Ohio Senate Killed New School Funding Plan: Now We Hear That Money Doesn’t Matter

Ohio Auditor Keith Faber explained on Tuesday that, “The Auditor of State’s Office recently completed a performance audit for the Ohio Department of Education.” Faber says that the purpose is to make recommendations about “economy, efficiency, and/or effectiveness in the areas reviewed…”

One of the subjects of the new report from the Ohio Auditor’s office is the correlation of school districts’ expenditure per pupil with their school performance as measured by standardized tests.  Here, from the Performance Audit Summary, is what the Auditor discovered: “Conclusion: Expenditure per pupil has a loose association with Achievement in Ohio, particularly at the high performing districts.  As total district spending increases, there is no single expenditure category driving this increase.”  Later in the body of the report, the Auditor states: “The analyses in this section indicate that it is not necessary for districts to spend more to get better results. The data show that lower spending districts can achieve at the same level as higher spending districts, a point which parents and taxpayers should take into consideration in their personal decision-making surrounding financial and performance issues in their district. ODE and LEAs should consider if there is a point of diminishing returns in spending, where additional district revenue and expenditures will not necessarily increase student success.”

The Plain Dealer‘s Emily Bamforth digs deeper, explaining to readers that one purpose of the Audit was to discover which practices in high spending school districts are most essential for raising test scores: “The research found there is a low correlation between per-pupil spending and success on the Performance Index, and often higher spending was correlated with a lower index score. The auditor’s report maps the analysis, which shows clusters of high spending compared to low index scores around urban areas, like Cleveland and Cincinnati. The conclusion was used to reinforce recommendations to the Department of Education to review the highest performing districts’ practices to see what could be applied to other schools, and for community members to question spending relative to student success.”

I give Bamforth credit for questioning the Auditor’s conclusions and highlighting some of what is missing in the auditor’s report: “(T)he state auditor’s office claims that spending-per-pupil in districts is not closely correlated with student success. However, this conclusion does not factor in socioeconomic data that might affect student performance. Socioeconomic standing affects outcomes in many areas of life, including education and health, according to the American Psychological Association.  Socioeconomic status includes household income, among other factors.”

Bamforth cites the American Psychological Association, but the body of research examining the correlation of school districts’ aggregate standardized test scores with family and neighborhood economics is long, deep, and overwhelming. Academic research in two areas—(1) the correlation of lower school achievement with socioeconomic opportunity gaps, and (2) the impact of per-pupil spending on student achievement—confirms Bamforth’s skepticism about the new report from Ohio Auditor Keith Faber.

The Research on the Difference Between School Achievement Gaps and Opportunity Gaps

In their 2014 book, 50 Myths and Lies That Threaten America’s Public Schools, educational researchers David Berliner and Gene Glass explain: “For schools to be a powerful solution to the problems of poverty, it would help if an America absent of poverty already existed. We know that the socioeconomic status of students explains most of the variation in educational outcomes. Although there is evidence that some schools with many low-income students are academically successful, there is much more evidence that most schools do not overcome the barriers that stem from low income and low wealth. Health care, housing, stability, and a host of other out-of-school influences greatly affect a child’s academic achievement. Much of the achievement gap in test scores and much of the gap in graduation rates between racial and socioeconomic groups are due to opportunity gaps such as access to medical care, stable housing, and freedom from discrimination.” (Fifty Myths and Lies that Threaten America’s Public Schools, pp. 230-231. The authors cite the research report documenting this conclusion.)

Why Money Matters and Why One Should Not Assume that Successful Programs in “High Achieving” School Districts Are Simply Transferable Best Practices

Ohio’s A-rated school districts on the state’s Performance Index are mostly located in wealthy exurbs. Ignoring the correlation between family and neighborhood economics, the Ohio Auditor’s report seems to suggest that if the state can only identify best practices in high-achieving school districts, these programs can simply be moved to low-achieving districts as a strategy for raising overall achievement as measured by test scores..

In Educational Inequality and School Finance: Why Money Matters for America’s Students, the nation’s best known expert on school finance, Bruce Baker explains, for example, that in a school where student poverty is concentrated, students will always benefit from the most basic—and sometimes very costly—investments. We don’t need the Ohio auditor to tell us what a rich exurban district is doing; instead the state simply needs to budget the needed dollars: “Reducing class size is often characterized as a particularly expensive use of additional school dollars… What we do know… is that ample research indicates that children in smaller classes achieved better outcomes, both academic and otherwise, and that class size reduction can be an effective strategy for closing racial and socioeconomic achievement gaps.” (Educational Inequality and School Finance, pp. 98-99)

Baker reports that education costs more in schools serving poorer students or students with special needs: “(A) substantial body of research addresses how child poverty, limited English proficiency, unplanned family mobility, and school racial composition may influence the costs of achieving any given level of student outcomes. The various ways children are sorted across districts and schools create large differences in the costs of achieving comparable outcomes, as do changes in the overall demography of the student population over time. Rises in poverty, mobility due to housing disruptions, and the numbers of children not speaking English proficiently all lead to increases in the cost of achieving even the same level of outcomes achieved in prior years. This is not an excuse. it’s reality. It costs more to achieve the same outcomes with some students than with others.”(Educational Inequality and School Finance, pp. 198-199)

Ohio legislators, with expert guidance from educational leaders and school finance economists,  just spent over two years developing a new school funding plan. Howard Fleeter, an expert on Ohio school finance, criticized the plan 18 months ago when an early draft was released, because while the first draft addressed the reality that Ohio’s school funding has become increasingly inadequate through a decade of tax cuts, the new plan’s first draft did not invest enough in equity.

In a September 4, 2019 report, Fleeter explained: “National research indicates that economically disadvantaged students typically cost at least 30% more to educate than do non-disadvantaged students. However… Ohio’s current formula only provides additional funding at less than 20% of the base cost…. Funding is an even lower percentage in districts with less than 100% economically disadvantaged students.”  In an appendix to the same report, Fleeter adds that over the past decade, Ohio has systematically reduced funding for school districts serving concentrations of poor children:

  • “For much of the past 30+ years, funding for economically disadvantaged students has increased at a far slower rate than the foundation level. Even worse, poverty funding has actually decreased by 13% from FY09 to FY18.
  • “Since 2001, the rate of increase in the number of low income students has been nearly 3 times as great as the rate of increase in state funding for these students.
  • “Funding for economically disadvantaged students in Ohio has become significantly more structured and restricted in the past 15 years as funding has been focused on programs related to the additional needs of these students and away from unrestricted grants.
  • “There has never been an objective study to determine the adequate level of funding for the programs needed to serve economically disadvantaged students.
  • “The focus on funding programs for economically disadvantaged students has largely ignored the impact of poverty on the social and emotional needs of low income children. These issues need to be addressed alongside – and arguably before – the academic needs of these children.”

It is ironic that, right now, Ohio Auditor Keith Faber has been asked by the Ohio Department of Education to investigate “economy, efficiency, and/or effectiveness” of the distribution of school funding. After all, less than a month ago, the Ohio Legislature killed the proposed new school funding plan once it had been adjusted to meet Fleeter’s demand that the state would more equitably serve the needs of the school districts serving the state’s poorest students. The Ohio House of Representatives passed the new plan by an overwhelming margin, but the Ohio Senate killed the plan by refusing to vote on it before the session ended.  Ohio Senate President Matt Huffman claims that the Ohio Senate let the plan die because he estimates the plan would have cost $4 billion rather than the $2 billion the plan’s sponsors projected. And now the auditor has conveniently “discovered” that perhaps a school district’s level of expenditure doesn’t really affect student achievement after all.

I suspect that leaders of the Ohio Senate are beginning to lay out their case that we can simply get by by spending less money more efficiently. That’s nonsense. It is just the latest proof that the conservative Republican majority in the Ohio Senate lacks the will to invest in the school districts which serve Ohio’s poorest children.

New Ohio Report: Cupp-Patterson Plan Creates Adequate School Funding but Must Be Corrected for Equity

Ohio’s legislature will soon hold hearings on a new, much touted, desperately needed, bipartisan school funding plan. The plan was developed and proposed by Rep. Robert Cupp (R) and Rep. John Patterson (D), and has now been formally introduced as House Bill 305.

Ohio’s current school funding formula is so dated and so badly underfunded that 503 of the state’s 610 school districts are currently either capped or on guarantee; they have been receiving from the state just what they got last year and the year before and the year before that.  The new Cupp-Patterson plan was designed to flip that situation and restore the awarding of formula-calculated funding to at least 510 districts.

The new formula was developed to establish a base cost per enrolled student, an amount which every district would receive through combined state and local funding. Everybody agrees that the new formula would begin to create an adequate funding floor.

But huge concerns have arisen since last spring when the formula was first announced. Once the computer runs were released to show how the new formula would treat each of the state’s 610 school districts, it became apparent that many of the state’s very poorest districts—especially poor urban districts with concentrated poverty and rural districts—would end up with meager funding increases, or, in some cases, no additional funding at all, while some of the state’s wealthiest exurban school districts would receive huge increases in state funding.

While the new Cupp-Patterson Plan produced an adequate school funding floor, it failed to achieve equity. Part of the reason is obvious: the outer ring suburbs are rapidly growing, and a higher per-pupil state funding system will add funding as students move to a school district. But until now, nobody has clearly explained what is causing the proposed formula to deny additional funding to the state’s poorest school districts—three of them currently being punished by autocratic state takeover, ten of them threatened with state takeover, and Cleveland under its own form of state supervision.

Last week, however, Howard Fleeter, an expert on Ohio school finance since the early 1990s, published a report for the Ohio Education Policy Institute to evaluate the proposed Cupp-Patterson formula.  In his new paper, Fleeter dissects the history and complexity of the state’s foundation formula along with the history and complexity of the way the state calculates categorical funding—the special funds the state awards to school districts in addition to basic aid for special services—special education, gifted, English learners, transportation, career-technical, and students in poverty.

Fleeter’s paper is extremely technical.  Even as a non-expert reads the new report, however, what becomes clear is that the very complexity of the calculations and the choice of particular factors has disadvantaged the state’s poorest school districts.

One Problem with the Foundation Base Cost Calculation

Any school funding formula is comprised of a state contribution and a local contribution which together add up to a base cost amount. The purpose of the formula is to deliver additional state aid to school districts whose fiscal capacity is lower. While he affirms much of the way the basic aid formula is calculated, Fleeter criticizes one area of the calculation. His concern is the way community median income is being used to calculate the local contribution to the formula. The proposed formula considers the size of the school district’s property tax base and also measures community income as a proxy for the community’s capacity to pass local operating levies.  The assumption here is that wealthier voters will more easily be able to afford to vote for tax levies.

The proposed formula measures income through a complicated calculation called local capacity percentage which is based on median income. Fleeter explains that the way the tiers are set fails entirely to distinguish high income from very poor communities. Fleeter provides an example: “Northern Local School District in Perry County has a median income of $41,826 while Orange City School District has a median income of $93,421 (more than twice as much), and yet both have the same local capacity percentage, which is clearly inequitable.”  The Northern Local School District in Perry County is the extremely poor rural school district where the DeRolph school funding equity lawsuit originated.  Orange City School District includes the very wealthiest communities in Cuyahoga County—greater Cleveland.

Problems with the Calculation of Categorical Funding

Fleeter also considers the mass of calculations which determine categorical funding levels, and he devotes much of his analysis to the way the proposed formula treats the school districts which serve a large number or a concentration of students living in poverty. Ohio’s current formula fails to support these districts even as the state punishes them with punitive measures—most notably state takeover.  Fleeter believes Ohio needs to assist these school districts with significant additional resources: “National research indicates that economically disadvantaged students typically cost at least 30% more to educate than do non-disadvantaged students. However… Ohio’s current formula only provides additional funding at less than 20% of the base cost…. Funding is an even lower percentage in districts with less than 100% economically disadvantaged students.”

In an appendix, Fleeter traces a history of state funding problems for school districts serving children in poverty: “The following points provide a summary of the main issues relating to funding for economically disadvantaged students in Ohio:

  • For much of the past 30+ years, funding for economically disadvantaged students has increased at a far slower rate than the foundation level. Even worse, poverty funding has actually decreased by 13% from FY09 to FY18.
  • Since 2001, the rate of increase in the number of low income students has been nearly 3 times as great as the rate of increase in state funding for these students.
  • Funding for economically disadvantaged students in Ohio has become significantly more structured and restricted in the past 15 years as funding has been focused on programs related to the additional needs of these students and away from unrestricted grants.
  • There has never been an objective study to determine the adequate level of funding for the programs needed to serve economically disadvantaged students.
  • The focus on funding programs for economically disadvantaged students has largely ignored the impact of poverty on the social and emotional needs of low income children. These issues need to be addressed alongside – and arguably before – the academic needs of these children.”

Fleeter examines several reasons why the new school funding plan does not solve the problem.

Historically, the state directed assistance to school districts serving very poor children with what was called Disadvantaged Pupil Impact Aid—later replaced after the DeRolph litigation with Targeted Assistance and Capacity Aid. In a series of calculations, Fleeter demonstrates that under the new Cupp-Patterson plan, the total of $987.3 million for these two programs, “would still be 20.3% below the actual FY 19 post-cap funding levels for Targeted Assistance and Capacity Aid.”

In the first place, the targeting of funding for disadvantaged students is part of the plan’s six-year phase in.  Over the period of the phase in, school districts would not receive all of the money until the whole plan were fully phased in. “Additionally, the state average base cost amount would increase to $7,190 in FY 20 under the Cupp-Patterson plan. Thus, the per-pupil amount of economically disadvantaged funding received in FY 20, even if there were no phase-in, would only be 25.6% of the new base cost.”

Problems with the proposed formula also derive from the way it counts students for Targeted Assistance. The plan uses overall enrollment instead of Average Daily Membership to calculate Targeted Assistance. (Overall enrollment counts students in charter schools and students receiving vouchers.)  The substitution of overall enrollment for ADM affects the mathematical calculation, making urban districts look wealthier than they actually are. Changing the method of counting students deprives school districts of millions of dollars annually.  For example, Cleveland would lose $27.6 million from the amount of Targeted Assistance it currently receives; Columbus, $27.1 million; Dayton, $21.0 million; Toledo, 19.1 million; Youngstown, $13.54 million; Cincinnati, $11.4 million; Lorain City, 10.1 million; Euclid, $4.7 million; Lima, $4.0 million; and Mansfield, $3.0 million.

Fleeter comments “When providing testimony in support of their plan, members of the Cupp-Patterson work group explained the above outcomes by saying that the number of students educated in the district is in fact the more appropriate measure for determining wealth than is the number of students who live in the district. While this is certainly true for the calculation of an input-based base cost measure, it is less clear for a measure that is designed explicitly to help less wealthy districts keep pace with their wealthier neighbors in providing educational opportunities for their students. Moreover, regardless of the theoretical merits of one student count versus another for making a per-pupil wealth calculation, the funding impact was clearly that high poverty urban districts lost so much revenue from Targeted Assistance under the initial Cupp-Patterson proposal that most of them ended up on the guarantee or with much smaller revenue increases than did the wealthier districts in the state.”

Again and again, Fleeter emphasizes the urgent need for the state to address the needs of school districts serving concentrations of poor children. He castigates legislators for proposing a formal study of the needs of students in these school districts but failing to fund such an investigation: “Finally, HB 305 would direct the state to undertake a study of the true cost of educating economically disadvantaged students in Ohio. Such a study has never been undertaken in Ohio. The final version of the FY 20-21 state budget did include a provision directing the Ohio Department of Education to oversee such a study; however, no funding was earmarked for this purpose. The state needs to be encouraged to find a way to fund and complete these studies in the FY 20-21 biennium.”