As Introduced

136th General Assembly

Regular Session H. B. No. 694

2025-2026

To amend sections 154.07, 3345.12, 3345.74, and 3345.75; to enact sections 3345.123 and 3345.741; and to repeal sections 154.25 and 3333.59 of the Revised Code regarding liens on state institutions of higher education facilities and conservatorships for state universities and colleges.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 154.07, 3345.12, 3345.74, and 3345.75 be amended and sections 3345.123 and 3345.741 of the Revised Code be enacted to read as follows:

Sec. 154.07. For the respective purposes provided in sections 154.20, 154.21, 154.22, 154.23, and 154.24~~, and 154.25~~ of the Revised Code, the issuing authority may issue obligations of the state of Ohio as provided in Chapter 154. of the Revised Code, provided that the holders or owners of obligations shall have no right to have excises or taxes levied by the general assembly for the payment of the bond service charges. The right of holders and owners to payment of bond service charges shall be limited to the revenues or receipts and funds pledged thereto in accordance with Chapter 154. of the Revised Code, and each obligation shall bear on its face a statement to that effect. Chapter 154. of the Revised Code does not permit, and no provision of that chapter shall be applied to authorize or grant, a pledge of charges for the treatment or care of mental hygiene and retardation patients to bond service charges on obligations other than those issued for capital facilities for mental hygiene and retardation, or a pledge of any receipts of or on behalf of state supported or state assisted institutions of higher education to bond service charges on obligations other than those issued for capital facilities for state supported or state assisted institutions of higher education, or a pledge of receipts with respect to parks and recreation to bond service charges on obligations other than those issued for capital facilities for parks and recreation, or a pledge of revenues or receipts received by or on behalf of any state agency to bond service charges on obligations other than those issued for capital facilities which are in whole or in part useful to, constructed by, or financed by the state agency that receives the revenues or receipts so pledged.

Sec. 3345.12. (A) As used in this section and sections 3345.07 and 3345.11 of the Revised Code, in other sections of the Revised Code that make reference to this section unless the context does not permit, and in related bond proceedings unless otherwise expressly provided:

(1) "State university or college" means each of the state universities identified in section 3345.011 of the Revised Code and the northeast Ohio medical university, and includes its board of trustees.

(2) "Institution of higher education" or "institution" means a state university or college, or a community college district, technical college district, university branch district, or state community college, and includes the applicable board of trustees or, in the case of a university branch district, any other managing authority.

(3) "Housing and dining facilities" means buildings, structures, and other improvements, and equipment, real estate, and interests in real estate therefor, to be used for or in connection with dormitories or other living quarters and accommodations, or related dining halls or other food service and preparation facilities, for students, members of the faculty, officers, or employees of the institution of higher education, and their spouses and families.

(4) "Auxiliary facilities" means buildings, structures, and other improvements, and equipment, real estate, and interests in real estate therefor, to be used for or in connection with student activity or student service facilities, housing and dining facilities, dining halls, and other food service and preparation facilities, vehicular parking facilities, bookstores, athletic and recreational facilities, faculty centers, auditoriums, assembly and exhibition halls, hospitals, infirmaries and other medical and health facilities, research, and continuing education facilities.

(5) "Education facilities" means buildings, structures, and other improvements, and equipment, real estate, and interests in real estate therefor, to be used for or in connection with, classrooms or other instructional facilities, libraries, administrative and office facilities, and other facilities, other than auxiliary facilities, to be used directly or indirectly for or in connection with the conduct of the institution of higher education.

(6) "Facilities" means housing and dining facilities, auxiliary facilities, or education facilities, and includes any one, part of, or any combination of such facilities, and further includes site improvements, utilities, machinery, furnishings, and any separate or connected buildings, structures, improvements, sites, open space and green space areas, utilities or equipment to be used in, or in connection with the operation or maintenance of, or supplementing or otherwise related to the services or facilities to be provided by, such facilities.

(7) "Obligations" means bonds or notes or other evidences of obligation, including interest coupons pertaining thereto, authorized to be issued under this section or section 3345.07, 3345.11, 3354.121, 3355.091, 3357.112, or 3358.10 of the Revised Code.

(8) "Bond service charges" means principal, including any mandatory sinking fund or redemption requirements for the retirement of obligations or assurances, interest, or interest equivalent and other accreted amounts, and any call premium required to be paid on obligations or assurances.

(9) "Bond proceedings" means the resolutions, trust agreement, indenture, and other agreements and any credit enhancement facilities established prior to the effective date of this amendment, and amendments and supplements to the foregoing, or any one or more or combination thereof, authorizing, awarding, or providing for the terms and conditions applicable to, or providing for the security or liquidity of, obligations or assurances, and the provisions contained in those obligations or assurances.

(10) "Costs of facilities" means the costs of acquiring, constructing, reconstructing, rehabilitating, remodeling, renovating, enlarging, improving, equipping, or furnishing facilities, and the financing thereof, including the cost of clearance and preparation of the site and of any land to be used in connection with facilities, the cost of any indemnity and surety bonds and premiums on insurance, all related direct administrative expenses and allocable portions of direct costs of the institution of higher education or state agency, cost of engineering, architectural services, design, plans, specifications and surveys, estimates of cost, legal fees, fees and expenses of trustees, depositories, bond registrars, and paying agents for the obligations, cost of issuance of the obligations and financing costs and fees and expenses of financial advisers and consultants in connection therewith, interest on the obligations from the date thereof to the time when interest is to be covered by available receipts or other sources other than proceeds of the obligations, amounts necessary to establish reserves as required by the bond proceedings, costs of audits, the reimbursements of all moneys advanced or applied by or borrowed from the institution or others, from whatever source provided, including any temporary advances from state appropriations, for the payment of any item or items of cost of facilities, and all other expenses necessary or incident to planning or determining feasibility or practicability with respect to facilities, and such other expenses as may be necessary or incident to the acquisition, construction, reconstruction, rehabilitation, remodeling, renovation, enlargement, improvement, equipment, and furnishing of facilities, the financing thereof and the placing of them in use and operation, including any one, part of, or combination of such classes of costs and expenses.

(11) "Available receipts" means all moneys received by the institution of higher education, including income, revenues, and receipts from the operation, ownership, or control of facilities or entrepreneurial projects, grants, gifts, donations, and pledges and receipts therefrom, receipts from fees and charges, and the proceeds of the sale of obligations or assurances, including proceeds of obligations or assurances issued to refund obligations or assurances previously issued, but excluding any special fee, and receipts therefrom, charged pursuant to division (D) of section 154.21 of the Revised Code.

(12) "Credit enhancement facilities" has the meaning given in division (H) of section 133.01 of the Revised Code.

(13) "Financing costs" has the meaning given in division (K) of section 133.01 of the Revised Code.

(14) "Interest" or "interest equivalent" has the meaning given in division (R) of section 133.01 of the Revised Code.

(15) "Assurances" means bonds, notes, or other evidence of indebtedness, including interest coupons pertaining thereto, authorized to be issued under section 3345.36 of the Revised Code.

(16) "Entrepreneurial project" has the same meaning as in section 3345.36 of the Revised Code.

(17) "Costs of entrepreneurial projects" means any costs related to the establishment or development of entrepreneurial projects pursuant to a resolution adopted under section 3345.36 of the Revised Code.

(B) Obligations issued under section 3345.07 or 3345.11 of the Revised Code by a state university or college shall be authorized by resolution of its board of trustees. Obligations issued by any other institution of higher education shall be authorized by resolution of its board of trustees, or managing directors in the case of certain university branch districts, as applicable. Sections 9.96 and 9.98 to 9.983 of the Revised Code apply to obligations and assurances. Obligations and assurances may be issued to pay costs of facilities or entrepreneurial projects even if the institution anticipates the possibility of a future state appropriation to pay all or a portion of such costs.

(C) Obligations and assurances shall be secured by a pledge of and lien on all or such part of the available receipts of the institution of higher education as it provides for in the bond proceedings, excluding moneys raised by taxation and state appropriations ~~except as permitted by section 3333.59 of the Revised Code~~. Such pledge and lien may be made prior to all other expenses, claims, or payments, ~~excepting any pledge~~ except in the case of any of the following:

(1) A lien filed in accordance with section 3345.123 of the Revised Code;

(2) Any pledge of such available receipts previously made to the contrary ~~and except as~~ ;

(3) As provided by any existing restrictions on the use thereof~~, or such~~ .

A pledge and lien may also be made subordinate to such other expenses, claims, or payments, as provided in the bond proceedings. Obligations or assurances may be additionally secured by covenants of the institution to make, fix, adjust, collect, and apply such charges, rates, fees, rentals, and other items of available receipts as will produce pledged available receipts sufficient to meet bond service charges, reserve, and other requirements provided for in the bond proceedings. Notwithstanding this and any other sections of the Revised Code, the holders or owners of the obligations or assurances shall not be given the right and shall have no right to have excises or taxes levied by the general assembly for the payment of bond service charges thereon, and each such obligation or assurance shall bear on its face a statement to that effect and to the effect that the right to such payment is limited to the available receipts and special funds pledged to such purpose under the bond proceedings.

All pledged available receipts and funds and the proceeds of obligations or assurances are trust funds and, subject to the provisions of this section and the applicable bond proceedings, shall be held, deposited, invested, reinvested, disbursed, applied, and used to such extent, in such manner, at such times, and for such purposes, as are provided in the bond proceedings.

(D) The bond proceedings for obligations or assurances shall provide for the purpose thereof and the principal amount or maximum principal amount, and provide for or authorize the manner of determining the principal maturity or maturities, the sale price including any permitted discount, the interest rate or rates, which may be a variable rate or rates, or the maximum interest rate, the date of the obligations or assurances and the date or dates of payment of interest thereon, their denominations, the manner of sale thereof, and the establishment within or without the state of a place or places of payment of bond service charges. The bond proceedings also shall provide for a pledge of and lien on available receipts of the institution of higher education as provided in division (C) of this section, and a pledge of and lien on such fund or funds provided in the bond proceedings arising from available receipts, which pledges and liens may provide for parity with obligations or assurances theretofore or thereafter issued by the institution. The available receipts so pledged and thereafter received by the institution and the funds so pledged are immediately subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of any such pledge is valid and binding against all parties having claims of any kind against the institution, irrespective of whether such parties have notice thereof, and shall create a perfected security interest for all purposes of Chapter 1309. of the Revised Code, without the necessity for separation or delivery of funds or for the filing or recording of the bond proceedings by which such pledge is created or any certificate, statement, or other document with respect thereto; and the pledge of such available receipts and funds shall be effective and the money therefrom and thereof may be applied to the purposes for which pledged without necessity for any act of appropriation.

(E) The bond proceedings may contain additional provisions customary or appropriate to the financing or to the obligations or assurances or to particular obligations and assurances, including:

(1) The acquisition, construction, reconstruction, equipment, furnishing, improvement, operation, alteration, enlargement, maintenance, insurance, and repair of facilities or entrepreneurial projects, and the duties of the institution of higher education with reference thereto;

(2) The terms of the obligations or assurances, including provisions for their redemption prior to maturity at the option of the institution of higher education at such price or prices and under such terms and conditions as are provided in the bond proceedings;

(3) Limitations on the purposes to which the proceeds of the obligations or assurances may be applied;

(4) The rates or rentals or other charges for the use of or right to use the facilities or entrepreneurial projects financed by the obligations or assurances, or other properties the revenues or receipts from which are pledged to the obligations or assurances, and rules for assuring any applicable use and occupancy thereof, including limitations upon the right to modify such rates, rentals, other charges, or regulations;

(5) The use and expenditure of the pledged available receipts in such manner and to such extent as shall be determined, which may include provision for the payment of the expenses of operation, maintenance, and repair of facilities or entrepreneurial projects so that such expenses, or part thereof, shall be paid or provided as a charge prior or subsequent to the payment of bond service charges and any other payments required to be made by the bond proceedings;

(6) Limitations on the issuance of additional obligations or assurances;

(7) The terms of any trust agreement or indenture securing the obligations or assurances or under which the same may be issued;

(8) The deposit, investment, and application of funds, and the safeguarding of funds on hand or on deposit without regard to Chapter 131. or 135. of the Revised Code, and any bank or trust company or other financial institution that acts as depository of any moneys under the bond proceedings shall furnish such indemnifying bonds or pledge such securities as required by the bond proceedings or otherwise by the institution of higher education;

(9) The binding effect of any or every provision of the bond proceedings upon such officer, board, commission, authority, agency, department, or other person or body as may from time to time have the authority under law to take such actions as may be necessary to perform all or any part of the duty required by such provision;

(10) Any provision that may be made in a trust agreement or indenture;

(11) Any other or additional agreements with respect to the facilities of the institution of higher education or its entrepreneurial projects, their operation, the available receipts and funds pledged, and insurance of facilities or entrepreneurial projects and of the institution, its officers and employees.

(F) Such obligations or assurances may have the seal of the institution of higher education or a facsimile thereof affixed thereto or printed thereon and shall be executed by such officers as are designated in the bond proceedings, which execution may be by facsimile signatures. Any obligations or assurances may be executed by an officer who, on the date of execution, is the proper officer although on the date of such obligations or assurances such person was not the proper officer. In case any officer whose signature or a facsimile of whose signature appears on any such obligation or assurance ceases to be such officer before delivery thereof, such signature or facsimile is nevertheless valid and sufficient for all purposes as if the person had remained such officer until such delivery; and in case the seal of the institution has been changed after a facsimile of the seal has been imprinted on such obligations or assurances, such facsimile seal continues to be sufficient as to such obligations or assurances and obligations or assurances issued in substitution or exchange therefor.

(G) All such obligations or assurances are negotiable instruments and securities under Chapter 1308. of the Revised Code, subject to the provisions of the bond proceedings as to registration. The obligations or assurances may be issued in coupon or in registered form, or both. Provision may be made for the registration of any obligations or assurances with coupons attached thereto as to principal alone or as to both principal and interest, their exchange for obligations or assurances so registered, and for the conversion or reconversion into obligations or assurances with coupons attached thereto of any obligations or assurances registered as to both principal and interest, and for reasonable charges for such registration, exchange, conversion, and reconversion.

(H) Pending preparation of definitive obligations or assurances, the institution of higher education may issue interim receipts or certificates which shall be exchanged for such definitive obligations or assurances.

(I) Such obligations or assurances may be secured additionally by a trust agreement or indenture between the institution of higher education and a corporate trustee, which may be any trust company or bank having the powers of a trust company within or without this state but authorized to exercise trust powers within this state. Any such agreement or indenture may contain the resolution authorizing the issuance of the obligations or assurances, any provisions that may be contained in the bond proceedings as authorized by this section, and other provisions which are customary or appropriate in an agreement or indenture of such type, including:

(1) Maintenance of each pledge, trust agreement, and indenture, or other instrument comprising part of the bond proceedings until the institution of higher education has fully paid the bond service charges on the obligations or assurances secured thereby, or provision therefor has been made;

(2) In the event of default in any payments required to be made by the bond proceedings, or any other agreement of the institution of higher education made as a part of the contract under which the obligations or assurances were issued, enforcement of such payments or agreement by mandamus, the appointment of a receiver, suit in equity, action at law, or any combination of the foregoing;

(3) The rights and remedies of the holders of obligations or assurances and of the trustee, and provisions for protecting and enforcing them, including limitations on rights of individual holders of obligations or assurances;

(4) The replacement of any obligations or assurances that become mutilated or are destroyed, lost, or stolen;

(5) Such other provisions as the trustee and the institution of higher education agree upon, including limitations, conditions, or qualifications relating to any of the foregoing.

(J) Each duty of the institution of higher education and its officers or employees, undertaken pursuant to the bond proceedings or any related agreement or lease made under authority of law, is hereby established as a duty of such institution, and of each such officer or employee having authority to perform such duty, specially enjoined by law resulting from an office, trust, or station within the meaning of section 2731.01 of the Revised Code. The persons who are at the time the members of the board of trustees or the managing directors of the institution or its officers or employees are not liable in their personal capacities on such obligations or assurances, or lease, or other agreement of the institution.

(K) The authority to issue obligations or assurances includes authority to:

(1) Issue obligations or assurances in the form of bond anticipation notes and to renew them from time to time by the issuance of new notes. Such notes are payable solely from the available receipts and funds that may be pledged to the payment of such bonds, or from the proceeds of such bonds or renewal notes, or both, as the institution of higher education provides in its resolution authorizing such notes. Such notes may be additionally secured by covenants of the institution to the effect that it will do such or all things necessary for the issuance of such bonds or renewal notes in appropriate amount, and either exchange such bonds or renewal notes therefor or apply the proceeds thereof to the extent necessary, to make full payment of the bond service charges on such notes at the time or times contemplated, as provided in such resolution. Subject to the provisions of this division, all references to obligations or assurances in this section apply to such anticipation notes.

(2) Issue obligations or assurances to refund, including funding and retirement of, obligations or assurances previously issued to pay costs of facilities or entrepreneurial projects. Such obligations or assurances may be issued in amounts sufficient for payment of the principal amount of the obligations or assurances to be so refunded, any redemption premiums thereon, principal maturities of any obligations or assurances maturing prior to the redemption of any other obligations or assurances on a parity therewith to be so refunded, interest accrued or to accrue to the maturity date or dates of redemption of such obligations or assurances, and any expenses incurred or to be incurred in connection with such refunding or the issuance of the obligations or assurances.

(L) Obligations and assurances are lawful investments for banks, societies for savings, savings and loan associations, deposit guarantee associations, trust companies, trustees, fiduciaries, insurance companies, including domestic for life and domestic not for life, trustees or other officers having charge of sinking and bond retirement or other special funds of political subdivisions and taxing districts of this state, the commissioners of the sinking fund, the administrator of workers' compensation in accordance with the investment policy approved by the bureau of workers' compensation board of directors pursuant to section 4121.12 of the Revised Code, the state teachers retirement system, the public employees retirement system, the school employees retirement system, and the Ohio police and fire pension fund, notwithstanding any other provisions of the Revised Code or rules adopted pursuant thereto by any state agency with respect to investments by them, and are also acceptable as security for the deposit of public moneys.

(M) All facilities or entrepreneurial projects purchased, acquired, constructed, or owned by an institution of higher education, or financed in whole or in part by obligations or assurances issued by an institution, and used for the purposes of the institution or other publicly owned and controlled college or university, is public property used exclusively for a public purpose, and such property and the income therefrom is exempt from all taxation and assessment within this state, including ad valorem and excise taxes. The obligations or assurances, the transfer thereof, and the income therefrom, including any profit made on the sale thereof, are at all times free from taxation within the state. The transfer of tangible personal property by lease under authority of this section or section 3345.07, 3345.11, 3345.36, 3354.121, 3355.091, 3357.112, or 3358.10 of the Revised Code is not a sale as used in Chapter 5739. of the Revised Code.

(N) The authority granted by this section is cumulative with the authority granted to institutions of higher education under Chapter 154. of the Revised Code, and nothing in this section impairs or limits the authority granted by Chapter 154. of the Revised Code. In any lease, agreement, or commitment made by an institution of higher education under Chapter 154. of the Revised Code, it may agree to restrict or subordinate any pledge it may thereafter make under authority of this section.

(O) Title to lands acquired under this section and sections 3345.07 and 3345.11 of the Revised Code by a state university or college shall be taken in the name of the state.

(P) Except where costs of facilities or entrepreneurial projects are to be paid in whole or in part from funds appropriated by the general assembly, section 125.81 of the Revised Code and the requirement for certification with respect thereto under section 153.04 of the Revised Code do not apply to such facilities or entrepreneurial projects.

(Q) A state university or college may sell or lease lands or interests in land owned by it or by the state for its use, or facilities authorized to be acquired or constructed by it under section 3345.07 or 3345.11 of the Revised Code, to permit the purchasers or lessees thereof to acquire, construct, equip, furnish, reconstruct, alter, enlarge, remodel, renovate, rehabilitate, improve, maintain, repair, or maintain and operate thereon and to provide by lease or otherwise to such institution, facilities authorized in section 3345.07 or 3345.11 of the Revised Code or entrepreneurial projects authorized under section 3345.36 of the Revised Code. Such land or interests therein shall be sold for such appraised value, or leased, and on such terms as the board of trustees determines. All deeds or other instruments relating to such sales or leases shall be executed by such officer of the state university or college as the board of trustees designates. The state university or college shall hold, invest, or use the proceeds of such sales or leases for the same purposes for which proceeds of borrowings may be used under sections 3345.07 and 3345.11 of the Revised Code or, if the proceeds relate to the sale or lease of entrepreneurial projects, for purposes of section 3345.36 of the Revised Code.

(R) An institution of higher education may pledge available receipts, to the extent permitted by division (C) of this section with respect to obligations, to secure the payments to be made by it under any lease, lease with option to purchase, or lease-purchase agreement authorized under this section or section 3345.07, 3345.11, 3345.36, 3354.121, 3355.091, 3357.112, or 3358.10 of the Revised Code.

Sec. 3345.123. (A) As used in this section:

(1) "Facilities" has the same meaning as in section 3345.12 of the Revised Code but does not include a facility that is funded solely by federal or private sources.

(2) "State institution of higher education" and "state university" have the same meanings as in section 3345.011 of the Revised Code.

(B) The Ohio facilities construction commission shall have a lien upon all facilities of state institutions of higher education and state universities constructed, reconstructed, enlarged, remodeled, renovated, improved, furnished, or equipped, or any combination thereof, with state funds or financed by the Ohio public facilities construction commission, the Ohio facilities construction commission, or any other state entity on or after the effective date of this section.

(1) For the amount of the actual project costs covered by the entity;

(2) Filed and recorded by the Ohio facilities construction commission in the office of the county recorder in the county in which the facility is located.

(D) In the event a facility upon which the commission has a lien provided under this section closes, is sold, or no longer operates as a facility, the lien has priority over any lien created pursuant to section 3345.12 of the Revised Code.

(E) A lien provided under this section continues in force for thirty years after it is recorded or until the amount of the lien is repaid, whichever occurs first. If an action is brought to enforce the lien within that time, the lien continues in force until final adjudication thereof.

(F) An action to enforce a lien provided by this section may be brought by the attorney general.

Sec. 3345.74. (A) The chancellor of higher education at least annually shall apply the indicators and standards adopted under division (A) of section 3345.73 of the Revised Code to determine whether a state university or college under a fiscal watch is experiencing sufficient fiscal difficulties to warrant the appointment of a conservator under this section or if the board of trustees of a state university or college has taken any action related to pausing or stopping enrollment, submitted a withdrawal of accreditation, or taken any other action indicating it will no longer offer educational activity or will undergo a wind down and dissolution of existence. Upon making a determination that appointment of a conservator is warranted, the chancellor shall request from the office of budget and management, which shall provide, certification that sufficient fiscal difficulties exist to warrant appointment of a conservator. The chancellor shall then certify this determination to the governor and, for the purposes of section 3345.741 of the Revised Code, the speaker of the house of representatives and the president of the senate.

Notwithstanding section 3333.021 of the Revised Code, that section does not apply to certification by the chancellor under this section or to the declaration of a fiscal watch under section 3345.72 of the Revised Code.

A determination by the chancellor under this division that sufficient fiscal difficulties exist or do not exist to warrant appointing a conservator is final and conclusive and not appealable.

(B) ~~The~~ If a conservator is determined necessary under divisions (B) and (C) of section 3345.741 of the Revised Code, the governor may appoint a conservator for any state university or college under a fiscal watch~~, upon certification by the chancellor under division (A) of this section that the appointment is warranted~~. The governor shall appoint a conservator from the list of recommended candidates selected under division (C) of section 3345.741 of the Revised Code. The governor shall consult with the speaker and minority leader of the house of representatives and the president and minority leader of the senate before making the appointment. From the time a conservator is appointed until the time the governor issues an order terminating the governance authority under division (B) of section 3345.76 of the Revised Code, the governor may remove any member of the board of trustees of the state university or college from office and not fill the vacancy.

(C) Upon appointment of a conservator under this section for a state university or college, all of the following shall occur effective immediately:

(1) All duties, responsibilities, and powers of the board of trustees of the university or college are suspended;

(2) The management and control of the state university or college is assumed by the conservator;

(3) Notwithstanding any section of the Revised Code, all duties, responsibilities, and powers assigned by law to the board of trustees are assigned to the conservator, and the conservator becomes the successor to, assumes the lawful obligations of, and otherwise constitutes the continuation of the board of trustees for purposes of all pending legal actions, contracts or other agreements, and obligations of the university or college;

(4) Wherever the board of trustees is referred to in any contract or legal document, the reference is deemed to refer to the conservator. No validation, cure, right, privilege, remedy, obligation, or liability is lost or impaired by reason of the assumption of the board's authority by the conservator under this section and any such validation, cure, right, privilege, remedy, obligation, or liability shall be administered by the conservator. No action or proceeding pending on the effective date of the assumption by the conservator of the board's authority is affected by that assumption and any such action or proceeding shall be prosecuted or defended in the name of the conservator.

(5) The conservator assumes custody of all equipment, records, files, effects, and all other property real or personal of the state university or college;

(6) All authority and duties of the president or chief executive officer, and the pay of the president or chief executive officer, are suspended.

(D) The conservator for a state university or college shall conduct a preliminary performance evaluation of the president or chief executive officer of the university or college and provide a copy of findings and any recommendations to the governance authority established for the university or college under section 3345.75 of the Revised Code.

(E) A conservator appointed under this section shall be immune, indemnified, and held harmless from civil liability, including any cause of action, legal, equitable, or otherwise, for any action taken or duties performed by the conservator in good faith and in furtherance of the performance of the duties of the conservator under this section.

(F) The ~~governor~~ chancellor, in consultation with the higher education committees, shall set the compensation for a conservator appointed for a state university or college. The expenses and compensation of the conservator and others employed by the conservator shall be paid out of the operating funds and revenues of that university or college.

(G) A conservator appointed for a state university or college shall report at least quarterly to the higher education committees for as long as the conservator is performing duties under this section.

(H) As used in this section, "higher education committees" means the committee established under division (A) of section 3345.741 of the Revised Code and the standing committee of the senate that considers higher education legislation.

Sec. 3345.741. (A) Upon certification by the chancellor of higher education that the appointment of a conservator for a state university or college is warranted under division (A) of section 3345.74 of the Revised Code, the speaker of the house of representatives shall establish a committee to consider the appointment of a conservator for that state university or college. The committee shall consist of the following members of the house of representatives:

(1) The speaker of the house of representatives or the speaker's designee;

(2) The chairperson of the standing committee of the house of representatives that considers higher education legislation;

(3) The chairperson of the finance committee of the house of representatives.

The speaker of the house of representatives shall designate one member of the committee to serve as its chairperson.

(B)(1) The committee established under division (A) of this section shall hold at least one public hearing to determine if appointing a conservator is necessary and, if so, to consider candidates to serve as conservator. The committee shall solicit the advice of the chancellor of higher education and the governor on these matters and may request that the chancellor, or the chancellor's designee, and the governor, or the governor's designee, participate in the public hearing.

(2) If the committee determines appointing a conservator is not necessary, the chairperson of the committee shall notify the chancellor, governor, speaker of the house of representatives, and president of the senate of that determination, and no conservator shall be appointed for the state university or college under section 3345.74 of the Revised Code.

(3) If the committee determines appointing a conservator is necessary, the committee shall select at least three candidates to recommend to serve as conservator for the state university or college. The chairperson of the committee shall notify the chancellor, governor, speaker of the house of representatives, president of the senate, and chairperson of the standing committee of the senate that considers higher education legislation of that determination and the list of recommended candidates.

(C)(1) If the chairperson of the standing committee of the senate that considers higher education legislation receives notice under division (B)(3) of this section, the chairperson shall hold at least one public hearing about whether to appoint a conservator for the state university or college and the list of candidates to serve as conservator provided by the house of representatives. The standing committee shall solicit the advice of the chancellor and the governor on these matters and may request that the chancellor, or the chancellor's designee, and the governor, or the governor's designee, participate in the public hearing.

(2) If the standing committee determines appointing a conservator is not necessary, the chairperson of the standing committee shall notify the chancellor, governor, speaker of the house of representatives, and president of the senate of that fact and no conservator shall be appointed for the state university or college under section 3345.74 of the Revised Code.

(3) If the standing committee determines appointing a conservator is necessary, the standing committee shall select, from the list of recommended candidates provided by the house of representatives, at least three candidates to recommend to serve as conservator for the state university or college. The chairperson of the standing committee shall notify the chancellor, governor, speaker of the house of representatives, and president of the senate of that determination and the list of recommended candidates.

(D) In considering candidates to serve as conservator for a state university or college, the committee established under division (A) of this section and the standing committee of the senate that considers higher education legislation shall give priority consideration to candidates who have extensive experience in governmental matters, including capital budgets, debt issuance, and debt service, facilities, and orderly closure of public entities.

Sec. 3345.75. (A) Not later than thirty days after the date of the appointment of a conservator for a state university or college under section 3345.74 of the Revised Code, the governor shall appoint, with the advice and consent of the senate, a governance authority for the university or college consisting of five members, of which one shall have expertise in academic affairs and accreditation and one shall have expertise in either state agency budgets or state university or college finances. The members shall serve at the pleasure of the governor and any vacancies shall be filled in the same manner as an original appointment.

The governor shall designate one of the members of the governance authority as the chairperson and shall call the first meeting of the authority. A majority of the members of a governance authority constitutes a quorum and the affirmative vote of a majority of the members shall be necessary for any action taken by an authority. Meetings of a governance authority shall be called in the manner and at the times prescribed by the authority, but the authority shall meet at least four times annually and at other times necessary for the best interest of the university or college. A governance authority may adopt procedures for the conduct of its business.

The members of a governance authority shall not receive compensation for their services, but shall be paid their reasonable and necessary expenses while engaged in the discharge of their official duties.

A governance authority shall report at least quarterly to the higher education committees, as defined in section 3345.74 of the Revised Code, for as long as the governance authority is in existence.

(B)(1) A governance authority established under this section shall appoint an executive director who shall serve at the pleasure of the authority and with the compensation and other terms and conditions established by it. With the approval of the chairperson of the authority, the executive director may appoint additional personnel as the director considers appropriate. The executive director shall oversee the day-to-day operation of the university or college under the direction and supervision of the authority.

(2) The governance authority shall conduct a final performance evaluation of the president or chief executive officer of the university or college. Following the evaluation, the governance authority may reinstate any duties, authority, or pay previously suspended under division (C)(6) of section 3345.74 of the Revised Code, or may terminate the president or chief executive officer in accordance with the terms of the person's employment contract.

(C) Upon appointment of all members of a governance authority under this section and upon the effective date for the commencement of the duties of the executive director appointed by that authority under this section, all authority, responsibilities, duties, and references assumed by or conferred upon the conservator under divisions (C)(2) to (6) of section 3345.74 of the Revised Code terminate and all of the following shall occur, effective immediately:

(1) The management and control of the state university or college is assumed by the governance authority;

(2) Notwithstanding any section of the Revised Code, all duties, responsibilities, and powers assigned by law to the board of trustees or to the conservator are assigned to the governance authority and the governance authority becomes the successor to, assumes the lawful obligations of, and otherwise constitutes the continuation of the board of trustees and the conservator for purposes of all pending legal actions, contracts or other agreements, and obligations of the university or college;

(3) Wherever the board of trustees or conservator is referred to in any contract or legal document, the reference is deemed to refer to the governance authority. No validation, cure, right, privilege, remedy, obligation, or liability is lost or impaired by reason of the assumption of the authority of the board of trustees and the conservator by the governance authority under this section and any such validation, cure, right, privilege, remedy, obligation, or liability shall be administered by the governance authority. No action or proceeding pending on the effective date of the assumption by the governance authority of the authority of the board of trustees and the conservator is affected by that assumption and any such action or proceeding shall be prosecuted or defended in the name of the governance authority.

(4) The governance authority assumes custody of all equipment, records, files, effects, and all other property real or personal of the state university or college.

(D) A governance authority and executive director appointed under this section shall be immune, indemnified, and held harmless from civil liability, including any cause of action, legal, equitable, or otherwise, for any action taken or duties performed by the governance authority and executive director in good faith and in furtherance of the performance of the duties of the governance authority and executive director under this section.

(E) The expenses of a governance authority and the expenses and compensation of an executive director appointed for a state university or college under this section and others employed by the executive director under this section shall be paid out of the operating funds and revenues of that university or college.

(F) A governance authority appointed under this section shall prepare, in accordance with rules adopted by the office of budget and management, and submit to the chancellor of higher education, the governor, the speaker and minority leader of the house of representatives, and the president and minority leader of the senate a quarterly report setting forth all of the following:

(1) The general condition of the university or college;

(2) The amounts of receipts and disbursements and the items for which the disbursements were made;

(3) The numbers of professors, officers, teachers, and other employees and the position and compensation of each and the numbers of students by courses of instruction;

(4) An estimate of expenses for the ensuing quarter;

(5) A statement of the general progress of the university or college with indication of any improvements and specification of any experiments with institutional reform and the costs and results of those experiments;

(6) If the governance authority determines closure is necessary or is appointed to facilitate an orderly closure as determined to be necessary by the board of trustees prior to the governance authority's appointment, all matters related to compliance with the requirements of a closure of an institution of higher education as specified by the chancellor;

(7) Any other matters the governance authority considers useful to report.

(G) The attorney general shall be the legal adviser to the conservator and the governance authority, and the attorney general may employ special counsel to aid the conservator or governance authority with respect to any legal matter on behalf of the institution. The conservator and the governance authority may as otherwise provided by law request the attorney general to bring or defend suits or proceedings in the name of the institution.

Section 2. That existing sections 154.07, 3345.12, 3345.74, and 3345.75 of the Revised Code are hereby repealed.

Section 3. That sections 154.25 and 3333.59 of the Revised Code are hereby repealed.

Section 4. On and after the effective date of this section, the Chancellor of Higher Education shall no longer approve any requests under sections 154.25 or 3333.59 of the Revised Code, as those sections existed before their repeal by Section 3 of this act, to enter into an agreement providing for the withholding and deposit of an institution's allocated state share of instruction under a credit enhancement agreement, for the payment of bond service charges on obligations. The Chancellor, with the advice and consent of the Office of Budget and Management, may adopt reasonable rules for the treatment of any credit enhancement agreement that existed prior to the effective date of this section that directly conflicts with any lien filed in accordance with section 3345.123 of the Revised Code.