No Han Solo: What’s missing in Ohio’s newest school funding attempt

When the long-awaited school funding simulations were released Friday by state Reps. John Patterson, D-Ashtabula, and Robert Cupp, R-Lima, for their Fair education funding plan, people didn’t really know how to respond. Yes, it called for an annual spending increase of $718 million statewide for schools.

That’s good.

But did Ohio’s suburban districts need to swallow up more than 1/3 of that increase while the state’s biggest urban districts only got 5 percent of the increase? And flat funding Northern Local in Perry County – the district that originally sued the state over its failure to properly fund education? How is that “fair”, as the plan’s authors claimed?

Something didn’t seem right. The formula Cupp and Patterson talked about made sense. Figure out what students need. Then fund it. The elements they picked (teachers, mental health, etc.) all made sense.

So why were wealthy, suburban districts getting more than 1/3 of the increase?

One explanation is that Ohio has held down increases in suburban districts through so-called “gain caps” for years.  This allowed the state to continue investing in districts that couldn’t raise local revenue – not enough state investment there, by the way, but this Robin-Hooding has happened for decades.

So if you’re eliminating gain caps – one of the hallmarks of the Cupp Patterson plan – you’re going to see large increases in districts that have been capped for years. In many ways, you are essentially making up for 30-40 years of Robin Hooding.

But the issue is more complicated than that.

Ten years ago, I was in the exact same position as Cup and Patterson. I was the chair (they are co-chairs) of the Primary and Secondary Education Subcommittee of the House Finance and Appropriations Committee when then-Gov. Ted Strickland introduced the Evidence Based Model of school funding – the state’s first real attempt to cost out education and pay for it since the Ohio Supreme Court ordered the state to do so in 1997.

In much the same way as Cupp-Patterson, the original EBM initially poured millions into wealthy, suburban districts while doing much less, relatively speaking, in poorer districts.

Yet by the time the formula left the House and eventually became law for a couple years, the plan did the best job of distributing revenue to the most needy districts the state had ever seen. And it won the prestigious Frank Newman Award from the bipartisan Education Commission of the States.

What happened?

We found Han Solo.

Let me explain.

I have always contended that the reason the Star Wars prequels failed to garner the widespread love of the original three was because the second prequel didn’t have Han Solo (or a character like him) – a wisecracking, street smart character who didn’t quite buy all this Jedi/Force/Destiny stuff. He was grounded in the real world. He was the guy audience members who weren’t buying the magical part of the movies could relate to.

You didn’t need to believe in the Force to believe in Han Solo. Because Han Solo was us.

Back to school funding.

The EBM’s Han Solo was the Education Challenge Factor – an index that calculated a school district’s extra-curricular challenges (and I don’t mean football teams). It took into account a district’s relative poverty and its parents’ educational attainment level – what we’ve known for years is the single most important determinant of a student’s success. Those were merged into a number that we applied to many of the formula elements.

 Why did we decide to apply the ECF to the formula elements? Because it’s hard to find, for example, teachers who want to teach in districts where the parents don’t value education that much and will more likely impede than support  learning. Likewise, it’s easier to find those teachers in wealthier districts with more supportive parents. We applied it to many of the other formula elements, but that's the reason why. It's generally harder to overcome poverty and other barriers in districts with more of it.

The ECF did a lot of the heavy lifting for the EBM – leveling out a lot of the original inequities in the formula.

The Cupp Patterson formula doesn’t have a similar mechanism to account for the more difficult challenges districts that are poor and whose students don’t have much support from parents face in finding talent and overcoming those barriers, especially in districts that are the most challenged.

So, for example, the Cupp Patterson plan assumes it will be just as easy to find the mental health professionals the formula envisions in Olentangy, Cleveland and New Boston. And those professionals will be equally successful in all those places.

That’s probably not an accurate assessment.

What effect would the ECF have on the Cupp Patterson plan? I’m not going to use dollar figures here because I don’t know which elements of the formula the authors would want to apply it to. And I’m using ECF figures from 10 years ago. I don’t want to suggest that Cupp and Patterson have to figure out how to find even more money than they currently have. 

However, what I can do is show how the distributions work under the current Cupp Patterson plan and how it would work if you applied the 10-year-old ECF to all of a district’s funding (which is not how it would work, but this is just an exercise). Here’s the result:

What you’ll see is that instead of only receiving 5 percent of the formula’s benefit, the state’s Big 8 Urban districts (Akron, Canton, Cincinnati, Cleveland, Columbus, Dayton, Toledo and Youngstown) would see about ¼ of the benefit with an ECF. Likewise, poor, rural and small town districts would see about 1/3 of the benefit.

Meanwhile, the state’s wealthiest suburban districts would see a small bump, or even a slight cut, depending on the category.

I want to be extremely clear: I am not saying this is how the distribution should look.

What I am saying is that this is a lot closer to what a fair distribution resembles. And since this is being dubbed the “Fair” education funding plan, it would appear that an ECF-like mechanism could significantly improve its fairness.

As this formula works its way through the legislature, it is important to realize that the funding simulations released Friday will change. That’s a given. And there are major challenges to find the additional revenue the plan calls for.

The only way to ensure that the most benefit goes to the most in need of those resources is to do what the Cupp Patterson plan states as a goal – develop a fair education funding formula.

The current plan does the best job since EBM of calculating the elements of student need. 

What the plan is missing is Han Solo -- something to bring everyone around to it. But there’s still time to release him from the carbonite.

You just have to march into Jabba’s Palace and do it.

DeWine Higher Ed Budget: Where there's hope ...

As we move forward with what could be the most consequential Ohio biennial budget for higher education in a generation, I want everyone to keep in mind the graphic on the left, courtesy of the Education Trust. What it shows is quite simple: It is twice as expensive for Ohioans to attend college in Ohio than it is for Californians to attend college in California (Ohio is the yellow bar; California is the smallest bar on the right).

That's right. Even with California's cost of living being through the roof, it is still half the relative cost of attending college in Ohio.

Why do I bring this up? Because this budget has the potential to make a serious dent in our status at the 8th most expensive place to attend college in the United States. Gov. Mike DeWine and his Lt. Gov. Jon Husted have put a lot on their efforts to get more Ohioans with degrees and high-quality credentials.

But if their budget is any indication, there is still work to do for Higher Education Subcommittee Chairman Rick Carfagna. I'll go through some highlights.

Micro Degrees

Both DeWine and Husted touted their efforts to allow Ohioans to accumulate certificates in as little time as a few weeks (their words), calling these "microdegrees." It's a trendy new movement in education -- quickly attainable certificates that show employers you can do the job you're being considered for. See, here's the problem. What happens when the job leaves, or if the student doesn't end up liking the job? Do those with a microdegree in, say artificial intelligence now have to go for one in data science? How many of these microdegrees will students have to attain in order to succeed in a work environment where they may change jobs 15-20 times?

As I've always said, it's more efficient and effective to educate someone once than train them 20 times.

I'm not saying microdegrees won't be a key component in a state's higher education portfolio. But when investing in them is a state's big play in higher education, I'm not so sure.

Ohio College Copportunity Grants and State Share of Instruction

This is where Ohio could make the biggest dent in the cost issues outlined above. Currently, OCOG provides a pittance, relative to the cost of college --  the result, frankly, of the state cutting the program during the recession and not returning it to its pre-recession level.

But its greatest shortcoming isn't necessarily in the amount of money it provides students; it's how many students can receive these state-level Pell-like Grants. First of all, the expected family contribution limit is $2,190. The EFC for Pell recipients is more than double that. So simply increasing OCOG eligibility to that of Pell would increase the number of OCOG recipients by about 35,000 students.

Also, OCOG has so many limits on it that students end up receiving far less than they should, if any at all. Because it's a Pell-first program, all of a student's Pell award is counted against their OCOG award. And it's all based on tuition. So if a student's Pell award is big enough to cover tuition, their OCOG could be zero. In addition, because of this rule, no student at an Ohio community college or technical school qualifies for OCOG, even though students attending community colleges are the most economically challenged in the state. Finally, OCOG students can only spend the money on tuition and books. However, GI Bill recipients can spent their OCOG awards on more life costs. So there's already a recognition that OCOG could help balance a student's many life costs.

DeWine's budget increases the amount of an OCOG grant by $500 at a cost of about $60 million. But it appears there is no change in who qualifies or what it can be spent on. Instead of spending $50-60 million more on OCOG to give a limited number of students a few hundred dollars more, the state should instead use that additional revenue to bring more students into OCOG. Allow them to get their money, regardless of Pell. Let community college students qualify. And let OCOG be spent on more than just tuition and books.

As for SSI, this is the main source of revenue for Ohio's colleges and universities. DeWine boosts the amount by 1 percent a year in each year of the biennium, which is far short of inflation. Then he tells schools they have to freeze tuition for all incoming students as they progress through the school. So if you pay $10,000 your freshman year, that's what you pay for all four years. Here's the issue: most Ohio colleges and universities already do this, only under this budget they can't make up for these tuition guarantees with additional tuition or fee adjustments, forcing colleges and universities to cut costs somewhere.

Beefing up SSI and OCOG are the two best ways for Ohio leaders to see that yellow bar above slide to the right. As of right now, I fear this budget won't budge that line too much.

STEM Investment

The DeWine budget boosts the Choose Ohio First STEM scholarship from $16 million to $40 million. This is a program to try to get more Ohio students to choose STEM disciplines and only pays for freshman year. My understanding is even at $16 million, Ohio struggles to find enough students for the program. I'm still waiting to see the plans to engage more students for the more than doubling of the program.

Also, DeWine's budget flat funds medical education investment and gives a middling 1 percent increase to Nurse education grant programs. Again, nursing is perhaps the most in-demand STEM discipline in our state's largest employment sector -- health care. It makes sense to invest heavily in this profession.

Over the next few days and weeks, we'll hear testimony about ways to make post-secondary options more accessible and affordable for more Ohioans. I look forward to working with everyone to improve on these efforts. Because our students and economy are counting on us to get this right.

DeWine K-12 Budget: Holding Pattern for the Real One.

While Gov. Mike DeWine's budget was rolled out Friday, the K-12 stuff wasn't nearly as exciting as some other areas of the budget. That's because the heavy lifting on K-12 funding will be done next week by state Reps. Cupp and Patterson in what's the most highly anticipated school funding reform plan since mine in 2009.

But that doesn't mean there wasn't interesting stuff in DeWine's budget. I'll go through a few of them.

$300 million a year more for wraparound services

This is a good effort to try to bring more mental health and other services to poor students, though as I've written, it didn't help that DeWine misled the public by calling this a $550 million increase. Every district would get at least $25,000, even if the district has only a handful of poor students. And the funding could get as high as about $250 a student, which could make a difference. However, given Cupp and Patterson's work, my concern would be if this is a substitute for more funding for schools overall. Kind of like this: "there's not enough money to do a school funding overhaul, so let's try a couple programs for poor kids instead." Our students deserve the investment the state simply hasn't made for 30 years. And every kid deserves that commitment. Yesterday.

$30 million for high performing charter schools

Again, this may be a worthwhile effort. However, DeWine will be taking this out of the state's lottery fund, forcing cuts in lottery money headed to school districts. At the end of this two-year budget, nearly $50 million will be headed to charters from the state's lottery fund, which was supposed to go strictly to school districts. Again, we need to be creating a charter school market that rewards success. But taking it out of funds voters created for school districts seems counterproductive.

Another big increase for vouchers

DeWine is continuing the misguided increases to the EdChoice, income-based voucher. EdChoice has actually been shown to harm student achievement. Why he would continue to pour about $24 million or so into this program that has hurt the kids who take the vouchers makes no sense to me.

Early childhood education funding flat funded

I was shocked with this, actually. Ohio's struggles with early childhood education, given how even conservative states like Oklahoma have created Universal Pre-K has been stunning, actually. There has been talk of doing a ballot initiative or designating new money for early childhood education initiatives. So I hope DeWine is just waiting for those options to shake out. If not, this is truly disappointing.

Significantly more charter school oversight

DeWine increased the budget for ODE's charter oversight office from $2.5 million to $7 million. That's good. Still not enough to oversee an $889 million a year program. But better. It also seems to fly in the face of the "House Bill 2 has fixed everything so give us more money" mantra coming recently from charter school proponents. If HB 2 fixed everything, why do we need to nearly triple the sector's oversight?

Overall, this is what I'm calling the "meh" budget. Yes, there are some small benefits. And a few districts may see significant increases to address the challenges of their most needy students. But overall, it's not enough money to overcome the needs of poor students in every district. Meanwhile, charters more than double their money from lottery funds, vouchers research has shown will hurt student achievement continue their march toward $1 billion a year and early childhood education is ignored.

So. Yeah.

DeWine Misleads on Commitment to Poor Kids. It's Not Unusual.

This is why the public doesn't trust politicians.

During Gov. Mike DeWine's news conference about his biennial budget (up almost $20 billion from the budget I worked on in 2009), he made a big deal about providing $550 million for poverty fighting measures in his K-12 school plan. And he claimed it was new money.

I was skeptical when I heard this because it's never new money. But I digress.

Anyway, when I added up the total increase, it only reached $300 million additional in the second year of the budget. Where did this $550 million come from?

An old state budget trick.

See, in the 2019-2020 school year, DeWine provides $250 million more for poverty based aid in the form of wraparound and other services. So that's $250 million more. Then in the 2020-2021 school year, he adds in another $50 million. So at the end of the day, districts will have an additional $300 million two years form now to spend on these wraparound services.

However, because $250 million more was spent in 2019-2020 and $300 million was spent in 2020-2021, DeWine added those together to get his $550 million figure.

But when he made the claim, it sure seemed like he meant that in 2020-2021, districts would have an additional $550 million to serve poor kids.

Instead, it was $300 million, which Columbus Dispatch reporter Jim Siegel explained in a tweet during Friday's budget frenzy (after I pointed this discrepancy out on Twitter myself):

"Upon further review...Gov. DeWine's budget provides $300M more for schools over two years. We feel that is a more accurate number than the $550M figure. (It's a $250M increase in from 2019 to 2020, and then $50M more from 2020 to 2021.)"

This is a very misleading tactic Governors and Legislatures of both parties have used for years and it drives school district treasurers and superintendents nuts. Because they think that they're getting $550 million more by the second year of the budget, but it's only $300 million. So then they have to explain to their parents why they didn't get quite the windfall the Governor proclaimed, so those programs that could have helped their kids won't be able to happen.

I don't understand why state officials do this stuff. I really don't. It's not like $300 million is insignificant. Why fib on the $550 million claim? One would think that given Mr. DeWine's substantial government experience, he could have pushed back on his staff's claims here.

Oh well.

Ron Packard: The New David Brennan

Not many people paid much attention to the passing of the torch, but when Ron Packard -- the infamous former owner of the oft-maligned K12, Inc. (whose diplomas aren't accepted by the NCAA) -- started buying up David Brennan's former White Hat Management empire in 2015, it didn't mark the end of an era.

It marked its continuation. (Except for the massive political contributions -- for now.)

A little background. Packard founded K12, Inc. and was paid millions to run the only school operation ever sold on the New York Stock Exchange -- a notoriously poor-performing online charter school operation that at the time of his departure was the nation's largest. Now he runs the Accel Schools chain in Ohio, which according to the latest data from the Ohio Department of Education operates 37 Ohio charter schools.

Tellingly, Accel started barely a handful of these schools. Nearly all were snatched up from mostly White Hat Management, including OHDELA -- long the cash cow of the White Hat operation, along with the dropout recovery Life Skills operation. And while Packard portrays himself as a turnaround guy, what he really seems to be is the education sector's Gordon Gecko -- an education corporate raider.

Accel recently took another page out of White Hat (which has dissolved into several small operations that run one or two Life Skills schools) and started splitting off some of its schools. Instead of operating all 37 under the single Accel Schools umbrella, now Accel schools in Akron, Canton, Columbus and Cleveland are run by splinter Accel Schools operators. 

Why would Packard do this?

Perhaps to boost the academic rating of the Accel Schools umbrella brand? 

See, prior to the splintering, Accel rated a D as a charter school operator, according to the state. This year, with those schools now run by "different" operators, the ones remaining under the umbrella Accel Schools operation got a C.

That's a higher grade than the D received each of the last three years by the revered Breakthrough Schools in Cleveland (a result I will examine more closely in a future post).

But see, here's the thing. In a recent story about how Ohio Charter Schools want a 22% raise from the state, Packard is quoted as saying, 

"Brick and mortar schools are a very low margin business."

This is what happens when you say you want to run schools like a business. You get guys talking about profit margins in education like they're restaurants or something.

But aside from that, this quote is straight Brennan. Remember K12, Inc.? The nation's largest online charter school operator that Packard founded and ran for many years?

Guess which state propped up his national operation? If you said, "Ohio", you'd be half right. Between Ohio and Pennsylvania's generosity with their taxpayers' money, Packard consistently reported to the SEC that about 1/4 of his company's total revenue came from those two states.

As he reported in his annual 10-K from 2012 (and other years around that time):

"In fiscal year 2012, we derived approximately 12% and 13% of our revenues, respectively, from the Ohio Virtual Academy and the Agora Cyber Charter School in Pennsylvania. In aggregate, these schools accounted for approximately 25% of our total revenues. If our contracts with either of these virtual public schools are terminated, the charters to operate either of these schools are not renewed or are revoked, enrollments decline substantially, funding is reduced, or more restrictive legislation is enacted, our business, financial condition and results of operations could be adversely affected."

He knows that in Ohio, there is a TON of profit to be made in the online charter school sector. In fact, there's enough for Ohio taxpayers to essentially subsidize an entire national operation.

Which is why he felt the need to qualify his "low margin business" quote to the PD to just the brick and mortar sector. And why he probably leaped at the chance to grab OHDELA from Brennan's fire sale.

But see, here's the problem. Brick and Mortar schools are not a very low margin business. We are told, even by charter school proponents, that they are a "non-profit" business. In fact, all charters are considered "non-profit" by the state.

Except the schools can hire sharks like Packard to run their operations. And Packard is allowed to make a profit. This profiteering hasn't led to billion dollar scandals or anything, has it?

Wait. Perhaps it has. 

Which is why Packard's growth and increased voice in Ohio should worry Ohio taxpayers who have been burned by 20 years of charter school profiteering.

This is why I'm so encouraged by House Speaker Larry Householder saying a few weeks ago that "those management entities, I believe should be nonprofit."

Not low profit margins. No profit margins.

Amen, brother. Amen.

Ohio Charters need a 22% Raise? Really?

Now that the Cleveland Plain Dealer has reported just how much more charter schools are demanding they be paid -- a staggering $2,000 per pupil -- I think it's fair to say that their request is a tall order.

If that increase had been granted this past school year, it would have cost the state another $208.8 million -- making the program cost taxpayers $1.1 billion.

How one could look at the above chart of state report card grades and call that increase justifiable, I have no idea. Especially when we are poised to have the most serious attempt in a decade at fixing school funding for the 90 percent of students attending local public schools.

Not only have Ohio charter schools not gotten appreciably better on the report card since House Bill 2 passed in 2015, but since the 2012-2013 school year, charter schools overall have received more Fs than all other grades combined on state report cards. This "House Bill 2 has fixed everything" mantra really bothers me. Even at the time, no one suggested that the fixes in HB 2 were a panacea. In many ways, the changes just caught us up to national norms.

Yet now those rather modest reforms are being used as justification for a massive new influx of your tax dollars.

Here's another complication: the average charter school spends about $400 more per student already. And they spend about $1,000 more per student on non-instructional administrative costs, eclipsing almost 25 percent of their total expenditure. So if they have another $2,000 per student to spend, their current spending patterns would place about $500 of that on administrators. The average school district would spend about half of that.

I hate to bring this up, but whenever charters ask for more money, I'm haunted by our past. As told in the groundbreaking and seminal report on Ohio's charter school roots, Akron Beacon Journal reporters Doug Oplinger and Dennis Willard -- using memos written by Akron businessman and Ohio school choice Godfather David Brennan -- described why Brennan switched from running voucher schools to charter schools:

"Why did Brennan give up on vouchers?

In his two Cleveland Hope schools, he was receiving more state aid per pupil than 85 percent of the public school children in Ohio. But it wasn’t enough to turn a profit.

Only nine weeks into the voucher program, Brennan began to lobby for a 44 percent increase -- or $1,100 -- in the value of vouchers. Brennan told the governor in writing that he was subsidizing his two voucher schools out of his own pocket. Some of that money came out of the Brennan Family Foundation, IRS records show.

In January 1998, Brennan wrote to Needles of the governor’s office and two new confidants -- state school board members Charles Byrne and Joseph Roman -- telling them that if the state didn’t raise the value of vouchers to an amount similar to charter-school funding, he was switching.

“I have indicated to you that the temptation to convert the operations at HOPE Central Academy and HOPE Tremont Academy is almost irresistible because of the higher funding from the community schools,” he told them.

In a recent interview with the Associated Press, Brennan gave a different reason. He said opponents of school choice made vouchers “a dirty word. Charters are a compromise to vouchers.”

But the numbers are revealing. By switching, he increased his state aid per pupil from about $3,000 in the voucher schools and $600 at Interfaith to at least $4,400 and possibly as high as $6,000. (emphasis added)"

Within a few short years of this switch, Brennan was the dominant charter school operator in Ohio and even the country on his way to becoming the single largest donor to Ohio Republicans the state has ever seen.

I know it's popular for charter proponents to pooh-pooh my and others' concerns about charters asking for more money. But as you can see, the history here isn't great. And when charters continue to not perform very well overall, and then demand pay raises over 22 percent, costing taxpayers hundreds of millions of dollars on top of the nearly $1 billion they already spent on these schools, is it understandable why we balk at that suggestion?