He trumpeted how having the state pick up the difference between what a district raises and $250,000 per pupil valuation at 20 mills means that 96% of districts would be equalized because only 4% raise more than $250,000 per pupil. In layman’s terms, 20 mills on $250,000 per pupil valuation equals $5,000 per pupil.
His effort received plaudits throughout the media. "... Kasich's rollout of what he seeks has to be considered a huge success," wrote the Plain Dealer's Tom Suddes, in what may soon be a column that lives in infamy.
However, after examining the district-by-district runs produced by the Kasich Administration yesterday (which I posted at Innovation Ohio earlier), what is clear that even without eliminating the guaranteed money Kasich said he wants to eliminate soon, kids in the poorest property wealth districts in the state will receive 25 cents in additional state revenue for every $1 received by kids in the property wealthiest districts.
And don’t forget that the only reason districts do “better” is because of a large pot of guaranteed money that Kasich has warned he is going to take away, and the Kasich Administration is comparing the new budget with Kasich’s previous budget, which cut $1.8 billion in education. Compared with the budget prior to Kasich, districts are mostly getting cut. Significantly.
Here's what the average cut from FY11 looks like for each 1/3 of property wealth . As you can see, even without eliminating the guarantee, as Kasich said he wants to do, the property poorest districts that get cut get cut worse than the wealthiest. And those property poor districts that get increases get much smaller ones than wealthy districts.
Why is this?
The Kasich Administration is equalizing everyone's funding based on per pupil valuation – the amount of money districts raise in relationship to how many children the districts educate. However, that is NOT how property wealth is defined in the real world of Ohio School Finance.
When residents in school districts go to the ballot to raise money for schools, they are never deciding how much property tax they should raise per pupil; they are deciding how many mills they want their property taxes to go up to pay for schools.
The true disparity in Ohio’s property tax, as the Ohio Supreme Court ruled on four different occasions, is in the capacity of school districts to raise revenue, not in the relationship between the school district’s locally raised revenue and its number of pupils. Though there certainly is disparity there, it is not nearly as stark.
For example, when voters in Bettsville Local in Seneca County vote themselves a 5-mill levy, it raises them barely $100,000. (A mill is simply the name of the calculus for property tax in this state. One mill equals about $31 for every $100,000 of home value) When voters in Olentangy vote themselves a 5-mill levy, it raises them $16 million. The inequity in Ohio’s property tax base, and the reason why the Ohio Supreme Court ruled four different times that overreliance on property taxes is unconstitutional, is because in order for kids in Bettsville Local to have the same opportunities as kids in Olentangy do, they will have to levy 158 mills for every mill voters in Olentangy raise.
Yet under Kasich's plan, Olentangy gets a 300% increase over their FY13 amount while Bettsville gets zip (cut the equivalent of about 17 mills compared with FY11).So, if the Kasich administration wanted to really cover the disparity in this state, it would look at the capacity of districts to raise revenue on a mill -- the actual way districts raise local revenue.
However, in order to do that for 96% of districts, as Kasich said he wanted to do last week, it would have to pick up the difference between what a district raises on a mill and $1.48 million, not $250,000. For the state to pick up the difference between the 96% of districts that don’t raise $1.48 million on a mill up to 20 mills, it would cost nearly $14 billion, not the $3.9 billion the Kasich Administration set aside for this “equalization” plan.To be clear, I am not suggesting this should be the amount for equalization. It is merely an exercise in showing how feebly Kasich’s plan actually addresses property wealth inequality -- the one thing Kasich really seemed most proud of during his rollout.
Per pupil valuation is also a flawed calculus when basing any sort of real funding for a district.
Let me demonstrate through a ridiculous extreme. A district with one student, under Kasich’s formula, would receive a portion of $5,000 per pupil. There is simply no way that the single child could be educated on even $5,000. The point is that per pupil costs are higher in some districts simply because of math, not inefficiency. And it doesn’t help when they raise scant amounts on a mill, because it is the small districts that tend to raise small amounts.
For example, of the 1.7 million kids in Ohio, about 10 percent live in the property poorest third of school districts. More than 1 million reside in the property wealthiest third.
However, this epic fail of the Kasich plan to do even the one thing Kasich was most proud of it doing is what happens when one does not base a formula on what kids need, but on accounting smoke and mirrors. As Kasich’s own school funding developer Barbara Mattei-Smith admitted to the media this week, Achievement Everywhere is not concerned with figuring out what kids need to succeed. It is a redistribution of wealth -- a Robin Hooding, if you will.
Trouble is, the plan isn't even good at that. This is how Daffy Duck’s Robin Hood redistributed wealth, not how Errol Flynn's Robin Hood did.I am familiar with district-by-district runs initially throwing a wrench into the rollout of a new funding formula. When Gov. Ted Strickland introduced his Evidence-Based Model in 2009, the initial runs showed wealthy districts doing better than poor districts. However, that wasn't a problem with the EBM; it was a problem with the phase in.
The EBM initially phased out 3 mills of charge off -- the amount districts were expected to raise, above which the state would pick up the rest. Dropping the charge off immediately helped property wealthy districts, while the stuff that benefited poorer districts were phased in later. My solution was to phase out the charge off over a longer period, while phasing in the other elements that helped poorer districts earlier. That way, the benefit was more evenly distributed. Once fully phased in, EBM would have provided 13 mills of property tax relief, on average, with most of that focused on districts that couldn't raise much money locally.
I struggle to figure how this plan can be fixed, though, without returning to the drawing board. That's because the funding system isn't based on what kids need; it's based on property inequity that's incorrectly calculated. So it's not a matter of phasing in some parts earlier than others; the whole calculus is woefully inadequate to meet the challenges of property wealth disparity in Ohio -- the one thing Kasich spent a week saying it did.
If Kasich goes back and re-does his calculus based on how much districts raise on a mill and wants to keep the cost the same as it is now, he would only be able to equalize a fraction of the districts he says he wants to equalize now. Equalizing 96% of districts would, as mentioned earlier, cost $14 billion, not the $3.9 billion he's set aside.
I don't envy my former House and Senate colleagues who have to clean up this mess. But it must be cleaned up. There have been multiple long-term efforts in Ohio over the years that have arrived at rational calculations of the resources students need in order to succeed in the classroom. Piggybacking that work would be a good start. Even going back to a "bridge formula," which the state's been using for the last two years and isn't even a formula, would be preferable to this system.
Until then, though, what the Governor’s data makes clear is that “Achievement Everywhere” should be re-named “More Levies Everywhere.” For all it will do is continue the levy cycle districts must complete in order to make up for inadequate state resources. And that is unconstitutional.
 I'm comparing the state aid, SFSF, state reimbursements for lost Tangible Personal Property and Public Utility taxes in Fiscal Year 11 with the Governor’s Fiscal Year 15 projections released yesterday, as well as the remaining reimbursements for TPP and PU taxes in FY 15. I used the appropriation figures from HB 153 in the previous General Assembly for the TPP and PU tax estimates that were contained in Fiscal Year 13 of that budget. The total amount of reimbursement for these lost revenue streams in the Governor’s current budget were about $500, which is about $65 million more than the amount projected in the HB 153 projection. However, all the change in amount will do is slightly modify the numbers. It will not alter the shape of these graphs, which is the overwhelming problem.
 I divided the overall cut or increase figures by the number of projected students that the Kasich Administration included in their data runs to arrive at the per pupil cut and increase figures in the following graphs.
 I figured this by examining the difference between what a district raises on a mill and $1.48 million – the same 96th percentile figure Kasich applied to per pupil valuation, then multiplying that difference by 20 mills.