2014 Tennessee Code
Title 7 - Consolidated Governments and Local Governmental Functions and Entities
Special Districts
Chapter 86 - Emergency Communications
Part 3 - Statewide Enhanced 911 Service
§ 7-86-304 - Uniform financial accounting system -- Audit -- Annual budgets -- Supervision of financially distressed districts.

(a) The comptroller of the treasury is directed to develop a uniform financial accounting system conforming to generally accepted accounting principles for use as required by this section. Effective July 1, 1999, each emergency communications district shall use the uniform accounting system developed by the comptroller of the treasury.

(b) The annual audit of all emergency communications districts shall disclose the failure of any such district to maintain such a financial accounting system as prescribed by the comptroller of the treasury. The comptroller of the treasury shall file with the board a copy of the audited financial statements of each emergency communications district, prepared pursuant to § 7-86-113. The board shall have authority to act upon any adverse findings noted in such audits or financial statements and to order such action as may be necessary to remedy the adverse findings.

(c) The board of directors of each emergency communications district shall file with the board a copy of its annual budget, prepared in accordance with § 7-86-120.

(d) (1) Any emergency communications district that is a financially distressed emergency communications district shall be subject to the supervision and evaluation of the board. A "financially distressed emergency communications district" is a district that, as shown by the annual audits:

(A) Has a negative change in net position for a period of three (3) consecutive years;

(B) Has a deficit in total net position; or

(C) Is in default on any indebtedness.

(2) Notwithstanding subdivision (d)(1), the board may determine that a district is a "financially distressed emergency communications district," and shall be subject to the supervision and evaluation of the board, if a district:

(A) Is the subject of a lien filed by the internal revenue service;

(B) The board determines that it appears that the district cannot satisfy its financial obligations to the extent that the continued operation of the district is at risk; or

(C) The district has defaulted on any indebtedness due to insufficient funds, such default is not cured within sixty (60) days and, upon determination of the board, it appears that the district cannot satisfy its financial obligations to the extent that the continued operation of the district is at risk.

(3) After reviewing the financial statements and operations of any financially distressed emergency communications district, and after holding a public hearing within such district's service area, the board may prescribe a rate structure, up to the maximum established pursuant to § 7-86-108(a)(2)(A), to be adopted by the district, as may be necessary to cause the district to liquidate in an orderly fashion any deficit total net position, to cure a default on any indebtedness of the district, and to eliminate the negative change in net position, or any of these.

(e) If the board of an emergency communications district fails to adopt the prescribed rate structure, the board may, in addition to any and all other remedial actions available to it, petition the chancery court, in a jurisdiction in which the emergency communications district is operating, to require the adoption of the rate structure prescribed by the board or such other remedial actions that, in the opinion of the court, may be required to cause the district to be operated in accordance with the provisions of state law.

§ First - of 2 versions of this section

7-86-305. Consolidation or merger for purposes of financial stability. [Effective until January 1, 2015. See the version effective on January 1, 2015.]

(a) As a means to restore financial stability to financially distressed emergency communications districts and to ensure continued 911 service for the benefit of the public, the board may study the possible consolidation or merger of two (2) or more adjacent emergency communications districts, if at least one (1) such emergency communications district is financially distressed. In the event that the board determines that such a consolidation or merger is in the best interest of the public, and after holding public hearings within the service areas of the affected emergency communications districts, the board may order the consolidation or merger. The board shall establish rules and policies concerning the composition and selection of the board of directors, and shall establish technical and operating standards and a rate structure for such multi-jurisdictional emergency communications district; provided, that such action shall not threaten the financial integrity or stability of the affected emergency communications districts, or the level and quality of 911 service.

(b) Notwithstanding subsection (a) to the contrary, a merger or consolidation affecting a non-financially distressed emergency communications district shall not become effective without the prior approval of the board of directors of such non-financially distressed emergency communications district.

§ Second - of 2 versions of this section

7-86-305. Consolidation or merger for purposes of financial stability. [Effective on January 1, 2015. See the version effective until January 1, 2015.]

(a) As a means to restore financial stability to financially distressed emergency communications districts and to ensure continued 911 service for the benefit of the public, the board may study the possible consolidation or merger of two (2) or more adjacent emergency communications districts, if at least one (1) such emergency communications district is financially distressed. In the event that the board determines that such a consolidation or merger is in the best interest of the public, and after holding public hearings within the service areas of the affected emergency communications districts, the board may order the consolidation or merger. The board shall establish rules and policies concerning the composition and selection of the board of directors, and shall establish technical and operating standards and a rate structure for such multi-jurisdictional emergency communications district; provided, that such action shall not threaten the financial integrity or stability of the affected emergency communications districts, or the level and quality of 911 service.

(b) Notwithstanding subsection (a) to the contrary, a merger or consolidation affecting a non-financially distressed emergency communications district shall not become effective without the prior approval of the board of directors of such non-financially distressed emergency communications district.

(c) For purposes of determining whether an emergency communications district is financially distressed, the board shall not consider an emergency communications district's depreciation costs as an operating expense.