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.