Editorial: A checkup for fiscal health

The Columbus Dispatch

No one can see the future, but there are ways to get an inkling of where things are headed. Leading indicators have been used for decades by economists, business people and policy makers to try to project where an economy, an industry or a business is likely to head in the near future. Tracking certain numbers over time – inventories, unemployment claims, customer satisfaction – can provide useful, if not infallible, clues about what lies ahead.

State Auditor Dave Yost has done something similar for Ohio municipalities, with a recently unveiled report and website called Financial Health Indicators (http://ohioauditor.gov/FHI/). This report measures the financial health of 247 cities and Ohio’s 88 counties and provides an early warning to those exhibiting danger signs.

The indicators were derived by reverse-engineering previous fiscal disasters, in much the same way that investigators suss out the cause of a plane crash so that they then can inspect other planes for signs of similar problems. The auditor’s staff identified municipalities that had suffered fiscal crises, then traced back in time to identify the trends in financial data that led to the crisis. Staff then checked to see if similar trends could be found in places that have not yet reached crisis.

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