Regards liens, conservatorships - state universities and colleges

As Introduced

136th
General Assembly

Regular
Session
H. B. No. 694

2025-2026

Representative Young

To
amend sections 154.07, 3345.12, 3345.74, and 3345.75; to enact
sections 3345.123 and 3345.741; and to repeal sections 154.25 and
3333.59 of the Revised Code
regarding
liens on state institutions of higher education facilities and
conservatorships for state universities and colleges.

BE
IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section
1.
That
sections 154.07, 3345.12, 3345.74, and 3345.75 be amended and
sections 3345.123 and 3345.741 of the Revised Code be enacted to read
as follows:

Sec.
154.07.
For
the respective purposes provided in sections 154.20, 154.21, 154.22,
154.23,
and

154.24
,
and 154.25
of
the Revised Code, the issuing authority may issue obligations of the
state of Ohio as provided in Chapter 154. of the Revised Code,
provided that the holders or owners of obligations shall have no
right to have excises or taxes levied by the general assembly for the
payment of the bond service charges. The right of holders and owners
to payment of bond service charges shall be limited to the revenues
or receipts and funds pledged thereto in accordance with Chapter 154.
of the Revised Code, and each obligation shall bear on its face a
statement to that effect. Chapter 154. of the Revised Code does not
permit, and no provision of that chapter shall be applied to
authorize or grant, a pledge of charges for the treatment or care of
mental hygiene and retardation patients to bond service charges on
obligations other than those issued for capital facilities for mental
hygiene and retardation, or a pledge of any receipts of or on behalf
of state supported or state assisted institutions of higher education
to bond service charges on obligations other than those issued for
capital facilities for state supported or state assisted institutions
of higher education, or a pledge of receipts with respect to parks
and recreation to bond service charges on obligations other than
those issued for capital facilities for parks and recreation, or a
pledge of revenues or receipts received by or on behalf of any state
agency to bond service charges on obligations other than those issued
for capital facilities which are in whole or in part useful to,
constructed by, or financed by the state agency that receives the
revenues or receipts so pledged.

Sec.
3345.12.
(A)
As used in this section and sections 3345.07 and 3345.11 of the
Revised Code, in other sections of the Revised Code that make
reference to this section unless the context does not permit, and in
related bond proceedings unless otherwise expressly provided:

(1)
"State university or college" means each of the state
universities identified in section 3345.011 of the Revised Code and
the northeast Ohio medical university, and includes its board of
trustees.

(2)
"Institution of higher education" or "institution"
means a state university or college, or a community college district,
technical college district, university branch district, or state
community college, and includes the applicable board of trustees or,
in the case of a university branch district, any other managing
authority.

(3)
"Housing and dining facilities" means buildings,
structures, and other improvements, and equipment, real estate, and
interests in real estate therefor, to be used for or in connection
with dormitories or other living quarters and accommodations, or
related dining halls or other food service and preparation
facilities, for students, members of the faculty, officers, or
employees of the institution of higher education, and their spouses
and families.

(4)
"Auxiliary facilities" means buildings, structures, and
other improvements, and equipment, real estate, and interests in real
estate therefor, to be used for or in connection with student
activity or student service facilities, housing and dining
facilities, dining halls, and other food service and preparation
facilities, vehicular parking facilities, bookstores, athletic and
recreational facilities, faculty centers, auditoriums, assembly and
exhibition halls, hospitals, infirmaries and other medical and health
facilities, research, and continuing education facilities.

(5)
"Education facilities" means buildings, structures, and
other improvements, and equipment, real estate, and interests in real
estate therefor, to be used for or in connection with, classrooms or
other instructional facilities, libraries, administrative and office
facilities, and other facilities, other than auxiliary facilities, to
be used directly or indirectly for or in connection with the conduct
of the institution of higher education.

(6)
"Facilities" means housing and dining facilities, auxiliary
facilities, or education facilities, and includes any one, part of,
or any combination of such facilities, and further includes site
improvements, utilities, machinery, furnishings, and any separate or
connected buildings, structures, improvements, sites, open space and
green space areas, utilities or equipment to be used in, or in
connection with the operation or maintenance of, or supplementing or
otherwise related to the services or facilities to be provided by,
such facilities.

(7)
"Obligations" means bonds or notes or other evidences of
obligation, including interest coupons pertaining thereto, authorized
to be issued under this section or section 3345.07, 3345.11,
3354.121, 3355.091, 3357.112, or 3358.10 of the Revised Code.

(8)
"Bond service charges" means principal, including any
mandatory sinking fund or redemption requirements for the retirement
of obligations or assurances, interest, or interest equivalent and
other accreted amounts, and any call premium required to be paid on
obligations or assurances.

(9)
"Bond proceedings" means the resolutions, trust agreement,
indenture, and other agreements and
any

credit
enhancement facilities

established prior to the effective date of this amendment
,
and amendments and supplements to the foregoing, or any one or more
or combination thereof, authorizing, awarding, or providing for the
terms and conditions applicable to, or providing for the security or
liquidity of, obligations or assurances, and the provisions contained
in those obligations or assurances.

(10)
"Costs of facilities" means the costs of acquiring,
constructing, reconstructing, rehabilitating, remodeling, renovating,
enlarging, improving, equipping, or furnishing facilities, and the
financing thereof, including the cost of clearance and preparation of
the site and of any land to be used in connection with facilities,
the cost of any indemnity and surety bonds and premiums on insurance,
all related direct administrative expenses and allocable portions of
direct costs of the institution of higher education or state agency,
cost of engineering, architectural services, design, plans,
specifications and surveys, estimates of cost, legal fees, fees and
expenses of trustees, depositories, bond registrars, and paying
agents for the obligations, cost of issuance of the obligations and
financing costs and fees and expenses of financial advisers and
consultants in connection therewith, interest on the obligations from
the date thereof to the time when interest is to be covered by
available receipts or other sources other than proceeds of the
obligations, amounts necessary to establish reserves as required by
the bond proceedings, costs of audits, the reimbursements of all
moneys advanced or applied by or borrowed from the institution or
others, from whatever source provided, including any temporary
advances from state appropriations, for the payment of any item or
items of cost of facilities, and all other expenses necessary or
incident to planning or determining feasibility or practicability
with respect to facilities, and such other expenses as may be
necessary or incident to the acquisition, construction,
reconstruction, rehabilitation, remodeling, renovation, enlargement,
improvement, equipment, and furnishing of facilities, the financing
thereof and the placing of them in use and operation, including any
one, part of, or combination of such classes of costs and expenses.

(11)
"Available receipts" means all moneys received by the
institution of higher education, including income, revenues, and
receipts from the operation, ownership, or control of facilities or
entrepreneurial projects, grants, gifts, donations, and pledges and
receipts therefrom, receipts from fees and charges, and the proceeds
of the sale of obligations or assurances, including proceeds of
obligations or assurances issued to refund obligations or assurances
previously issued, but excluding any special fee, and receipts
therefrom, charged pursuant to division (D) of section 154.21 of the
Revised Code.

(12)
"Credit enhancement facilities" has the meaning given in
division (H) of section 133.01 of the Revised Code.

(13)
"Financing costs" has the meaning given in division (K) of
section 133.01 of the Revised Code.

(14)
"Interest" or "interest equivalent" has the
meaning given in division (R) of section 133.01 of the Revised Code.

(15)
"Assurances" means bonds, notes, or other evidence of
indebtedness, including interest coupons pertaining thereto,
authorized to be issued under section 3345.36 of the Revised Code.

(16)
"Entrepreneurial project" has the same meaning as in
section 3345.36 of the Revised Code.

(17)
"Costs of entrepreneurial projects" means any costs related
to the establishment or development of entrepreneurial projects
pursuant to a resolution adopted under section 3345.36 of the Revised
Code.

(B)
Obligations issued under section 3345.07 or 3345.11 of the Revised
Code by a state university or college shall be authorized by
resolution of its board of trustees. Obligations issued by any other
institution of higher education shall be authorized by resolution of
its board of trustees, or managing directors in the case of certain
university branch districts, as applicable. Sections 9.96 and 9.98 to
9.983 of the Revised Code apply to obligations and assurances.
Obligations and assurances may be issued to pay costs of facilities
or entrepreneurial projects even if the institution anticipates the
possibility of a future state appropriation to pay all or a portion
of such costs.

(C)
Obligations and assurances shall be secured by a pledge of and lien
on all or such part of the available receipts of the institution of
higher education as it provides for in the bond proceedings,
excluding moneys raised by taxation and state appropriations

except as permitted by section 3333.59 of the Revised Code
.
Such pledge and lien may be made prior to all other expenses, claims,
or payments,
excepting
any pledge
except
in the case of any of the following:

(1)
A lien filed in accordance with section 3345.123 of the Revised Code;

(2)
Any pledge
of
such available receipts previously made to the contrary

and except as
;

(3)
As
provided
by any existing restrictions on the use thereof
,
or such
.

A

pledge
and lien may

also

be made subordinate to such other expenses, claims, or payments, as
provided in the bond proceedings. Obligations or assurances may be
additionally secured by covenants of the institution to make, fix,
adjust, collect, and apply such charges, rates, fees, rentals, and
other items of available receipts as will produce pledged available
receipts sufficient to meet bond service charges, reserve, and other
requirements provided for in the bond proceedings. Notwithstanding
this and any other sections of the Revised Code, the holders or
owners of the obligations or assurances shall not be given the right
and shall have no right to have excises or taxes levied by the
general assembly for the payment of bond service charges thereon, and
each such obligation or assurance shall bear on its face a statement
to that effect and to the effect that the right to such payment is
limited to the available receipts and special funds pledged to such
purpose under the bond proceedings.

All
pledged available receipts and funds and the proceeds of obligations
or assurances are trust funds and, subject to the provisions of this
section and the applicable bond proceedings, shall be held,
deposited, invested, reinvested, disbursed, applied, and used to such
extent, in such manner, at such times, and for such purposes, as are
provided in the bond proceedings.

(D)
The bond proceedings for obligations or assurances shall provide for
the purpose thereof and the principal amount or maximum principal
amount, and provide for or authorize the manner of determining the
principal maturity or maturities, the sale price including any
permitted discount, the interest rate or rates, which may be a
variable rate or rates, or the maximum interest rate, the date of the
obligations or assurances and the date or dates of payment of
interest thereon, their denominations, the manner of sale thereof,
and the establishment within or without the state of a place or
places of payment of bond service charges. The bond proceedings also
shall provide for a pledge of and lien on available receipts of the
institution of higher education as provided in division (C) of this
section, and a pledge of and lien on such fund or funds provided in
the bond proceedings arising from available receipts, which pledges
and liens may provide for parity with obligations or assurances
theretofore or thereafter issued by the institution. The available
receipts so pledged and thereafter received by the institution and
the funds so pledged are immediately subject to the lien of such
pledge without any physical delivery thereof or further act, and the
lien of any such pledge is valid and binding against all parties
having claims of any kind against the institution, irrespective of
whether such parties have notice thereof, and shall create a
perfected security interest for all purposes of Chapter 1309. of the
Revised Code, without the necessity for separation or delivery of
funds or for the filing or recording of the bond proceedings by which
such pledge is created or any certificate, statement, or other
document with respect thereto; and the pledge of such available
receipts and funds shall be effective and the money therefrom and
thereof may be applied to the purposes for which pledged without
necessity for any act of appropriation.

(E)
The bond proceedings may contain additional provisions customary or
appropriate to the financing or to the obligations or assurances or
to particular obligations and assurances, including:

(1)
The acquisition, construction, reconstruction, equipment, furnishing,
improvement, operation, alteration, enlargement, maintenance,
insurance, and repair of facilities or entrepreneurial projects, and
the duties of the institution of higher education with reference
thereto;

(2)
The terms of the obligations or assurances, including provisions for
their redemption prior to maturity at the option of the institution
of higher education at such price or prices and under such terms and
conditions as are provided in the bond proceedings;

(3)
Limitations on the purposes to which the proceeds of the obligations
or assurances may be applied;

(4)
The rates or rentals or other charges for the use of or right to use
the facilities or entrepreneurial projects financed by the
obligations or assurances, or other properties the revenues or
receipts from which are pledged to the obligations or assurances, and
rules for assuring any applicable use and occupancy thereof,
including limitations upon the right to modify such rates, rentals,
other charges, or regulations;

(5)
The use and expenditure of the pledged available receipts in such
manner and to such extent as shall be determined, which may include
provision for the payment of the expenses of operation, maintenance,
and repair of facilities or entrepreneurial projects so that such
expenses, or part thereof, shall be paid or provided as a charge
prior or subsequent to the payment of bond service charges and any
other payments required to be made by the bond proceedings;

(6)
Limitations on the issuance of additional obligations or assurances;

(7)
The terms of any trust agreement or indenture securing the
obligations or assurances or under which the same may be issued;

(8)
The deposit, investment, and application of funds, and the
safeguarding of funds on hand or on deposit without regard to Chapter
131. or 135. of the Revised Code, and any bank or trust company or
other financial institution that acts as depository of any moneys
under the bond proceedings shall furnish such indemnifying bonds or
pledge such securities as required by the bond proceedings or
otherwise by the institution of higher education;

(9)
The binding effect of any or every provision of the bond proceedings
upon such officer, board, commission, authority, agency, department,
or other person or body as may from time to time have the authority
under law to take such actions as may be necessary to perform all or
any part of the duty required by such provision;

(10)
Any provision that may be made in a trust agreement or indenture;

(11)
Any other or additional agreements with respect to the facilities of
the institution of higher education or its entrepreneurial projects,
their operation, the available receipts and funds pledged, and
insurance of facilities or entrepreneurial projects and of the
institution, its officers and employees.

(F)
Such obligations or assurances may have the seal of the institution
of higher education or a facsimile thereof affixed thereto or printed
thereon and shall be executed by such officers as are designated in
the bond proceedings, which execution may be by facsimile signatures.
Any obligations or assurances may be executed by an officer who, on
the date of execution, is the proper officer although on the date of
such obligations or assurances such person was not the proper
officer. In case any officer whose signature or a facsimile of whose
signature appears on any such obligation or assurance ceases to be
such officer before delivery thereof, such signature or facsimile is
nevertheless valid and sufficient for all purposes as if the person
had remained such officer until such delivery; and in case the seal
of the institution has been changed after a facsimile of the seal has
been imprinted on such obligations or assurances, such facsimile seal
continues to be sufficient as to such obligations or assurances and
obligations or assurances issued in substitution or exchange
therefor.

(G)
All such obligations or assurances are negotiable instruments and
securities under Chapter 1308. of the Revised Code, subject to the
provisions of the bond proceedings as to registration. The
obligations or assurances may be issued in coupon or in registered
form, or both. Provision may be made for the registration of any
obligations or assurances with coupons attached thereto as to
principal alone or as to both principal and interest, their exchange
for obligations or assurances so registered, and for the conversion
or reconversion into obligations or assurances with coupons attached
thereto of any obligations or assurances registered as to both
principal and interest, and for reasonable charges for such
registration, exchange, conversion, and reconversion.

(H)
Pending preparation of definitive obligations or assurances, the
institution of higher education may issue interim receipts or
certificates which shall be exchanged for such definitive obligations
or assurances.

(I)
Such obligations or assurances may be secured additionally by a trust
agreement or indenture between the institution of higher education
and a corporate trustee, which may be any trust company or bank
having the powers of a trust company within or without this state but
authorized to exercise trust powers within this state. Any such
agreement or indenture may contain the resolution authorizing the
issuance of the obligations or assurances, any provisions that may be
contained in the bond proceedings as authorized by this section, and
other provisions which are customary or appropriate in an agreement
or indenture of such type, including:

(1)
Maintenance of each pledge, trust agreement, and indenture, or other
instrument comprising part of the bond proceedings until the
institution of higher education has fully paid the bond service
charges on the obligations or assurances secured thereby, or
provision therefor has been made;

(2)
In the event of default in any payments required to be made by the
bond proceedings, or any other agreement of the institution of higher
education made as a part of the contract under which the obligations
or assurances were issued, enforcement of such payments or agreement
by mandamus, the appointment of a receiver, suit in equity, action at
law, or any combination of the foregoing;

(3)
The rights and remedies of the holders of obligations or assurances
and of the trustee, and provisions for protecting and enforcing them,
including limitations on rights of individual holders of obligations
or assurances;

(4)
The replacement of any obligations or assurances that become
mutilated or are destroyed, lost, or stolen;

(5)
Such other provisions as the trustee and the institution of higher
education agree upon, including limitations, conditions, or
qualifications relating to any of the foregoing.

(J)
Each duty of the institution of higher education and its officers or
employees, undertaken pursuant to the bond proceedings or any related
agreement or lease made under authority of law, is hereby established
as a duty of such institution, and of each such officer or employee
having authority to perform such duty, specially enjoined by law
resulting from an office, trust, or station within the meaning of
section 2731.01 of the Revised Code. The persons who are at the time
the members of the board of trustees or the managing directors of the
institution or its officers or employees are not liable in their
personal capacities on such obligations or assurances, or lease, or
other agreement of the institution.

(K)
The authority to issue obligations or assurances includes authority
to:

(1)
Issue obligations or assurances in the form of bond anticipation
notes and to renew them from time to time by the issuance of new
notes. Such notes are payable solely from the available receipts and
funds that may be pledged to the payment of such bonds, or from the
proceeds of such bonds or renewal notes, or both, as the institution
of higher education provides in its resolution authorizing such
notes. Such notes may be additionally secured by covenants of the
institution to the effect that it will do such or all things
necessary for the issuance of such bonds or renewal notes in
appropriate amount, and either exchange such bonds or renewal notes
therefor or apply the proceeds thereof to the extent necessary, to
make full payment of the bond service charges on such notes at the
time or times contemplated, as provided in such resolution. Subject
to the provisions of this division, all references to obligations or
assurances in this section apply to such anticipation notes.

(2)
Issue obligations or assurances to refund, including funding and
retirement of, obligations or assurances previously issued to pay
costs of facilities or entrepreneurial projects. Such obligations or
assurances may be issued in amounts sufficient for payment of the
principal amount of the obligations or assurances to be so refunded,
any redemption premiums thereon, principal maturities of any
obligations or assurances maturing prior to the redemption of any
other obligations or assurances on a parity therewith to be so
refunded, interest accrued or to accrue to the maturity date or dates
of redemption of such obligations or assurances, and any expenses
incurred or to be incurred in connection with such refunding or the
issuance of the obligations or assurances.

(L)
Obligations and assurances are lawful investments for banks,
societies for savings, savings and loan associations, deposit
guarantee associations, trust companies, trustees, fiduciaries,
insurance companies, including domestic for life and domestic not for
life, trustees or other officers having charge of sinking and bond
retirement or other special funds of political subdivisions and
taxing districts of this state, the commissioners of the sinking
fund, the administrator of workers' compensation in accordance with
the investment policy approved by the bureau of workers' compensation
board of directors pursuant to section 4121.12 of the Revised Code,
the state teachers retirement system, the public employees retirement
system, the school employees retirement system, and the Ohio police
and fire pension fund, notwithstanding any other provisions of the
Revised Code or rules adopted pursuant thereto by any state agency
with respect to investments by them, and are also acceptable as
security for the deposit of public moneys.

(M)
All facilities or entrepreneurial projects purchased, acquired,
constructed, or owned by an institution of higher education, or
financed in whole or in part by obligations or assurances issued by
an institution, and used for the purposes of the institution or other
publicly owned and controlled college or university, is public
property used exclusively for a public purpose, and such property and
the income therefrom is exempt from all taxation and assessment
within this state, including ad valorem and excise taxes. The
obligations or assurances, the transfer thereof, and the income
therefrom, including any profit made on the sale thereof, are at all
times free from taxation within the state. The transfer of tangible
personal property by lease under authority of this section or section
3345.07, 3345.11, 3345.36, 3354.121, 3355.091, 3357.112, or 3358.10
of the Revised Code is not a sale as used in Chapter 5739. of the
Revised Code.

(N)
The authority granted by this section is cumulative with the
authority granted to institutions of higher education under Chapter
154. of the Revised Code, and nothing in this section impairs or
limits the authority granted by Chapter 154. of the Revised Code. In
any lease, agreement, or commitment made by an institution of higher
education under Chapter 154. of the Revised Code, it may agree to
restrict or subordinate any pledge it may thereafter make under
authority of this section.

(O)
Title to lands acquired under this section and sections 3345.07 and
3345.11 of the Revised Code by a state university or college shall be
taken in the name of the state.

(P)
Except where costs of facilities or entrepreneurial projects are to
be paid in whole or in part from funds appropriated by the general
assembly, section 125.81 of the Revised Code and the requirement for
certification with respect thereto under section 153.04 of the
Revised Code do not apply to such facilities or entrepreneurial
projects.

(Q)
A state university or college may sell or lease lands or interests in
land owned by it or by the state for its use, or facilities
authorized to be acquired or constructed by it under section 3345.07
or 3345.11 of the Revised Code, to permit the purchasers or lessees
thereof to acquire, construct, equip, furnish, reconstruct, alter,
enlarge, remodel, renovate, rehabilitate, improve, maintain, repair,
or maintain and operate thereon and to provide by lease or otherwise
to such institution, facilities authorized in section 3345.07 or
3345.11 of the Revised Code or entrepreneurial projects authorized
under section 3345.36 of the Revised Code. Such land or interests
therein shall be sold for such appraised value, or leased, and on
such terms as the board of trustees determines. All deeds or other
instruments relating to such sales or leases shall be executed by
such officer of the state university or college as the board of
trustees designates. The state university or college shall hold,
invest, or use the proceeds of such sales or leases for the same
purposes for which proceeds of borrowings may be used under sections
3345.07 and 3345.11 of the Revised Code or, if the proceeds relate to
the sale or lease of entrepreneurial projects, for purposes of
section 3345.36 of the Revised Code.

(R)
An institution of higher education may pledge available receipts, to
the extent permitted by division (C) of this section with respect to
obligations, to secure the payments to be made by it under any lease,
lease with option to purchase, or lease-purchase agreement authorized
under this section or section 3345.07, 3345.11, 3345.36, 3354.121,
3355.091, 3357.112, or 3358.10 of the Revised Code.

Sec.
3345.123.
(A)
As used in this section:

(1)
"Facilities" has the same meaning as in section 3345.12 of
the Revised Code but does not include a facility that is funded
solely by federal or private sources.

(2)
"State institution of higher education" and "state
university" have the same meanings as in section 3345.011 of the
Revised Code.

(B)
The Ohio facilities construction commission shall have a lien upon
all facilities of state institutions of higher education and state
universities constructed, reconstructed, enlarged, remodeled,
renovated, improved, furnished, or equipped, or any combination
thereof, with state funds or financed by the Ohio public facilities
construction commission, the Ohio facilities construction commission,
or any other state entity on or after the effective date of this
section.

(C)
A lien provided under this section shall be:

(1)
For the amount of the actual project costs covered by the entity;

(2)
Filed and recorded by the Ohio facilities construction commission in
the office of the county recorder in the county in which the facility
is located.

(D)
In the event a facility upon which the commission has a lien provided
under this section closes, is sold, or no longer operates as a
facility, the lien has priority over any lien created pursuant to
section 3345.12 of the Revised Code.

(E)
A lien provided under this section continues in force for thirty
years after it is recorded or until the amount of the lien is repaid,
whichever occurs first. If an action is brought to enforce the lien
within that time, the lien continues in force until final
adjudication thereof.

(F)
An action to enforce a lien provided by this section may be brought
by the attorney general.

Sec.
3345.74.
(A)
The chancellor of higher education at least annually shall apply the
indicators and standards adopted under division (A) of section
3345.73 of the Revised Code to determine whether a state university
or college under a fiscal watch is experiencing sufficient fiscal
difficulties to warrant the appointment of a conservator under this
section or if the board of trustees of a state university or college
has taken any action related to pausing or stopping enrollment,
submitted a withdrawal of accreditation, or taken any other action
indicating it will no longer offer educational activity or will
undergo a wind down and dissolution of existence. Upon making a
determination that appointment of a conservator is warranted, the
chancellor shall request from the office of budget and management,
which shall provide, certification that sufficient fiscal
difficulties exist to warrant appointment of a conservator. The
chancellor shall then certify this determination to the governor

and, for the purposes of section 3345.741 of the Revised Code, the
speaker of the house of representatives and the president of the
senate
.

Notwithstanding
section 3333.021 of the Revised Code, that section does not apply to
certification by the chancellor under this section or to the
declaration of a fiscal watch under section 3345.72 of the Revised
Code.

A
determination by the chancellor under this division that sufficient
fiscal difficulties exist or do not exist to warrant appointing a
conservator is final and conclusive and not appealable.

(B)

The

If
a conservator is determined necessary under divisions (B) and (C) of
section 3345.741 of the Revised Code, the
governor
may appoint a conservator for any state university or college under a
fiscal watch
,
upon certification by the chancellor under division (A) of this
section that the appointment is warranted
.

The
governor shall appoint a conservator from the list of recommended
candidates selected under division (C) of section 3345.741 of the
Revised Code.
The
governor shall consult with the speaker and minority leader of the
house of representatives and the president and minority leader of the
senate before making the appointment. From the time a conservator is
appointed until the time the governor issues an order terminating the
governance authority under division (B) of section 3345.76 of the
Revised Code, the governor may remove any member of the board of
trustees of the state university or college from office and not fill
the vacancy.

(C)
Upon appointment of a conservator under this section for a state
university or college, all of the following shall occur effective
immediately:

(1)
All duties, responsibilities, and powers of the board of trustees of
the university or college are suspended;

(2)
The management and control of the state university or college is
assumed by the conservator;

(3)
Notwithstanding any section of the Revised Code, all duties,
responsibilities, and powers assigned by law to the board of trustees
are assigned to the conservator, and the conservator becomes the
successor to, assumes the lawful obligations of, and otherwise
constitutes the continuation of the board of trustees for purposes of
all pending legal actions, contracts or other agreements, and
obligations of the university or college;

(4)
Wherever the board of trustees is referred to in any contract or
legal document, the reference is deemed to refer to the conservator.
No validation, cure, right, privilege, remedy, obligation, or
liability is lost or impaired by reason of the assumption of the
board's authority by the conservator under this section and any such
validation, cure, right, privilege, remedy, obligation, or liability
shall be administered by the conservator. No action or proceeding
pending on the effective date of the assumption by the conservator of
the board's authority is affected by that assumption and any such
action or proceeding shall be prosecuted or defended in the name of
the conservator.

(5)
The conservator assumes custody of all equipment, records, files,
effects, and all other property real or personal of the state
university or college;

(6)
All authority and duties of the president or chief executive officer,
and the pay of the president or chief executive officer, are
suspended.

(D)
The conservator for a state university or college shall conduct a
preliminary performance evaluation of the president or chief
executive officer of the university or college and provide a copy of
findings and any recommendations to the governance authority
established for the university or college under section 3345.75 of
the Revised Code.

(E)
A conservator appointed under this section shall be immune,
indemnified, and held harmless from civil liability, including any
cause of action, legal, equitable, or otherwise, for any action taken
or duties performed by the conservator in good faith and in
furtherance of the performance of the duties of the conservator under
this section.

(F)
The
governor

chancellor,
in consultation with the higher education committees,
shall
set the compensation for a conservator appointed for a state
university or college. The expenses and compensation of the
conservator and others employed by the conservator shall be paid out
of the operating funds and revenues of that university or college.

(G)
A conservator appointed for a state university or college shall
report at least quarterly to the higher education committees for as
long as the conservator is performing duties under this section.

(H)
As used in this section, "higher education committees"
means the committee established under division (A) of section
3345.741 of the Revised Code and the standing committee of the senate
that considers higher education legislation.

Sec.
3345.741.
(A)
Upon certification by the chancellor of higher education that the
appointment of a conservator for a state university or college is
warranted under division (A) of section 3345.74 of the Revised Code,
the speaker of the house of representatives shall establish a
committee to consider the appointment of a conservator for that state
university or college. The committee shall consist of the following
members of the house of representatives:

(1)
The speaker of the house of representatives or the speaker's
designee;

(2)
The chairperson of the standing committee of the house of
representatives that considers higher education legislation;

(3)
The chairperson of the finance committee of the house of
representatives.

The
speaker of the house of representatives shall designate one member of
the committee to serve as its chairperson.

(B)(1)
The committee established under division (A) of this section shall
hold at least one public hearing to determine if appointing a
conservator is necessary and, if so, to consider candidates to serve
as conservator. The committee shall solicit the advice of the
chancellor of higher education and the governor on these matters and
may request that the chancellor, or the chancellor's designee, and
the governor, or the governor's designee, participate in the public
hearing.

(2)
If the committee determines appointing a conservator is not
necessary, the chairperson of the committee shall notify the
chancellor, governor, speaker of the house of representatives, and
president of the senate of that determination, and no conservator
shall be appointed for the state university or college under section
3345.74 of the Revised Code.

(3)
If the committee determines appointing a conservator is necessary,
the committee shall select at least three candidates to recommend to
serve as conservator for the state university or college. The
chairperson of the committee shall notify the chancellor, governor,
speaker of the house of representatives, president of the senate, and
chairperson of the standing committee of the senate that considers
higher education legislation of that determination and the list of
recommended candidates.

(C)(1)
If the chairperson of the standing committee of the senate that
considers higher education legislation receives notice under division
(B)(3) of this section, the chairperson shall hold at least one
public hearing about whether to appoint a conservator for the state
university or college and the list of candidates to serve as
conservator provided by the house of representatives. The standing
committee shall solicit the advice of the chancellor and the governor
on these matters and may request that the chancellor, or the
chancellor's designee, and the governor, or the governor's designee,
participate in the public hearing.

(2)
If the standing committee determines appointing a conservator is not
necessary, the chairperson of the standing committee shall notify the
chancellor, governor, speaker of the house of representatives, and
president of the senate of that fact and no conservator shall be
appointed for the state university or college under section 3345.74
of the Revised Code.

(3)
If the standing committee determines appointing a conservator is
necessary, the standing committee shall select, from the list of
recommended candidates provided by the house of representatives, at
least three candidates to recommend to serve as conservator for the
state university or college. The chairperson of the standing
committee shall notify the chancellor, governor, speaker of the house
of representatives, and president of the senate of that determination
and the list of recommended candidates.

(D)
In considering candidates to serve as conservator for a state
university or college, the committee established under division (A)
of this section and the standing committee of the senate that
considers higher education legislation shall give priority
consideration to candidates who have extensive experience in
governmental matters, including capital budgets, debt issuance, and
debt service, facilities, and orderly closure of public entities.

Sec.
3345.75.
(A)
Not later than thirty days after the date of the appointment of a
conservator for a state university or college under section 3345.74
of the Revised Code, the governor shall appoint, with the advice and
consent of the senate, a governance authority for the university or
college consisting of five members, of which one shall have expertise
in academic affairs and accreditation and one shall have expertise in
either state agency budgets or state university or college finances.
The members shall serve at the pleasure of the governor and any
vacancies shall be filled in the same manner as an original
appointment.

The
governor shall designate one of the members of the governance
authority as the chairperson and shall call the first meeting of the
authority. A majority of the members of a governance authority
constitutes a quorum and the affirmative vote of a majority of the
members shall be necessary for any action taken by an authority.
Meetings of a governance authority shall be called in the manner and
at the times prescribed by the authority, but the authority shall
meet at least four times annually and at other times necessary for
the best interest of the university or college. A governance
authority may adopt procedures for the conduct of its business.

The
members of a governance authority shall not receive compensation for
their services, but shall be paid their reasonable and necessary
expenses while engaged in the discharge of their official duties.

A
governance authority shall report at least quarterly to the higher
education committees, as defined in section 3345.74 of the Revised
Code, for as long as the governance authority is in existence.

(B)(1)
A governance authority established under this section shall appoint
an executive director who shall serve at the pleasure of the
authority and with the compensation and other terms and conditions
established by it. With the approval of the chairperson of the
authority, the executive director may appoint additional personnel as
the director considers appropriate. The executive director shall
oversee the day-to-day operation of the university or college under
the direction and supervision of the authority.

(2)
The governance authority shall conduct a final performance evaluation
of the president or chief executive officer of the university or
college. Following the evaluation, the governance authority may
reinstate any duties, authority, or pay previously suspended under
division (C)(6) of section 3345.74 of the Revised Code, or may
terminate the president or chief executive officer in accordance with
the terms of the person's employment contract.

(C)
Upon appointment of all members of a governance authority under this
section and upon the effective date for the commencement of the
duties of the executive director appointed by that authority under
this section, all authority, responsibilities, duties, and references
assumed by or conferred upon the conservator under divisions (C)(2)
to (6) of section 3345.74 of the Revised Code terminate and all of
the following shall occur, effective immediately:

(1)
The management and control of the state university or college is
assumed by the governance authority;

(2)
Notwithstanding any section of the Revised Code, all duties,
responsibilities, and powers assigned by law to the board of trustees
or to the conservator are assigned to the governance authority and
the governance authority becomes the successor to, assumes the lawful
obligations of, and otherwise constitutes the continuation of the
board of trustees and the conservator for purposes of all pending
legal actions, contracts or other agreements, and obligations of the
university or college;

(3)
Wherever the board of trustees or conservator is referred to in any
contract or legal document, the reference is deemed to refer to the
governance authority. No validation, cure, right, privilege, remedy,
obligation, or liability is lost or impaired by reason of the
assumption of the authority of the board of trustees and the
conservator by the governance authority under this section and any
such validation, cure, right, privilege, remedy, obligation, or
liability shall be administered by the governance authority. No
action or proceeding pending on the effective date of the assumption
by the governance authority of the authority of the board of trustees
and the conservator is affected by that assumption and any such
action or proceeding shall be prosecuted or defended in the name of
the governance authority.

(4)
The governance authority assumes custody of all equipment, records,
files, effects, and all other property real or personal of the state
university or college.

(D)
A governance authority and executive director appointed under this
section shall be immune, indemnified, and held harmless from civil
liability, including any cause of action, legal, equitable, or
otherwise, for any action taken or duties performed by the governance
authority and executive director in good faith and in furtherance of
the performance of the duties of the governance authority and
executive director under this section.

(E)
The expenses of a governance authority and the expenses and
compensation of an executive director appointed for a state
university or college under this section and others employed by the
executive director under this section shall be paid out of the
operating funds and revenues of that university or college.

(F)
A governance authority appointed under this section shall prepare, in
accordance with rules adopted by the office of budget and management,
and submit to the chancellor of higher education, the governor, the
speaker and minority leader of the house of representatives, and the
president and minority leader of the senate a quarterly report
setting forth all of the following:

(1)
The general condition of the university or college;

(2)
The amounts of receipts and disbursements and the items for which the
disbursements were made;

(3)
The numbers of professors, officers, teachers, and other employees
and the position and compensation of each and the numbers of students
by courses of instruction;

(4)
An estimate of expenses for the ensuing quarter;

(5)
A statement of the general progress of the university or college with
indication of any improvements and specification of any experiments
with institutional reform and the costs and results of those
experiments;

(6)
If the governance authority determines closure is necessary or is
appointed to facilitate an orderly closure as determined to be
necessary by the board of trustees prior to the governance
authority's appointment, all matters related to compliance with the
requirements of a closure of an institution of higher education as
specified by the chancellor;

(7)
Any other matters the governance authority considers useful to
report.

(G)
The attorney general shall be the legal adviser to the conservator
and the governance authority, and the attorney general may employ
special counsel to aid the conservator or governance authority with
respect to any legal matter on behalf of the institution. The
conservator and the governance authority may as otherwise provided by
law request the attorney general to bring or defend suits or
proceedings in the name of the institution.

Section
2.
That
existing sections 154.07, 3345.12, 3345.74, and 3345.75 of the
Revised Code are hereby repealed.

Section
3.
That
sections 154.25 and 3333.59 of the Revised Code are hereby repealed.

Section
4.
On
and after the effective date of this section, the Chancellor of
Higher Education shall no longer approve any requests under sections
154.25 or 3333.59 of the Revised Code, as those sections existed
before their repeal by Section 3 of this act, to enter into an
agreement providing for the withholding and deposit of an
institution's allocated state share of instruction under a credit
enhancement agreement, for the payment of bond service charges on
obligations. The Chancellor, with the advice and consent of the
Office of Budget and Management, may adopt reasonable rules for the
treatment of any credit enhancement agreement that existed prior to
the effective date of this section that directly conflicts with any
lien filed in accordance with section 3345.123 of the Revised Code.