On 25th Anniversary of Ohio’s “DeRolph” Decision, Expansion of Vouchers Has Only Exacerbated School Funding Inadequacy and Inequity

Today is the 25th anniversary of the original Ohio Supreme Court decision in DeRolph v. Ohio. A quarter of a century ago, the Court declared Ohio’s method of school funding unconstitutional because state dollars were inadequate and inequitably distributed. The case was brought back to the Ohio Supreme Court and upheld three more times, but in the ensuing 25 years, Ohio’s flawed school funding system has never been legislatively remedied.

Because state funding was deemed inadequate and inequitably distributed, the Court declared that the entire system was overly reliant on local property tax levies which Ohio requires school districts to put on the ballot. The Court also charged the Ohio Legislature to discontinue a long practice of what the justices called “residual budgeting” and instead to base the per-pupil funding level on what school districts must actually spend to fulfill the state’s commitment, as defined in the state constitution, to a “thorough and efficient’ system of common schools. What is residual budgeting? It is the Legislature’s practice of dividing up the state’s revenues in each biennial budget across all the functions of government, and spending what’s available for K-12 education without consideration of the actual costs of teachers and school counselors or special education or school transportation, or the needs of English learners or the importance of enriched curriculum or school libraries or music and art classes.

The problem in March 2022, on the 25th anniversary of the first of four Supreme Court decisions in DeRolph v. Ohio, is that the legislature has neither chosen to fund public schools sufficiently nor to compensate for differences across local school districts in the amount and type of local property that can be taxed. Ohio school funding remains inadequate and inequitably distributed. School funding continues to depend too much on each school district’s capacity to put school millage on the ballot and on parents’ willingness to mount major political campaigns to pass these levies every few years.

Part of the problem has been a long legislative commitment to tax cuts. In an April 2021 report for Policy Matters Ohio, Wendy Patton examined Ohio’s chronic disinvestment in state funding for public education: “On average, local governments paid for the greater part of school funding in each of the last 40 years but three, 1987-1989. At times, the gap narrowed between state and local share, but the 2006-07 budget halted that progress by eliminating major business taxes and phasing in big state income tax cuts. Gov. Ted. Strickland made positive steps using federal stimulus…. But Gov. John Kasich promptly reversed that effort with a $1.8 billion cut to school funding imposed over the two-year budget of 2012-13. School funding has lagged ever since. By 2020, the state share of school funding had fallen to its lowest point since 1985.” In the most recent FY 2022-2023 state budget, passed by the Ohio Legislature in June 2021, the Ohio Legislature again cut income taxes, this time by $1.7 billion over the biennium.

The new FY 2022-2023 state budget raised some hope for school refunding reform. In the budget, the Legislature passed a brand new Fair School Funding Plan designed to meet the mandates of the Ohio Supreme Court’s four DeRolph decisions. The new plan was developed through a study in which experts tried to figure out a base cost per pupil that would reflect the real costs for school districts. Over a six-year phase-in, the Fair School Funding Plan was supposed to guarantee adequate funding, equitably distributed. Legislators promised it would end residual budgeting and end what, 25 years ago, the Court had condemned as overreliance on local property taxes.

But problems became apparent as last summer wore on.  The Ohio Senate refused to pass a law implementing the plan in full, and merely chose to fund the first two years of the plan because state senators said they did not want to tie the hands of future legislatures. It soon became apparent that there was no long-term commitment among many in the Ohio Legislature fully to implement the plan. The Ohio Senate also left out an important provision in the original Fair School Funding Plan—the inclusion of a cost study of the real needs in districts serving concentrations of children living in poverty while at the same time refusing to begin a phase-in of “disadvantage aid” until the second year of the biennium, with a zero percent increase for FY 2022.

The most serious threat to fair school funding in the new Ohio budget for FY 2022 and FY 2023 is that the budget alarmingly expanded school privatization, with the added investment in vouchers and charter schools coming out of the state’s public school foundation budget.  In the budget the Legislature raised the state budget for charter schools from $30 to $54 million per year. Legislators also allowed charter schools to locate in any or all of the state’s 610 school districts, while in the past, charter startups had been limited to a group of eligible districts.

But the biggest threat to fair public school funding cames from the myriad ways the budget expanded the state’s investment in one of its largest school voucher programs—EdChoice.  Each K-8 EdChoice voucher grew from $4,650 to $5,500; each high school voucher grew from $6,000 to $7,500.  The legislature altogether removed any cap on the number of EdChoice vouchers, which had previously been limited to 60,000 total.  Students qualify for EdChoice if they live in the attendance area of a public school that ranks in the lowest 20 percent on the State School Report Card Performance Index, but under the budget, all siblings of students who currently have a voucher qualify, wherever they live.

And there’s more. While there used to be a 75 day window for submitting an application for an EdChoice voucher, there is now “a rolling window with no closing date.” Alarmingly, in the new budget the state has begun phasing out the requirement that students must have attended a public school in the year prior to qualifying for an EdChoice voucher. High school students had previously been able to apply for a voucher without prior public school enrollment, but that requirement will have been phased out for all K-12 students by 2026.

A quarter of a century after the Ohio Supreme Court declared Ohio school funding unconstitutional, over 100 public school districts recently filed a second lawsuit declaring that EdChoice vouchers deprive Ohio’s public school districts of essential revenue. Much of the substance of the new lawsuit traces Ohio’s school funding problems to the same old issues—inadequate and inequitable school funding and the resulting overreliance on local property taxes.

In their lawsuit, plaintiffs declare: “The EdChoice Scholarship Program poses an existential threat to Ohio’s public school system. Not only does this voucher program unconstitutionally usurp Ohio’s public tax dollars to subsidize private school tuitions, it does so by depleting Ohio’s foundation funding—the pool of money out of which the state funds Ohio’s public schools… The discrepancy in per pupil foundation funding is so great that some districts’ private school pupils receive, as a group, more in funding via EdChoice Vouchers than Ohio allocates in foundation funding for the entire public school districts where those students reside. This voucher program effectively cripples the public school districts’ resources, creates an ‘uncommon’, or private system of schools unconstitutionally funded by taxpayers, siphons hundreds of millions of dollars of taxpayer funds into private (and mostly religious) institutions, and discriminates against minority students by increasing segregation in Ohio’s public schools. Because private schools receiving EdChoice funding are not subject to Ohio’s Sunshine Laws or most other regulations applicable to public schools, these private facilities operate with impunity, exempt from public scrutiny despite the public funding that sustains them.”

The plaintiffs continue:  “Because public funds are finite, funding EdChoice Program Vouchers out of the foundation funding designated for public school districts inevitably depletes the resources designated by the legislature for educating Ohio’s public school students. H.B. 110 (the state budget bill) initially incorporated the salient features of the …Fair School Funding Plan  …. However, due to the ballooning effects of the EdChoice program, the enacted version of H.B. 110 funded only up to one-third of the increases required by the proposed Fair School Funding Plan over the next two fiscal years.” “(T)he Fair School Funding Plan was not fully funded due to the ballooning costs of the EdChoice Program. Only 16.67% of the Fair School Funding Plan is being funded through Fiscal Year 2022 and 33% of the Fair School Funding Plan will be funded through Fiscal Year 2023, as specifically delineated in H.B. 110.  This means the General Assembly will meet only a fraction of its constitutional obligation, by the standards it has adopted, to provide a thorough and efficient system of common schools for Fiscal Year 2022.”

On this 25th anniversary of the DeRolph decision, Ohio’s legislators continue to flout their responsibility as defined by Article VI, Section 2 of the 1851 Ohio Constitution: “The General Assembly shall make such provisions, by taxation, or otherwise, as, with the income arising from the school trust fund, will secure a thorough and efficient system of common schools throughout the state; but no religious or other sect, or sects, shall ever have any exclusive right to, or control of, any part of the school funds of this state.”

If you are interested in further exploring Ohio’s school funding dilemma, sign up to attend an Ohio League of Women Voters webinar tonight, March 24, 2022 at 7:00 PM: Fair School Funding: The Unfinished Agenda and How to Win.  Register here.

It Looks As Though Proposed Ohio School Funding Overhaul May Have to Wait Two More Years

There was a sense of hope on March 25th, when Ohio State Representatives Bob Cupp and John Patterson proposed a new, bipartisan school funding plan for Ohio, a plan that was intended to serve as the House’s education proposal for the 2020-2021 biennial budget, which must be passed by June 30.  We owe these two legislators enormous thanks for overcoming partisan rancor and setting out to try to address school funding injustice in our state.

Under a patched together mess of additions to old formulas, Ohio’s school districts have suffered for years from state funding that hasn’t met the state’s constitutional obligation. The problem has become more serious as state revenue for schools has declined. Following the Great Recession a decade ago, Governor John Kasich and his all-Republican legislature continued the phase out of local business taxes, eliminated the state estate tax and reduced state income taxes. In a state where all tax increases are required by law to be voted, school districts have been forced to ask their residents to increase local property taxes and at the same time to cut programming.  Just as school teachers have been striking all year across other states to highlight outrageous problems with large classes and shortages of counselors, social workers, nurses and librarians, Ohio’s students and teachers have been experiencing the same funding inadequacies.

The proposed Cupp-Patterson Plan was supposed to fund schools adequately—according to a calculation of what it actually costs to provide required services.  It was supposed to be stable without the kind of quirks and changes Ohio school districts have noticed recently in their state funding.  And it was supposed to be equitable by considering not only a district’s property valuation but also the community’s aggregate income in calculating what Ohio calls the local chargeoff—the calculation of what a school district has the capacity to generate in local taxes. Currently in Ohio, 503 of the state’s 610 school districts are on guarantee; they have been getting 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 only problem was, once the computer runs for the state’s 610 school districts were released, it became apparent that many of the state’s very poorest districts, especially poor urban districts with concentrated poverty, ended up with zero new funding—at the same level where they were last year.

This past weekend, the Speaker of the Ohio House, Larry Householder told the Columbus Dispatch that the new plan probably cannot be adjusted quickly enough to be part of Ohio’s 2020-2021 biennial budget:  “I think Cupp-Patterson needs a lot more work… I don’t think it can be done in the time frame for this budget.”

The Columbus Dispatch‘s Jim Siegel explains the problems with the plan and Householder’s concerns: “Over two years, the plan would mean a $280 increase per pupil on average for districts with student poverty rates of at least 60 percent.  Meanwhile, the increase is $392 per pupil for districts with poverty concentration of less than 15 percent.  Several urban districts get little or no additional money.  For Householder, that means more new money for districts that, thanks to local tax revenue, are already funded at an ‘excellent level,’ while less is going to schools where kids have ‘tons of disadvantages.’ That, he said, compounds a revenue imbalance that already exists between poor and wealthy districts. ‘It’s going to create a funding system that’s going to bring a greater amount of inequity between school districts… And there’s no way that it doesn’t.'”

For a fascinating analysis of the complexities that must be addressed by any Ohio school funding plan, I encourage readers of this blog to listen to Jim Siegel’s podcast from last Thursday: Why Is School Funding Still Broken? Siegel talks with two people who bring very different experiences to the conversation. Howard Fleeter, Ohio’s school funding expert has been tracking and advising the legislature about Ohio school finance since 1991.  Julie Wagner Feasel is a member of the school board in Olentangy, a suburban school district just north of Columbus and the fastest growing school district in the state in terms of families moving in.

We learn from Julie Wagner Feasel that even the state’s wealthiest school districts—as measured by property valuation and family income—have been ill-served by our current formula. Olentangy is a wealthy suburban district that for several years has been receiving less state funding than the amount the state awards to private schools for auxiliary services.  Between 2009 and 2014, Olentangy gained 6,000 students at a time when the formula was frozen and the district was on guarantee.  Between 2014 and 2019, the district has been under a “gain cap,” freezing the district’s state funding as it gained another 4,000 or 5,000 students.  Under the proposed Cupp-Patterson formula, which awards what the district needs as measured by its rapid growth, Olntangy will get a significant boost just because its state revenue has been frozen for over a decade.

In the podcast, Howard Fleeter defends the needs of the state’s poorest school districts, those which have lost population but still need additional funds to address the barriers that confront the school districts serving the state’s poorest students. Fleeter suggests that districts serving a high concentration of student poverty need a third more revenue per pupil.  Fleeter disputes Wagner Feasel’s worry that more money would just be absorbed by teachers’ salaries: “Putting resources into classrooms is important. There is important value in teaching, and with salaries, you get what you pay for. To attract good teachers and keep them, you must pay them well… Stability in staff makes a successful school.”

Fleeter also explains why it is enormously complicated to create a state school funding formula that addresses the needs of all 610 of Ohio’s school districts.  We have more big cities than any state except California or Texas—Cleveland, Cincinnati, and Columbus, and then a bit smaller—Dayton, Toledo, and Youngstown, and then a couple of tiers slightly smaller but still big cities.  We have rural Appalachian poverty and then a whole different rural economy on the west side of the state. Then there are the growing outer suburbs and the inner suburbs that are more urban.  How do we calculate equity and adequacy across this array of very legitimate needs?

In his report on the plan’s likely delay, Siegel quotes Ohio House Speaker Larry Householder commenting on the complexity of the problem: “If all we had to do was worry about poor, rural school districts, we could fix that in a heartbeat… But we’ve got everything under the sun in Ohio.”

It will perhaps take another biennial budget cycle before Ohio can create the political will to pass a truly equitable new school funding plan.  In the meantime, however, the Cupp-Patterson plan addresses one concern that could and should be resolved in a stand-alone bill. Ohio has been operating for years with a punitive accountability system beginning with the state report cards that brand the poorest school district with low grades, the third-grade guarantee, the location of charter schools and the EdChoice voucher eligibility in what the state consider academically distressed (low-scoring) school zones and districts, and finally the state takeovers that are currently being seriously challenged in other stand-alone bills.

The Cupp-Patterson Plan proposes to substitute full state funding of school privatization—vouchers and charter schools—for what is now a school district deduction plan.  While today, the child who secures a voucher or leaves for a charter is counted in a school district’s Average Daily Membership, and then carries the voucher or charter amount out of the school district’s budget, in the Cupp-Patterson Plan the state would fully fund the cost of these privatization schemes. In a number of school districts today, the child carries away more in the school district charter school or voucher deduction than the state’s per-pupil funding to that district. Because standardized test scores correlate, in the aggregate, with family and neighborhood economics, the current plan punishes the state’s poorest school districts by locating voucher and charter eligibility in those districts and then extracting the funding for the vouchers and charters from their local budgets. The current plan exacerbates inequity by further reducing the school district budgets in already poor school districts.

The state should not wait two years to address this inequity in the next budget. If the legislature is going to privatize education, the full expense should fall on the state budget and not on the already meager budgets of the state’s poorest school districts.

Protection for Public Education Will Remain in Ohio Constitution

Last week the Columbus Dispatch reported that the Ohio Constitutional Modernization Commission’s Committee on Education, Public Institutions and Local Government voted unanimously to retain the language by which the courts can hold the state’s legislature responsible for funding “a thorough and efficient system of common schools throughout the state.”

In other words, by agreeing to leave the language protecting Ohio’s provision of adequate public education for our children in the state constitution, the committee charged by the current legislature to suggest updates to the language of the constitution agreed to continue protecting education through the old concept of checks and balances.  While you might have learned about the need for  checks and balances in your high school civics class, its importance in 2015 has been a huge battle across Ohio for over a year now.

Why was there any question? According to the Dispatch: “The 164-year-old phrase has defined Ohio’s school-funding battles, including four straight 4-3 rulings by the Ohio Supreme Court through 2002 declaring the state’s setup unconstitutional.”  Opponents of adequate funding for public education hoped to remove the language that forces our state to provide public schools that are well enough funded to serve the needs of all children.

The constitutional modernization commission’s education committee was chaired by Columbus attorney Chad Readler, an advocate for expanding charter schools.  “Readler, who successfully defended the constitutionality of Ohio’s charter schools in the state Supreme Court,” was part of the group who “pushed to trim or eliminate the language to limit the courts’ influence over education policy.”  “He touched off the vigorous discussion in April by suggesting a change that would have required the General Assembly only to ‘provide for the organization, administration and control of the public-school system of the state supported by public funds.'”  By Readler’s suggestion, any amount of money allocated would have passed constitutional muster.

It is possible that one reason Readler’s suggestions were defeated is that in Ohio the public is becoming aware that the legislature is not fulfilling its responsibility for oversight of charter schools, virtually unregulated due to lavish campaign contributions from the for-profit charter operators.

The primary reason Readler’s suggestions were blocked, however, has been a year-long campaign against Readler’s suggestions by members of the public including leading attorneys and law professors, a campaign led by Bill Phillis, the executive director of the Ohio Coalition for Equity and Adequacy of School Funding, the coalition of school districts that successfully sued the state in the long running DeRolph school finance litigation. Phillis must be honored as a warrior for justice for Ohio’s children.  He never gives up.  Thank you, Bill.