Ohio

Introduction

Ohio’s school system is the sixth largest in the United States, containing 614 public school districts and educating 1.8 million students. Ohio uses foundation funding for school districts. The foundation uses the following seven components for computing basic aid to school districts: opportunity grants (nearly 66%), targeted assistance (nearly 10%), special education (nearly 12%), limited English proficient students (0.3%), economically disadvantaged (8.4%), early childhood access (1.7%), and gifted students (1.5%). The operating budget appropriates $11.52 billion in FY 2014 and $12.01 billion in FY 2015.

State Issues Affecting P–12 and/or Higher Education Funding

The state of Ohio is suffering from side effects associated with legislation of the past, an unconstitutional funding formula for almost two decades, a struggling economy attempting to rebound from the recession, and governing bodies focusing on reforming education through charter schools and school vouchers. The taxpayers are burdened by high property taxes and a push for increased local control and funding. However, local control is stymied by state program mandates, redistribution of public dollars to private entities, and blanket reform initiatives.

Governor Kasich signed House Bill 59 into law June 30, 2013. HB 59 is the biennial budget that consists of over 5,000 pages and many provisions associated with the funding, governance, and reform initiates affecting the state’s education system. Tax reform efforts have reduced funding to school districts and the state has not adequately addressed the discrepancy, leaving districts with unfunded programs mandated by the state. Furthermore, HB 59 expands the charter school and voucher efforts, putting additional strain on overburdened district budgets.

Funding Priorities/Trends for P–12 and/or Higher Education

Charter school funding will increase to over $900 million. These monies are deducted from districts for funding children attending charter schools. This money is removed from district budgets first; the remaining money is then designated to the students attending the districts–traditional public schools.

A new income voucher applies to all districts, regardless of school performance. The voucher will be available this fall to kindergarteners (2,000 students) and in FY 2014–2015 for first graders (4,000 students). The income vouchers are currently funded by lottery profits. The K–3 literacy voucher is designated for buildings that receive a “D” or “F” in K–3 literacy progress. The voucher is slated to begin in 2016–2017. Funding will be directly deducted from the local district. Ohio currently has four voucher programs—the income-based voucher would make five, the most in the nation.

The Third Grade Reading Guarantee has increased the accountability measures. This guarantee requires that students in the third grade read at grade level. All students that cannot will be retained. The Common Core State Standards will also affect this law, as the standards are new and will take time to transition for both students and teachers.

The enactment of Senate Bill 28 incorporates federal tax code changes from the American Tax Payer Relief Act of 2012 into Ohio law. The American Tax Payer Relief Act of 2012 reduced the federal adjusted gross income (FAGI) for taxpayers, thus limiting taxable income. In FY 2014, districts that have a school district income tax (SDIT) will lose $1.1 million.

A last-minute addition to HB 59 eliminated a 12.5% rollback replacement payment to property taxpayers. Any new or modified levy will not include rollback.

Changes to the Funding Formula for P–12 and/or Higher Education

HB 59 made adjustments to the funding formula. The new budget maintains the six categories of special education services, specifying a dollar amount per child rather than categorical weights. The budget caps core foundation amounts through the lesser of two caps. Despite these caps, the budget guarantees that districts receive the greater amount of the previous year’s aid or opportunity grant. Lastly, each district is required to set aside 3% of the opportunity grant in a fund for capital and maintenance.

The enacted budget contains two accountability measures. The Straight A Program allocates $250 million from the Lottery Profits Education Fund for...