State auditor warns of steep local audit rate hikes unless Senate funds recommended budget

Auditor of State Keith Faber told the Senate Finance Committee that the auditor's office requires full funding of its executive budget submission to preserve affordable audit rates for local governments and schools and to sustain fraud and performance work statewide.

Faber said his office has kept local audit rates at $41 per hour since February 2011, subsidized by state appropriations, and proposed modest increases to $42 in FY26 and $43 in FY27. He warned that the governor’s recommended funding levels would require much larger increases — to about $50 per hour in the first year and $56 in the second year — to maintain operations. Faber said the House substitute included the funding his office requested and thanked House leadership for supporting those levels.

Why it matters: The auditor’s office audits roughly 6,000 local government entities across Ohio. Significant rate increases would raise costs for townships, villages, municipalities and school districts that already face tight budgets.

Key points from testimony

- Audit rates and subsidy: The office charges audit recipients to recover direct and indirect audit costs under Revised Code section 117.13. The state audit rate is $90 per hour in 2025 and is projected to be about $96 in the next biennium. Local government audit rates have been subsidized (charged $41/hour in 2025) through state appropriations; Faber’s budget proposes modest increases while warning larger rate hikes are the alternative if the state does not maintain requested subsidy.

- Operational scope: Faber highlighted the office’s Uniform Accounting Network (UAN), local government services, the Special Investigations Unit (SIU) and the Ohio Performance Team (OPT). SIU has closed more than 130 criminal convictions since his tenure began and OPT recently completed eight performance audits last biennium (twice the statutory minimum of four per biennium under Revised Code section 119.46).

- Medicaid and provider audits: Faber told the committee his office has identified duplication of Medicaid enrollment across states and flagged the issue as costing “hundreds of millions of dollars.” He described limits on provider audits tied to federal reimbursement rules and urged more resources to pursue provider‑level audits where the office sees statistical inconsistencies or outlier billing patterns (for example, consistently high acuity coding or home‑health billing practices).

- K–12 fiscal health tools: Faber said his office will roll out school district financial health indicators to supplement or improve upon five‑year forecasts, which he characterized as vulnerable to wide assumption variance. The new indicators will use objective, statement‑based metrics and produce red/green/yellow flags to give earlier warning of fiscal deterioration.

Follow‑up and outcome

Faber said the House adopted the funding levels his office requested in the substitute version of House Bill 96. He urged the Senate to adopt similar funding to avoid a large rate shock for local governments and said his office will provide additional details and regional office locations on request.

Ending

Faber said continued legislative support would allow the auditor’s office to keep local rates near historical levels while investing modestly in the SIU and Ohio Performance Team to detect waste, fraud, and structural fiscal problems.