Kasich K-12 Budget Means a Loss for Many Districts
This month marks the 20th anniversary of the Ohio Supreme Court case DeRolph versus the State of Ohio. That was the case brought by a 15-year-old boy in Southeast Ohio who complained that Ohio’s system of relying on property taxes to fund schools created wide disparities among pubic school education and was therefore unconstitutional. The Court agreed that it left public schools in poor counties inadequately funded.
The state made some efforts to balance funding but never achieved what the court had demanded. After six years of legal battles the high court did not back down but in 2002 it largely washed its hands of the case.
Some echoes of DeRolph can be seen in Governor John Kasich’s 2015 biennium budget. Kasich proposed some cuts in funding to the wealthier school districts – those he says have “higher capacity” to raise money themselves through property taxes.
The idea broke with the tradition of never allowing a district to lose money from one year to the next. Members of the legislature didn’t want to go home to voters in 2015 telling constituents they should raise the money locally. So they voted to keep all districts whole. Kasich had the final say with a line item veto that did cut funding for about 100 school districts in Ohio.
He’ll get that chance again after a joint conference committee of 4 legislators -- 2 from the house and 2 from the senate -- come up with their budget plan.
Kasich says his current biennium proposal would provide more primary and secondary education spending in Ohio than ever. With federal funds, the first year totals $11.2 billion, or 1.2% above FY 2017 spending levels. That rises to $11.4 billion in FY 2019 or 1.4% above FY 2018.
Capacity to raise local money
Overall it’s more money but under the governor’s plan more than half of Ohio’s 612 districts would receive less state money than they got this year.
It starts with a formula wherein each district can get as much as $6,000 for each student. Charter schools will get all of that but local districts receive only a share of it.
Kasich’s tax chief, Tim Keen, the director of Ohio’s Office of Budget and Management, explains the state school foundation formula:
“You’re basically paid based on your State Share Index, which is a number that judges, based on your property value primarily, what your capacity to produce local revenue is.”
Each district has to raise a minimum of 20 mills in property taxes. Those rich communities who have the “capacity” to make more money per mill will get a smaller payment from the state. That’s the Kasich administration’s bow to the DeRolph case, an effort to give more funding to the poorer districts.
Shrinking district shrinking payouts
The Kasich plan calls for a maximum increase of 5% for a district in each of the next two fiscal years. Columbus City Schools will get that maximum rate.
Kasich says budget means each district will not receive less state money than this year. But many will.
The proposal from Kasich is to cut funding for the districts that have lost at least 5% of their enrollment over the past 5 years. The greater the loss in students, the greater the loss in funding -- up to a maximum of 5%.
Akron City Schools Superintendent David James is relieved his schools haven’t met that threshold, but he understands the argument.
“There is this thing called the ‘guarantee’ and so I think the heartburn with the state has been: you have districts that have really seen enrollment declines and they’re still getting the basic level of state. And [the Kasich administration] is saying that really should stop and try to normalize it where it’s more reflective of the students coming through the door of each school district.”
In the past, districts had been guaranteed to not lose money if they lost enrollment because a few less students in each class didn’t save the school any money. But Tim Keen says he only accepts that to a point.
“I’m not sure I believe that but people say that. So we try to be cognizant of that concern and we picked a level – 5% -- where certainly there ought to be cost savings that could be obtained if your population drops by that much.”
A large number of districts have lost student population in the past five years. Some losses are due to simple demographics but many have seen students leave through open enrollment with nearby districts, switch to charter schools, or use state vouchers to attend private schools.
None of the big urban districts will lose money in this proposed budget but many smaller districts face flat funding or cuts. In Stark County, 12 of the 17 districts have lost enough students to have their state funding cut. Nine districts in Cuyahoga County will receive flat funding or less money. The biggest hit there goes to Lakewood City School District which may get a 5% cut, or almost $900 thousand dollars.
Taxes fade away
State legislators decided to eliminate the Tangible Personal Property tax on businesses in 2006. But they added some protection to hold harmless school districts that had relied on the TPP tax. That guarantee is being phased out so some districts will continue to lose a little of that money in each of the next two years.
Another tax that some local districts collected came from the deregulation of pubic utilities. Extra money to make up those losses is also being phased out so those schools will face some reduction in state funding.
Greg Lawson, senior policy analyst at the conservative think-tank The Buckeye Institute, issued a written statement praising that aspect of Kasich’s budget, while suggesting the state offer no increases in education spending overall.
“As with Mr. Obama’s stimulus, districts were well-aware that those state reimbursements would sunset, and school administrators have had years to prepare for it. [Ohio received about $500m in federal stimulus money for education for each FY10 and FY11]
“Facing tighter budgets and less funding from Columbus, school districts should continue to find ways to cut costs through greater inter-district collaboration and reforming their collective bargaining agreements.”
From a more liberal perspective, Howard Fleeter, a consultant for the Ohio Education Policy Institute notes that the new budget’s 1.5% hike fails to keep up with inflation.
“It was not until FY16 that formula funding had increased enough to offset the loss in TPP at the aggregate state level over the time period.
“Even though total formula + TPP funding is now higher than it was in FY11, the net increase (5.8%) has only been slightly more than half that of inflation (10.7%) over the same time frame.”
Another education budget change comes with the new minimum level of funding for busing from the state. The Office of budget and Management’s Tim Keen says the budget will reduce the minimum state share of transportation costs from 50% to 37% and then reduce that to 25%.
“[An] artificially high state minimum for transportation consumes resources and drives them into districts with higher capacity, thereby preventing us from focusing those resources on lower capacity districts - where we really ought to be putting state support.”
Public schools in Ohio are responsible not only for transporting their own students but also those who attend parochial or charter schools in their district.
Local school superintendents will pore over the details of this 860 page document to plan their financial future, but the governor’s proposal is not necessarily the final Ohio budget, as Akron’s David James points out.
“The budget can change as it moves through the legislature.”
The Ohio House and Senate are holding hearings on the budget and will come up with their own ideas.
As Republicans have consolidated control over state government they have also moved to centralize policy power from local municipalities and jurisdictions to the Statehouse.
In December the chairman of the House Education Committee, Andrew Brenner, floated the idea of doing away with local school levies. He suggested all education funding be collected and distributed by the state government.
Brenner has not proposed the legislature take up that issue this year. But Governor Kasich says he’s open to making changes to his budget if Ohio’s economy allows it.
“If we find out that we have more revenue, then I think we can be in a position to again address some our more priority issues, which really are things like K through 12.”
And in the end he’ll be holding the veto pen.