The fiscal administration statutes (Louisiana Revised Statute (R.S.) 39:1351-1357) were enacted in 1990 to allow state intervention if a political subdivision’s fiscal stability is in jeopardy.
The Louisiana Legislative Auditor (LLA), State Treasurer, and Attorney General (the Fiscal Review Committee) are authorized by R.S. 39:1351 to meet as often as necessary to review the financial stability of the political subdivisions of the state.
Financial stability is defined as:
- A condition in which the political subdivision is capable of meeting its financial obligations in a timely manner as they become due without substantial disposition of assets outside the ordinary course of business, substantial layoffs of personnel, or interruption of statutorily or other legally required services of the political subdivision, restructuring of debt, revision of operations, or similar actions
If the Fiscal Review Committee determines unanimously that a political subdivision is reasonably certain to not maintain financial stability, including but not limited to having insufficient revenue to pay current expenditures, excluding civil judgments; or failing to make a debt service payment, the Attorney General shall file a motion in district court to appoint a fiscal administrator.
Other criteria for the appointment of a fiscal administrator are the failure of a political subdivision to provide its audit or other report required by R.S. 24:513 to LLA for three consecutive years; or the failure of a school board to resolve its status as financially at risk, as defined by the State Board of Elementary and Secondary Education.
The duties of a fiscal administrator are outlined in R.S. 39:1352; and include the authority to direct all fiscal operations of the political subdivision and to take whatever action deemed necessary to return the political subdivision to financial stability.
The fiscal administrator has broad authority to direct all operations of the political subdivision regarding budgets, debt, contracts, and personnel of the political subdivision. The officers, including elected officials of the organization assist the fiscal administrator in an advisory capacity. If a conflict arises, the decision of the fiscal administrator prevails. Failure of an official to cooperate with the fiscal administrator may result in fines and imprisonment.
The fiscal administrator makes periodic reports to the court and the Fiscal Review Committee.
Once appointed, the fiscal administrator may only be removed by the court at his own request; or as provided for in R.S. 39:1354, or for fraud, negligence, or misconduct.
Because many of the political subdivisions placed under fiscal administration are financially insolvent, R.S. 39:1357 authorizes the creation of a fund, managed by the State Treasurer, for the purpose of funding the costs and expenses of fiscal administrators.
LLA’s Legal Division has prepared an informational document on Fiscal Administrator Law that is available on the LLA website.