Analysis: Ohio Schools Would Get Enough Stimulus to Cover About 30% of Expected Cuts. Maybe.

Tucked away in the $2.3 trillion CARES Act was about $14.3 billion for schools. And while that sounds like a lot, it's a relative pittance compared with the overall cost of educating America's 74 million school children.

But it wasn't nothing.

The Learning Policy Institute put out an analysis of how much each state would receive from that $14.5 billion. Ohio does OK. A little above the national average on a per pupil basis, but lower than all surrounding states except for Indiana.

More telling is this: That $547.9 million is just for one year. Ohio's budget is a two-year budget. And the stimulus money is only good through the end of this calendar year, which is only half of the current school year.

So while the $547.9 million infusion would equal about 7 percent of the total amount of money sent to Ohio's school districts through the state's funding formula next year (meaning it would theoretically cover a 7 percent statewide cut), the money would likely only go the districts through the end of the year, meaning that the state's next biennial budget would not have any of this stimulus money in it.

But let's assume states could pocket this money and put it into their budgets next year. This money represents about 25-30 percent of the cuts school districts are forecasting for next year, let alone over two years. So there needs to be a significant investment in education in the next COVID aid package. In fact, many school groups are asking for a $200 billion school package.

That amount should make up for the severe cuts being forecast in Ohio and elsewhere.

Some may talk about how great it is that the CARES Act provided money to schools. Believe me, I'd rather kids have this money than not, but keep in mind it's a small percentage of the expected cuts, and it may not even be allowed to be spent during the next biennial budget, which means it won't help cover any future school revenue losses.

So.

Keep fighting.

Feds Hurt Kids with Latest CARES Act Maneuver

When the CARES Act passed last month, a large, $4 billion plus was slated to come to Ohio. There was a catch, though. It had to be spent on direct, non-budgeted, COVID-related expenses.

However, there is a huge need in replacing the lost revenue Ohio and local officials are feeling now that businesses are essentially at a standstill. Last month, state revenues were down $164.4 million from estimates, but remember that Ohio's stay at home order wasn't issued until March 22. So expaect a much greater fall off for this and future months.

The latest $450 billion federal bill that passed yesterday was supposed to have a provision in it allowing states and local governements to have flexibility on how that CARES Act money would be spent. In other words, allowing it to be used to fill the gaping revenue holes blowing away state, local and school budgets.

However, at the last minute, that flexibility provision was eliminated.

That means the $4 billion plus coming to the state from the CARES Act cannot be used to fill revenue holes for states, local governments or schools.

While that may mean we finally get statewide broadband access or something similar -- a new spend necessitated by COVID-related closures -- it would ignore the revenue shortfalls states, cities and schools will see.

How does this hurt kids?

Because we're starting to see stories about districts preparing for massive cuts next year. When you add the continuation of the hotly contested school voucher expansion, and places like Middletown are looking at millions of dollars in budget cuts next school year -- numbers that will only grow given the depth and breadth of this economic hit.

Now, Senate Majority Leader Mitch McConnell is suddenly concerned about budget deficits (mind you he did the previous stimulus bills and a $1 trillion tax cut without mentioning such concerns). If that holds, then the fourth round of stimulus money -- which everyone was banking on filling state budget revenue shortfalls this and and next budget cycle -- may be in jeopardy.

And if we don't have a fourth stimulus (education groups are seeking $200 billion nationally), then we could be looking at crippling school cuts that would make the 2011 cuts seem like a little finger splinter.

By way of perspective, during the 2010-2011 school year, more than 1 out of every 4 dollars the state sent to school districts was federal stimulus money. And this state revenue hole may be even bigger than the one from the Great Recession.

So you could be looking at 25-35% state budget cuts for schools. In some districts that can't raise much local revenue, that kind of funding loss would lay waste to communities, forcing some districts to consider closing, merging, or seeking other drastic measures. The hardest hit districts would be in Ohio's poor, rural communities -- Trump Country. Would Trump leave his core consitutency hanging out to dry during an election year?

We'll see.

But all who are concerned about kids must insist that whatever happens, states, local governments and schools have what they need to provide the services our families and kids need during this crisis. Playing political games at the height of this pandemic is political malfeasance of the highest order.

There now must be a fourth round of stimulus. And that money must be made available to states to fill the yawning chasm that will be created in their revenues next cycle, which for Ohio starts next year.

Call your member of Congress and our Senators. And tell them you want your kids to be as important to them as Wal-Mart and United Airlines.

And do it yesterday.

Charter Schools Again Want Their Cake and Eat It Too

For years now, I and other critics of Charter Schools have been regularly chastised for suggesting that charters are not really public schools, even though they are called public schools in state law. In fact, every judicial and quasi-judicial panel that's examined charters' organizational status has found them to be private actors, not public schools.

Now we discover that the National Alliance for Public Charter Schools is telling charters to apply for the Small Business Administration Loans in the $2 trillion CARES Act that passed last month. Why is this significant? Because the NAPCS thinks that charters could qualify for the money -- money that is not allowed to be accessed by governmental entities. It is only for "non-governmental" entities.

Public schools cannot qualify for this money.

So if charters qualify for these low to no-interest SBA loans -- like a restuarant can -- then they are definitely NOT public schools.

Yet that would not keep charters from trying to also qualify for some of the $13.7 billion K-12 stimulus money included in the CARES Act, and additional federal stimulus money that will surely be included in further stimulus bills.

Once again, charter schools are gaming their squishy governmental structure. They want to access all the money available to them based on whichever form of governance benefits them -- whether that's as a non-governmental or governmental entity.

It would be outrageous if charters would be able to access SBA loans and additional stimulus for all schools. No other public school could do this.

And if they get SBA loans, that should be credited toward their other stimlus payments.

At least.

Navigating a Crisis: Lessons from 2009

I know I tend to talk a bit about my time as the Chair of the Primary and Secondary Education Subcommittee on the House Finance & Appropriations Committee. I try not to use that word salad too much, but being in charge of the $24 billion biennial education budget while making sweeping changes to the state's school funding system was one of the honors of my life.

I haven't talked much about how the Great Recession interfered with that effort and how we were able to deal with hundreds of millions of dollars of lost revenue each month.

As it appears we're about to face a similar and potentially deeper state budgeting crisis next year, I thought I'd offer some insight about ways for the state and federal governments to make sure we're still able to provide the essential services our country needs (specifically education) while navigating a financial and humanitarian crisis.

So, here it goes.

Maintenance of Effort

In the 2009 Stimulus bill, the federal government provided Ohio what they called State Fiscal Stabilization funds. This money was meant to prop up state budgets while state revenues (primarily income and sales taxes) cratered. The idea was to ensure that the state could essentially maintain the same level of services through the crisis, and even more in some areas (like unemployment, food stamps, Medicaid, etc.) that are more heavily used during recessions.

Ohio used about $933 million over the two-year budget (Ohio by law has to do biennial budgeting) -- about $417.6 million in the first year and $515.5 the second -- for K-12 education.

However, we were only able to draw down that additional funding because we were able to show something called "Maintenance of Effort." The feds required states to maintain a certain level of state funding relative to previous years' spending before allowing states to draw down the federal dollars. I get it. You didn't want states just gobbling up money without any effort.

However, the maintenance of effort with the 2009 stimulus was quite rigorous. And there were times when we didn't think we'd be able to make it. In fact, as Chair of the House committee dealing with the education portion of the budget, I forced the legislative and executive budgeting offices (we rarely if ever agreed on anything) to meet for many late nights (along with me and my staff) so we could have agreement by everyone in the room that we had met those standards. So instead of working on programs that could help kids, we spent countless hours doing an accounting exercise.

My advice to the feds this time is to ease up on maintenance of effort this cycle. I'm not saying have no maintenance of effort, but let's make it reasonable given these circumstances so state policy makers can focus on policy and not on academic exercises.

Target federal spending to meet the crisis

If there is one thing I'm hearing today from school leaders, teachers and parents, it's how this crisis has revealed the technology equity gap between districts and even neighborhoods of districts. There are many students throughout Ohio that don't have computers or internet access at home. Not every district can afford to give out laptops and hotspots to every kid, especially in areas with lots of families who don't have internet or laptops. Some districts are mailing out worksheets for families to mail back the responses.

Federal Title IV, Part A funding is meant to address these technology concerns. If the feds would significantly boost funding to this program, it would allow many families to access the technology needed to do universal remote learning. And in the context of trillions of dollars of federal spending, this should cost a relative pittance.

Be Bold

During the 2009 recession, as we were watching literally hundreds of millions of dollars of revenue just disappear monthly, Gov. Ted Strickland and the House still undertook what remains today as the most ambitious effort to fix our unconstitutional school funding system -- the Evidence Based Model. A version of this Evidence Based Model of school funding is still in place in Wyoming, which has the most highly regarded, equitable and adequate funding system in the country.

While the recession kept us from realizing the model's true potential for our kids, it did allow the state for the first (and only) time to commit additional state resources to education beyond the biennium. It promised a little more than $3 billion additional state revenue over 10 years, greatly reducing our state's need for property taxes to fund education -- the primary issue for the Ohio Supreme Court and why it ruled four times that the way we fund schools is inequitable and inadequate.

The current legislature has the Cupp Patterson funding plan before it as we speak. I would urge leaders to not ditch the plan. Instead, use this crisis to make the changes everyone knows we need to our school funding system. Commit to fully funding the plan, even if it's many years in the future (you can always do it quicker if our recovery happens qufaster than expected).

But you will get a pass from folks if you don't immediately infuse billions into education because we just won't have it. But committing to that additional funding, even over a decade, will show schools, families and kids that the state is indeed committed to their futures. And at the very least, we will have a formula that is rational and can more efficiently and effectively distribute revenue to districts that need it the most during this coming downturn. If we're going to have to deal with funding cuts, at least have a formula in place that will better ease the pain on kids in districts that are most reliant on state funding (typically the poor ones).

A good formula can protect districts from cuts as well as it can benefit districts with funding increases. The makings of the best formula since EBM are in front of the legislature now. Don't abandon the good work. Use it to help ease the pain of the coming downturn.

Revenue

Look, I more than most understand the political power of the anti-tax message in Ohio. In 2009, we delayed the implementation of the last year of the 2005 income tax cut by two years and I got hammered for "raising taxes" the rest of my political career.

Unfortuantely, there is no relatively simple revenue fix available to lawmakers now. They've cut taxes to the bone. About the only large pot of money out there is the $1 billion or so "LLC loophole." But will the legislature have the political courage to examine revenue increases during this downturn? Lots of people forget that after the last recession, property tax levies jumped and income tax rates increased too. The legislature wasn't willing to do that dirty work, so it was up to local communities to raise the needed revenue.

But I don't know how much more locals can do on revenue, what with school property taxes alone going up by about $2 billion between 2010 and 2018 and the average tax rate jumping by 10 percent.

Municipal Income Tax collections are also up by $1.4 billion -- a more than 1/3 increase -- between 2010 and 2017.

There is going to be a serious revenue shortfall coming up next year. The Rainy Day Fund likely will be depeleted soon. So then what? State legislators and the governor have to be sober and serious when dealing with this issue. We are going to need more first responders and educators now given the nature of this crisis. How do we provide these services with less revenue?

One option that will have to be discussed is more revenue.

Keep the kids in mind

One of the things I kept returning to in 2009 while we were worrying about lost revenue, maintenance of effort and creating a new school funding and accountability system was this: What will help kids the most? What I eventually landed on was pretty simple: Follow the evidence and fund those services we know will help kids, especially as their families fall on hard economic times. Smaller classes (which help offset many at-home issues), community liaisons, multiple ways to graduate more college and work-ready students and create a formula that most efficiently drives dollars to the neediest kids at the neediest times are all efforts that meet the need.

One of the issues with the Cupp Patterson plan is it is kind of a peanut-butter approach -- spread a lot of money over many districts, lessening the benefits for the most needy kids. But it's not that far from being fixed. A tweak here and there and we could have a formula that actually protects the most vulnerable kids and families from the coming recession. So let's do that.

Conclusion

These are just a few of my memories and recommendations for those who will likely face the most daunting task in our lifetimes -- developing and funding policies that help kids and families during what will surely be an unprecendented economic and public health crisis.

We've seen the state show great leadership on the public health side of this crisis. I pray it shows equal competence and leadership during the coming financial crisis. Because if they do, our kids and families will succeed and dig us out of this hole more quickly. If the state shrugs its shoulders, lacks courage and eschews bold solutions to an unprecedented crisis, then we will struggle for a generation.

No pressure.