Longstanding State Tax Freeze and New Voucher Explosion Create Overwhelming Financial Problems for Ohio School Districts

The Presidential election has torn the country apart this fall, but in my community, the local school operating levy on next week’s ballot has caused almost as much rancor. One problem is a 40-year-old property tax freeze law that keeps all Ohio school districts repeatedly begging for money. But the explosive expansion of school vouchers has compounded the problem.

Like many other parents in my community, I developed a deep personal interest in the tangled, arcane and seemingly boring subject of school finance back in the days, 35 years ago, when my children were enrolled in the Cleveland Heights-University Heights public schools, the school district where my husband and I continue to reside. As a mom, I noticed that every time our community voted down a school operating levy—even if we finally passed it on the second or third try—our schools were forced to ratchet down services. Class sizes got bigger. The school nurses began to cover several buildings and were in any one school only one day per week. The inspiring and gifted certified school librarians who created exciting school-wide reading programs were replaced by aides and volunteers who were well meaning but not the same.

Next Tuesday in Cleveland Heights and University Heights, there are two primary issues voters ought to keep in mind as we go to the polls to try to prevent the schools that serve our community’s children from falling into fiscal catastrophe. These structural problems have been thrust on our school district by the state legislature. They have nothing to do with the management of our school district and nothing to do with the oversight of the local board of education. They are only creating added stress for our fine teachers who are doing their best to support our children during the pandemic.

First: In Ohio, property taxes are the primarily method of generating local school revenue. But to keep taxes low, in 1976, the Ohio Legislature passed House Bill 920—a freeze on local property taxes which was locked into the Ohio Constitution by a 1980 amendment. House Bill 920 prevents school districts from automatically collecting any extra property tax revenue when the value of houses and businesses appreciates. When the residents of a school district vote to pass a specified amount of operating millage, that levy will raise the same amount of revenue in perpetuity as it does on the day the levy passes. This means that as inflation inevitably occurs over the years, the school district must pass additional tax levies just to cover the added expense. The same is true if costs rise for other reasons. To cover added staffing or programming of any kind, the district must put another levy on the ballot. In Ohio, House Bill 920 forces school districts to be on the ballot regularly just to cover normal inflation or necessary increases in expenses.

Second, the Ohio Legislature is in love with charter schools and tax funded tuition vouchers for private and religious schools. Last week, the executive director of the Ohio Coalition for Equity and Adequacy of School funding,  Bill Phillis explained that in Ohio: “The direct state subsidies to private schools and school choice programs will cost taxpayers $751,894,805 in FY 21 and FY22; additionally, $2,352,881,306 will be deducted from school districts for vouchers and charters.” During these two fiscal years, the Legislature is diverting three quarters of a billion dollars out of the state budget to charter schools and school vouchers. But, more shockingly, the Legislature has found a way to suck over two billion dollars out of the budgets of the state’s 610 local school districts. (Emphasis is mine.)

The EdChoice voucher program operates through school district budget deductions, and when the Legislature passed the current FY 2020–FY 2021 biennial state budget in the summer of 2019, someone quietly inserted fine print that explosively expanded the number of students who could qualify to secure EdChoice vouchers. EdChoice extracts $6,000 for each high school voucher student and $4,650 for each K-8 voucher student right out of a local school district’s budget to pay private school tuition.

Here is how EdChoice works: Although voucher students attend private and religious schools, the state counts each voucher student as part of the per-pupil enrollment of the school district where the student resides, which means that the state pays per-pupil foundation basic aid to the school district for each of these students. In the Cleveland Heights-University Heights school district in a normal year, there is a net loss because the vouchers are worth more than our district’s state foundation funding. But this year the loss is even worse: In the current state budget, the Legislature froze the state’s foundation basic aid to all of the state’s school districts at the FY 2019 level. This means that the state is not allocating any additional funding to our school district to cover the new vouchers the state is awarding this year from our local budget.

Why have EdChoice vouchers become such a funding catastrophe for our school district?  In a PowerPoint presented to our school board last week, the school district’s treasurer, Scott Gainer explains that in our school district the number of students seeking vouchers—and the dollars being deducted from our school district’s budget—have grown precipitously.  Much of the growth occurred when the Legislature, in the FY 20-21 biennial state budget, expanded eligibility to all students in grades 8-11 in EdChoice designated school districts.

The amount diverted from our school district budget to EdChoice vouchers has grown from $2,256,017 in 2017;  to $3,232,403 in 2018;  to $4,187,249 in 2019;  to $7,074,249 in 2020;  to $9,017,250 in the current 2020-2021 school year.  Currently 1,792 students are carrying vouchers out of our school district budget at the expense of the 4,810 students enrolled in our public schools. This year EdChoice voucher students are carrying away to private and religious schools 45 percent of the school district’s state basic aid foundation school funding although they represent only 27 percent of the combined total of students the state counts as part of the district..

While 1,240 of those vouchers are renewals, which means that the district continues to collect some state aid to cover the vouchers, students applied for 552 new vouchers for this school year—a year when the state budget allocation is frozen at the FY 2019 level.  For these 552 students, the district is forced to cover the full cost of their vouchers—$2,566,800—out of the local school district budget.

And while the legislature claims that the vouchers are designed to help students and their families be able to make a choice to leave public schools, Gainer documents that in our school district during the current school year, 1,699 of the 1,792 students carrying the vouchers out of our school district—roughly 95 percent—have never been enrolled in our public schools.  In essence, this means that in our school district, and across Ohio, the Legislature is forcing local public school districts to undertake an unexpected expense: paying for private and religious education.

The explosive growth of EdChoice vouchers is the primary the reason our school district is on the ballot next week.  Unless our community supports this levy, the school district will be forced to reduce programming for the children and adolescents who attend our public schools.

Fortunately our community has proud history of supporting public education. This long list of endorsers is a mere sample of the people in our community who believe it is our public obligation to invest in our children. They explain: “We believe it is our public responsibility and our privilege to invest in providing opportunity for our children. By supporting our local levy, we must challenge the Ohio Legislature’s policies which have thrust our schools into fiscal instability.”

2 thoughts on “Longstanding State Tax Freeze and New Voucher Explosion Create Overwhelming Financial Problems for Ohio School Districts

  1. I am ‘almost’ speechless. Or rather I’m in a moment of agitation, that falls short of ‘heart-rending’, as it is structural injustice, egregious action across so many actors. that drives this disturbance. And it is not easy to identify any one person, other than our legislators en masse, as much as so many are co-operating and co-opting themselves in this cash-transfer from public school students to private/parochial school students.
    I am grateful for your detailed analysis and the link to Scott Gainer’s specific details, as it helps define the actual dollar amount (now $9 million (2020-2021) leaving CHUH, up from $2 million in 2017) and very clearly the private and parochial schools who are receiving direct subsidies for their children’s education from CHUH! Those funds are NOT state funds, but directly out of CHUH tax/funds. (That, perhaps, seems the point ultimately: to drain the very substance out of PUBLIC education).
    This is the ongoing attack not only on public education (with so many participants), but on the very idea of a ‘public commons.’
    The participation of private and parochial schools represents not only their failure to value/respect a commons, but their own desperate need to fund themselves, and pay teachers often much less than the fair wage.
    I will leave it at that lest I fail to observe a limit.

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