct examinations of the accounts of all public offices. Acting under this latter power the State Examiner questioned the pay- ments made to the contractor. The Court held that the State Exam- iner had no power to inspect the highway. In the course of its decision the Court said: "The specific purposes sought to be accomplished are a higher standard of accuracy and efficiency in accounting and reporting; the discovery of wrong- doing, and the recovery of funds." "Neither the chief examiner nor any of his deputies can allow or disallow, approve or disapprove, any item of expenditure, or adjudicate any question of fact or law * * * neither the department nor any of its officers has any right '8 The decisions of other states have also been examined but without finding analogous cases. ~ State ex. ref. Licking Township vs. Clamme et al., 134 N. E. 676.
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IN STATE GOVERNMENTS 47 to review the action of a board of commissioners, of a common council of a city, or of any board, court or officer, authorized by law to make allowances, for the purpose of altering, reversing or affirming any allowance made by any of these agencies." "There is absolutely nothing in any of the legislation relating to this subject which tends in the slightest degree to authorize the department [of inspection and supervision of public offices] td control the discretion of any public officer, administrative board, or other governmental agency whatever." "Neither the State Board of Accounts nor the department of inspection and supervision of public offices had authority to inspect the highway. The action of the department in that regard constitutes a plain case of usurpation." A very recent Michigan case,20 State Board of Agriculture vs. Fuller, reaches a similar conclusion but on the basis of the constitutional status of the State Agricultural College. The legislature of the State of Michigan established a State Administrative Board and authorized it to exercise general supervisory control over funds appropriated by the state legislature. Acting under this general authority the adrnin- istrative board undertook to direct some phases of the work of the Michigan Agricultural College. The college authorities took the view that inasmuch as the institution was established by the Constitution, it was impossible for the legislature to impose a financial control of this sort upon them. The Supreme Court by divided decision sus- tained this view. In the course of its decision the Court said: "Clearly, in saying that the legislature can attach to an appropriation any condition which it may deem expedient and wise, the court had in mind only such a condition as the legislature had power to make. It did not mean that a condition could be imposed that would be an invasion of the constitutional rights and powers of the governing board of the college. It did not mean to say that in order to avail itself of the money appropriated, the State Board of Agriculture must turn over to the legislature management and control of the college, or of any of its activities.'' "It is not an easy matter to separate a supervisory control of the expenditure of money for extension work from a control of the work itself." "General supervisory control was not a meaningless term with the legislature. As Justice Wiest points out, it had been applied in other appropriation acts of the same session. It was understood to mean that it conferred the right not only to control the expenditure of the money but to direct the work for which the appropriation was made. It is evident that the legislature intended to confer just such power on the State Administrative Board as it assumed to exer- cise in relation to this appropriation. In doing so, it exceeds its powers." An Idaho case takes much the same view.2t In the words of a resolution of the Board of Regents reported in the case, "various state officers and particularly the State Board of Examiners, the State Treas- urer, the State Auditor, and the Department of Public Works acting Case not yet reported. Decision rendered February 1, 1924. ~ State vs. State Board of Education and Regents of the University of Idaho, 33 Idaho 415.
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48 FINANCIAL CONTROL OF RESEARCH as a purchasing bureau for the state have interpreted their duties as prescribed by the legislature so as to infringe upon and limit the Board of Regents in the exercise of its constitutional duties." Arising out of this situation the University authorities brought action to define their power. The Supreme Court sustained the contention of the University, saying: "The Board of Regents of the University of Idaho is a constitutional corpora- tion with guaranteed powers and while functioning within the scope of its authority is not subject to the control or supervision of any other branch, board or department of the State government." It has been observed that the language of the Ohio law omits that section of the Illinois Civil Code which vests in the director of finance power to question the fairness, justness, and reasonableness of expen- ditures. On the other hand, the language used in authorizing the Ohio Department of Finance to disapprove orders and payrolls is not limited by the statement of reasons for such action, and up to the time of this decision of the Supreme Court, was open to as broad an interpretation as that which is explicitly stated in Illinois. In considering the Ohio case it must be remembered that the court had under consideration only a proposed contract, and that the power of the finance department to question a voucher, claim, or payroll remains unaffected by the terms of the decision. The scientific divisions and institutions which have been particularly considered in this study are the Archaeological and Historical Society, the Geological Survey, the Agricultural Experiment Station, the De- partment of Health and the Bureau of Juvenile Research.22 The period of years for which information has been secured includes the fiscal years 1915-16 to 192~25. It may be noted further that the operation of the Civil Code since 1923 has been under conditions of divided political control. The Gov- ernor has been a Democrat, the legislature in both houses Republican. The elective state officers are likewise Republican. The governor's appointees to the Code positions are, of course, Democrats, including the officials of the Department of Finance. The term of the governor in Ohio is two years, a fact which makes for instability and lack of continuity in the state government. For reasons which are not wholly clear, the governors of Ohio have not been prepared to make vigorous use of the powers vested in the finance department by the legislation of 1921. With a few exceptions, the work of the department has been confined to the preparation of the biennial budget, to the purchase of supplies and making of con 22A brief statement of the work of each division of the government may be found in the Report of the Auditor, 1922.
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IN STATE GOVERNMENTS 49 tracts for printing, and the routine examination of vouchers and claims to ensure that they were charged against the right appropri- ation and that money was available for payment. In the matter of purchasing and printing, it appears that the department has allowed the scientific divisions substantial freedom; in the matter of estimates, the department has made considerable reductions but has not been able to prevail with the legislature; in the matter of requiring reports, the department seems to have been only partially successful; and in the elimination of deficiencies, it seems to have been distinctly unsuc- cessful. ACCOUNTING CONTROL The Ohio Civil Code vests in the Department of Finance "power to exercise control over the financial transactions of all departments, offices and institutions, excepting the judicial and legislative depart- ments," as follows: 1. By prescribing and requiring the installation of a uniform system of accounting and reporting. 2. By prescribing and requiring uniform order and invoice forms and forms for financial reports and statements, and by requiring financial reports and statements. 3. By supervising-and examining accounts, the expenditures and receipts of public money and the disposition and use of public prop- erty, in connection with the administration of the state budget. 4. By prescribing the manner of certifying that funds are available to meet contracts. No provision of law authorizing any--department to exercise fiscal management and control over any institution or function of the state bars the operation of the powers vested in the finance department. By virtue of this section entire control over the form and method of keeping accounts is vested in the Department of Finance. Acting by authority of these sections an accounting system has been installed uniform for all state agencies. The standard account titles are per- sonal service; supplies; materials; equipment; contract and open order service; additions and betterments; fixed charges and contributions; and rotary funds. The writer did not discover any complaint as to complexity or lack of adaptability of the accounting system. The Department of Finance does not make a detailed audit of vouchers. It inquires merely into the questions, are the vouchers properly classified, and is there money available to meet the expen- diture. The department maintains a system of control accounts. At the beginning of the fiscal year all appropriations are set up in the proper books, against which all purchase orders, releases, or encum
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50 FINANCIAL CONTROL OF RESEARCH brances are posted as a contingent liability; when vouchers are pre- sented they are checked against the purchase orders and proper adjustment is made. Separate accounts for each month or quarter are not set up, but the office endeavors to hold expenditures for each quarter within the pro-rata proportion of the annual expenditures. As the vouchers go through the office they are deducted from the cash balance, the records therefore showing at all times the cash balance and the unencumbered balance. The finance department, however, has not always been able to hold departments within their appro- priations. Two reasons are given for this failure. On the one hand, it is said that the appropriations made by the legislature are too small, and have insufficient elasticity to permit departments to operate throughout the fiscal period. The writer was not able to test the accuracy of this statement, except that the lack of division contingency funds was noted. On the other hand, it is said that the existence of a large emergency fund at the disposal of the Emergency Board has encouraged departments to spend more freely in the expectation of receiving support from these funds. This statement, if true, seems to indicate a lack of determination on the part of the Emergency Board (and to a less degree on the part of the' Department of Finance) to restrict expenditures to the minimum. Bl,TDGET CONTROL The first state budget law was enacted in 1913, and although brief and general in its terms established an executive budget. The law required the several departments to report to the governor, on blanks furnished for the purpose, an itemized estimate of needs. The depart- ments were likewise required to furnish the governor any information desired. The governor at the beginning of each regular session was required to submit to the legislature the original estimates and his recommendations. He was authorized also to "appoint competent, disinterested persons to examine without notice the affairs of any department for the purpose of ascertaining facts and to make findings and recommendations relative to increasing efficiency and curtailing expense." (Laws 1913, p. 658.) The governor appointed art official known as commissioner of the budget who prepared budgets in 1915, 1917, 1919 and 1921 and was then superseded by the newly established superintendent of the budget. The procedure used in making the budget was rewritten and made more detailed and explicit. The director of finance is now authorized to fix the form of the estimate blanks, which are sent out not later than September 15 and returned by November 1. These forms show revenues and expenditures for two years, appropriations, expenditures,
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1 IN STATE GOVERNMENTS 51 encumbrances, and free balances; estimate of revenues and expendi- tures for the current fiscal year and for the ensuing two years. The director of finance may make further inquiry and investigation and may approve, disapprove or alter the estimates, excepting those for the legislative and judicial departments. The estimates as revised by him are then submitted to the governor. The governor submits a budget to the legislature not later than four weeks after the organization of the General Assembly, showing his recommendations for each department and institution. The budget is set up in detail under the accounting heads described in the previous section. The practice in Ohio with regard to the preparation of the budget contrasts sharply with that in Wisconsin and Illinois. In Ohio there is no regular and formal procedure for conference between the budget officials and various departments. Whether they are heard before the finance department's reductions are made depends to a substantial degree on whether they are invited to make a statement or whether they insist on being heard. A case was brought to the attention of the writer in which the total appropriation for printing was eliminated without notice to the division concerned. This failure to confer with departments is in a way the less serious because the finance committees of the legislature seem to reconsider the whole question d e nova, making sweeping changes in the recommendations brought before them by the governor. Each department, moreover, must feel at liberty to disregard the conclusions of the finance department reached thus without full conference. There still seems to be in Ohio a lack of complete cooperation between the finance department and the other departments not only in framing a budget but in other aspects of the work of the finance department. The situation has'been aggravated by the fact of fre- quent shift in political control of the state. A Democratic governor inheriting a budget prepared by his Republican predecessor, or vice versa, is likely to give it scant support; and when the governor is of one party and the legislature of another, the situation becomes even more difficult. The writer found evidence of political jockeying with the budget which goes far to explain the wide variations between the original estimates, governor's recommendations, and final appropria- tions which are revealed in the tables found in this section.23 What have been the effects of this budget procedure? An answer to this question was sought in two ways, (1) by examining the finan- cial history of the scientific departments for the fiscal years from 1915 ~ The political situation in Ohio since 1913 is shown in the following table.
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52 FINANCIAL CONTROL OF RESEARCH to 1925; and (2) by consulting those who have been most directly concerned in the matter. TABLE VIII. Party Affiliation of Ohio Governor, Senate and House of Representatives Year 913-15. . 915-17. . 917-19. . 919-21. . 921-23. . 923-25 . Governor Senate . Democrat . . . . . . . . Democrat ... Republican . . . . . . . Republican . Democrat . . . . . . . . Democrat . Democrat . . . . . . . . Republican . Republican . . . . . . . Republican . Democrat . . . . . . . . Republican . House of Repre- sentatives Democrat. Republican. Democrat. Republican. Republican. Republican. The table on page fifty-three shows the original estimates, the recom- mendations of the governor, increase or decrease of recommendations as compared with original estimates, and the appropriation of the legis- lature, showing increase or decrease over the governor's recommenda- tion for the fiscal years from 1917-18 to 192~25 inclusive. From this table certain conclusions may be drawn. As would naturally be expected the governor's recommendations show almost no increases over the original estimates. On the other hand, the amount of reduction by the budget official has from the very beginning been considerable and seems to have been steadily increasing with the preparation of every budget. In the budget of 1917-19 the reductions were $302,356. In the budget for 1919-21 the total decreases, excluding additions and betterments, in budgets of scientific agencies amounted to $211,349, including a reduction of $121,590 in the budget of the Agricultural Experiment Station. In 1921-23, the total reduction amounted to $310,743, and in the current fiscal period, 1923-25 the reduction was $493,536. These recommended reductions must be read in connection with the constantly increasing demands of the scientific agencies with each succeeding budget, and must be understood not to include requests for capital outlay. The largest cuts (not included here) have almost uniformly been in connection with requests for capital outlay. It appears furthermore that the General Assembly has not always followed the recommendations of the governor but in many cases has made substantial increases and decreases compared with the amounts recommended in the budgets. This contrasts sharply with the findings in Illinois where the legislature has usually accepted the governor's recommendation so far as the scientific agencies are concerned. The
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IN STATE GOVERNMENTS TABLE IX. Unit and bienniUm 1923-25 GeO1OgiCa1 SUrVeY.... ArChaeO1. and HiSt. SOC.. . Ag. EXP. StatiOn..... D`ept. Of Heaith.... TOta1S .......... 1921-23 GeO1OgiCa1 SUrVeY...... ArChaeO1. and HiSt. SOC.. Ag. EXP. StatiOn.... DePt. Of Heaith..... TOta1S....... Origina1 eStimate a 21,280 89,306 688,555 1,062,126 1,861,267 23,262 70,046 704,310 865,200 1,662,818 APPrOVed eStimate - 22,150 60,956 568,725 717,640 1,369,471 17,815 39,380 461,930 832,950 1,352,075 De CreaSe APPrO PriatiOn b 870 28,350 119,830 344,486 493,536 5,447 30,666 242,380 32,250 310.743 53 In CreaSe 25,300 81,356 ° 676,775 d 982,306 1,865,737 19,245 72,380 484,830 723,730 1,300,185 3,150 20,400 108,050 264,666 396,266 1,430 33,000 22,900 107,220* 51,890* GOV- ernOr'S VetO o e o o o o o o o 1919-21 GeO1OgiCa] SUrVeY. ArCLaeO1. and HiSt. SOC.. Ag EXP. StatiOn. . DePt. Of Heaith. . . TOta1S ........ 1917-19 GeO1OgiCa1 SUrVeY.... ArChaeO1. and HiSt. SOC. . Ag. EXP. StatiOn..... DePt. Of Heaith...... * Decrease. 19,657 77,698 610,260 476,680 1,184,295 18,640 156,626 623,340 310,655 17,180 58,826 488,670 408,240 972,916 17,028 38,436 447,450 243,810 2,447 18,872 121,590 68,440 211,349 1,431 118,190 115,890 66,846 17,780 f 54,546 465,570 393,180 931,076 17,707 54,176 535,060 256,010 600 4,280* 23,100* 15,060* 41,840* 679 15,740 87,610 12,200 TOta1S 1,109 261 ~746 724 , , 302,356 o o o o o o o o 862,953 116,229 a These figures exclude additions and bettern~ents but include all other items given in the biennial budget and appropriation acts from which they are taken. b Increase. c Excluding the division of forestry, newly created. ~ Excluding the division of vital statistics, newly segregated. e An appropriation of $238,0~ for an addition to the building of the Society was vetoed; but repassed over the veto by the legislature. f Not including a supplementary appropriation of $7,830.
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54 FINANCIAL CONTROL OF RESEARCH total increases and decreases made by the legislature are indicated in the following table: TABLE X. Year 923-25..... 921-23..... 919-21..... 917-19..... Increase 396,266 116,229 Decrease 51,890 41 ,840 The governor's veto power has been almost unused so far as the scientific agencies are concerned. Only one case has occurred since 1915 and in-this case the Assembly overruled the veto by the requisite majority and thus restored the appropriation. It will be observed that the net result of the Ohio appropriation process has been to hold stationary the amount of money granted for the scientific divisions under review. The recent increase, more- over, has not kept pace with the general increase in the state appro- priations. Table XI on page fifty-five shows the total expenditure and the expenditures for a larger group of the scientific departments, ex- cluding capital outlay, for the fiscal period 191~1922. This table includes the accounting groups of salaries and wages; maintenance; materials, equipment; contract and open order service. In every case except 1920-21 the figures are taken from the Executive Budget of Ohio. For 1920-21 the figures for the state are taken from the budget but those for the divisions are taken from the auditor's report for that year, inasmuch as they were not shown in the budget. Using the year 191~15 as a base and giving it the value 100 the relative change for the state and for the scientific divisions is given in the following table: Year 914-15....... 915-16....... 1916-17..... lDl7-18....... 918-19. 919-20. 2~-21 ..... 921-22..... TABLE XII. State expenditures 00 93 06 7 3 ~5 74 ~3 Scientific expenditures Tao 87 96 ~9 ~0 112 149 103
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IN STATE GOVERNMENTS ¢ Cal em Cal A Cal - o l oo G: .o l o ·~`, ~ Cal : ~ l O c~ ~ 00 ~ o0 di r~ c~ oo co C~ C~ C] ~ C~ ~ oo ~ X ~ o o oo ~ C~ ~ ~ ~ ~ G: ~C~ o - CC' - oo o o oo o - C~ - oo ~o C~ - oo oo oo - c°~ o o o o C~ C~ oo G: _ _ C~ o C~ oo ~ ~ C~ oo o C~ Co oo U: oO C~ d~ ~ ~ oO C~ oo CO C~ oo CO C~ CO C~ _ CO ~ ~ CO CO CD d~ CD 00 ~ C~ CD o oo oo 1 - CD 00 0 0 ~ C9 C~ ~ C~ C ~Ct _ 00 ~ CD ~ ~ O co 00 d~ ~ ~ C~ 00 ~ ~ O ~ C~ O C~ ~O0 C~ 00 0 CO ~ ~ C~ CO C~ 0O O0 ~ ~ Co C~ O ~ 00 CO ~ C~ CO C~ C~ ~ C~ CC ~ ~ 00 C~ ~ o0 0 _______ ~ C~ O C~ |~ 00 ~ C ~C~ C~ ~00 ~ ~ CD C~ L~ C~ o0 C~ ~ ~ ~ ~ O C~ _ C~ O ~ ~ ~ CO /= C~ -~ t ~ ~ oO 00 C~ C~ O O O ~ ~ ~ ~ o0 C~ CO ~ ~ C~ C<) O _ _ _ _ _ _ _ O ~ ~ ~ C~ ~D ~0 l G, C) ·,_ ._ C) . . . · · ^, . . ~O O · ~Q ~· _ C~ · Ct ~C) - D2. · ~ ~ ~ · O D E ~ O >, O i ~ ° 0 ~ ~ C) ~, a~ p4 ~ ~ ~ ~ ~ 55
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56 FINANCIAL CONTROL OF RESEARCH Consultation with many of the directors of scientific divisions did not reveal any dissatisfaction with the budget plan. The fact that it has now been in operation for ten years has served to make it the accepted mode of approaching the legislature. Cases came to the attention of the writer in which the scientific appropriations appeared to receive inadequate support from the department head and from the budget commissioner, and in which the personal intervention of the scientist before the appropriation committees became necessary. In other cases cordial relations between scientist and administrative supervisor prevailed. There has been some complaint about the lack of intelligent handling of requests for appropriation. Surpluses are taken by the budget officials as proof of the possibility of making reductions, and some departments at least try to obviate this necessity by spending all the appropriation. These reductions in turn seem to prevent the mechanism for controlling expenditure within an appro- priation from operating edectively because the various departments then feel entitled to make an appeal for help from the funds of the Emergency Board. The Ohio appropriation acts are highly itemized, especially in the case of personal service. The number, title and salary of each em- ployee is as a rule specifically fixed in the appropriation act. The chiefs of scientific divisions have therefore little discretion in the personnel which they may employ, and no opportunity such as is found in Illinois to choose between a smaller number with larger salaries, or a larger number with smaller salaries. Other items of expenditure are also itemized. In the relatively few cases in which salaries are not itemized, the departments are required to submit to the Controlling Board the spe- cific apportionment of the lump sum. This apportionment may not be changed except with the consent of the Controlling Board. Some provision is made, however, for contingency funds and for transfer of funds from one division to another. The accounting and budget plan carries an item, general plant, which embraces supplies or services not otherwise itemized and also in the case of the Archaeological and Historical Society a contingency appropriation. This fund has always been very small. ~ In addition to the division contingency funds, there is a general fund at the disposal of the Emergency Board. In the appropriation act for the fiscal period 1923-25, this fund amounted to $725,000, of which $225,000 was reserved for expenses incurred by the Ohio National Guard in connection with floods, fires and riots. It appears from the following tables that frequent requests are made for use of this fund.
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IN STATE GOVERNMENTS 57 The Controlling Board is authorized to permit the items to be varied within the general purpose for which the appropriation is made. In this way a certain degree of elasticity is secured. TABLE XIII. Ohio Emergency Board Appropriations and Expenditures, 1912-192524 Year 1912-13... 1913-14. 1914-15... 1915-16.. 1916-17... 1917-18... 1918-19... 1919-20... 1920-21... 1921-22... 1922-23.. 1923-24........................ 1924-25.. Appropriation 200,000 None 50,000 200,000 200,000 750,000 500,000 650,000 400,000 900,000 325,000 400,000 325,000 Expenditure 46,646 71,216 63,333 200,692 203,847 499,471 325,446 552,571 396,569 474,588 ~ Figures for Tables XIII and XIV taken from Report of the Auditor. TABLE XIV. Allowances by Ohio Emergency Board in the Fiscal ~- Senate.................................................... House of Representatives................................... Executive Department..................................... Secretary of State.......................................... Automobile Department.................................... Auditor of State........................................... Bureau of Inspection and Supervision of Public Offices......... Treasurer of State....... Department of Finance.... State Bindery............ Department of Commerce. Division of Building and Loan Associations................... Division of Insurance.... Division of Oil Inspection.. Division of Securities..... Division of Public Utilities. Division of Public Utilities Physical Valuation.... Public Works......................... State House and Grounds............... Hartman Building.................... State Architect........................ Department of Agriculture.............. State Department of Health.............. Department of Industrial Relations....... .. .. . .... . .... . . .. . . ..... . .. .. .. .. . .. .. . ..... ........ Year, 1921-23 1,900 1,200 5,000 250 14,091 7,177 10,000 - 430 10,730 1,407 922 1,000 1,676 29,625 6,779 2,450 4,000 27,787 1 ,000 24,660 20,000 27,657 16,930 2,540
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58 F1~01~[ C0~60[ OF ~ TABLE art. Department of Public Welfare .................... a Interest on Building [und.< .................... Obio Commisdon for tbe Blind ...... ~ ......... ~iv~ion of St~te Cb~rhies.................................. Dep~rtment of Public Inst~ct10n ~ . St~te Bo~rd of Educ~t10n................................... D~ion of FUm Censorsbip................................. Bo~ing Green St~te ~orm~1 CoDege......................... Kent St~!e ~o~1 ColIege................................. ~iami [niver~ty.......................................... Ob10 St~te [n1verdty...................................... Ob10 St~te UDivers~y Agr1quItural ExteDs10n................ WOberforce [Diver~ty..................................... Obio 801diers ~Dd S~Hors O~b~ns' Home.................... Amedc~niz~t10n . .. . . . . Arcb~eologic~1 ~nd Bistork~1 Society......................... Adjut~nt Gener~l.......................................... Obio ~tion~1 Ouard ........ Armory Fund ~ State Dent~1 Bo~rd........................................ St~te Boar] of Emb~lmiDg Ex~miners........................ 8t~te ~edic~1 Bo~rd ~ 8t~te ~edic~1 Bo~rd-~urse Reg~tr~tion ~ St~te Bo~rd of Optometry............... 8t~te Bo~rd of Pb~cy.............. ProbibRion Commis~on .. Ob10 Penitentiary Commisdon........... Prosedution ~nd Ir~nsport~tion of Convicts................... ~ . . Juc ]cl~ry ... Commisdon of PubUc Printing.............................. Tot~1 ABo~snces........................................ lp,280 2,758 3,765 24,205 5,410 1,138 2,075 1 ,477 lg. 800 5, 82g 2g, 500 4,000 8, 535 15, 298 COO ~0 5, 000 1S,000 23, 500 . oo0 i, oo0 173 635 395 260 785 10, 010 1,000 35, 000 8, 500 18,614 CC~T REV~ OF YODC~ERS 474, 58S Ibe Ob10 Code uses much tbe same language as ~ found in IUinols to vest broad powers of review of current expense iD tbe ~ep~r~ent of PinaDce. Ibe department is autborized to require orders, invoices, claims, voucbers, or p~yroUs to be submi~ed ~bere pre~cribed by law or by tbe goverDor, and to ~pprove or dis~pprove such orders or p~yroNa. ID pr~ctice, bowever, tbe Ohio Department of Finance teas never 1Dquired into the reasonableness or expediency of any expendi- ture incurred, but teas hmited itself to ~ p~rt1~1 sudit [ach division teas in f~ct ne~rly coInpleto freedom in spending ~s appropriatioD ~itbiD tbe terms of tbe appropriation act. The fojowing quotOtioD from the he~d of ~ scientiRc division soems to revei1 tbo pre~ent shu~tion: ~The state exercises no over~ight, controI1 or approva1 over
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IN STATE GOVERNMENTS 59 scientific work, and the approval of vouchers is only formal." The decision of the Supreme Court in State vs. Herrick, outlined above, will make it difficult to develop this type of control. CENTRALIZED PURCHASING Prior to the enactment of the Civil Code, control of purchasing had been vested in a State Purchasing Department under supervision of the secretary of state. The auditor and secretary of state determined the amount of supplies and materials necessary for each department or board. The Code transferred these powers to the superintendent of purchases and printing in the office of the Department of Finance, but exempted from the jurisdiction of this office the State Universities, Normal Schools and the Archaeological and Historical Society. By special arrangement some scientific apparatus and material is pur- chased directly from the university storerooms rather than through the office of the superintendent of purchases and printing. A storeroom is maintained in the capitol building from which mis- cellaneous office supplies are directly requisitioned by the department. Other purchases are made on requisition by the departments, by the superintendent of purchases and printing. There seems to be no serious complaint as to these arrangements. In the purchase of scientific apparatus and material, the scientific divisions seem to be left with considerable freedom. The superin- tendent of purchases and printing allows the division to make a preliminary investigation, to lay down the specifications and to secure bids. These bids are then submitted to the superintendent of pur- chases and printing and if satisfactory, a release is given authorizing the division to make the purchase. Recent purchases of X-ray machines by three state hospitals were handled in this way. Emergency purchases are handled by telephone, followed by the ordinary written requisition as a matter of record. So far as the writer could ascertain, the work of the scientific divisions was not affected unfavorably by the machinery for central purchasing. THE CONTROL 0F PRINTING The control of printing in Ohio has been removed by law from the hands of the individual departments; formerly vested in an ex-officao printing board consisting of the secretary of state, the auditor and the attorney general, and a supervisor of public printing, the Ohio Civil Code of 1921 placed the general supervision of state printing in the superintendent of purchases and printing in the Department of Finance. The superintendent is appointed by and
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60 FINANCIAL CONTROL OF RESEARCH holds office during the pleasure of the director of the department, whose term is for two years. The Department of Finance, acting through the superintendent of purchases and printing, has power to determine the number of volumes, kind of binding, quality of paper and kind of type to be used in all public printing. Exceptions to this rule include the State University and Normal Schools, the Ohio Agricultural Experiment Station, and The Military Department, each of which is responsible for handling its own printing. The University maintains its own press. The Agricultural Experiment Station also has its own printing plant and in 1923. for the first time also purchased its own paper. For a short time the printing appropriation was made in a lump sum to the printing board. As this failed to give satisfaction, in 1923 the appropriation was made to each department, the contracting and n,~rn.hn.~in~ r~mn.inin~ however with the superintendent of printing and purchasing in the finance department. There is some complaint on the delay involved in sending printing through a central office. This is explained by one official as due to the fact that the state printing contracts are so low that the printers give it scant considera- tion, once the contract has been secured. Priority is given to other printing on which profits are greater. Another official accounts for the delay as the result of concentration of demand at certain periods of the year. The superintendent of purchases and printing- does not edit the subject-matter of scientific publications. Although there has long been a central printing board, until recent years the control exercised has been purely nominal and the conduct of the office seems to have been marked by unbusinesslike and extrava- gant methods. The number of volumes, kind of paper and size of type seems usually to be determined at the present time on the recommendation of the scientific agency asking for printing. Exami- nation of the publications of these agencies shows an excellent quality of paper and a satisfactory style of page and type. An investigating commission was authorized by the 1923 legislature to inquire into the amount of public printing in view of allegations that it has become rare = ~ -=, -A 7 THE CONTROL OF TRAVBE Bulletin number five of the Ohio Department of Finance contains regulations governing traveling expense. Travel on official business is always based on a travel order issued by the head of the depart- ment or some one authorized by him. Wherever possible daytime travel must be in day coaches. Whenever expenses of rooms and
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IN STATE GOVERNMENTS 61 meals exceed $4.00 a day a written explanation must accompany the report of traveling expenses. The Department of Finance, however, recognizes the impossibility in many cases of keeping within the $4.00 limit. Travel without the state requires the consent of the Emergency Board. Section 2313-3 of the General Code provides "No executive. legislative, or judicial officer, board, commission, or employe of the state shall attend at state expense any association, conference, or con- vention outside the state unless authorized by the Emergency Board. Before such allowance shall be made the head of the department shall make application in writing to the Emergency Board showing necessity for such attendance and the probable cost to the state. If a majority of the members of the Emergency Board approve the appli- cation, such expense shall be paid from the emergency fund." SUMMARY lTrom the foregoing description of the Ohio system and its practical operation it appears that a far-reaching system of control has been established in law, but that the governors of Ohio have as yet not been prepared to give it full edect. In view of the fact that a plan of central budget-making, central purchasing and central control of printing had already been in existence, the enactment of the Ohio Code in 1921 may be properly understood as primarily a departmental reorganization, plus the grant of certain additional powers of financial control to the newly established Department of Finance. These powers chiefly involved authority to approve or disapprove vouchers, to require financial reports, and to make quarterly estimates of expenditures. These powers, however, have not been actively exercised, with the net result that the conduct of scientific investigation since 1921 has proceeded under substantially the same conditions as prior to 1921. The process of integration has gone on gradually in Ohio for over a decade, and the legislation of 1921 appears to have accelerated the process in fact only to a slight degree. Scientific divisions and institutions in Ohio in conclusion are subject to the following financial arrangements: Their estimates for expendi- ture are submitted to the Department of Finance before submission to the legislature, and are usually substantially reduced by the depart- ment; but the legislature on many occasions restores a part of the reduction. After an appropriation is made, their expenditures are reviewed by the finance department, but only to determine the correct- ness of the accounting and to assure the availability of funds. They
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62 FINANCIAL CONTROL OF RESEARCH are required by law to submit quarterly statements of proposed expenditures but this has not been uniformly enforced. Their purchases are made generally by the superintendent of pur- chases and printing, but scientific apparatus is purchased strictly on their recommendation. Their printing is governed by the same officer but it appears he does not often question either the size of the edition, or the quality of paper or binding, and never the subject- matter of the report. Travel outside the state requires consent of the Emergency Board, but apparently is granted without detriment to the work of the scientific agencies. Bibliography. Relatively little has been written on the Ohio plan. See, how- ever, R. E. Miles, Fiscal Control in Ohio, in 113 Annals 105, Joint Legislative Committee on Administrative Reorganization, Reports, 1920, F. W. Coker, Dogmas of Administrative Reform as Exemplified in the Recent Reorganization in Ohio, in 16 American Political Science Review, 399.
Representative terms from entire chapter: