Rhode Island General Laws
Chapter 45-12 - Indebtedness of Towns and Cities
Section 45-12-22.2. - Monitoring of financial operations — Corrective action.

§ 45-12-22.2. Monitoring of financial operations — Corrective action.
Subsections (a) through (h) below shall apply to cities and towns.
(a) The chief financial officer of each municipality and each school district within the state shall continuously monitor financial operations by tracking actual versus budgeted revenue and expense.
(b) The chief financial officer of the municipality shall submit a report on a monthly basis to the municipality’s chief executive officer, each member of the city or town council, and school district committee certifying the status of the municipal budget from all fund sources, including the school department budget from all fund sources, or regional school district budget from all fund sources. The chief financial officer of the municipality shall also submit budget-to-actual financial information on or before the 25th day succeeding the last day of the sixth, ninth, and twelfth month of each fiscal year to the division of municipal finance pursuant to the provisions outlined in subsection (d) certifying the status of the municipal budget, including the school budget that has been certified by the school department. The chief financial officer of the school department or school district shall certify the status of the school district’s budget and shall assist in the preparation of these reports. The monthly report and budget-to-actual financial information as required in this section shall be in a format prescribed by the division of municipal finance, the commissioner of education, and the state auditor general. The budget-to-actual financial information and the monthly reports shall contain a statement as to whether any actual or projected shortfalls in budget line items are expected to result in a year-end deficit; the projected impact on year-end financial results, including all accruals and encumbrances; and how the municipality and school district plans to address any such shortfalls. In the event that the school reporting is not provided, then state education aid may be withheld pursuant to the provisions of § 16-2-9.4(g).
(c) In order to facilitate electronic upload to the “Transparency Portal,” as defined herein, the chief financial officer of the municipality shall also submit, as part of the annual audited financial statements of the municipality, a municipal-data report for the municipality’s general fund containing content and in a format designated by the division of municipal finance and the office of the auditor general. Such municipal-data report shall be included in the scope of the annual audit and shall be included in the municipality’s financial statements as supplementary information.
(d) All budget-to-actual financial information as required in subsection (b), municipal-data report as required in subsection (c), and reports required pursuant to the provisions of § 44-35-10 shall be submitted to the division of municipal finance through the use of the division’s Transparency Portal, in the format required by the division of municipal finance, which will be located on the division’s website. The division of municipal finance will create a finalized report from all information submitted through the Transparency Portal (“Transparency Report”). The division of municipal finance will submit the Transparency Report to the municipality to be signed by the chief executive officer, chief financial officer, superintendent of the school district, and chief financial officer for the school district. All signed Transparency Reports shall be posted to the municipality’s website within ten (10) business days of receipt of such report. The municipalities shall provide a copy of the signed Transparency Report to the commissioner of education, the office of the auditor general, the municipality’s council president, and the school committee chair. In addition, a copy of the signed Transparency Report, which has been designated by the division of municipal finance for inclusion in the municipality’s audited financial statements, shall be provided by the municipality to its auditor.
(e) If any of the budget-to-actual financial information required under subsection (b) project a year-end deficit, the chief financial officer of the municipality shall submit to the state division of municipal finance, the commissioner of education, and the auditor general a corrective action plan, signed by the chief executive officer and chief financial officer, on or before the last day of the month succeeding the close of the fiscal quarter in which budget-to-actual financial information is required, that provides for the avoidance of a year-end deficit or structural deficit that could impact future years, and the school superintendent shall also comply with the provisions of § 16-2-11(c) to assist in this effort. The plan may include recommendations as to whether an increase in property taxes and/or spending cuts should be adopted to eliminate the deficit. The plan shall include a legal opinion by municipal counsel that the proposed actions under the plan are permissible under federal, state, and local law. The state division of municipal affairs may rely on the written representations made by the municipality in the plan and will not be required to perform an audit.
(f) If the division of municipal finance concludes the plan required hereunder is insufficient and/or fails to adequately address the financial condition of the municipality, the division of municipal finance can elect to pursue the remedies identified in § 45-12-22.7.
(g) The monthly reports and budget-to-actual financial information required shall include the financial operations of any departments or funds of municipal government, including the school department or the regional school district, notwithstanding the status of the entity as a separate legal body. This provision does not eliminate the additional requirements placed on local and regional school districts by §§ 16-2-9(f) and 16-3-11(e)(3).
(h) The “Transparency Portal” shall be an electronic interface that will be implemented, maintained, and monitored by the state division of municipal finance with the assistance of the state department of administration. In addition, the division of municipal finance shall post to its website a list of participating and non-participating entities for each reporting cycle identified under subsections (b), (c), and required reports pursuant to § 44-35-10.
Subsections (i) through (m) below shall apply to fire districts.
(i) The treasurer/chief financial officer or other fiduciary, as applicable, of the fire district within the state shall continuously monitor the fire district’s financial operations by tracking actual versus budgeted revenue and expense.
(j) The treasurer/chief financial officer or other fiduciary, as applicable, of the fire district shall submit a quarterly report on or before the 25th day of the month succeeding the end of each fiscal quarter to the division of municipal finance and the state auditor general certifying the status of the fire district’s budget. Each quarterly report submitted must be signed by the chair of the governing body and the treasurer/chief financial officer. The report shall be submitted to the members of the governing body and the members of the town council. The quarterly reports shall be in a format prescribed by the division of municipal finance and the state auditor general. The reports shall contain a statement as to whether any actual or projected shortfalls in budget line items are expected to result in a year-end deficit; the projected impact on year-end financial results including all accruals and encumbrances; and how the fire district plans to address any such shortfalls.
(k) If any of the quarterly reports required under subsection (j) above project a year-end deficit, the treasurer/chief financial officer or other fiduciary, as applicable, of the fire district shall submit to the division of municipal finance and the state auditor general a corrective action plan signed by the chair of the governing body and treasurer/chief financial office, or other fiduciary as applicable, of the fire district on or before the last day of the month succeeding the close of the fiscal quarter, that provides for the avoidance of a year-end deficit or structural deficit that could impact future years. The plan may include recommendations as to whether an increase in property taxes and/or spending cuts should be adopted to eliminate the deficit. The plan shall include a legal opinion by legal counsel that the proposed actions under the plan are permissible under federal, state, and local law. Said plan shall be sent to the members of the fire district’s governing body and the members of the town council. The division of municipal finance may rely on the written representations made by the governing body of the fire district in the plan and will not be required to perform an audit.
(l) If the division of municipal finance concludes the plan required hereunder is insufficient and/or fails to adequately address the financial condition of the fire district, the division of municipal finance can elect to pursue the remedies identified in § 45-12-22.7.
(m) The reports and plans required above shall also include, but not be limited to, a comprehensive overview of the financial operations of the fire district, including a list of the value of the fire district’s assets (tangibles and intangibles) and liabilities.
History of Section.P.L. 2003, ch. 54, § 2; P.L. 2003, ch. 66, § 2; P.L. 2006, ch. 246, art. 38, § 18; P.L. 2011, ch. 151, art. 12, § 14; P.L. 2012, ch. 241, art. 12, § 2; P.L. 2014, ch. 31, § 3; P.L. 2014, ch. 33, § 3; P.L. 2016, ch. 142, art. 8, § 1.

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