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OCR for page 42
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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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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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.
OCR for page 54
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
OCR for page 55
IN STATE GOVERNMENTS
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OCR for page 56
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.
OCR for page 57
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
OCR for page 58
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
OCR for page 59
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
OCR for page 60
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
OCR for page 61
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
OCR for page 62
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:
financial control
