Understanding the Legality and Importance of Ohio’s Controlling Board

What Is Ohio’s Controlling Board and Why Is It Important to the Debate Over Expanding Ohio’s Medicaid Program?


As the Ohio debate has continued over whether to expand the state’s Medicaid program, one of the issues that has arisen is how Governor Kasich will proceed with his plan to accomplish this goal. In light of an ongoing deadlock in Ohio’s General Assembly over this issue, it appears that the Governor will use an existing, alternate pathway to commence this expanded program in January 2014.

That alternate pathway is through the use of Ohio’s Controlling Board. Despite its somewhat ominous name, the Controlling Board doesn’t control EVERYTHING in Ohio, but the Controlling Board does play a very important role in Ohio’s government. Accordingly, it is important for all of us to understand the structure and authority of the Controlling Board.

History and Purpose of the Controlling Board

From its creation in 1917, Ohio’s Controlling Board has been designed to address the day-to-day responsibilities of administering the budget for a large and complicated state like Ohio. Pursuant to the Ohio Constitution, the General Assembly and Governor must agree on a balanced budget every two years. That budget process results in a 2-year budget, beginning on July 1 of each odd-numbered year.

Not surprisingly, it was long ago recognized that during any 2-year time period, the agreed upon biennial budget would need to be modified in order to address circumstances that were not anticipated at the time the budget was adopted. For nearly 100 years, that role has been filled by the Controlling Board.

The composition of the Controlling Board has varied over the years, but the current membership of the Controlling Board has remained essentially the same since 1969. Today, the Controlling Board is described in R.C. Chapter 127. It consists of seven members; (i) a Republican and a Democrat from each chamber of the General Assembly; (ii) the Finance Chairs of the Senate and the House; and, (iii) a President who is the representative of the Director of the Office of Budget and Management, who is a member of the Governor’s cabinet.

As is clear from its membership, the Controlling Board is, in form, a Joint Legislative Committee and it is described as such by the General Assembly. The Controlling Board’s essential function is to provide legislative oversight to the Executive Branch as it administers Ohio’s biennial budget, and to provide a convenient forum for the ongoing budget modification process.

R.C. Chapter 127 also generally describes the duties of the Controlling Board. Over the nearly 100 years of the Controlling Board’s existence, experience has led to various expansions of the authority of the Controlling Board. Those changes have been designed to ensure that Ohio’s budget process is flexible enough to meet the almost daily changes required in the administration of the government of Ohio.

In addition to authorizing various transfers within agency budgets, and approving expenditures of virtually all of the state’s capital funds, the Controlling Board plays a role in reviewing and approving major contracts and leases to ensure that Ohio’s funds are spent by the Executive Branch in a transparent and accountable manner. The Controlling Board is even responsible for approving the state’s collective bargaining agreements with the various unions that represent unionized state workers.

Last, but certainly not least, the Controlling Board plays a major role in determining how to address budget shortfalls, by reducing state expenditures. Similarly, in “good times” the Controlling Board addresses what to do with budget “windfalls” when unexpected and/or additional state revenue becomes available.

In short, the Controlling Board is the major conduit for the use of state funds by Ohio government and it carefully supervises those expenditures. Very few significant expenditures are made by Ohio government without review by the Controlling Board.

The Controlling Board and Federal Funds

In addition to the foregoing responsibilities, the Controlling Board also is responsible for supervising the similar, but completely independent, function of “controlling” the expenditure of funds that Ohio receives from the federal government and certain other external funding sources. Those responsibilities are outlined in a different Chapter of the Revised Code – specifically they are set forth in R.C. Section 131.35.

Pursuant to that statutory authority, the Controlling Board has regularly exercised control over the receipt and disbursement of large sums of federal dollars that were not included in the basic Ohio biennial budget process. In recent decades, there has been a regular flow of funds from the federal government back to Ohio, sometimes anticipated and sometimes not. The Controlling Board has supervised and “controlled” that process, in addition to its role as the supervising entity over the expenditure of state-generated funds.

We are all familiar with the basic funding returned to Ohio through this intergovernmental process, such as funds for Medicaid, education, and countless other programs that are jointly funded from state and federal sources. These programs are typically built into Ohio’s biennial budget. In addition to that regular revenue stream, the Controlling Board has also been solely responsible for the “control” of federal funds that were NOT authorized at the time of the adoption of Ohio’s biennial budget.

For example, in 2010 the Controlling Board was solely responsible for accepting and disseminating additional Medicaid dollars, which were allocated to Ohio. Those additional dollars, which were allocated to Ohio as the result of an alteration in the funding formula for Medicaid, totaled an additional $210 million for fiscal year 2010 and, an additional $371 million for fiscal year 2011.

Similarly, the Controlling Board was solely responsible for accepting and disseminating over $100 million in federal “Race to the Top” education funds that were awarded to Ohio through a competitive process. As in the case of the additional Medicaid funds, these dollars were not accounted for in the Ohio basic budget process.

As you can see from the foregoing examples, the Controlling Board is regularly responsible for the receipt, appropriate allocation, and dissemination of large sums of federal dollars. This important work is plainly within the historic, statutory jurisdiction of the Controlling Board and is an integral part of its regular operations. No one has ever challenged the authority of the Controlling Board to fulfill this statutory responsibility as it relates to federal funds.

The Constitutionality of the Controlling Board

Recently, there have been statements made claiming that the Controlling Board structure and its activities are unconstitutional and that it cannot “accept” federal funds to expand Ohio’s Medicaid program. As you might expect, in light of the extraordinarily important roles that the Controlling Board fills in Ohio’s budget process, this type of attack has occurred before.

For example in State ex rel. Meshel v. Keip, 66 Ohio St. 2d 379 (1981), the Ohio Supreme Court directly addressed the issue of whether the Controlling Board, as currently constituted, is a constitutionally approved agency of the State of Ohio. The Supreme Court made short shrift of the arguments that the Controlling Board was an unconstitutional delegation of legislative authority.

On the other hand, the Ohio Supreme Court did hold in the Meshel case that the Controlling Board cannot act in a manner that is contrary to applicable Ohio law. Thus, the Supreme Court found that by directly acting contrary to Ohio law in that case, the Controlling Board had exceeded its authority. However, but for the limited exception of violating contrary Ohio law, there have never been any other judicial limitations placed upon the authority of the Controlling Board.

The bottom line is that there has never been a successful attack on the overall authority of the Controlling Board to exercise significant control over the funding of the operations of Ohio government. As long as the Controlling Board follows existing Ohio law, it has full power and authority to act on matters related to its overall jurisdiction. Statements to the contrary are simply incorrect, and lack any legal or factual foundation.

The Controlling Board and Medicaid Funding

As noted above, the current issue as to whether the Controlling Board has the power to accept additional funding from the federal government for the state’s Medicaid program, even though the funds were not accounted for originally in Ohio’s biennial budget, is not a new situation. Within the last 3 years alone, the Controlling Board accepted, properly accounted for, and disseminated nearly $800 million in additional federal funds that were to be used in connection with Ohio’s Medicaid program. No one challenged the power and authority of the Controlling Board to exercise control over these federal funds, pursuant to R.C. Section 131.35, despite the fact these funds were not originally appropriated in the applicable state budget legislation.

It cannot be seriously disputed that the Controlling Board has the overall authority to “control” virtually all major expenditures in Ohio. Nor can it be disputed that both from a practical and legal standpoint, the Controlling Board has the specific authority under R.C. Section 131.35 to accept federal funds for the administration of Ohio programs, particularly the Medicaid program, even if the funds were not expressly accounted for in the state’s biennial budget. These are settled matters.

The only remaining issue appears to be whether in the acceptance of the federal funds that are targeted for the “expansion” of Ohio’s Medicaid program, the Controlling Board would be acting contrary to existing Ohio law, as discussed in the Meshel case. A resolution of that issue requires a closer look at the language of Ohio H.B. 59, the biennial budget for the Ohio fiscal years, 2014-2015 and, an important provision of the Ohio Constitution, Article II, Section 16.

The actual, enacted provisions of H.B 59 have been largely ignored in the discussion of whether the Controlling Board can accept these additional Medicaid funds without directly contradicting Ohio law. Those who ignore the actual law, do so at peril of having their argument turned to ashes.

One of the important concepts set forth in H.B. 59 was the inclusion of a complete revision of Ohio’s Medicaid program that, for the first time, consolidated all of Ohio’s Medicaid operations into a new cabinet level agency, the Ohio Medicaid Department. In H.B. 59, the Director of the Ohio Medicaid Department was granted broad operational authority over the program.

Specifically, in new R.C. Section 5163.03, the Director was charged with the responsibility of ensuring that the Department provided coverage for all groups of individuals who must be treated as beneficiaries under state and federal law. In addition, the Director was given unfettered discretion to add beneficiaries to the program, as long as there is no Ohio law prohibiting the addition of the group to Ohio’s Medicaid program. R.C. Section 5163.03(D).

Consistent with that new provision of Ohio law, it is understood that the Director intends to order the inclusion of the “expansion” population in Ohio’s Medicaid program. He is able to do so because there is no provision of Ohio law prohibiting his order that this expansion occur.

Opponents of this Medicaid expansion have argued that the Director should not order this expansion because it would violate a provision of H.B. 59 that the General Assembly advanced to Governor Kasich for his approval. However, the proposed statutory provision that would have prevented the Director from ordering this expansion was vetoed by the Governor. (Proposed R.C. Section 5163.04).

Because the Governor vetoed the provision prohibiting an expansion of the Medicaid program, the opponents’ argument is fatally flawed. Provisions of an Ohio budget bill that are vetoed by the Governor (as was R.C. Section 5163.04) are not the law of Ohio. In fact, vetoed items in a budget bill have absolutely no force and effect in Ohio.

This result is not surprising. Article II, Section 16 of the Ohio Constitution clearly and unequivocally states:

The governor may disapprove any item or items in any bill making an appropriation of money, and the item or items, so disapproved, shall be void, unless repassed in the manner prescribed…. (emphasis added)

Here, no effort was made to “repass” the vetoed language. Moreover, no effort was made to judicially challenge the veto as an ultra vires act by the Governor. Accordingly, any argument that the provisions of the vetoed Section 5163.04 can be relied upon to restrain the Director from his Medicaid “expansion” plans has no legal basis.

It was the knowing choice of the General Assembly to separate the broad grant of authority given to the Medicaid Department to expand coverage in R.C. Section 5163.03, from the “prohibition” language in R.C. Section 5163.04. The decision to separate these items in House Bill 59, permitted the Governor to exercise his “line item” veto in his review of House Bill 59 before affixing his signature. It must be presumed that the General Assembly knew that by separating this language into two separate items, that the Governor could accept the broad grant of authority in Section 5163.03, and veto the restrictions created in Section 5163.04.

It is well known to everyone who has been involved in drafting the language for Ohio’s budget bills that to ensure that this type of result does not occur, one must inextricably link provisions together so that the Governor cannot accept one provision and reject a second one, by crafting them into one “item.” That did not happen here. Indeed, it can be argued that by separating the broad grant of authority to expand Ohio’s Medicaid program from the proposed restriction into two entirely separate proposed sections of the Revised Code, that this potential result was actually invited by the General Assembly.


From the foregoing discussion, it is clear that the new Director of Ohio’s Medicaid Agency has the unrestricted right to expand the Medicaid program pursuant to new R.C. Section 5163.03. There are no valid arguments that can be made to the contrary because, the General Assembly failed to craft any appropriate restrictions on that right that survived the Governor’s constitutionally mandated review of the legislation.

In addition, it is equally clear that the Controlling Board has the unrestricted statutory right to accept “unbudgeted” federal funds for this purpose, pursuant to its authority under R.C. Section 131.35. Moreover, since there are no provisions of Ohio statutory law that the Controlling Board would be contradicting, it is highly unlikely that any judicial challenge to the actions of the Controlling Board would be successful.

The issue of whether one agrees with the policy choices inherent in expanding Ohio’s Medicaid program is completely separate from the issue of whether there are any viable legal challenges to that set of policy choices. On these facts, crafting a successful legal challenge to this set of policy choices, to put it charitably, is a long shot.


Featured-Columnist---William-ToddWilliam M. Todd, Esq. is a prominent Republican lawyer engaged in private practice in Columbus. For over 30 years, he has been deeply involved in conservative causes including tax reform, tort reform, school choice, election reform, and pro-life related matters.  His principal substantive  expertise is in the field of health law and health system reform


All opinions expressed belong solely to their authors and may not be construed as the opinions of other writers or of OCR staff.

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