With the Ohio Legislature, Even When You Win, You Lose

In the new state budget, the Ohio Legislature supposedly fixed an inequitable and troubling scheme for funding the state’s extensive private school vouchers.

In recent years, through something called “school district deduction funding,” the state has counted each voucher student as though he or she attended the public schools in the district where the voucher student resides and then sent the voucher amount—$4,650 for younger students and $6,000 for high school students—to the private school right out of the local school district budget.  In my school district, Cleveland Heights-University Heights, and many others, the cost of each voucher was far more than the district received from the state in school foundation basic aid for that student. The result in my school district, which has a growing religious community applying for vouchers, was that in five years the district’s annual loss to vouchers grew from $2,256,017 in 2017 to $9,017,250 in 2021 (last school year). That $9,017,250 lost by our school district last school year constituted 45 percent of our school district’s state foundation basic aid even though 1,699 of our district’s 1,792 voucher students—roughly 95 percent— have never been enrolled in our public schools.

Statewide, the school district deductions for vouchers have been disequalizing. The state offered the vouchers only to students who reside in the attendance zone of a Title I school, which means that the vouchers extracted the money for vouchers out of the budgets of school districts serving concentrations of the state’s poorest children—leaving less money for the students remaining in the public schools.

As promised, in the state budget passed at the end of June, the Legislature ended school district deductions to pay for private school tuition vouchers (and other deductions from school district budgets to pay for charter schools).

In a state where the only way to make up for money lost to vouchers and charters is to go on the ballot to try to pass local school operating levies, there was widespread relief and jubilation about the end of local school district deductions. In my own school district, on the assumption that we won’t need to pay such high local school taxes anymore, some people have even proposed that the school board rescind the most recent school levy.

But the end of school district deduction funding for vouchers was passed by the Ohio Legislature as part of a new school funding plan that had been included in the new state budget. The Fair School Funding Plan had been designed with a six year phase-in. But the Republican leaders in the Ohio Senate refused to pass the full six year phase-in. They merely passed the first two years of the plan, which means that the full plan won’t be operational this year or even next year. In fact, it may not ever be realized unless future legislatures fully fund it.

This summer, when the Ohio Department of Education released computer runs of state foundation per-pupil funding for the current 2021-2022 school year, it became clear that—despite the end of school district deduction voucher funding—there is a continuing state funding penalty for school districts which have experienced explosive growth of vouchers over the recent years. According to the Ohio Department of Education’s FY2022, Summary School Funding Reports released this summer, for my district, Cleveland Heights-University Heights, total net state school funding will be $7,024,199,33, an increase of only $41,310 over last school year. By looking at two relatively comparable inner-ring suburban Cleveland school districts, the problem becomes evident: Shaker Heights, a smaller district in a wealthier community, will be getting $15,310,927.25 in net state school funding, and Lakewood, a slightly smaller district and economically similar to Cleveland Heights-University Heights will be getting $17,143,938.65 in net state school funding.  State printouts show Cleveland Heights-University Heights receiving 46 percent of the amount of state funding Shaker will receive and 41 percent of what Lakewood will receive from the state.

What is going on?

In August in a powerpoint which Cleveland Heights-University Heights’ district treasurer, Scott Gainer presented to the CH-UH Board of Education, he explains that, while the new state budget promised a “fair school funding plan,” legislators continue to assign the ongoing costs of previously awarded vouchers to the local school districts where the students carrying those old vouchers reside. While, the Legislature’s recent elimination of school district deductions for vouchers will protect  local school district budgets from absorbing the cost of new vouchers the state awards in the future, it appears that at least for a time local school districts will carry the burden of the explosive growth of vouchers in recent years.

But the state no longer calls what is happening “a school district deduction.”   How did the Legislature accomplish this slight-of-hand? Instead of calculating the actual phase in of an entirely new school funding formula, the Ohio Department of Education is using last year’s net state funding for each school district as the baseline for future funding.

When I asked Gainer to explain what’s happening, he told me: “The big discrepancy is that the starting point the state is using to begin phasing in the plan (over 6 years, with no guarantee that they will continue to do so) is the net funding from last year (gross funding less all voucher/scholarship/charter deductions).  We have had so many deductions that our net was lower than the surrounding school districts. In theory, by year 6 of the phase-in, the other districts will have moved very little, while we will increase each year to a similar funding level. I’m not holding my breath that the plan will survive two more biennial budgets.”

There is some reason to hope for some more optimistic news next month.  In July, the Ohio Department of Education announced that computer runs based on last school year’s net funding levels as the basis of the new school funding plan are temporary while the state figures out how the new formula will work—with a planned phase-in (but remember the Legislature’s stated decision to adopt only the first two years of the six-year phase-in).  The Ohio Department of Education promises new calculations in October, 2021: “The State Funding Payment Reports and payments for July through September will generally reflect net funding levels equal to FY2021 levels, with the goal of implementing the new funding calculations… by October.”

Cleveland Heights-University Heights City Schools Treasurer Gainer expects that in October the district will experience some jump in revenue, but there are two caveats.  First, the calculations in the school funding plan included in the state budget were based on the enactment of a six-year phase-in, and the district will likely experience only what that first year of correction will bring (and legislative leaders in the Oho Senate continue to hint that the six-year phase-in may never be fully implemented).

Additionally, there is a second problem. The new budget folds an important budget line from the previous budget biennium, Governor Mike DeWine’s Student Wellness and Success Program, into the current budget’s Disadvantaged Pupil Impact Aid without additional funding. Ohio’s school funding expert, Howard Fleeter explains that the change “raises questions as to whether this funding stream will ultimately be spent on new initiatives to help reduce non-academic barriers to student success (as envisioned by Governor DeWine) or will simply be absorbed into the spending that districts are already incurring.”  The committee that developed the Fair School Funding Plan had originally anticipated that a big bump in Disadvantaged Pupil Impact Aid would be awarded to schools in the first year—the current school year—of the new budget biennium, but the Ohio Senate blocked the adoption of that provision.

For these reasons, in a July 9 statement on projected school funding under the new state budget—including the elimination of the school district deduction, Gainer estimated that in October, the Cleveland Heights-University Heights school district may realize some additional state foundation funding beyond the $7,024,199,39 projected in Ohio Department of Education printouts over the summer: “(S)imulations provided by Ohio’s school business professional organizations indicate CH-UH will receive an additional $2 million in year one (21-22 school year) and an additional $1.3 million in year two (22-23 school year) over our current funding… The detailed amounts will be provided by the Ohio Department of Education in October.”

Certainly the students, educators, and local taxpayers in Cleveland Heights and University Heights can hope for this additional funding, but its addition would still leave us far behind the state funding being awarded to comparable neighboring school districts.

The problem represents a serious case of structural inequity in what was supposedly a “fair school funding plan.” Ohio legislators managed to revise, readjust, and underfund the plan in the new state budget.  They have merely perpetuated a long history in Ohio of inadequate and inequitable public school funding.