Eye on Education

Ohio Edu-Budget 2013: More State Money for Schools, But Local Levies Will Be Harder To Pass

Avery Perryman, 7,

Thomas Ondrey / The Plain Dealer /Landov

Ohio’s new state budget, signed by Governor John Kasich earlier this week, makes a number of changes that affect K-12 education. In a series of posts, we’ll be analyzing those changes and what they mean. Today, we look at money.

Quick Read

Ohio’s 2013 biennial budget gives schools nearly a billion dollars more than the 2011 state budget did and changes how that money is distributed among schools. But the budget also makes it harder for districts to get voter approval for local tax levies and does not fully restore earlier funding cuts.

The Long Version

The 2013 state budget puts more than $15 billion into traditional public schools over the next two years.

That’s a 4-percent increase for 2014 compared to the current year.

Ohio Edu-Budget 2013
This post is part of StateImpact’s Edu-Budget 2013 series outlining what the 2013 biennial budget does to and for Ohio schools. Read other parts of this series here.
And it’s a 6-percent increase over the 2011 biennial budget.

About two-thirds of districts will receive more state money in 2014 and 2015 than they did over the past two years. No district will receive less money this coming year than it did in the previous year.

After 2011 cuts to state education spending, many school district leaders are pleasantly surprised at actually getting more money this time around.

“Obviously when you’re the recipient of a billion dollars more in funding we’re pleased with that investment,” David Varda, executive director at Ohio Association of School Business Officials, said earlier this week.

Not everyone is happy with the new formula, including leaders of some districts that will see no increase in state funding next year.

It’s likely that state lawmakers will revise the formula in two years, during the next budget cycle, school business officials said.

After two years of discussion, that makes this formula a bit of a letdown, said the Fordham Institute’s Terry Ryan.

“It’s like having a tofu turkey for Thanksgiving,” Ryan said. It fits the bill “but It’s not quite satisfying.”

A Step Forward

The state budget changes the formula used to distribute that money among schools.

School Funding Increases in 2013 State Budget

This chart shows how state funding for school districts’ core functions have changed over time.

School District Formula Aid & Tangible Personal Property (TPP) Tax Replacement Payments
($ in Millions)

FY10* FY11* FY12 FY13 FY14 FY15
Total K-12 Formula Aid $6,797.80 $6,777.70 $6,529.10 $6,588.60 $6,879.00 $7,319.50
Total TPP Replacement $1,121.30 $1,129.10 $759.90 $510.00 $510.00 $510.00
Total Formula Aid & TPP Replacement $7,919.00 $7,906.80 $7,289.10 $7,098.60 $7,398.00 $7,829.50
Biennial Totals $15,825.80 $14,387.70 $15,218.50
Biennial Change   -$1,438.1 +$830.8
FY14-15 vs. FY10-11     -$607.3

Note: This chart looks only at funding that flows through the school funding formula — the biggest source of unrestricted state funding for districts — and state reimbursement for the phaseout of tangible personal property taxes on businesses and public utilities. It does not include other state money districts may receive such as state grants and early childhood education funding.

*Formula Aid figures include federal stimulus funds of $417.6 million in FY10 and $515.5 million in FY11.

Source: Howard Fleeter, Education Tax Policy Institute, Ohio Legislative Service Commission data

This new formula replaces the “temporary” formula of the 2011 budget. That old formula basically took school districts’ 2009 funding levels and adjusted them downwards.

The new formula sets a base amount of spending per pupil to be paid by both the state and local taxpayers. For 2014, that figure is $5,745. The state’s share of that amount varies by district: In districts with less property wealth or lower-income residents, the state picks up a bigger part.

Poorer districts again get additional funding on top of that base figure in an attempt to give them the same resources as wealthier districts. And all districts get additional funding for certain groups of students including students with disabilities and students from low-income families.

But the budget limits how much more state funding districts can get. Even if under the new formula a district is slated to get a huge increase, it won’t necessarily get all of it. The budget caps funding increases at 6.25 percent for 2014 and 10.5 percent for 2015.

The formula is complicated and even the state association of school business officials is still trying to understand what it means for every district. The original formula proposed by Gov. John Kasich in January has morphed over the past five months to spread more money among more districts.

“The formula becomes less of a mathematical formula that’s a rational way to distribute money than a political process,” Ryan said.

Still, having an actual formula in place and money to fund it is a step forward, said Barbara Shaner of the Ohio Association of School Business Officials. But Shaner’s group would like to see more state funding go to poor districts.

“We don’t feel that the formula itself constitutes an adequate and equitable system yet,” she said.

A Message on Tax Levies

As part of a bigger program of tax cuts, the budget removes a state subsidy for local school levies. The state used to pick of 12.5 percent of the cost of new or replacement levies from its general fund, which is mostly sales- and income-tax revenue.

That pick-up is going away. Without the state subsidy, supporters say, the full cost of local levies will become more transparent but that will likely make it harder for districts to sell voters on approving levies.

That’s just fine with some leading Republicans.

Gov. John Kasich has in the past told voters not to support local school levies. And last week, Senate President Keith Faber had a similar message:

“If you want to know what my message is from the property-tax adjustment, it’s to local colleagues: Don’t pass new property-tax levies….For those who say, ‘Oh no, you’re making it more difficult to raise property-tax levies,’ the response is: Are you for property-tax levies? Do you think that’s a good thing? I’m not.”


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