The Office of Auditor of State has taken a unique approach to help clarify the picture for many local governments in Ohio. Last year it initiated a series of reports detailing key ratios gleaned from financial statements as benchmarks to measure performance. These basic indicators illustrate financial practices among governments, and may provide an early warning when governments drift toward financial crisis. The Government Finance Officers Association of the United States and Canada has selected this series for a 1998 Award for Excellence in Government Finance. Less than a year after the office launched the project, the GFOA chose it as one of three public agencies to be honored this year at its annual conference in San Francisco.
Benchmarks are simply information measuring sticks used for comparison purposes.
The local government benchmark reports relay factors that help assess trends in government finance. Certain benchmarks followed over the long term could foreshadow financial crisis. Imagine a couple taking on too many financial obligations, and then having to erode their savings to cover costs. Likewise, a continuous percentage decrease in a government's unreserved funds carried over each year throws up red flags. The office is implementing historical analyses of certain trends to help governments chart these critical fiscal benchmarks.