Ohio Legislature Looks to Adopt New School Finance Plan During 2020 Lame Duck Session

The Ohio Legislature will waste no time before trying to enact—before the end of the current legislative session at the end of December—a Fair School Funding Plan, which was proposed in the spring of 2019. The Ohio House has been holding hearings for months on what, this week, became Substitute House Bill 305. Last week Senate Education Chair, Peggy Lehner, and 14 additional co-sponsors introduced a companion bill, Senate Bill 376.

The Columbus Dispatch‘s Catherine Candisky summarizes the Ohio Legislature’s attempt to move forward immediately to pass the new school funding blueprint: “A bipartisan group of state lawmakers on Friday unveiled a complex and long-sought overhaul of Ohio’s school funding system that would provide another $1.99 billion a year—about a 24% increase—to K-12 schools when fully implemented. The proposal to change the way state aid is calculated and distributed to public schools establishes the per-pupil cost of ‘a quality education,’ and determines how much funding each local community should be able to cover itself and how much should come from the state. It aims to keep overall funding levels relatively even across the state despite widely varied tax bases across Ohio’s more than 600 school districts.”

The term-limiting of several of the plan’s co-sponsors is accelerating the timeline for seeking the bill’s passage before the end of 2020.

Here is the primary reason why a new school funding plan is needed in Ohio. Materials released when the new funding plan was introduced in the spring of 2019 showed that before the current biennium, in 503 of the state’s 610 school districts, state school funding was capped or the district had fallen onto a hold-harmless guarantee. Then the current biennial budget for FY 2020-2021, froze the state’s contribution to state foundation school funding at the FY 2019 level with no increase to cover normal inflation.

The purpose of a state school funding plan, in accord with the provisions of each state’s constitution, is to create a system ensuring that all children, no matter where they live, are provided an equitable opportunity to learn. The late political theorist, Benjamin Barber defined educational equity: “Education need not begin with equally adept students, because education is itself the equalizer. Equality is achieved not by handicapping the swiftest, but by assuring the less advantaged a comparable opportunity. ‘Comparable’ here does not mean identical…” (An Aristocracy of Everyone, p. 13)

The Fair School Funding Plan Would Make Ohio School Funding More Equitable

The plan the Ohio Legislature now hopes to pass has been modified from an earlier version to enhance equity.  It directs additional funding to the state’s poorest school districts, particularly those in urban areas where poverty is concentrated. The plan was developed through a comprehensive costing out study to establish an ongoing method for defining the per-pupil base cost, which the formula then modifies through a calculation of each school district’s local capacity to raise school revenue. Local capacity in this plan combines two measures: (1) each school district’s local property valuation and (2) the income of the school district’s residents (as a proxy for their capacity to vote to pass local levies). Modifications to the original plan have expanded the calculation that divides the state’s school districts into five tiers based on local school district wealth categories. Very significantly, the revised plan increases categorical aid for economically disadvantaged students from $272 per pupil to $422 per pupil.

The Fair School Funding Plan Eliminates School District Deduction Funding for Charters and Vouchers

The Fair School Funding Plan does nothing to reduce the extensive school privatization that already exists in Ohio.  Ohio’s original school voucher program is the second oldest in the country, and the legislature has multiplied the number of statewide school voucher programs at public expense.  Neither does the new plan control the number of charter schools nor does it enhance regulation of what has proven to be a charter sector filled with conflicts of interest and fraud.

However, the new plan significantly shifts the funding mechanism for some of these programs. In Ohio, while some of the voucher and charter programs are currently funded out of the state budget, the legislature has recently expanded the funding of statewide EdChoice vouchers by deducting dollars right out of school districts’ local budgets for students to carry away in vouchers for private school tuition.

In the current biennial budget, passed in the summer of 2019, the Legislature expanded EdChoice vouchers by adding new grade level cohorts of students who qualify in designated schools and also by expanding the number of schools the state deems “EdChoice designated.” Because the burden of EdChoice falls most heavily on public school districts serving poor children, the expansion of EdChoice, which is funded by the local deduction method, poses serious equity concerns, by extracting essential dollars that could otherwise be used for reducing class size and hiring counselors, social workers, school nurses, and librarians.

The proposed Fair School Funding Plan eliminates the school district deduction funding mechanism for the state’s vouchers and charter schools and would, therefore, remedy what has become a primary inequity in Ohio’s system of funding schools. Here is the sponsors’ explanation of Substitute HB 305: “‘Enrollment’ used in HB 305 means the number of students actually being educated by the district. Students attending community schools (Ohio’s name for charter schools), other schools through one of the state scholarship programs (Ohio’s name for vouchers), or court-placed in schools outside the district of residence would be counted for funding purposes in the school where they are being taught. Students open enrolling into a district also would be counted as students of the district where they are taught.  In all of these instances, funding would go directly (from the state) to the educating entity.”

The Fair School Funding Plan’s elimination of the school district deduction as the funding mechanism for privatized vouchers and charter schools  is one of the urgently important reasons for the Legislature to pass Substitute HB 305 and SB 376.  Recently the Executive Director of the Ohio Coalition for Equity and Adequacy of School Funding, Bill Phillis documented that in FY 21 and FY 22, “$2,352,881,306 will be deducted statewide from local school district budgets for vouchers and charters.

In the Cleveland Heights-University Heights City Schools, the district where I live, the amount of the local school district deduction for EdChoice vouchers has grown explosively: 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. This year students with vouchers are carrying away 45 percent of the school district’s state foundation funding to pay private and religious school tuition. Ninety-five percent of the students carrying vouchers out of the CH-UH public school budget this year have never been enrolled in the district’s public schools. In essence, this means that in the CH-UH school district, and across Ohio, the Legislature has been forcing local public school districts to undertake an unexpected expense: paying for private and religious education. 

Will the Ohio Legislature Raise the Funds to Pay for a Six Year Phase-In of the Fair School Funding Plan?

The caution about the new plan is that sponsors call it a blueprint, but they are clear that it will not come with immediate funding appropriations to cover the cost.  A six year phase-in is anticipated.

Funding the new plan will pose a major challenge as, after a decade of tax cuts during Governor John Kasich’s tenure, the state lacks the necessary revenue to cover the cost of the new plan. The worry about funding is complicated by projections, reported last Friday by the Plain Dealer‘s Jeremy Pelzer, that Ohio will face a state budget shortfall in the current fiscal year of $2 billion (before June 30, 2021) due to the COVID-19 recession which is expected to continue and perhaps intensify unless the pandemic can be brought under control through testing and contact tracing until a vaccine is widely available. Late last spring, after the pandemic caused business shutdowns and widespread layoffs, Governor Mike DeWine was forced by a recessionary collapse in state revenue to cut $330 million out of the already appropriated FY 20 state K-12 education funding. This money, which school districts had already allocated for specific expenses, disappeared before June 30.

Despite Worries About Paying for the 6-Year Phase-In, the Legislature Should Adopt the Fair School Funding Plan.

Despite concerns about how the Legislature will fund the six-year phase-in of the plan, it is important that a bipartisan coalition of Ohio legislators has come together to create a blueprint school funding formula, which would fulfill the Legislature’s obligation under the state constitution to provide all of Ohio’s children equal access to educational opportunity. It will be up to the public to support the full funding of the new plan.

5 thoughts on “Ohio Legislature Looks to Adopt New School Finance Plan During 2020 Lame Duck Session

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