HB 694

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  1
  3345.75; to enact sections 3345.123 and  2
  3345.741; and to repeal sections 154.25 and  3
  3333.59 of the Revised Code regarding liens on  4
  state institutions of higher education  5
  facilities and conservatorships for state  6
  universities and colleges.  7
 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
     Section 1. That sections 154.07, 3345.12, 3345.74, and  8
3345.75 be amended and sections 3345.123 and 3345.741 of the  9
Revised Code be enacted to read as follows:  10
     Sec. 154.07. For the respective purposes provided in  11
sections 154.20, 154.21, 154.22, 154.23, and 154.24, and 154.25  12
of the Revised Code, the issuing authority may issue obligations  13
of the state of Ohio as provided in Chapter 154. of the Revised  14
Code, provided that the holders or owners of obligations shall  15
have no right to have excises or taxes levied by the general  16
assembly for the payment of the bond service charges. The right  17
of holders and owners to payment of bond service charges shall  18
be limited to the revenues or receipts and funds pledged thereto  19
in accordance with Chapter 154. of the Revised Code, and each  20
obligation shall bear on its face a statement to that effect.  21
H. B. No. 694  Page 2
As Introduced
Chapter 154. of the Revised Code does not permit, and no  22
provision of that chapter shall be applied to authorize or  23
grant, a pledge of charges for the treatment or care of mental  24
hygiene and retardation patients to bond service charges on  25
obligations other than those issued for capital facilities for  26
mental hygiene and retardation, or a pledge of any receipts of  27
or on behalf of state supported or state assisted institutions  28
of higher education to bond service charges on obligations other  29
than those issued for capital facilities for state supported or  30
state assisted institutions of higher education, or a pledge of  31
receipts with respect to parks and recreation to bond service  32
charges on obligations other than those issued for capital  33
facilities for parks and recreation, or a pledge of revenues or  34
receipts received by or on behalf of any state agency to bond  35
service charges on obligations other than those issued for  36
capital facilities which are in whole or in part useful to,  37
constructed by, or financed by the state agency that receives  38
the revenues or receipts so pledged.  39
       Sec. 3345.12. (A) As used in this section and sections  40
3345.07 and 3345.11 of the Revised Code, in other sections of  41
the Revised Code that make reference to this section unless the  42
context does not permit, and in related bond proceedings unless  43
otherwise expressly provided:  44
       (1) "State university or college" means each of the state  45
universities identified in section 3345.011 of the Revised Code  46
and the northeast Ohio medical university, and includes its  47
board of trustees.  48
       (2) "Institution of higher education" or "institution"  49
means a state university or college, or a community college  50
district, technical college district, university branch  51
H. B. No. 694  Page 3
As Introduced
district, or state community college, and includes the  52
applicable board of trustees or, in the case of a university  53
branch district, any other managing authority.  54
       (3) "Housing and dining facilities" means buildings,  55
structures, and other improvements, and equipment, real estate,  56
and interests in real estate therefor, to be used for or in  57
connection with dormitories or other living quarters and  58
accommodations, or related dining halls or other food service  59
and preparation facilities, for students, members of the  60
faculty, officers, or employees of the institution of higher  61
education, and their spouses and families.  62
       (4) "Auxiliary facilities" means buildings, structures,  63
and other improvements, and equipment, real estate, and  64
interests in real estate therefor, to be used for or in  65
connection with student activity or student service facilities,  66
housing and dining facilities, dining halls, and other food  67
service and preparation facilities, vehicular parking  68
facilities, bookstores, athletic and recreational facilities,  69
faculty centers, auditoriums, assembly and exhibition halls,  70
hospitals, infirmaries and other medical and health facilities,  71
research, and continuing education facilities.  72
       (5) "Education facilities" means buildings, structures,  73
and other improvements, and equipment, real estate, and  74
interests in real estate therefor, to be used for or in  75
connection with, classrooms or other instructional facilities,  76
libraries, administrative and office facilities, and other  77
facilities, other than auxiliary facilities, to be used directly  78
or indirectly for or in connection with the conduct of the  79
institution of higher education.  80
       (6) "Facilities" means housing and dining facilities,  81
H. B. No. 694  Page 4
As Introduced
auxiliary facilities, or education facilities, and includes any  82
one, part of, or any combination of such facilities, and further  83
includes site improvements, utilities, machinery, furnishings,  84
and any separate or connected buildings, structures,  85
improvements, sites, open space and green space areas, utilities  86
or equipment to be used in, or in connection with the operation  87
or maintenance of, or supplementing or otherwise related to the  88
services or facilities to be provided by, such facilities.  89
        (7) "Obligations" means bonds or notes or other evidences  90
of obligation, including interest coupons pertaining thereto,  91
authorized to be issued under this section or section 3345.07,  92
3345.11, 3354.121, 3355.091, 3357.112, or 3358.10 of the Revised  93
Code.  94
        (8) "Bond service charges" means principal, including any  95
mandatory sinking fund or redemption requirements for the  96
retirement of obligations or assurances, interest, or interest  97
equivalent and other accreted amounts, and any call premium  98
required to be paid on obligations or assurances.  99
        (9) "Bond proceedings" means the resolutions, trust  100
agreement, indenture, and other agreements and any credit  101
enhancement facilities established prior to the effective date  102
of this amendment, and amendments and supplements to the  103
foregoing, or any one or more or combination thereof,  104
authorizing, awarding, or providing for the terms and conditions  105
applicable to, or providing for the security or liquidity of,  106
obligations or assurances, and the provisions contained in those  107
obligations or assurances.  108
        (10) "Costs of facilities" means the costs of acquiring,  109
constructing, reconstructing, rehabilitating, remodeling,  110
renovating, enlarging, improving, equipping, or furnishing  111
H. B. No. 694  Page 5
As Introduced
facilities, and the financing thereof, including the cost of  112
clearance and preparation of the site and of any land to be used  113
in connection with facilities, the cost of any indemnity and  114
surety bonds and premiums on insurance, all related direct  115
administrative expenses and allocable portions of direct costs  116
of the institution of higher education or state agency, cost of  117
engineering, architectural services, design, plans,  118
specifications and surveys, estimates of cost, legal fees, fees  119
and expenses of trustees, depositories, bond registrars, and  120
paying agents for the obligations, cost of issuance of the  121
obligations and financing costs and fees and expenses of  122
financial advisers and consultants in connection therewith,  123
interest on the obligations from the date thereof to the time  124
when interest is to be covered by available receipts or other  125
sources other than proceeds of the obligations, amounts  126
necessary to establish reserves as required by the bond  127
proceedings, costs of audits, the reimbursements of all moneys  128
advanced or applied by or borrowed from the institution or  129
others, from whatever source provided, including any temporary  130
advances from state appropriations, for the payment of any item  131
or items of cost of facilities, and all other expenses necessary  132
or incident to planning or determining feasibility or  133
practicability with respect to facilities, and such other  134
expenses as may be necessary or incident to the acquisition,  135
construction, reconstruction, rehabilitation, remodeling,  136
renovation, enlargement, improvement, equipment, and furnishing  137
of facilities, the financing thereof and the placing of them in  138
use and operation, including any one, part of, or combination of  139
such classes of costs and expenses.  140
       (11) "Available receipts" means all moneys received by the  141
institution of higher education, including income, revenues, and  142
H. B. No. 694  Page 6
As Introduced
receipts from the operation, ownership, or control of facilities  143
or entrepreneurial projects, grants, gifts, donations, and  144
pledges and receipts therefrom, receipts from fees and charges,  145
and the proceeds of the sale of obligations or assurances,  146
including proceeds of obligations or assurances issued to refund  147
obligations or assurances previously issued, but excluding any  148
special fee, and receipts therefrom, charged pursuant to  149
division (D) of section 154.21 of the Revised Code.  150
        (12) "Credit enhancement facilities" has the meaning given  151
in division (H) of section 133.01 of the Revised Code.  152
        (13) "Financing costs" has the meaning given in division  153
(K) of section 133.01 of the Revised Code.  154
        (14) "Interest" or "interest equivalent" has the meaning  155
given in division (R) of section 133.01 of the Revised Code.  156
        (15) "Assurances" means bonds, notes, or other evidence of  157
indebtedness, including interest coupons pertaining thereto,  158
authorized to be issued under section 3345.36 of the Revised  159
Code.  160
        (16) "Entrepreneurial project" has the same meaning as in  161
section 3345.36 of the Revised Code.  162
        (17) "Costs of entrepreneurial projects" means any costs  163
related to the establishment or development of entrepreneurial  164
projects pursuant to a resolution adopted under section 3345.36  165
of the Revised Code.  166
        (B) Obligations issued under section 3345.07 or 3345.11 of  167
the Revised Code by a state university or college shall be  168
authorized by resolution of its board of trustees. Obligations  169
issued by any other institution of higher education shall be  170
authorized by resolution of its board of trustees, or managing  171
H. B. No. 694  Page 7
As Introduced
directors in the case of certain university branch districts, as  172
applicable. Sections 9.96 and 9.98 to 9.983 of the Revised Code  173
apply to obligations and assurances. Obligations and assurances  174
may be issued to pay costs of facilities or entrepreneurial  175
projects even if the institution anticipates the possibility of  176
a future state appropriation to pay all or a portion of such  177
costs.  178
       (C) Obligations and assurances shall be secured by a  179
pledge of and lien on all or such part of the available receipts  180
of the institution of higher education as it provides for in the  181
bond proceedings, excluding moneys raised by taxation and state  182
appropriations except as permitted by section 3333.59 of the  183
Revised Code. Such pledge and lien may be made prior to all  184
other expenses, claims, or payments, excepting any pledge except  185
in the case of any of the following:  186
       (1) A lien filed in accordance with section 3345.123 of  187
the Revised Code;  188
       (2) Any pledge of such available receipts previously made  189
to the contrary and except as ;  190
       (3) As provided by any existing restrictions on the use  191
thereof, or such .  192
       A pledge and lien may also be made subordinate to such  193
other expenses, claims, or payments, as provided in the bond  194
proceedings. Obligations or assurances may be additionally  195
secured by covenants of the institution to make, fix, adjust,  196
collect, and apply such charges, rates, fees, rentals, and other  197
items of available receipts as will produce pledged available  198
receipts sufficient to meet bond service charges, reserve, and  199
other requirements provided for in the bond proceedings.  200
H. B. No. 694  Page 8
As Introduced
Notwithstanding this and any other sections of the Revised Code,  201
the holders or owners of the obligations or assurances shall not  202
be given the right and shall have no right to have excises or  203
taxes levied by the general assembly for the payment of bond  204
service charges thereon, and each such obligation or assurance  205
shall bear on its face a statement to that effect and to the  206
effect that the right to such payment is limited to the  207
available receipts and special funds pledged to such purpose  208
under the bond proceedings.  209
       All pledged available receipts and funds and the proceeds  210
of obligations or assurances are trust funds and, subject to the  211
provisions of this section and the applicable bond proceedings,  212
shall be held, deposited, invested, reinvested, disbursed,  213
applied, and used to such extent, in such manner, at such times,  214
and for such purposes, as are provided in the bond proceedings.  215
       (D) The bond proceedings for obligations or assurances  216
shall provide for the purpose thereof and the principal amount  217
or maximum principal amount, and provide for or authorize the  218
manner of determining the principal maturity or maturities, the  219
sale price including any permitted discount, the interest rate  220
or rates, which may be a variable rate or rates, or the maximum  221
interest rate, the date of the obligations or assurances and the  222
date or dates of payment of interest thereon, their  223
denominations, the manner of sale thereof, and the establishment  224
within or without the state of a place or places of payment of  225
bond service charges. The bond proceedings also shall provide  226
for a pledge of and lien on available receipts of the  227
institution of higher education as provided in division (C) of  228
this section, and a pledge of and lien on such fund or funds  229
provided in the bond proceedings arising from available  230
receipts, which pledges and liens may provide for parity with  231
H. B. No. 694  Page 9
As Introduced
obligations or assurances theretofore or thereafter issued by  232
the institution. The available receipts so pledged and  233
thereafter received by the institution and the funds so pledged  234
are immediately subject to the lien of such pledge without any  235
physical delivery thereof or further act, and the lien of any  236
such pledge is valid and binding against all parties having  237
claims of any kind against the institution, irrespective of  238
whether such parties have notice thereof, and shall create a  239
perfected security interest for all purposes of Chapter 1309. of  240
the Revised Code, without the necessity for separation or  241
delivery of funds or for the filing or recording of the bond  242
proceedings by which such pledge is created or any certificate,  243
statement, or other document with respect thereto; and the  244
pledge of such available receipts and funds shall be effective  245
and the money therefrom and thereof may be applied to the  246
purposes for which pledged without necessity for any act of  247
appropriation.  248
       (E) The bond proceedings may contain additional provisions  249
customary or appropriate to the financing or to the obligations  250
or assurances or to particular obligations and assurances,  251
including:  252
       (1) The acquisition, construction, reconstruction,  253
equipment, furnishing, improvement, operation, alteration,  254
enlargement, maintenance, insurance, and repair of facilities or  255
entrepreneurial projects, and the duties of the institution of  256
higher education with reference thereto;  257
       (2) The terms of the obligations or assurances, including  258
provisions for their redemption prior to maturity at the option  259
of the institution of higher education at such price or prices  260
and under such terms and conditions as are provided in the bond  261
H. B. No. 694  Page 10
As Introduced
proceedings;  262
       (3) Limitations on the purposes to which the proceeds of  263
the obligations or assurances may be applied;  264
       (4) The rates or rentals or other charges for the use of  265
or right to use the facilities or entrepreneurial projects  266
financed by the obligations or assurances, or other properties  267
the revenues or receipts from which are pledged to the  268
obligations or assurances, and rules for assuring any applicable  269
use and occupancy thereof, including limitations upon the right  270
to modify such rates, rentals, other charges, or regulations;  271
       (5) The use and expenditure of the pledged available  272
receipts in such manner and to such extent as shall be  273
determined, which may include provision for the payment of the  274
expenses of operation, maintenance, and repair of facilities or  275
entrepreneurial projects so that such expenses, or part thereof,  276
shall be paid or provided as a charge prior or subsequent to the  277
payment of bond service charges and any other payments required  278
to be made by the bond proceedings;  279
       (6) Limitations on the issuance of additional obligations  280
or assurances;  281
       (7) The terms of any trust agreement or indenture securing  282
the obligations or assurances or under which the same may be  283
issued;  284
       (8) The deposit, investment, and application of funds, and  285
the safeguarding of funds on hand or on deposit without regard  286
to Chapter 131. or 135. of the Revised Code, and any bank or  287
trust company or other financial institution that acts as  288
depository of any moneys under the bond proceedings shall  289
furnish such indemnifying bonds or pledge such securities as  290
H. B. No. 694  Page 11
As Introduced
required by the bond proceedings or otherwise by the institution  291
of higher education;  292
       (9) The binding effect of any or every provision of the  293
bond proceedings upon such officer, board, commission,  294
authority, agency, department, or other person or body as may  295
from time to time have the authority under law to take such  296
actions as may be necessary to perform all or any part of the  297
duty required by such provision;  298
       (10) Any provision that may be made in a trust agreement  299
or indenture;  300
       (11) Any other or additional agreements with respect to  301
the facilities of the institution of higher education or its  302
entrepreneurial projects, their operation, the available  303
receipts and funds pledged, and insurance of facilities or  304
entrepreneurial projects and of the institution, its officers  305
and employees.  306
       (F) Such obligations or assurances may have the seal of  307
the institution of higher education or a facsimile thereof  308
affixed thereto or printed thereon and shall be executed by such  309
officers as are designated in the bond proceedings, which  310
execution may be by facsimile signatures. Any obligations or  311
assurances may be executed by an officer who, on the date of  312
execution, is the proper officer although on the date of such  313
obligations or assurances such person was not the proper  314
officer. In case any officer whose signature or a facsimile of  315
whose signature appears on any such obligation or assurance  316
ceases to be such officer before delivery thereof, such  317
signature or facsimile is nevertheless valid and sufficient for  318
all purposes as if the person had remained such officer until  319
such delivery; and in case the seal of the institution has been  320
H. B. No. 694  Page 12
As Introduced
changed after a facsimile of the seal has been imprinted on such  321
obligations or assurances, such facsimile seal continues to be  322
sufficient as to such obligations or assurances and obligations  323
or assurances issued in substitution or exchange therefor.  324
       (G) All such obligations or assurances are negotiable  325
instruments and securities under Chapter 1308. of the Revised  326
Code, subject to the provisions of the bond proceedings as to  327
registration. The obligations or assurances may be issued in  328
coupon or in registered form, or both. Provision may be made for  329
the registration of any obligations or assurances with coupons  330
attached thereto as to principal alone or as to both principal  331
and interest, their exchange for obligations or assurances so  332
registered, and for the conversion or reconversion into  333
obligations or assurances with coupons attached thereto of any  334
obligations or assurances registered as to both principal and  335
interest, and for reasonable charges for such registration,  336
exchange, conversion, and reconversion.  337
       (H) Pending preparation of definitive obligations or  338
assurances, the institution of higher education may issue  339
interim receipts or certificates which shall be exchanged for  340
such definitive obligations or assurances.  341
       (I) Such obligations or assurances may be secured  342
additionally by a trust agreement or indenture between the  343
institution of higher education and a corporate trustee, which  344
may be any trust company or bank having the powers of a trust  345
company within or without this state but authorized to exercise  346
trust powers within this state. Any such agreement or indenture  347
may contain the resolution authorizing the issuance of the  348
obligations or assurances, any provisions that may be contained  349
in the bond proceedings as authorized by this section, and other  350
H. B. No. 694  Page 13
As Introduced
provisions which are customary or appropriate in an agreement or  351
indenture of such type, including:  352
       (1) Maintenance of each pledge, trust agreement, and  353
indenture, or other instrument comprising part of the bond  354
proceedings until the institution of higher education has fully  355
paid the bond service charges on the obligations or assurances  356
secured thereby, or provision therefor has been made;  357
       (2) In the event of default in any payments required to be  358
made by the bond proceedings, or any other agreement of the  359
institution of higher education made as a part of the contract  360
under which the obligations or assurances were issued,  361
enforcement of such payments or agreement by mandamus, the  362
appointment of a receiver, suit in equity, action at law, or any  363
combination of the foregoing;  364
       (3) The rights and remedies of the holders of obligations  365
or assurances and of the trustee, and provisions for protecting  366
and enforcing them, including limitations on rights of  367
individual holders of obligations or assurances;  368
       (4) The replacement of any obligations or assurances that  369
become mutilated or are destroyed, lost, or stolen;  370
       (5) Such other provisions as the trustee and the  371
institution of higher education agree upon, including  372
limitations, conditions, or qualifications relating to any of  373
the foregoing.  374
       (J) Each duty of the institution of higher education and  375
its officers or employees, undertaken pursuant to the bond  376
proceedings or any related agreement or lease made under  377
authority of law, is hereby established as a duty of such  378
institution, and of each such officer or employee having  379
H. B. No. 694  Page 14
As Introduced
authority to perform such duty, specially enjoined by law  380
resulting from an office, trust, or station within the meaning  381
of section 2731.01 of the Revised Code. The persons who are at  382
the time the members of the board of trustees or the managing  383
directors of the institution or its officers or employees are  384
not liable in their personal capacities on such obligations or  385
assurances, or lease, or other agreement of the institution.  386
       (K) The authority to issue obligations or assurances  387
includes authority to:  388
       (1) Issue obligations or assurances in the form of bond  389
anticipation notes and to renew them from time to time by the  390
issuance of new notes. Such notes are payable solely from the  391
available receipts and funds that may be pledged to the payment  392
of such bonds, or from the proceeds of such bonds or renewal  393
notes, or both, as the institution of higher education provides  394
in its resolution authorizing such notes. Such notes may be  395
additionally secured by covenants of the institution to the  396
effect that it will do such or all things necessary for the  397
issuance of such bonds or renewal notes in appropriate amount,  398
and either exchange such bonds or renewal notes therefor or  399
apply the proceeds thereof to the extent necessary, to make full  400
payment of the bond service charges on such notes at the time or  401
times contemplated, as provided in such resolution. Subject to  402
the provisions of this division, all references to obligations  403
or assurances in this section apply to such anticipation notes.  404
       (2) Issue obligations or assurances to refund, including  405
funding and retirement of, obligations or assurances previously  406
issued to pay costs of facilities or entrepreneurial projects.  407
Such obligations or assurances may be issued in amounts  408
sufficient for payment of the principal amount of the  409
H. B. No. 694  Page 15
As Introduced
obligations or assurances to be so refunded, any redemption  410
premiums thereon, principal maturities of any obligations or  411
assurances maturing prior to the redemption of any other  412
obligations or assurances on a parity therewith to be so  413
refunded, interest accrued or to accrue to the maturity date or  414
dates of redemption of such obligations or assurances, and any  415
expenses incurred or to be incurred in connection with such  416
refunding or the issuance of the obligations or assurances.  417
       (L) Obligations and assurances are lawful investments for  418
banks, societies for savings, savings and loan associations,  419
deposit guarantee associations, trust companies, trustees,  420
fiduciaries, insurance companies, including domestic for life  421
and domestic not for life, trustees or other officers having  422
charge of sinking and bond retirement or other special funds of  423
political subdivisions and taxing districts of this state, the  424
commissioners of the sinking fund, the administrator of workers'  425
compensation in accordance with the investment policy approved  426
by the bureau of workers' compensation board of directors  427
pursuant to section 4121.12 of the Revised Code, the state  428
teachers retirement system, the public employees retirement  429
system, the school employees retirement system, and the Ohio  430
police and fire pension fund, notwithstanding any other  431
provisions of the Revised Code or rules adopted pursuant thereto  432
by any state agency with respect to investments by them, and are  433
also acceptable as security for the deposit of public moneys.  434
       (M) All facilities or entrepreneurial projects purchased,  435
acquired, constructed, or owned by an institution of higher  436
education, or financed in whole or in part by obligations or  437
assurances issued by an institution, and used for the purposes  438
of the institution or other publicly owned and controlled  439
college or university, is public property used exclusively for a  440
H. B. No. 694  Page 16
As Introduced
public purpose, and such property and the income therefrom is  441
exempt from all taxation and assessment within this state,  442
including ad valorem and excise taxes. The obligations or  443
assurances, the transfer thereof, and the income therefrom,  444
including any profit made on the sale thereof, are at all times  445
free from taxation within the state. The transfer of tangible  446
personal property by lease under authority of this section or  447
section 3345.07, 3345.11, 3345.36, 3354.121, 3355.091, 3357.112,  448
or 3358.10 of the Revised Code is not a sale as used in Chapter  449
5739. of the Revised Code.  450
       (N) The authority granted by this section is cumulative  451
with the authority granted to institutions of higher education  452
under Chapter 154. of the Revised Code, and nothing in this  453
section impairs or limits the authority granted by Chapter 154.  454
of the Revised Code. In any lease, agreement, or commitment made  455
by an institution of higher education under Chapter 154. of the  456
Revised Code, it may agree to restrict or subordinate any pledge  457
it may thereafter make under authority of this section.  458
       (O) Title to lands acquired under this section and  459
sections 3345.07 and 3345.11 of the Revised Code by a state  460
university or college shall be taken in the name of the state.  461
       (P) Except where costs of facilities or entrepreneurial  462
projects are to be paid in whole or in part from funds  463
appropriated by the general assembly, section 125.81 of the  464
Revised Code and the requirement for certification with respect  465
thereto under section 153.04 of the Revised Code do not apply to  466
such facilities or entrepreneurial projects.  467
       (Q) A state university or college may sell or lease lands  468
or interests in land owned by it or by the state for its use, or  469
facilities authorized to be acquired or constructed by it under  470
H. B. No. 694  Page 17
As Introduced
section 3345.07 or 3345.11 of the Revised Code, to permit the  471
purchasers or lessees thereof to acquire, construct, equip,  472
furnish, reconstruct, alter, enlarge, remodel, renovate,  473
rehabilitate, improve, maintain, repair, or maintain and operate  474
thereon and to provide by lease or otherwise to such  475
institution, facilities authorized in section 3345.07 or 3345.11  476
of the Revised Code or entrepreneurial projects authorized under  477
section 3345.36 of the Revised Code. Such land or interests  478
therein shall be sold for such appraised value, or leased, and  479
on such terms as the board of trustees determines. All deeds or  480
other instruments relating to such sales or leases shall be  481
executed by such officer of the state university or college as  482
the board of trustees designates. The state university or  483
college shall hold, invest, or use the proceeds of such sales or  484
leases for the same purposes for which proceeds of borrowings  485
may be used under sections 3345.07 and 3345.11 of the Revised  486
Code or, if the proceeds relate to the sale or lease of  487
entrepreneurial projects, for purposes of section 3345.36 of the  488
Revised Code.  489
       (R) An institution of higher education may pledge  490
available receipts, to the extent permitted by division (C) of  491
this section with respect to obligations, to secure the payments  492
to be made by it under any lease, lease with option to purchase,  493
or lease-purchase agreement authorized under this section or  494
section 3345.07, 3345.11, 3345.36, 3354.121, 3355.091, 3357.112,  495
or 3358.10 of the Revised Code.  496
       Sec. 3345.123. (A) As used in this section:  497
       (1) "Facilities" has the same meaning as in section  498
3345.12 of the Revised Code but does not include a facility that  499
is funded solely by federal or private sources.  500
H. B. No. 694  Page 18
As Introduced
       (2) "State institution of higher education" and "state  501
university" have the same meanings as in section 3345.011 of the  502
Revised Code.  503
       (B) The Ohio facilities construction commission shall have  504
a lien upon all facilities of state institutions of higher  505
education and state universities constructed, reconstructed,  506
enlarged, remodeled, renovated, improved, furnished, or  507
equipped, or any combination thereof, with state funds or  508
financed by the Ohio public facilities construction commission,  509
the Ohio facilities construction commission, or any other state  510
entity on or after the effective date of this section.  511
       (C) A lien provided under this section shall be:  512
       (1) For the amount of the actual project costs covered by  513
the entity;  514
       (2) Filed and recorded by the Ohio facilities construction  515
commission in the office of the county recorder in the county in  516
which the facility is located.  517
       (D) In the event a facility upon which the commission has  518
a lien provided under this section closes, is sold, or no longer  519
operates as a facility, the lien has priority over any lien  520
created pursuant to section 3345.12 of the Revised Code.  521
       (E) A lien provided under this section continues in force  522
for thirty years after it is recorded or until the amount of the  523
lien is repaid, whichever occurs first. If an action is brought  524
to enforce the lien within that time, the lien continues in  525
force until final adjudication thereof.  526
       (F) An action to enforce a lien provided by this section  527
may be brought by the attorney general.  528
H. B. No. 694  Page 19
As Introduced
       Sec. 3345.74. (A) The chancellor of higher education at  529
least annually shall apply the indicators and standards adopted  530
under division (A) of section 3345.73 of the Revised Code to  531
determine whether a state university or college under a fiscal  532
watch is experiencing sufficient fiscal difficulties to warrant  533
the appointment of a conservator under this section or if the  534
board of trustees of a state university or college has taken any  535
action related to pausing or stopping enrollment, submitted a  536
withdrawal of accreditation, or taken any other action  537
indicating it will no longer offer educational activity or will  538
undergo a wind down and dissolution of existence. Upon making a  539
determination that appointment of a conservator is warranted,  540
the chancellor shall request from the office of budget and  541
management, which shall provide, certification that sufficient  542
fiscal difficulties exist to warrant appointment of a  543
conservator. The chancellor shall then certify this  544
determination to the governor and, for the purposes of section  545
3345.741 of the Revised Code, the speaker of the house of  546
representatives and the president of the senate.  547
       Notwithstanding section 3333.021 of the Revised Code, that  548
section does not apply to certification by the chancellor under  549
this section or to the declaration of a fiscal watch under  550
section 3345.72 of the Revised Code.  551
       A determination by the chancellor under this division that  552
sufficient fiscal difficulties exist or do not exist to warrant  553
appointing a conservator is final and conclusive and not  554
appealable.  555
       (B) The If a conservator is determined necessary under  556
divisions (B) and (C) of section 3345.741 of the Revised Code,  557
the governor may appoint a conservator for any state university  558
H. B. No. 694  Page 20
As Introduced
or college under a fiscal watch, upon certification by the  559
chancellor under division (A) of this section that the  560
appointment is warranted. The governor shall appoint a  561
conservator from the list of recommended candidates selected  562
under division (C) of section 3345.741 of the Revised Code. The  563
governor shall consult with the speaker and minority leader of  564
the house of representatives and the president and minority  565
leader of the senate before making the appointment. From the  566
time a conservator is appointed until the time the governor  567
issues an order terminating the governance authority under  568
division (B) of section 3345.76 of the Revised Code, the  569
governor may remove any member of the board of trustees of the  570
state university or college from office and not fill the  571
vacancy.  572
       (C) Upon appointment of a conservator under this section  573
for a state university or college, all of the following shall  574
occur effective immediately:  575
       (1) All duties, responsibilities, and powers of the board  576
of trustees of the university or college are suspended;  577
       (2) The management and control of the state university or  578
college is assumed by the conservator;  579
       (3) Notwithstanding any section of the Revised Code, all  580
duties, responsibilities, and powers assigned by law to the  581
board of trustees are assigned to the conservator, and the  582
conservator becomes the successor to, assumes the lawful  583
obligations of, and otherwise constitutes the continuation of  584
the board of trustees for purposes of all pending legal actions,  585
contracts or other agreements, and obligations of the university  586
or college;  587
H. B. No. 694  Page 21
As Introduced
       (4) Wherever the board of trustees is referred to in any  588
contract or legal document, the reference is deemed to refer to  589
the conservator. No validation, cure, right, privilege, remedy,  590
obligation, or liability is lost or impaired by reason of the  591
assumption of the board's authority by the conservator under  592
this section and any such validation, cure, right, privilege,  593
remedy, obligation, or liability shall be administered by the  594
conservator. No action or proceeding pending on the effective  595
date of the assumption by the conservator of the board's  596
authority is affected by that assumption and any such action or  597
proceeding shall be prosecuted or defended in the name of the  598
conservator.  599
       (5) The conservator assumes custody of all equipment,  600
records, files, effects, and all other property real or personal  601
of the state university or college;  602
       (6) All authority and duties of the president or chief  603
executive officer, and the pay of the president or chief  604
executive officer, are suspended.  605
       (D) The conservator for a state university or college  606
shall conduct a preliminary performance evaluation of the  607
president or chief executive officer of the university or  608
college and provide a copy of findings and any recommendations  609
to the governance authority established for the university or  610
college under section 3345.75 of the Revised Code.  611
       (E) A conservator appointed under this section shall be  612
immune, indemnified, and held harmless from civil liability,  613
including any cause of action, legal, equitable, or otherwise,  614
for any action taken or duties performed by the conservator in  615
good faith and in furtherance of the performance of the duties  616
of the conservator under this section.  617
H. B. No. 694  Page 22
As Introduced
       (F) The governor chancellor, in consultation with the  618
higher education committees, shall set the compensation for a  619
conservator appointed for a state university or college. The  620
expenses and compensation of the conservator and others employed  621
by the conservator shall be paid out of the operating funds and  622
revenues of that university or college.  623
       (G) A conservator appointed for a state university or  624
college shall report at least quarterly to the higher education  625
committees for as long as the conservator is performing duties  626
under this section.  627
       (H) As used in this section, "higher education committees"  628
means the committee established under division (A) of section  629
3345.741 of the Revised Code and the standing committee of the  630
senate that considers higher education legislation.  631
       Sec. 3345.741. (A) Upon certification by the chancellor of  632
higher education that the appointment of a conservator for a  633
state university or college is warranted under division (A) of  634
section 3345.74 of the Revised Code, the speaker of the house of  635
representatives shall establish a committee to consider the  636
appointment of a conservator for that state university or  637
college. The committee shall consist of the following members of  638
the house of representatives:  639
       (1) The speaker of the house of representatives or the  640
speaker's designee;  641
       (2) The chairperson of the standing committee of the house  642
of representatives that considers higher education legislation;  643
       (3) The chairperson of the finance committee of the house  644
of representatives.  645
       The speaker of the house of representatives shall  646
H. B. No. 694  Page 23
As Introduced
designate one member of the committee to serve as its  647
chairperson.  648
        (B)(1) The committee established under division (A) of  649
this section shall hold at least one public hearing to determine  650
if appointing a conservator is necessary and, if so, to consider  651
candidates to serve as conservator. The committee shall solicit  652
the advice of the chancellor of higher education and the  653
governor on these matters and may request that the chancellor,  654
or the chancellor's designee, and the governor, or the  655
governor's designee, participate in the public hearing.  656
        (2) If the committee determines appointing a conservator  657
is not necessary, the chairperson of the committee shall notify  658
the chancellor, governor, speaker of the house of  659
representatives, and president of the senate of that  660
determination, and no conservator shall be appointed for the  661
state university or college under section 3345.74 of the Revised  662
Code.  663
        (3) If the committee determines appointing a conservator  664
is necessary, the committee shall select at least three  665
candidates to recommend to serve as conservator for the state  666
university or college. The chairperson of the committee shall  667
notify the chancellor, governor, speaker of the house of  668
representatives, president of the senate, and chairperson of the  669
standing committee of the senate that considers higher education  670
legislation of that determination and the list of recommended  671
candidates.  672
        (C)(1) If the chairperson of the standing committee of the  673
senate that considers higher education legislation receives  674
notice under division (B)(3) of this section, the chairperson  675
shall hold at least one public hearing about whether to appoint  676
H. B. No. 694  Page 24
As Introduced
a conservator for the state university or college and the list  677
of candidates to serve as conservator provided by the house of  678
representatives. The standing committee shall solicit the advice  679
of the chancellor and the governor on these matters and may  680
request that the chancellor, or the chancellor's designee, and  681
the governor, or the governor's designee, participate in the  682
public hearing.  683
       (2) If the standing committee determines appointing a  684
conservator is not necessary, the chairperson of the standing  685
committee shall notify the chancellor, governor, speaker of the  686
house of representatives, and president of the senate of that  687
fact and no conservator shall be appointed for the state  688
university or college under section 3345.74 of the Revised Code.  689
       (3) If the standing committee determines appointing a  690
conservator is necessary, the standing committee shall select,  691
from the list of recommended candidates provided by the house of  692
representatives, at least three candidates to recommend to serve  693
as conservator for the state university or college. The  694
chairperson of the standing committee shall notify the  695
chancellor, governor, speaker of the house of representatives,  696
and president of the senate of that determination and the list  697
of recommended candidates.  698
       (D) In considering candidates to serve as conservator for  699
a state university or college, the committee established under  700
division (A) of this section and the standing committee of the  701
senate that considers higher education legislation shall give  702
priority consideration to candidates who have extensive  703
experience in governmental matters, including capital budgets,  704
debt issuance, and debt service, facilities, and orderly closure  705
of public entities.  706
H. B. No. 694  Page 25
As Introduced
       Sec. 3345.75. (A) Not later than thirty days after the  707
date of the appointment of a conservator for a state university  708
or college under section 3345.74 of the Revised Code, the  709
governor shall appoint, with the advice and consent of the  710
senate, a governance authority for the university or college  711
consisting of five members, of which one shall have expertise in  712
academic affairs and accreditation and one shall have expertise  713
in either state agency budgets or state university or college  714
finances. The members shall serve at the pleasure of the  715
governor and any vacancies shall be filled in the same manner as  716
an original appointment.  717
       The governor shall designate one of the members of the  718
governance authority as the chairperson and shall call the first  719
meeting of the authority. A majority of the members of a  720
governance authority constitutes a quorum and the affirmative  721
vote of a majority of the members shall be necessary for any  722
action taken by an authority. Meetings of a governance authority  723
shall be called in the manner and at the times prescribed by the  724
authority, but the authority shall meet at least four times  725
annually and at other times necessary for the best interest of  726
the university or college. A governance authority may adopt  727
procedures for the conduct of its business.  728
       The members of a governance authority shall not receive  729
compensation for their services, but shall be paid their  730
reasonable and necessary expenses while engaged in the discharge  731
of their official duties.  732
       A governance authority shall report at least quarterly to  733
the higher education committees, as defined in section 3345.74  734
of the Revised Code, for as long as the governance authority is  735
in existence.  736
H. B. No. 694  Page 26
As Introduced
       (B)(1) A governance authority established under this  737
section shall appoint an executive director who shall serve at  738
the pleasure of the authority and with the compensation and  739
other terms and conditions established by it. With the approval  740
of the chairperson of the authority, the executive director may  741
appoint additional personnel as the director considers  742
appropriate. The executive director shall oversee the day-to-day  743
operation of the university or college under the direction and  744
supervision of the authority.  745
       (2) The governance authority shall conduct a final  746
performance evaluation of the president or chief executive  747
officer of the university or college. Following the evaluation,  748
the governance authority may reinstate any duties, authority, or  749
pay previously suspended under division (C)(6) of section  750
3345.74 of the Revised Code, or may terminate the president or  751
chief executive officer in accordance with the terms of the  752
person's employment contract.  753
       (C) Upon appointment of all members of a governance  754
authority under this section and upon the effective date for the  755
commencement of the duties of the executive director appointed  756
by that authority under this section, all authority,  757
responsibilities, duties, and references assumed by or conferred  758
upon the conservator under divisions (C)(2) to (6) of section  759
3345.74 of the Revised Code terminate and all of the following  760
shall occur, effective immediately:  761
       (1) The management and control of the state university or  762
college is assumed by the governance authority;  763
       (2) Notwithstanding any section of the Revised Code, all  764
duties, responsibilities, and powers assigned by law to the  765
board of trustees or to the conservator are assigned to the  766
H. B. No. 694  Page 27
As Introduced
governance authority and the governance authority becomes the  767
successor to, assumes the lawful obligations of, and otherwise  768
constitutes the continuation of the board of trustees and the  769
conservator for purposes of all pending legal actions, contracts  770
or other agreements, and obligations of the university or  771
college;  772
       (3) Wherever the board of trustees or conservator is  773
referred to in any contract or legal document, the reference is  774
deemed to refer to the governance authority. No validation,  775
cure, right, privilege, remedy, obligation, or liability is lost  776
or impaired by reason of the assumption of the authority of the  777
board of trustees and the conservator by the governance  778
authority under this section and any such validation, cure,  779
right, privilege, remedy, obligation, or liability shall be  780
administered by the governance authority. No action or  781
proceeding pending on the effective date of the assumption by  782
the governance authority of the authority of the board of  783
trustees and the conservator is affected by that assumption and  784
any such action or proceeding shall be prosecuted or defended in  785
the name of the governance authority.  786
       (4) The governance authority assumes custody of all  787
equipment, records, files, effects, and all other property real  788
or personal of the state university or college.  789
       (D) A governance authority and executive director  790
appointed under this section shall be immune, indemnified, and  791
held harmless from civil liability, including any cause of  792
action, legal, equitable, or otherwise, for any action taken or  793
duties performed by the governance authority and executive  794
director in good faith and in furtherance of the performance of  795
the duties of the governance authority and executive director  796
H. B. No. 694  Page 28
As Introduced
under this section.  797
       (E) The expenses of a governance authority and the  798
expenses and compensation of an executive director appointed for  799
a state university or college under this section and others  800
employed by the executive director under this section shall be  801
paid out of the operating funds and revenues of that university  802
or college.  803
       (F) A governance authority appointed under this section  804
shall prepare, in accordance with rules adopted by the office of  805
budget and management, and submit to the chancellor of higher  806
education, the governor, the speaker and minority leader of the  807
house of representatives, and the president and minority leader  808
of the senate a quarterly report setting forth all of the  809
following:  810
       (1) The general condition of the university or college;  811
       (2) The amounts of receipts and disbursements and the  812
items for which the disbursements were made;  813
       (3) The numbers of professors, officers, teachers, and  814
other employees and the position and compensation of each and  815
the numbers of students by courses of instruction;  816
       (4) An estimate of expenses for the ensuing quarter;  817
       (5) A statement of the general progress of the university  818
or college with indication of any improvements and specification  819
of any experiments with institutional reform and the costs and  820
results of those experiments;  821
       (6) If the governance authority determines closure is  822
necessary or is appointed to facilitate an orderly closure as  823
determined to be necessary by the board of trustees prior to the  824
H. B. No. 694  Page 29
As Introduced
governance authority's appointment, all matters related to  825
compliance with the requirements of a closure of an institution  826
of higher education as specified by the chancellor;  827
       (7) Any other matters the governance authority considers  828
useful to report.  829
       (G) The attorney general shall be the legal adviser to the  830
conservator and the governance authority, and the attorney  831
general may employ special counsel to aid the conservator or  832
governance authority with respect to any legal matter on behalf  833
of the institution. The conservator and the governance authority  834
may as otherwise provided by law request the attorney general to  835
bring or defend suits or proceedings in the name of the  836
institution.  837
       Section 2. That existing sections 154.07, 3345.12,  838
3345.74, and 3345.75 of the Revised Code are hereby repealed.  839
       Section 3. That sections 154.25 and 3333.59 of the Revised  840
Code are hereby repealed.  841
       Section 4. On and after the effective date of this  842
section, the Chancellor of Higher Education shall no longer  843
approve any requests under sections 154.25 or 3333.59 of the  844
Revised Code, as those sections existed before their repeal by  845
Section 3 of this act, to enter into an agreement providing for  846
the withholding and deposit of an institution's allocated state  847
share of instruction under a credit enhancement agreement, for  848
the payment of bond service charges on obligations. The  849
Chancellor, with the advice and consent of the Office of Budget  850
and Management, may adopt reasonable rules for the treatment of  851
any credit enhancement agreement that existed prior to the  852
effective date of this section that directly conflicts with any  853
H. B. No. 694  Page 30
As Introduced
lien filed in accordance with section 3345.123 of the Revised  854
Code.  855