§1351. Appointment of a fiscal administrator
A.
(1)(a) The legislative auditor, the attorney general, and the state treasurer, or their
designees, shall meet as often as deemed necessary to review the financial stability of the
political subdivisions of this state.
(b)As used in this Chapter, "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. A political subdivision shall not be considered financial
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§1351. Appointment of a fiscal administrator
A.(1)(a) The legislative auditor, the attorney general, and the state treasurer, or their
designees, shall meet as often as deemed necessary to review the financial stability of the
political subdivisions of this state.
(b) As used in this Chapter, "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. A political subdivision shall not be considered financially stable if any
of the conditions described in Items (2)(a)(i) through (x) of this Subsection exist. The
existence of a single such condition is sufficient to remove a political subdivision from the
category of "financial stability" regardless of its other financial metrics or circumstances.
(2)(a) The attorney general shall file a rule to show cause to appoint a fiscal
administrator for the political subdivision as provided for in this Chapter if it is determined
by the unanimous decision of the legislative auditor, the attorney general, and the state
treasurer at a public meeting to consider such matters that a political subdivision is
reasonably certain to not maintain financial stability including but not limited to any of the
following conditions:
(i) Having insufficient revenue to pay twelve months of operating expenditures,
excluding civil judgments.
(ii) Failure to make a debt service payment.
(iii) Material fraud, misappropriation, or intentional misrepresentation in financial
records that has been discovered by any regulatory body, law enforcement agency, auditor,
or governmental entity.
(iv) File or maintain false public records including knowingly filing, maintaining,
or certifying false, fraudulent, or materially misleading financial documents, reports, or
records.
(v) Receive an audit opinion other than an unmodified opinion, or having a material
weakness, significant deficiency, or growing concern, or uncertainty identified in the
independent audit.
(vi) Violate or is in technical default of bond covenants or financing agreements.
(vii) Recurring or significant reliance on nonrecurring sources of revenue to cover
routine operating expenditures. "Significant reliance" includes cashing certificates or
deposits or other long-term investments to pay operating expenses, or using funds from loans
that are intended for a purpose other than paying operating expenses.
(viii) Failure to timely adopt a balanced annual budget or repeated mid-year budget
adjustments indicative of structural financial imbalance.
(ix) Failure to make timely payments to retirement systems or health benefit
programs for employees.
(x) Failure to make timely payments to the Internal Revenue Service or the Louisiana
Department of Revenue for employees' payroll taxes.
(b) In addition to either of the determinations in Subparagraph (a) of this Paragraph,
in the case of a city, parish, or other local public school board, upon notification by the state
superintendent of education as he is directed to do by the State Board of Elementary and
Secondary Education, the attorney general shall file such a rule when, by the unanimous
decision of the legislative auditor, the attorney general, and the state treasurer at a public
meeting to consider such matters, a determination is made that such local public school board
is reasonably certain to fail to resolve its status as financially at risk as that status has been
defined by rule by the State Board of Elementary and Secondary Education for ensuring the
fiscal soundness of all public school systems, pursuant to R.S. 17:10.1(C).
(c)(i) Failure of a political subdivision to provide an audit required by R.S. 24:513
to the legislative auditor for a period of two consecutive fiscal years shall automatically
remove the political subdivision from the category of "financial stability" as defined in this
Section and shall be prima facie evidence that the political subdivision is reasonably certain
not to have sufficient revenue to pay current expenditures, excluding civil judgments.
(ii) Failure of a city, parish, or other local public school board to provide an audit
required by R.S. 24:513 to the legislative auditor for a period of two consecutive fiscal years
shall automatically place that political subdivision in the category of "financially at risk" and
shall be prima facie evidence that the political subdivision is reasonably certain to fail to
resolve its status as financially at risk as that status is defined by rule by the State Board of
Elementary and Secondary Education.
(3) Upon making the decision authorized by Paragraph (2) of this Subsection, the
attorney general shall, on motion in the district court of the domicile of the political
subdivision, file a rule on the political subdivision to show cause why a fiscal administrator
should not be appointed for the political subdivision as provided for in this Chapter. The
hearing on the rule to show cause shall be tried out of term, shall always be tried by
preference, and shall be held in not less than ten nor more than twenty days from the date the
motion is filed. If the political subdivision consents to the appointment of a fiscal
administrator, a joint motion by the attorney general and the political subdivision, along with
a consent judgment, shall be filed in the district court of the domicile of the political
subdivision within forty-five days of the decision authorized by Paragraph (2) of this
Subsection. The court shall appoint a fiscal administrator within twenty days of filing the
joint motion and consent judgment according to the terms of the consent judgment.
B.(1) The trial court, in the absence of a joint motion and consent judgment, shall
appoint a fiscal administrator in the following instances:
(a) If the court finds by a preponderance of the evidence from the facts and evidence
deduced at the hearing of the rule that the political subdivision is reasonably certain to fail
to make a debt service payment or reasonably certain to not have sufficient revenue to pay
current expenditures, excluding civil judgments, or any of the conditions set forth in Items
(A)(2)(a)(iii) through (x) of this Section exists or, in the case of a city, parish, or other local
public school board, reasonably certain to fail to resolve its status as financially at risk as that
status has been defined by rule by the State Board of Elementary and Secondary Education.
(b) If a political subdivision has failed to provide an audit required by R.S. 24:513
to the legislative auditor for a period of two consecutive fiscal years, unless the political
subdivision provides sufficient evidence to establish that the political subdivision has an
audit for one or more of two such years.
(c) If the condition or operations of any community water system or community
sewerage system necessitates the expenditure of state funds to address or mitigate an
emergency related to that community system as provided for in R.S. 30:2075.4 or R.S.
40:5.9.1.
(2) The fiscal administrator shall be a person recommended by the legislative auditor
and the attorney general and approved by the court as having sufficient education,
experience, and qualifications to enable him to perform the duties of fiscal administrator as
provided for in this Chapter.
(3) The fiscal administrator appointed under this Chapter shall be indemnified as a
covered person as defined in R.S. 13:5108.1.
(4) All costs and expenses associated with the independent fiscal administration of
a political subdivision, including but not limited to all costs and expenses incurred by the
fiscal administrator, the legislative auditor, the attorney general, the state treasurer, and any
other persons engaged in connection with the independent fiscal administration of a political
subdivision shall be borne by the political subdivision subject to independent fiscal
administration.
C. Once appointed, a 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.