Why the New “Fair School Funding Plan” Matters for One Ohio School District: Will the Ohio Senate Let It Die?

In Ohio, the state senate is refusing even to consider a new school funding plan, developed over a period of several years to replace the old school funding system that has become progressively unworkable over the past decade.  Last Thursday, the Ohio House of Representatives passed the proposed new plan by a huge margin: 84-8.  But the Ohio Senate Finance Committee has not even chosen to hold open hearings on its own companion bill, which was introduced early last month as Senate Bill 376.  The current biennial legislative session will end on December 31, and without consideration by the Ohio Senate and passage by that date, the Fair School Funding Plan will die.

If the Ohio Senate refuses to pass this bill, it will be merely one more piece of proof that the incoming senate president, Matt Huffman, and Matt Dolan, who chairs the senate’s finance committee, are committed to supporting children in private and religious schools with publicly funded vouchers at the expense of the 1.6 million children and adolescents who are enrolled in our state’s public schools.

The testimony I submitted last month to the Ohio House Finance Committee on behalf of the Heights Coalition for Public Education details why passage of the new plan is so important to one school district—the Cleveland Heights-University Heights City Schools, in an inner-ring suburb of Cleveland. Here is that testimony.

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The Heights Coalition for Public Education commends the sponsors in both chambers of the Ohio Legislature for bringing forward the proposed Fair School Funding Plan, defined by Substitute HB 305. The bill’s original sponsors described the new plan’s necessity when it was introduced a year and a half ago: Eighty percent of the state’s school districts, 503 of 610 districts, were capped or had fallen onto guarantee. Today, neither base cost nor categorical state school funding comes close to approximating the actual cost of K-12 schooling in Ohio.

Substitute HB 305 enhances equity, increases the state’s investment in the under-resourced public schools and school districts with concentrations of the state’s poorest children, and ends school district deduction funding for charter schools and tuition vouchers for private school tuition.

We commend the sponsors of the bill for revising the original plan to enhance equity. For measuring local capacity, you have expanded the range of the sliding scale to ensure that the state better distinguishes wealthy school districts from the school districts with low property tax bases or those which struggle to pass levies because their residents are impoverished. And you have increased categorical aid for economically disadvantaged students from $272 per pupil to $422 per pupil, an urgently important change. The purpose of the state school funding plan, in accord with the provisions of the Ohio Constitution, is to create a system that ensures that all children 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)

For many years—through mechanisms like the state report card which rates and ranks school districts; the third grade guarantee; the state takeovers in Youngstown, Lorain, and East Cleveland; and the assignment of charter schools and vouchers, all based primarily on aggregate standardized test scores—Ohio has doled out punishments for schools and school districts that serve concentrations of the state’s poorest children. However, a mass of educational research documents that aggregate standardized test scores for any school or school district correlate with family and neighborhood income and are a poor measure of school quality. In September of 2019, the Cleveland Plain Dealer published a stunning analysis, by the newspaper’s data analyst Rich Exner, of the school district grades awarded by the state of Ohio on the 2018-2019 state report cards. Exner’s bar graphs present a series of almost perfect downward staircases, with “A” grades for school districts in communities with high median income and “F” grades for the school districts in Ohio’s poorest communities. The correlation of academic achievement with family income has been demonstrated now for half a century, but too often Ohio policy has blamed public school teachers and administrators instead of using the resources of government to assist struggling families who need better access to healthcare, quality childcare, better jobs, food assistance, and better resourced public schools.

Substitute HB 305 eliminates school district deduction funding for the state’s vouchers and charter schools, and would, therefore remedy what has become a primary source of inequality in Ohio’s system of funding public schools. Because, in Ohio, students in so-called failing schools qualify for vouchers, and because the siting of charter schools is limited to districts with lower test scores, “school district deduction” funding for these programs punishes the very school districts that serve concentrations of children living in poverty. Not only will vouchers and charter schools drain $2,352,881,306 overall from the budgets of Ohio school districts for vouchers and charters in FY 21 and FY 22, according to William Phillis, executive director of the Ohio Coalition of Equity and Adequacy, but the cost of these school district deductions for vouchers and charters is inequitably distributed across the state’s 610 school districts. School district deduction funding, which is said to provide students an escape from so called “failing” schools, inequitably sucks money out of the local budgets of school districts which serve children who need expensive additional services. Many of these districts also have the lowest capacity to raise local revenue. In many cases, the students carrying away the vouchers have never been enrolled in the districts from which they are carrying away the money.

In a white paper last April , a co-convener of the Heights Coalition, Susan Kaeser explains why specifically the EdChoice voucher program, funded by school district deduction, is inequitable: “The financial burden of EdChoice vouchers is not shared evenly by school districts across the state, punishing some districts and not others. This disparity is made worse by the reality that the majority of students in the districts most affected by vouchers live in poverty and are not white…”

The Heights Coalition advocates for the public schools in the Cleveland Heights-University Heights City School District. whose school district budget has been devastated in recent years by EdChoice vouchers. Why?  First is the clamor for vouchers among a growing community of religious families whose children have never been enrolled in the district’s public schools. The second reason is the increase over the years in impoverished students currently enrolled in our public schools. According to the Ohio Department of  Education’s 2019 Cupp Printout, 99.98 percent of our students are currently designated as disadvantaged.

Here is what the school district deduction for EdChoice vouchers has done to our school district. In a PowerPoint presented to the Cleveland Heights-University Heights Board of Education last month, the school district’s treasurer, Scott Gainer explains that in our school district the number of students claiming 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 schools. 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 diverting to private and religious schools 45 percent of the school district’s state’s foundation school funding despite that they represent only 27 percent of the combined total of students the state counts as part of the district.

While 1,240 of vouchers granted by the state this year are renewals, which means that the district continues to collect state aid to cover a portion of the cost of each voucher, 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.

In the DeRolph decision, the Ohio Supreme Court charged the state legislature to create a system that is no longer overly reliant on the passage of local operating millage. Currently in our district, EdChoice diverts 45 percent of state foundation funding out of our school budget and forces our voters to replace this funding with additional local operating levies.

The Heights Coalition for Public Education commends you for considering Substitute HB 305. The Fair School Funding Plan is a comprehensive blueprint which, when funded, will ensure that public schools across Ohio can provide an opportunity to learn for all of our children. We urge you promptly to enact the Fair School Funding Plan.

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Will the State Senate Punish Ohio’s 1.6 Million Public School Students by Letting School Funding Reform Die?

The Ohio House Finance Committee voted unanimously (32-0) on Wednesday to refer Substitute House Bill 305, the proposal for a new Fair School Funding Formula, to the full Ohio House for approval. And late yesterday afternoon, the Ohio House of Representatives passed the bill by huge margin: 84-8.

The Ohio Senate, however, is dragging its feet on Senate Bill 376, the companion bill. Plain Dealer reporter Laura Hancock quotes Senator Matt Dolan, who chairs the Senate Finance Committee, hinting that he will not bring SB 376 to for a vote by his committee:  “I remain hesitant to pass this… There are still studies that need to be done. I think it’s going to be difficult to pass this out, out of the context of a state budget.”  Senator Dolan has said that he doesn’t want to enact a plan that will eventually cost a lot of money without having the money up front.

The authors of the new school funding plan know the legislature currently lacks the money to pay for the plan’s full implementation, which is why they prescribe a six-year phase in. The authors describe it as a blueprint for an equitable and adequate system.

I don’t know anybody other than Senator Matt Dolan—and likely Senator Matt Huffman, the incoming Senate President—who believes more studies are needed before we know how the plan is designed to work. Representatives Bob Cupp and John Patterson built the plan upon at least three years of study by experts. The House has held a number of hearings since the the plan was originally introduced in the spring of 2019 and incorporated further adjustments to enhance the equity of the plan.

The clearest explanation I’ve seen is in Howard Fleeter’s testimony, presented to the House Finance Committee at the committee’s final hearing on Substitute HB 305 on December 2.  (You can find Dr. Fleeter’s testimony near the end of the list of submitted testimony, third from the bottom.) Better than anyone else, Fleeter grasps the nuances of Ohio school finance. Here are Fleeter’s credentials as he presents them to the Finance Committee in his testimony: “I have a PhD in economics from the University of California, Berkeley, I spent 10 years as a Public Policy professor at The Ohio State University, and I have been researching school funding and education policy in Ohio for nearly 30 years. My career working with Ohio policymakers began when Governor Voinovich commissioned me to write my report, ‘Equity, Adequacy and Reliability in Ohio Education Finance,’ which I completed in November, 1992.”

Because the proposed Fair School Funding Plan is complicated and press reports have sometimes been confusing, I will quote extensively from Dr. Fleeter’s recent testimony.

Fleeter begins by explaining that Ohio needs a new school funding formula because for the past decade the state has lacked a working school funding plan: “The FY10-11 school year was the last year in which Ohio had a school funding formula… which was based on objective methodologies for determining the cost of providing an adequate education to Ohio’s 1.6 million public school students.  In FY12 and FY13, Ohio employed the ‘Bridge’ formula which was not really a formula at all, instead basing funding on FY11 levels. From FY14 through FY19, Ohio did have a school funding formula; however, this formula suffered from several significant deficiencies. First the base cost was not based on any adequacy methodology, instead just utilizing per pupil amounts selected by the legislature. This approach is the very embodiment of ‘residual budgeting’ which was explicitly ruled unconstitutional in the March 1997 DeRolph ruling.”  Although the term “residual budgeting” sounds technical and complicated, what Fleeter is explaining is that from FY 14 to FY 19, the Legislature simply set per-pupil state funding based on now much “residual” money the Legislature had left in the budget after funding all the other expenses of state government.

Fleeter continues by explaining that between FY14 and FY19, a State Share Index, “the principle driver of equity in the state funding formula… was both inadequate and inequitable.”  Fleeter explains that the flaws in the formula left the vast majority of the state’s school districts on hold harmless guarantees (last year’s funding) or capped (last year’s funding) no matter what might have changed in their enrollment or the demonstrated funding needs of their student populations. Fleeter continues: “This problem has been made worse in the past 2 years as the FY20 and FY21 state aid formula has been frozen at FY19 levels.

Then there is the injustice in the way Ohio funds vouchers and charter schools through something called “the school district deduction.”  Fleeter believes the way Ohio funds school privatization is such a serious problem that it threatens the adequacy and equity of the entire school funding system: “Finally, the ‘deduction’ method used to fund Ohio’s community (charter) schools along with the EdChoice, Jon Peterson (for students with disabilities), and Autism voucher programs has also significantly undermined the adequacy and equity of school funding in Ohio by effectively deducting (from school districts’ local budgets) a ‘local share’ of funding because the deduction amount is greater than the state aid provides when these students are counted in a district’s formula ADM (Average Daily Membership).  This problem has also been made worse in the current FY20-FY21 biennium because the funding formula has been frozen at FY 19 levels while the community (charter) school and voucher deductions have been allowed to increase, meaning that all funding for new community (charter) school and voucher students in the past 2 years has effectively come from local revenue.”

Fleeter endorses the proposed Fair School Funding Plan because it measures the actual cost of educational services as the way to calculate the state and local contributions to school funding;  because the state would directly pay charter and voucher expenses to the school where each student is enrolled (eliminating school district deductions);  because the new plan “increases funding for economically disadvantaged students”;  because the new plan more accurately measures each local school district’s capacity to raise local tax revenue;  and because the new formula provides continuing Targeted Assistance and Capacity Aid to help lower wealth school districts provide the kind of enriched curricular opportunities for their students that wealthy districts provide as a matter of course.

Fleeter makes an extremely well informed, nuanced, and convincing argument for immediate passage of the new plan. He accepts the fact that it would be an improvement the state would live into during the six-year phase-in the plan’s authors envision.

So… why is the Ohio Senate dragging its feet?

First, Senator Louis Blessing has released an analysis that the plan will cost $3.5 billion when fully implemented, when its sponsors project the total cost at $2 billion. Fleeter devotes two pages of testimony to disproving Blessing’s analysis and explains: “My analysis concludes that the Senate’s assertions betray fundamental misunderstandings of the role played by the state aid formula and their cost estimates are wildly exaggerated, and in some cases simply incorrect.”

It is sadly true that Ohio is so broke that the new plan, if passed, cannot be fully funded in the biennial budget which will take effect on July 1, 2021. Because the state lacks the money, sponsors of the Fair School Funding Plan anticipate a phase-in over the next three biennial budgets.  Further budget cuts due to the current recession caused by COVID-19 shutdowns will complicate the phase-in; a $2 billion shortage in the current fiscal year has already been predicted.

I believe, however, that Dolan’s professed worries about the Fair Funding Plan’s expense cover something more sinister.  I suspect that powerful members of the Ohio Senate prize increasing the privatization of education; perhaps they don’t really worry about inadequate and inequitably distributed public school funding.

Senator Matt Dolan, chair of the Senate Finance Committee has used the excuse that there is no time to hold enough hearings before the end of the legislative session on December 31, when the bill will die if it is not passed by the Ohio Senate.  Senator Peggy Lehner, the Republican Education Committee chair, and Democratic Senator Vernon Sykes introduced SB 376—the companion bill to Substitute HB 305—on November 9.  At hearings on November 18 and December 1, the Senate Finance Committee heard testimony invited by the bill’s sponsors. So far Dolan has held no open open hearings to receive public testimony.

Senator Dolan’s inaction is surely being influenced by the incoming Ohio Senate President, Senator Matt Huffman, who has proven that he doesn’t worry about holding open hearings and doing adequate research before he pushes through his own priorities. For example, Huffman just rushed through—in two days without a public hearing—a massive revision of Ohio’s EdChoice voucher program. Ohio Capital Journal‘s Susan Tebben explains what happened suddenly on November 18, 2020: “After months of public silence, the EdChoice private school voucher program reappeared at Wednesday’s Ohio Senate session… State Sen. Matt Huffman, R-Lima, brought back Senate Bill 89, completely changed from its last appearance in the chamber, when it mainly focused on career centers… The bill passed with 23 affirmative votes, and eight negative votes.” The bill, now a redesign of the state’s EdChoice vouchers, went immediately to the Ohio House and without further discussion, the Ohio House passed the bill on November 19.  The Governor has signed it.

Despite the need for a comprehensive, working school funding formula, and despite enthusiastic support in the Ohio House, powerful forces in the Ohio Senate appear to be trying to kill the proposed Ohio Fair School Funding Plan by allowing it to languish until the end of the session.

Senator Dolan says it can’t be passed without attached funding, and says its components must, therefore, be part of the budget bill the Legislature will take up in the spring. I fear that Senators Dolan and Huffman will perhaps include some of the plan’s parts in the next biennial budget.  We know, however, that Ohio does not have enough revenue to implement the whole plan without a phase-in.  And we know that breaking a comprehensive plan into bits and pieces will undermine the adequacy and equity balanced together by experts in the comprehensive Fair School Funding Plan. The Fair School Funding Plan’s sponsors openly call it a blueprint to be phased in, but they emphasize that to work, the plan must be passed as a comprehensive whole.

If the Ohio Senate sits on this bill until it dies on December 31, it will be a tragedy for Ohio’s children. The Legislature needs to pass the new funding plan and the state needs to begin to fund the plan’s systematic phase in.

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.