State Hides the Ball on K-12 COVID Cuts

This is why I think people are driven nuts by government.

A couple days ago, Gov. Mike DeWine announced a $300 million cut would be coming in this school year for Ohio's K-12 school districts due to the COVID crisis. Very understandable. Absent the feds granting states flexibility on CARES Act stimulus money and doing another COVID rescue package for education, states and local governments, big cuts like what DeWine announced are expected.

We'll leave the debate over the state's $2.3 billion rainy day fund for another day.

But when DeWine's Office of Budget and Management (OBM) listed the district-by-district cuts ("runs" is what we call it in the biz), the percentage cuts didn't look all that bad. Between 1% and 2.8%. Given that $300 million is about 4% of the state aid handed out this last school year, that didn't jibe to me.

That's when I noticed that OBM was comparing the amount of money cut to all money being spent in a school district. That's all money spent. State, local and federal. So, yeah, it looks like the cut isn't that bad when you look at it that way.

But it's completely misleading. Why? Because the state has zero say in how much federal and local money is spent or raised in a district. So the state is taking credit for money it didn't send to or raise in the district.

I can honestly say I've never seen a district-by-district run expressed this way. Every other run I've seen has compared how much state money districts were receiving and how much they will be receiving now.

In fact, it's how DeWine put out his district-by-district runs last year during the budget. He compared his state funding increase (from wraparound services money) with the state funding schools received the prior year. That makes the percentage increase look bigger. If he compared it with a district's overall spend, the increase would have seemed smaller.

It's a budgetary parlor trick.

On the Surface, these Cuts Look Fair

So what's the real state cut, in terms that have always been used?

The average Ohio school district will get cut 5.9%, with some getting cut 55%. Half of districts will get cut more than 3.8%. Half get cut less.

But there is a silver lining to this. The largest percentage cuts are disproporitionately in wealthier, suburban communities. The smallest percentage cuts are in poorer communities less able to withstand them. So that 55% cut? It's in Rocky River in Cuyahoga County, which doesn't get much state funding anyway because it's so wealthy. Other major percentage cuts are in Upper Arlington (53.6%), Independence (51.4%) and Inidian Hill (47.9%). All tolled, suburban and wealthy suburban districts will absorb 41 percent of all the costs, even though they only make up about 17.7% of the state's foundation funding.

In Ohio's major urban districts (Akron, Canton, Cincinnati, Cleveland, Columbus, Dayton, Toledo, Youngstown), the typical cut will be 1.8%. The poorest, rural districts will get an average 3.1% cut.

So while those cuts in Ohio's most vulnerable communities will be less, they will still be meaningful. There just isn't enough money being sent to the wealthiest schools to Robin Hood the cuts for very long.

But Ohio's Most Vulnerable Districts Still Get Disproportionately Hurt

While the percentage cut in Ohio's most vulnerable communities is less than its wealthiest ones, because there just isn't enough money being sent to the the wealthiest districts to absorb all the cuts, the relative amount being cut in Ohio's most vulnerable communities is actually higher.

Let me explain.

The way education funding works in Ohio is the state figures out how much it should cost to educate kids in your district, then determines how much of that cost you should be able to pick up based on your property tax values. The state then picks up the rest. And while there are serious problems with the way Ohio does this because the state formula for determining the cost isn't an actual formula, that's the calculus.

The issue though is everything hinges on the ability to raise local money through property tax levies. Districts that raise more ("wealthier"), have less state money coming to them. Those that raise less ("poorer"), have more state money coming. (And there are districts that aren't "wealthy" that are classified as such, like Coventry and Danbury, but that's another topic for another post).

The problem with this system is when state cuts come to districts, poorer districts' budgets are far more sensitive to state funding losses because they raise so much less locally. So a relatively modest cut in a poor, rural Ohio district could mean that district now has to go out for a larger levy (which won't likely pass) or cut services. Meanwhile, even a larger cut in a wealthier district won't have the same impact because they could raise even a tiny additional levy amount to cover it.

So even though 40.9% of all the money being cut is coming out of wealthier districts, the relative cut is worse in Ohio's poorer communities.

For example, on average, Ohio's poor, rural districts would have to raise 15% more local money to make up for their cut than the average welathy, suburban district. Likewise, the average major urban district would have to raise a 36% larger levy to replace its lost state revenue than the wealthy, suburban district.

Rocky River's seemingly massive 55.2% cut? In actuality, they would have to raise a 0.88-mill levy to cover that loss. Meanwhile, even though Trimble Local in tiny Noble County only gets cut by 0.7%, -- the state's smallest percentage cut -- they would need a 1.55-mill levy to cover the cost. That's nearly double the levy needed to cover state costs from a community with a 40% lower median income than Rocky River.

Younsgtown would have to come up with nearly 2 mills of local levy money to cover their 0.8% cut. Lorain needs 1.55 mills to cover its 1% cut.

You get the idea.

Any Education Cut Hurts Vulnerable Kids Most. Period. Thats' Why We Need Federal Stimulus. Now!

So while DeWine did an admirable job trying to deflect a large chunk of these cuts onto the districts that could shoulder them best, because there simply isn't enough money being sent to the state's wealthier districts, the seemingly palty percentage of state funding cuts in Ohio's most vulnerable communities are still disproportionately burdensome to them.

It's simply a function of local ability to raise revenue to replace the state money.

This is why we need a real state formula and investment in education funding -- a task that seemed so possible pre-COVID and now seems like a pipe dream.

The other issue is timing.

These cuts, assuming they go through shortly, would be deducted from payments the state will be making to districts in May and June. There are 4 payments made in these two months, with one scheduled to be made tomorrow.

So over 3 payments, districts will have to absorb all the cuts.

While it's tough to do a district-by-district anylsis of this impact quickly, overall, the bi-monthly state payment to districts is about $336 million. So this cut will mean that instead of three bi-monthly payments at the end of this school year, districts will essentially only get two.

That could mean serious logistical problems for districts, which may have already made purchases or paid salaries that the payments were expected to cover. Now that they won't, what will happen?

This will be a quite concerning offshoot of these cuts.

And again these cuts are only for this school year. Next school year, expect more. And next biennial budget expect even more.

Unless the feds step in and free up CARES Act money and pass additional stimulus money. And the state taps its significant rainy day fund.

Until then, look out. Take cover. And pray.

Speaker's got a curveball. But is it a good one?

Well, that was unexpected.

During the debate on fixing Ohio's school funding system, much time has been spent poring over the Cupp-Patterson funding plan, now encapsulated in House Bill 305, which had its 6th hearing yesterday in the House Finance Committee.

And while much has also been made of how about 2/3 of the Ohio House has signed onto the bill, one conspicuously absent name is House Speaker Larry Householder, who lives in the same county where Ohio's school funding lawsuit originated.

We finally heard something from the Speaker yesterday and it threw people for a loop. He wants to potentially "redistribute" local revenue to help handle the $1.5 billion (or more) cost of fully funding the plan in HB 305.

While not a new idea (when I first ran for office in 2006, I suggested a statewide property tax to provide the local share of education's base cost), suggesting something like this out of the blue was a bit surprising.

This could be good or bad, depending on how this is done. I'll go through a few of the options and what each could mean for schools and kids.

1) The Brenner redistribution. Remember when now-state Sen. Andy Brenner suggested rolling everyone's local and state money into one pot, then redistributing it to every school, public, private and charter? Yeah, that led to big cuts in school districts and huge increases in charter schools. Couple that with his banning of additional local levies, and you can see why he had only one sponsor hearing on this bill. Householder is most likely not suggesting this.

2) Inside millage. This is something I've heard around for a couple years now. On all our tax bills, there is an automatic 10 mill charge that every property owner in Ohio pays, on top of the voted mills we pay. The inside millage is divided up among schools and local governments. He may be suggesting taking all of those mills and giving it to schools, or taking all the inside millage, sending it back to Columbus and redistributing it back out to school districts. This isn't an awesome idea because it would remove money from local governments (which have already been decimated by local government fund cuts) and agencies to fund schools. But it's much better than Brenner's disastrous plan. He could also be suggesting raising the inside millage to something like 15 or 20 mills and taking the millage above 10 to all go to schools. That would be better for local governments, but would likely be met with stiff resistance in his caucus.

3) Create a statewide property tax for basic education. This would be the best idea -- create a statewide property tax that the state would calculate to provide the local share of the cost of the new school funding plan. That way communities wouldn't (in theory at least) have to vote for more levies to pay for basic needs like books and teachers. Local levies would be used instead to pay for relative luxuries -- 8 years of French, orchestra programs, etc. This is kind of the Holy Grail for Ohio education funding. And it would eliminate the need to use endless levies to pay for education. But I'm not sure that Householder would want to create something like this that would require a constitutional amendment, which requires large numbers of votes in both legislative chambers.

4) Raiding local revenue. It would be a real world problem if his idea is to take a bunch of locally raised and voted on money, then redistribute it to other areas. It's not that the idea doesn't have merit; it's just that I live in the real world and I can't imagine the uproar if local property taxpayers are seeing their voted property taxes going across the state.

We don't know which, or combination of which idea(s) Householder is contemplating here. But he's undertaking a key attack on our unconstitutional funding system -- the overreliance on property taxes to pay for schools. There is no question as a Perry County Speaker, he gets the issue here. And I believe he wants to do the right thing to fix this mess.

If the plan he's talking about would say that the state now has a formula (under Cupp-Patterson) that accurately calculates student need, and it's going to base the local share of funding on a levy amount that doesn't have to be constantly voted on, then it's a good thing.

If he's raiding local revenue from some areas of the state and giving it to others, that creates a whole new set of challenges.

But they're not impossible to overcome. A plan like this is how Wyoming -- the state judged by Education Week as having the country's best, most adequate and equitable funding sytem in the country — pays for its school system. The state of Wyoming takes money from districts that raise more than they need locally and redistributes it to districts that don't raise that kind of revenue.

The problem with doing that in Ohio is we have a long history of keeping local revenue local. Asking our state to change its outlook on locally raised money will be quite a challenge.

So stay tuned...

Too Much Peanut Butter: How the Cupp Patterson School Funding Plan's Base Formula Bakes in Inequity

What has become abundantly clear during these initial hearings of HB 305 -- the standalone version of the so-called "Cupp-Patterson" school funding plan -- is that the authors seem pretty convinced that the one aspect of the plan that should be edited the least is the base cost portion of the formula.

Proponent testimony on the plan's base cost is scheduled to be heard before the House Finance Committee Wednesday at 9:30 a.m. in Room 313 of the Ohio Statehouse.

What is the base cost anyway? It's how much the state figures educating the state's 1.7 million students should cost. So it takes into account several factors, including teachers, administrators, busing, mental health professionals, athletics, etc.

The ultimate cost of the base funding portion of the formula is $11.22 billion in Fiscal Year 2020.

That's a lot of money.

However, what's clear from the formula itself is that money is spread pretty evenly across all district types. In other words, the poorest districts get about the same base cost per pupil as the richest ones.

That's a problem because even base costs are decidedly not the same across districts.

It's much harder, for example, to find teachers willing to instruct students in small, poor, rural districts like Crooksville than it is in wealthy suburban ones like Bexley. However, under the current iteration of the Cupp Patterson formula, Crooksville receives $3561 per pupil for teachers and Bexley receives $3565 per pupil.

Likewise, Orange City Schools -- Cleveland's wealthiest suburb -- will receive $3,553 per pupil for teachers and Cleveland Municipal Schools will receive $3,570 per pupil -- a 0.5% difference in cost.

Because it's only 0.5% more difficult to teach in Cleveland than Orange? I don't think that's an accurate assessment.

These results mirror the overall result: there is almost no difference in teacher per pupil costs regardless of district type.

School Type	Average PP Teacher Funding FY20
Rich Suburban	$                                        3,536
Suburban	$                                         3,561
Small Town	$                                         3,571
Rural	$                                         3,581
Poor Small Town	$                                        3,584
Poor Rural	$                                         3,587
Urban	$                                        3,596
Major Urban	$                                         3,610

This teacher equity issue spreads throughout the current version of the formula. Looking at the total cost, the spread is quite narrow between each school type, meaning the formula sees almost no difference in the base needs at wealthy suburban districts and poor rural and urban districts.

In fact, the lowest per pupil base cost is at Ohio's largest urban districts like Cleveland, Columbus, Cincinnati, etc. Because their needs are so much less? Again, it seems a bit unfair to have these results on the $11.22 billion bulk price calculation for the school funding formula.

This result forces plan designers to rely on the weighted funding (Poverty, English Language Learners, etc.) or dream up exotic distribution fixes to a base cost formula that seems like it's piling on globs of peanut butter without much thought as to whether some districts' bread slices need more or less of it.

School Type	Average PP Base Cost
Poor Rural	$                       7,873
Rural	$                      7,998
Small Town	$                       7,520
Poor Small Town	$                      7,420
Suburban	$                       7,282
Rich Suburban	$                       7,278
Urban	$                       7,333
Major Urban	$                       7,263

The authors and proponents of the Cupp Patterson plan have suggested they are open to distribution fixes, meaning adjusting how much of these costs have to be picked up by the state vs. the local taxpayer.

And they should be commended for recognizing that the way these funds get distributed should vary more greatly between the haves and have nots than the formula's initial version.

However, if $11.22 billion of the formula are calculated inequitably, how much of a difference could moving around even $1 billion (as an example) through various additional weights or distribution changes make?

There is a solution: building more equity into the $11.22 billion base cost formula. Doing things like acknowledging that smaller classes in poorer schools helps students succeed, or recognizing the difficulty in attracting talented teachers to the most difficult to staff districts would go a long way toward helping the formula work better at its initial calculation. An added benefit of working more equity into the base funding cost is you would have to be less exotic at the distribution or weighted funding end.

As Chairman of the Primary and Secondary Education Subcommittee of the House Finance and Appropriations Committee, I did this 10 years ago using an index based on poverty, property wealth and education attainment levels that was then applied to these costs, which helped to ensure districts with more needs and challenges were recognized as such by the funding formula from the very beginning.

I'm not saying that using an index is the only way to address the inherent inequity the current base funding formula employs, but it is a place to start, for we must work to improve this thing.

This funding formula is the best shot we'll have for a generation of getting this right, and its authors and working group should be lauded for their Herculean efforts. But it will require mutability of those who have put so much blood, sweat and tears into its drafting, not unlike what those who drafted House Bill 1 10 years ago did.

I know it's not easy. Having gone through exactly what these brave souls have gone through, I can assure them that working on all aspects of their formula, with no sacred cows, can make it work better for all our kids, regardless of where they live.

And that should be all of our goal.

Should Charter Schools Get More Money for Buildings? Depends...

A recent call by the Fordham Institute and national charter school proponents has called for Ohio charter school facilities funding to be boosted by nearly 400 percent to match what they actually spend on facilities. While that may sound outrageous, especially given how Ohio charter schools have been near the bottom in national performance comparisons, I'm (surprisingly, perhaps) sympathetic to the idea.

And I told NPR so yesterday.

With major caveats.

First of all, let's talk money. Currently, charters get $200 per student for facilities funding. Yet they spend $785 per pupil, according to Fordham. Which means, they argue, charters need more money.

I do find it curious that when school districts argue they're not being paid enough by the state to cover expenses, free market folks like Fordham call districts wasteful or slovenly inefficient. Yet no such calls here. Hmmm.

Anyway, I've always believed that ensuring charter schools don't have to go into the waiting arms of ne'er-do-well, for-profit charter school operators would be a strong change in policy. One of the major reasons schools pick for profits is because for profits have access to capital and buildings. However, the for profits then fleece the schools on rents.

Here's the problem, though. That charter facility funding comes out of Ohio Lottery money. Last I checked, we were told the lottery was supposed to save us from having more property taxes. Now the state is removing about $16.6 million a year -- instead of putting it into school districts, potentially reducing property taxes -- and giving it to charters for facilities. If they quadruple that, it would be about $50 million more removed form Lottery funds to give to charters.

I don't think that's what the voters approved when they adopted the Lottery.

See, this has been, is and (I fear) will continue to be the problem with the way Ohio has funded school choice programs. The state siphons off a few million here and a few million there that would otherwise have gone to the 90 percent of students whose families choose local public schools. And they give it to privately run schools that aren't nearly as transparent as local public school districts.

And they generally perform worse that the school districts to whom that money was originally designated.

All that invariably forces local property taxpayers to pass more and bigger levies.

So, I am all for charters getting more facilities money because I think it helps keep the bad operators out of the game. But not if it means the 90 percent of Ohio students who remain in local public schools have to rely on more levies for their educations, or go with fewer opportunities.

If the state really believes in school choice, put your money where your mouth is and fund it with separate money that isn't taken away from local public school districts. Stop forcing property taxpayers to subsidize these payments.

I would feel better about Fordham's advocacy here if they identified a new revenue stream or something else to pay for this expense. But I'm suspecting that they'll just ask for a 400 percent jump in their facilities funding through the Lottery, which will siphons off more money originally meant for school districts.

Fish or cut bait. It's really that simple.

What Coulda Been (And Still Could Be) ...

This school year is the 10th since I was the Chairman of the Primary and Secondary Education Subcommittee on the House Finance and Appropriations Committee. It was during that committee process that we developed (among other national award-winning education reforms) the so-called Evidence Based Model of school funding -- Ohio's most serious attempt to address the Ohio Supreme Court's four rulings determining that Ohio's education funding formula was inadequate at calculating the cost of educating Ohio's 1.7 million students and relied too much on local property taxes to fund.

Among the promises made in that package was a 10-year, phased-in funding plan. We picked 10 years because 2009 was the height of the Great Recession, which limited the additional revenue we could commit to the plan initially. But I required that the state publish the 10-year full funding version so that the public could at least hold future legislators accountable to fully fund the thing.

Here is a look at the research that backed each of the funding elements in the EBM. As you can see, there was evidence behind the model -- a far cry from today's "formula", which isn't really a formula in the classic sense.

Even with the limited additional revenue, EBM was beginning to work. The second year of that plan was the only time in Ohio history that more state than local revenue paid for Ohio's public education.

After the 2010 election, though, Gov. John Kasich killed the EBM, replacing it with a plan that initially cut money to education by about $1.8 billion. He then developed his own school funding plan, which was so despised that his own party rejected it in 2013. Ever since, Ohio has essentially created arbitrary per pupil funding increases, which bear no relation to the actual cost of educating kids.

However, that may be changing soon as state Reps. Robert Cupp and John Patterson have been working on a plan that sounds eerily similar to me, basing funding on what kids need and trying to reduce the need for local property taxes to pay for it. And that's all I've ever asked: Figure out the cost, pay for it and don't force us to go to the ballot every couple years to pay for your poorly calculated formula. I don't care what you call it. Just do it.

Given the historic nature of this school year, I wanted to show everyone what the EBM would have provided districts and what today's formula provides.

The difference is stark.

Only about 10 percent do better under the current formula. And 90 percent do worse. Usually significantly worse. For example, Cleveland receives $144 million less today than they would have under the EBM.

Think that would have helped CMSD implement its Transformation Plan? Instead, they've had to rely on local philanthropy and an historically huge local property tax hike to do not even all of what the plan called for.

For a district-by-district rundown of all the state's school districts, visit the spreadsheet I've posted here.

Now some may say that coming up with the $1.7 billion difference between a fully-funded EBM and what the state current spends is an outrageous amount. However, the state now has at least $3 billion fewer today than it could have because of various tax cuts that the state has instituted, especially during the Kasich years.

So we could have paid for a fully funded EBM if we had only cut taxes half as much. It wouldn't have required an additional income tax increase or anything.

Just not as big a tax cut. That's all.

And I bet you haven't even noticed the tax cuts. That's because the wealthiest 1 percent has seen a $17,618 tax cut. Regular folks have seen a $94 cut. And the least wealthy among us have seen an increase. That's right. Give back half of that $94 and your property taxes could have been dramatically cut by an average of $240 a year (depending on where you live, it could have been MUCH more than that).

Look, I get that finding money in this budget will be a challenge. I understand that given the makeup of the General Assembly and Governor's mansion, this will be a heavy lift.

But I also know that two House members are genuinely trying to get this right. I see a new House Speaker who lives in the school district where the DeRolph school funding case originated and probably feels like he has some unfinished business on school funding.

But most of all, I get that our kids need us to deliver for them. A new formula based on what kids need to succeed in the classroom and beyond. A mechanism that doesn't force voters to tax themselves at higher and higher rates every couple years. A system we can all be proud of.

Ten years ago, we were on our way to accomplishing that. Maybe over the next 10 years we can finish that mission.

Just as a personal aside, when I did EBM, my oldest son was in Kindergarten and my youngest had just been born. At the end of the coming two-year budget cycle, my oldest son will be driving and my youngest will be getting ready for middle school.

It is ridiculous that we are working on our third generation of Ohio students whose educations we've failed to properly fund or even calculate.

It's now no longer for my kids' sake we need to get this right.

It's for the generation behind them.

State Superintendent Tells New School Board Members Ohio School Funding is Constitutional. Data Say He's Wrong.

Well this is quite a thing. State Superintendent of Public Instruction Paolo DeMaria wrote a memo to school board members Sunday that openly claimed that Ohio's school funding system is now constitutional. Even though the Ohio Supreme Court has ruled four times that it's unconstitutional.

Why did he say this? Because the court hasn't ruled on the issue since 2002. Yet the reason they haven't is because the Court dropped jurisdiction over the case, not because they thought anything was fixed. So plaintiffs are barred from suing over the issue anymore. Yet DeMaria is telling incoming State Board members that means it's constitutional.

Because plaintiffs can't test it?

Oy.

Vay.

Look, according to the fourth Supreme Court ruling from 2002, “Until a complete systematic overhaul of the system is accomplished, it will continue to be far from thorough and efficient and will continue to shortchange our students. The overreliance on local property taxes is the fatal flaw that until rectified will stand in the way of constitutional compliance.”

So let's use the test laid out by the Ohio Supreme Court (not the State Superintendent of Public Instruction) to determine whether today's school funding system is constitutional, shall we?

Systemic Overhaul

Today's school funding "formula" is not appreciably different from the one instituted in 2002. It has a few different calculations, but it's not unrecognizable. Certainly no "systemic overhaul." In fact, it's not even a formula, per se. The amount for basic aid was set up through arbitrary increases from the Building Blocks formula last calculated in 2007. It's so inadequate at calculating student need that nearly every school district gets too much or too little under its mechanism.

State Reps. Cupp and Patterson are working on a real formula overhaul. And in 2009, the Evidence Based Model certainly fit the definition of an overhaul that calculated an actual cost. But today's "formula"?

Please.

Overreliance on Property Taxes

This is pretty simple to determine. Do property taxes make up a greater share of the cost of education today than they did it 2002? The answer is, well, yes. In 2002-2003, the local share was 51.05%. In the 2015-2016 school year, that percentage was 51.75% -- and that doesn't include the nearly $800 million or so more that school districts lose in state revenue to charter schools and vouchers today than they did in 2002-2003.

So clearly, the cost to local taxpayers has gone up since 2002-2003. In addition, look at average property tax rates. In 2002-2003, the Ohio Department of Taxation reported that the average number of mills a district collected from property taxpayers to pay for schools were 30.06.

Today, it's 37.70.

That's a 25% increase in local property taxes paying for schools!

Under the key requirements set by the Ohio Supreme Court in 2002, today's school funding system fails to meet either.

The question remains: Why is the State Superintendent telling school board members the exact opposite? Especially given how potentially influential the state board could be in helping state lawmakers and the new governor adopt a real "systemic overhaul" of the school funding system that doesn't overly rely on property taxes to fund it?

Keep Your Eye on the School Funding Ball

As you begin hearing more about the Patterson-Cupp committee's proposals for fixing school funding -- ideas that as of now hold much promise -- I want to make sure everyone is aware of what funding numbers matter as we consider future funding levels.

There are several pots of state money that go to schools. The largest is from the state's General Revenue Fund (GRF). The next largest is the Lottery Fund, which has been a problem since the beginning because all that fund did is allow state lawmakers to cut GRF funding and replace that cut with lottery money. Lottery money doesn't increase commitment to education; it just changes what percentage of that money comes from the GRF.

However, there are others that used to not be considered part of state funding, but now are (for reasons I'll explain in a bit).

The first is Property Tax Relief. This is state money that has been set aside to offset property taxes since the income tax passed in the 1970s. The deal was if schools supported the income tax, a portion of it would be used to reduce local property taxes. That's why Ohioans have, in the past, only paid $0.875 cents for every $1 of property tax raised.

However, in 2013, Gov. John Kasich eliminated this property tax relief on all future, new money levies. So while Ohioans continue to pay about 88 cents on the dollar for old and renewed levies, for new ones, they pay the full freight.

Whenever this pot of money has been used by governors to claim that the state provides about $1 billion in school funding through property tax relief, it generally has been dismissed by any serious Ohio school funding analyst. Why? Because that money doesn't go directly to school districts and kids; it goes to property taxpayers (who don't even notice the property tax cut is there, if they even know it exists at all).

The next big pot is reimbursements for Tangible Personal Property (TPP) and Utility (KWH) taxes. Prior to 2011, this payment also wasn't considered part of state support for public education, for much the same reason as the property tax relief. The reimbursement payments were created to get the support of schools during the massive tax reform included in 2005's House Bill 66. One of the reforms was eliminating the taxes on tangible personal property, or inventory. This hammered our traditional manufacturing plants, who invested heavily in equipment and inventory. However, the locally derived tax provided sometimes substantial revenue to schools and kids, so eliminating it would cause a huge cut to kids in many school districts.

So when the state created the Commercial Activity Tax (CAT) to replace TPP, the deal was it would make up for the lost TPP revenue with CAT revenue. And that was how schools ended up being OK with losing TPP. The idea was eventually that reimbursement would be replaced with something else, but until then, the state would uphold its word to schools and make the payments. So because this was simply a state reimbursement, school funding analysts also didn't count this payment as state support because the state chose to eliminate locally derived revenue with a state figure.

Until 2011.

That's when Gov. John Kasich eliminated the TPP and KWH taxes (gradually), all but eliminating what had been a $1.2 billion line item in the 2010-2011 school year. So now local districts lost state funding, so TPP and KWH reimbursements were now considered school funding cuts (as they would have been in 2005 if the state hadn't agreed to the CAT payments).

Finally, during the 2009-2010 and 2010-2011 school years, the federal stimulus gave Ohio about $450 million a year (on average) to help make up for lost state revenue due to the Great Recession. The idea was states would replace the stimulus money with state money once revenues returned post-Recession. So because this money flowed through Ohio's school funding formula, it's been considered part of the state's school funding commitment.

This is a long-winded way of getting to the issue: Beware of state leaders who claim that certain pots of money should be included as part of the state's school funding commitment, for comparison's sake.

I mention this because the Ohio Department of Education has produced a truly misleading graphic on its website (which I have posted at left) dubbed "Primary and Secondary Education Funding FY 2009 - FY 2019". In it, they try to show that Ohio's greatly boosted school funding during the last 8 years. While the political implications of that timeline are obvious, I'll just discuss the policy problems with their assertion.

First of all, the period is long enough that inflation matters.

For example, according to the Bureau of Labor Statistics, a dollar in 2009 is worth $1.16 today.

In addition, it includes the property tax reimbursement as state education funding -- a figure that the vast majority of analysts would never include because it doesn't go to kids; it goes to adults who are property taxpayers.

Finally, the amount includes Lottery money, which is OK, except the amount has increased by more than 50 percent. Why? Because of VLTs and other gambling opportunities that have increased since 2011.

So if you wanted to look at money that went directly to kids (and didn't supplant GRF the way the lottery does), then you need to look at GRF, TPP reimbursement and stimulus. Those are the funds that directly fund schools.

When you do that, and build in the inflationary adjustments for each year, you'll see quite a drop in state funding for Primary and Secondary Education since the 2009-2010 school year -- $863 million, in fact.

Even if you include all the so-called funding pots ODE includes, it's a $664 million inflationary cut to Primary and Secondary Education.

Which points out the challenge for Reps. Patterson and Cupp. In order to keep pace with the Great Recession spending on education, they have to boost funding by nearly $1 billion. And they have to do it with a new Governor whose only stated K-12 initiative was to boost some poverty funding and provide a more "equitable system" (the problems with equity minus adequacy, I've discussed before).

But that doesn't mean what these state reps are doing isn't important. What it does mean is we citizens must insist that the rest of the state's leadership follows through on their good work.

And above all, it means that we all keep our collective eyes on that pesky school funding ball.

Brenner School Funding "Fix" Gets Courtesy Hearing

Within the first couple months of the 2017-2018 legislative session, state Rep. Andrew Brenner, R-Powell, introduced a new Ohio school funding plan.

As chairman of the House Education Committee, people logically thought this might be a serious attempt to fix Ohio's long-broken school funding system. And while I pointed out how absurd the plan was -- essentially giving huge influxes of cash to privately run charter and largely religious private schools while cutting funding to most local public school districts -- the plan's introduction was treated seriously be many in the media.

However, the bill -- HJR 3 -- had zero co-sponsors.

Not a one.

I thought that would be a big tell about this plan's viability and quality.

Then, in an embarrassing rebuke of the House Education Chairman's authority, the bill was sent to the House Finance and Appropriations Committee, not Brenner's committee. School funding bills should generally go to finance. But out of respect for the committee chair, one would think his big school funding bill would be sent to his committee.

Yet it wasn't.

What does all this inside baseball mean?

Well, it means that instead of being able to talk about his school funding plan for nearly two years in his own committee, drumming up support, Brenner will be given a single hearing tomorrow in the Finance committee -- a hearing that's required by House rules for all pieces of legislation filed prior to July of even years. Even the crazy bills that have zero chances of passing.

So the House Education Committee Chairman can only get a single, required hearing for an overhaul of the state's school funding system, which has been declared unconstitutional four different times.

That, my friends, is a legislator with zero clout.

Ohio Now at Historically High Reliance on Local Taxpayers to Pay for Schools

Twenty years ago, the Ohio Supreme Court issued the first of four rulings determining that the way Ohio paid for schools was unconstitutional because it relied too much on local property taxes, putting kids in Ohio's less wealthy districts at a decided disadvantage. That school year -- 1996-1997 -- saw the largest difference between state-local share of education in history at 55.02 percent local, 44.98 percent state.

Twenty years later, after two decades of narrowing the gap and even overcoming it in the 2010-2011 school year, Ohio once again has achieved that exact state-local split.

According to the Ohio Department of Education's latest revenue data, Ohio has once again provided 44.98 percent of the funding for Ohio's school children, with the local taxpayers having to come up with 55.02 percent.

If you don't include the $935 million transferred to charter schools last year, that local share percentage jumps to more than 57 percent for local school district taxpayers.

This means that after four Supreme Court cases and 20 years of arguments, Ohio's legislature has done, essentially, nothing to address this most important of issues. In fact, if you include lost state revenue to charter schools and private school vouchers over the last 20 years, the legislature has actually made the reliance on local property taxes worse since the first case was decided.

There is only one thing the Ohio Constitution says the legislature has to do: fund schools. And for 20 years, this General Assembly hasn't performed its only basic function.

How sad for our kids.

Starting in the 2012-2013 school year, the Ohio Department of Education split the local revenue data it had always collected into local revenue and "other non-tax revenue". However, that designation had previously always been included in the local revenue calculation. So in order to do a longitudinal analytic comparison with years prior to 2012-2013, I added the "other non-tax revenue" with the local revenue, as ODE had always done prior to 2012-2013.

Ohio Budget Process Ends with $896 million Less for Kids in School Districts than Great Recession

The Ohio General Assembly's Conference Committee, which is charged with reconciling differences between the Ohio House of Representatives' and Ohio Senate's budget bills have agreed on that bill. It is set to be voted on and passed this afternoon.

The education funding portion of the bill is, of course, disappointing. This budget will have $896 million fewer, adjusted for inflation, than the budget that passed during the Great Recession in 2009 -- the budget I helped shepherd as the Chairman of the Primary and Secondary Education Subcommittee on the House Finance and Appropriations Committee. In addition, 409 school districts will have less in the last year of this budget than they had in the last year of the Recession budget.

The disservice this lack of funding does to our kids is staggering. To add insult to injury, in 2009, we passed the Evidence Based Model of school funding -- a system that has been adopted by the country's most conservative state, Wyoming, and has utterly transformed that state from a bottom feeder on national rankings to one of the country's top rated states.

But because our revenues had bottomed out that year, we had to phase in the EBM over the next four budgets. This budget would have been the one that fully phased in the EBM. What would that have meant for kids in Ohio school districts? Another $3 billion in this biennium than what the state is about to pass.

That would have meant that a homeowner with a $100,000 home would have been able to realize as much as $420 a year in property tax savings.

Stunning.

Just so you wonder whether the money was there to do this investment, there is approximately $11 billion more General Revenue Fund revenue in the budget that is set to pass the Ohio General Assembly today than existed in the 2009 budget that created the EBM.

As I have always said about Ohio's struggle with education funding, it is not really a question of money.

It's a question of priority.

And for too long, our kids have been way, way, way down that list.

Ohio Senate Tries to Sell Cuts as Increases

I'm growing weary of writing this stuff, but the Ohio Senate has once again misled Ohio taxpayers by claiming increases in school funding. The Senate's version of the budget bill actually cuts funding to Ohio's 613 school districts by about $70 million over the Ohio House's meager addition.

All the Senate has done is revert the funding levels to what Gov. John Kasich proposed, which represented about $900 million less in total, inflation adjusted dollars over this biennium compared with the budget that passed during the Great Recession.

Once again, I also have to take issue with Randy Gardner -- a Senator with whom I worked pretty well while I was in the House. He and his friends always tout how there is an historic level of state aid going into public schools.

What he fails to address is that while the state aid funding line has gone up, the overall aid has not kept pace.

You always have to watch how careful politicians in the General Assembly and Governor's mansion talk about school funding. It's always about one aid line, not all aid lines. It's like if you have two jobs and income from one has gone up 50%, but income from the other has dropped 75%. The overall result is a 25% cut.

All you need to know about how inadequate Ohio's school funding system is is to look at the monkeying they do to it. Playing around with how much school districts are guaranteed to get, or what funding cap needs to be instituted to keep increases down tells you there isn't enough money to pay for the formula.

Oh, and the formula itself? Simply a product of arbitrary increases done to a calculation last completed 10 years ago.

Another budget cycle is about to pass with the state failing to live up to its constitutional obligations to our kids. When will this end?

What's a Baseline: Why Most Reporting on School Funding Falls Short

Since the Ohio House of Representatives passed its unbalanced budget about two weeks ago (an issue I'll take up in another post), I've been watching the reporting on its school funding provisions. No surprise. The focus has been on how the House version provides (slightly) more funding than Gov. John Kasich's budget.

Kasich's budget was compared with what districts received in the previous year.

Look, both of those stories tell us something. But they miss the point. And this is no knock on the reporters. They are doing what they've always done -- compare the current budget with the one immediately proceeding it.

This approach, though, misses the mark. Here's how. In 2007-2008, we went through the biggest economic downturn since the Great Depression. That resulted in huge revenue shortfalls for the state and its communities -- a shortfall that wasn't just an Ohio problem. It was a United States problem. However, the federal government stepped in to shore up those shortfalls, with the thought that once the economy snapped back, states would use the new revenue in place of the federal assistance.

But that's not what happened in Ohio and other states. Instead, they used the lack of federal funding as an excuse to cut funding to education and other services. Oh, and to cut taxes for primarily rich people. And in Ohio, the new Governor also eliminated nearly $1 billion in additional state resources that had been promised to schools after the state eliminated a tax upon which many districts had come to depend. And this doesn't include the explosion in the diversion of school district dollars to privately run charter schools and private school vouchers.

To me, the baseline has always been the Great Recession budget. For if you aren't providing more funding for kids than you did in the toughest economic time in 80 years, then your funding scheme probably doesn't meet the "thorough and efficient" clause of the Ohio Constitution.

What does it matter if this version of the budget provides slightly more funding than the one immediately proceeding it, if that version was demonstrably inadequate?

This is why when I and Innovation Ohio compare school funding numbers, we will always use the Great Recession as a baseline, adjusted for inflation. Because I and we believe that if Ohio can't provide kids more than what the state did during the Great Recession, the system is wholly inadequate.

So even with the "boost" from the House, this budget provides $828.6 million fewer to Ohio school districts over this biennium than during the Great Recession budget. In the last year of this budget, about 400 of 613 school districts will receive fewer dollars than they did during the last year of the Great Recession budget.

This is including all revenue headed to districts, which answers the ultimate question at the end of the day: What do kids in public schools get when everything's included?

So whenever you see my budget data, or Innovation Ohio's, it will generally be compared with what children received during the Great Recession. And it will likely result in children receiving fewer resources than they did during that awful economic period.

Until it doesn't.

Given our state's recent history, you'll be excused if you decide not to hold your breath until that happens. But until it does, we will hold our elected officials to that, I think, minimal standard.

School Funding: Here We Go Again

Every time I think we've perhaps turned a school funding corner as a state, something happens that undoes all that. Or at least expands the length of the block we need to turn.

Take this year's state budget. When Gov. John Kasich introduced his initial plan, it called for about half of school districts to get less money than they did last school year. That is not a good outcome. 

The Ohio House, to their great credit, recognized that the Kasich formula was inadequate, so they did what responsible legislators do when there's not enough money in an inadequate formula -- they created a guarantee that no district would get less than last year and they lowered the upper limit on how much any district could get as an increase over last year. And, most importantly, they set up a school funding commission (I think the 1,287,643rd established since 1991) to look at the issue.

This was a reasonable, rational and responsible way to approach this school funding issue. It's not perfect. And I really didn't like the extra $25 a kid for E-Schools for capital funding. But on the big issue of how to pay for educating our state's 1.8 million kids, the House plan was about as sound as it could be, given the tremendous shortcomings in the current formula.

Then the plan hit Ohio Senate, which is where some of the most important, significant and positive charter school reform legislation is currently being crafted by some of the state's best legislative leaders on the issue. And now it looks like Ohio Senate President Keith Faber has decided to (once again) dictate school funding policy in the state, regardless of what his committee and subcommittee chairs think.

On Friday, Faber told the Columbus Dispatch that he wants to undo the House plan and eliminate any guarantees and artificial caps on increases because he wants everyone to be on the formula. Look, that makes sense ... if you have a funding formula that makes sense. Right now, Ohio does not.

The formula, as currently constituted, is simply an arbitrarily increased version of the Building Blocks formula from the mid-2000s. That formula took into account three items -- instructional, support and operational costs -- to calculate a per pupil funding amount. The total in the formula's last iteration from 2007 was $5,732. The amount has simply been arbitrarily increased to $6,000 in this proposed budget.

To give you an idea of how inadequate that amount is, if you simply did inflationary increases on the Building Blocks from 2007, the per pupil amount would be $6,581.

But the Building Blocks only looked a few of the educational costs schools need. The next formula -- the Evidence Based Model -- looked at about 2 dozen educational costs and found that the per pupil amount should be closer to an average of $6,817 (as high as $8,333 in the K-3 grades).

Again, both formulas (Building Blocks adjusted for inflation) -- one developed by Ohio Republicans and one by Ohio Democrats -- both came up with numbers greater than the current state formula.

I'm not here to say there's a magic per pupil figure. And I think focusing on just the number is a mistake. What I care about is the process of developing a per pupil amount. That is where this current formula is so woeful. It doesn't even pretend to measure what kids need. It simply bumps up per pupil amounts by round figures ($100 a year) with zero regard for actual cost or need.

My issue isn't with the $6,000 per pupil figure (though I can't figure how that would be adequate) so much as it is with the current formula's lack of a rational approach to funding based on, well, reality.

Whenever examining a school funding formula, you have to answer the following three questions: How is the formula calculated? How do we ensure it remains adequate and at the cutting edge? How do we de-politicize school funding?

Answers to these questions are what any school funding fix must have. And, frankly, the House plan does address some of them. But it appears that Faber simply has no interest in dealing with really any of them.

Faber told the Dispatch that there may be districts with huge percentage increases because some districts are growing while others are shrinking. What does this mean? It means wealthy, growing districts will get huge increases because they're the districts with the least state funding, so any increase will be a big percentage. 

But other districts -- likely poorer districts -- will see funding cuts to pay for those increases.

In Kasich's original school funding plan from two years ago (that his own party scrapped), Olentangy -- one of the state's wealthiest districts -- received a more than 300% increase in the as-introduced version.

Granted, 300% increases in Olentangy make up a fraction, in terms of dollar amount, of a 5% increase in Cleveland. But the look was an awful one -- paying for large relative increases in districts best able to provide local support at the expense of districts least able to do so. This was especially true when a week prior to the formula's introduction, Kasich told an assembled throng of superintendents that the exact opposite would happen, leading to some superintendents to claim Kasich outright lied to them.

But it appears that Faber wants this reverse Robin Hooding to happen. Like if a few kids leave your district, that's your fault, so we're cutting your money. 

Look, I get that if you have a district of 4,000 kids and 1,000 have left over the last decade, you probably don't need the buildings you once had, nor do you need the staff, etc. But if you're a district of 4,000 and you lose 50 kids across all grades, your expenses will not go down. Why? Because that's not enough kids to warrant the closing of a building, or even the laying off of a teacher or the reduction of an electric or gas bill. That's losing about a kid per classroom.

Faber wants to double down on a formula that really isn't a formula just because he can. He seems to have little interest in actually trying to figure out how much it costs to educate kids, or what they need to succeed in today's knowledge economy. He just wants to eliminate guarantees, which hurts Ohio's neediest kids, and give massive increases in our wealthiest communities, which help our state's most fortunate children. 

I simply do not understand this approach from a policy perspective. It runs contrary to every goal of every serious education policy thinker I know on every side of the issue. Punishing kids because economies change and we live in an aging state makes zero sense to me. The point of a school funding formula is to provide the necessary resources for kids to succeed in all zip codes, not just a few. And I know well-meaning Senators on both sides of the aisle understand that.

It is indeed unfortunate that the state's most important Senator, though, does not. He should listen to his caucus' policy leaders on this. But, judging from his comments, I fear that instead of turning a corner, we just have to keep walking, hoping that the gap between buildings we see on the horizon is a corner capable of being turned, not just someone's open garage.

Ohio Senate President Faber Lays Groundwork for Flat Education Funding Next Year

Last week, Sen. Keith Faber, R-Celina, the Ohio Senate President, said that he wanted to deregulate education, especially for high-performing schools. Here's what he said, according to the Gongwer report on his talk:

"Next year we're going to be looking at ways to set those high-performing school districts free of unnecessary bureaucratic regulation from Columbus, and it is going to be a challenge. But it is a challenge that I am confident we'll be successful on," Sen. Faber said.

While deregulation might be appropriate for the top third of Ohio's school districts, "we still have to remember the other two-thirds," he said. "And we have ideas there as well," he added.

Faber's play may have some merit from a policy perspective. Politically, it's a tell for next year: Get ready for flat funding or cuts. But in exchange for not raising a stink about the state's failure to live up to its constitutional obligations, we'll get rid of some unfunded mandates. How's that for a political trade off?

Let me deal first with the policy. During the House Bill 1 deliberations from 2009, then-State Superintendent of Public Instruction (and current U.S. Assistant Secretary of Education) Deb Delisle put forward a similar idea to Faber's.

As a refresher, the Evidence Based Model of school funding was based on several lines of research that indicated that the model's elements would positively impact student growth and achievement. While I eliminated any requirement that school districts follow the elements until they were fully funded (kind of the opposite of an unfunded mandate), Delisle came up with the idea that when the model was fully funded, districts and schools that demonstrated excellence would be given more latitude to comply with the model's elements. But if they were struggling, then the model would be more closely adhered to because the research upon which it was based suggested that these elements could actually help districts and schools find a way to improve student success across demographics.

What Faber's talking about is similar, but very different in one incredibly important way: the state currently doesn't have a formula that has any evidence behind it suggesting it could improve student achievement. The base funding amount is based on a calculation made in 2007 for a formula that no longer exists in law. So the deregulation he's talking about isn't about allowing successful schools a more diverse array of options to meet the state's regulatory scheme. It's about eliminating the scheme all together.

This is dangerous. And while Faber is fond of calling the current scheme "Soviet style" because the state sets policy (as the Ohio Constitution calls for because it's a good idea to have some uniformity of education across communities and regions, but that's another story), the fact is Ohio is a strong local control state. Each district negotiates its contracts with teachers and other educators. Each district determines its curriculum. Each district makes its own calls about field trips, grade and building-wide themes, projects, etc. So, in fact, in Ohio, local districts have a pretty wide array of options -- especially if they have money. And that's the problem here. Districts that have money have options. Ones that don't, well ... don't.

And thanks to Faber and friends, fewer districts have options because the state has cut money to school districts by $515 million over the last couple budgets. In addition, money lost to charters and vouchers have gone way up. So districts have significantly fewer options simply because Faber's colleagues won't fund education the way it needs to be funded.

Which is a nice segway into the real reason for Faber's newly found concern with deregulating education -- politics. For the last several years, the main complaints of the state's superintendents has focused on unfunded mandates and the fact that districts aren't on the same regulatory footing as charter schools. This argument is especially prevalent in wealthy, suburban schools that don't receive that much state aid anyway.

What Faber is counting on is the elimination of some unfunded mandates will buy silence from the Ohio education community when the General Assembly flat funds or cuts school funding (despite a budget surplus), barely does anything with charter schools, lets vouchers expand, or does anything else that could significantly hurt children in our state's public school districts.

What that silence will do, though, is hurt schools that depend more heavily on state aid -- namely poor districts. It won't matter that districts don't have to meet some regulation if they don't have enough money to buy books, go on field trips, or do much beyond keep on the lights and pay teachers $30,000 a year.

In addition, my guess is the top third performing districts, as Faber mentions in Gongwer, will be determined by Performance Index Score, which is how the state determines whether charter schools should open in districts to compete with these lower performing districts. The problem with that is Performance Index Score is nearly perfectly correlated with wealth. So without controlling for demographic variables that we know impact these proficiency scores, we'll essentially be letting wealthy school districts off the accountability hook and hammering districts who were unlucky enough to be serving our most at-need youth -- districts, it could be argued, that actually should be free to experiment more, not less.

What else we'll find is that some high-performing school districts may be underperforming their demographics, while low performers outperform them. Shouldn't we reward districts that are exceeding expectations, even if those expectations aren't as high as, say, Beachwood or Orange? And why should districts that have every demographic advantage be rewarded if they are failing to live up to the necessary standards? Maybe an urban district's 85 performance index score is more impressive than a suburban district's 103? Yet I doubt that Faber's idea will incorporate this level of nuance into the discussion.

We also know that children have many different kinds of intelligence and skill, yet we only test analytical right now -- the area in which poor kids struggle the most. Maybe some districts have kids that struggle on analytics, but they're off the charts on creativity and innovation. Shouldn't they be freed up to continue that work?

There is some merit to using the regulatory structure to encourage innovation and ideas in learning. And if Faber's talking about doing something like Delisle -- letting districts that perform well more options to meet regulatory requirements, then it's less problematic. However, simply eliminating that structure for the state's wealthiest school districts so you can justify the continued state failure to live up to its constitutional obligation to all of our children. Well, that is extremely cynical.

We're better than that, even if our political leaders sometimes stray. I hope our state's education leaders don't take this devil's bargain. Our kids need them to stay strong.

Kasich Record: Largest Number of Property Tax Increases. Ever.

As part of this week's return to school for Ohio's 1.8 million schoolchildren, we at Innovation Ohio have posted what amounts to most of the education-related material it's done during the Gov. John Kasich's years.

The material is pretty damning.

However, there is an additional fact that speaks to Gov. Kasich's historic divestment from public education. Because Kasich has committed the smallest share of the state budget for education since 1997, local property taxpayers have seen more property tax increases than any first three years of an Ohio governor's regime on record.

As you can see, according to the Ohio Department of Taxation, property taxpayers in more school districts saw their property tax rates (total gross rate) go up in the first three years of the Kasich administration than at any other comparable time since 1994 -- the earliest record available.

Nearly 1/2 of all Ohio school districts have had to increase their property taxes under this governor. Meanwhile, his predecessor had the lowest number of increases on record. So in three years we've gone from the fewest to the most property tax increases on record -- a greater than 20% increase.

Remember that the Ohio Supreme Court ruled four times that the state needed to rely less, not more on property taxes to pay for schools. As you can see, the exact opposite is occurring under this governor.

Quite a swing.

Quite a record.