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Despite being unconstitutional, Ohio’s school funding system lives on. How is it hurting students?

'You can't have programs without sustainable funding.'
Empty School Hallway with Lockers
Posted at 9:03 AM, Oct 28, 2020
and last updated 2020-10-29 17:33:56-04

CINCINNATI — Lawmakers across Ohio have been working for years to reform the state's school funding system, though experts say there has not been any definitive progress on the effort. Many still express uncertainty over when that progress will come, even as Election Day -- and a slew of school levies for voters to decide on -- is right around the corner.

The Ohio Supreme Court ruled that the state’s school funding method was unconstitutional in the landmark case DeRolph vs. State over 20 years ago. The state was found to have failed to provide a thorough and efficient network of schools with common, equitable conditions and called for a systemic overhaul. This eventually spurred lawmakers to introduce a proposal re-imagining Ohio’s school funding model last year using recommendations from the area’s education experts.

However, the bill, officially known as House Bill 305, has been held up by six hearings and revisions since, and its advocates are under pressure to get the bill passed by December before the end of the legislative session. One of the bill’s original sponsors acknowledges this is an uphill battle, saying time is short and there are new, competing needs brought on by the pandemic.

“The plate that the finance committee is going to be devouring is going to be so overwhelming,” said Democratic Rep. John Patterson. “It would be better to take this school-funding rubric off the table so they can concentrate on the others. And we can do that, because this provides a framework, a blueprint, moving forward for the state…”

A defining aspect of the bill is that it bypasses the state’s historical defect in being overly reliant on property taxes to fund schools through deriving more accurate projections of local communities’ abilities to invest in their school districts. This in turn reveals more accurate figures as to how much the state needs to contribute to school budgets to create those more equitable conditions that were prescribed by the Ohio Supreme Court.

The bill also creates a formula that identifies specific costs for educating individual students that are unique to student bodies throughout Ohio, and allocates more money for schools’ various needs during a years-long phase-in process for the plan.

”It gives us a blueprint for the future, as we would plan for the future of our own household budgets,” Patterson said. He thinks it is crucial for Ohio to enforce a more viable plan that not only offers more balanced and effective learning environments across different neighborhoods, but also funds a diverse set of programs that appeal to students' various needs and interests.

“If we're really going to tap into the natural gifts that students come to us with and match them with their calling, we have to allow for those programs," Patterson said. "But you can't have programs without sustainable funding.”

Current school funding issues & the 2020 election

Currently, like most other states throughout the U.S., Ohio school districts are initially funded by property taxes based on the local tax base. The applied tax rate is voted on by constituents and the money ultimately comes through the form of levies. That money is then supplemented by state aid.

Experts said that property tax has historically been used for school budgets because they are stable and less likely to fluctuate with the economy, unlike other revenue, like income and sales taxes. They also said that Ohio voters distinctly favor holding local control over neighborhood institutions, which in part explains why Ohio has more levies than any other state.

In its most recent report card detailing its revenue types, Cincinnati Public Schools received about 46% (or $284,686,854) of its budget from local dollars in contrast to about 37% (or $229,311,807) from the state. The remaining 17% of the budget came from federal money and other miscellaneous sources.

Another local district, Mason City Schools, has a similar breakdown. The district’s Public Information Officer, Tracey Carson, says 49% of Mason City Schools’ expenses are funded by local revenue while 39% of the budget comes from the state. The remaining revenue is supplied by the federal government and non-tax sources like public utilities, agricultural property and residential construction.

However, experts who spoke with WCPO agreed that school budgets depend too much on local revenue through property taxes. They said that taxpayers in some school districts are wealthier than those in other areas, so some communities are better equipped to finance education. This leads to unequal conditions across schools.

Patterson also said that property does not necessarily paint an accurate picture of wealth or a district’s ability to pay for local education services. He said some areas may have particularly large or high-value properties that can skew figures on the average wealth in the area.

More than that, members of the education community point out that the school funding system is inadequate because it lacks a budget formula that is based on actual costs to educate different types of students. This deficiency was one of the reasons the system was found unconstitutional back in 1997.

“The state funding formula has always been a concern for districts like Cincinnati Public,” Carolyn Jones, the board president of Cincinnati Public School, said. “[W]hen we look at proportionately the size of our district, and where we're located being an urban district, I think the funding streams don't follow the kid in that way.”

She said CPS is not being allocated enough money. The dire need for financial support is evidenced by things like the fact that almost 85% of its students qualify for its free and reduced lunch program, according to CPS’ Director of Student Dining Services Jessica Shelly. By comparison, Carson said Mason’s free and reduced lunch rate is only at 9%.

“Cincinnati is considered a wealthy district,” Jones said, "and so that formula sort of minimizes that true picture of what's going on in Cincinnati with us being an urban core district.”

Carson acknowledges that Mason is an affluent area that spends less than the state average and less than some of its high-earning peers. Still, her department has struggled to keep up with students’ needs under the current system. She said that before the district passed an operating levy in April, it had to create more than $12 million in revenue by shutting down two schools and eliminating 160 jobs after failing another levy in 2010.

“We did all those things that helped,” Carson said, to “keep the ship sailing. But we sort of knew if we didn't pass this levy this spring, our school district would not be able to continue to deliver the kinds of services that it does.”

Mason has an unusually high number of issues in regard to school funding on the ballot for the November election this year. The nine issues are proposals to reduce local funding for operational expenses at a nominal amount, 0.01 mills, that were put forward through an initiative petition organized by Mason For Kids, an organization of local parents and concerned citizens. The group is focused on protecting the quality of Mason’s schools.

Voting “yes” on the proposals seeks to lower the district’s revenue while voting “no” aims to maintain it. One of its members, Casey Moran, said part of Mason For Kids’ strategy is to encourage voters to vote against the proposals to keep funding the schools intact. Their move to put the issues on the ballot is part of a larger plan to safeguard Mason’s levies from getting further cuts by those who opposed them through proposing to make the lowest millage reduction legally possible.

“When our opposition in November of 2019 shared their strategy, we could not not take action,” Moran said. “We were bound to protect the interests of our students... the interest of my children and other children, our faculty, our staff and transparently our community.”

CPS, on the other hand, has a levy on the ballot to renew funding for expanded preschool access, as well as additional support in its schools. Jones said the levy has a good chance of being passed based on projections from the early vote, and because it will not raise taxes. Still, she said, it is imperative that enough voters get behind the measure.

“Without this levy, we probably will see some some definitive cuts, which, you know, in this pandemic is not where we want to be,” Jones said.

There are a number of other school districts in the Greater Cincinnati area that have issues on the ballot for the Nov. 3 election, too.

Franklin City School District has a $66 million bond issue to construct a new high school, renovate the existing high school and make other improvements to sites.

Georgetown Exempted Village School District’s issue would renew a levy mandated for general improvements that has already been in place for 15 years. This levy would be active for five more years and does not raise taxes. If it does not pass, expenses like upgrading computer technology, textbooks, buses and maintenance equipment could instead be paid for by the district’s general budget or scrapped all together.

The Little Miami School District also has a renewal levy. It would continue an operating levy to avoid a budget deficit over a five-year period. This levy would not raise taxes either, and is set to generate $10.6 million each year for the district.

Norwood Schools’ tax levy would substitute an existing one to implement requirements for the district at an initial cost of $3,395,000.

Finally, Winton Woods’ tax levy would be applied to current operating costs brought on by its expanded preschool program and the resultant boost in enrollment. In exchange for homeowners paying around $243 to $486 a year in taxes, the levy is projected to collect another $3.2 million annually for the district.

Howard Fleeter, a consultant specializing in state and local government finance for K-12 education, said these levies are among more than 200 levies that have been on the ballot in Ohio this year. He said that while there has been a slight uptick in recent years, the number of levies the state has seen each year has declined since the DeRolph decision was brought down.

That decline suggests there has been improvement in school finance. However, Fleeter said the current school funding system’s model is still insufficient because it lacks crucial information about baseline costs, and there is still great need for reform.

“Right now, we really don't have a formula,” Fleeter said. “Again, we're being funded at 2019 levels, minus some cuts that were made because of the COVID pandemic. So we're kind of back to square one on the adequacy issue, and the share of property taxes versus, you know, local funding versus state funding is not very different now than it was in 1997.”

The fight for House Bill 305

Patterson said he and other lawmakers have been making a concerted effort to implement the formula detailed in House Bill 305 by refining it throughout the recent summer months after receiving feedback from concerned parties.

Republican Rep. Gary Scherer has joined Patterson in waging this effort in the place of Speaker of the House Bob Cupp, another original sponsor of the bill, due to Cupp’s new responsibilities. Republican State Senator Peggy Lehner and Democratic State Senator Vernon Sykes have joined the effort by leading the charge in the Senate with a companion bill. That bill is set to be introduced in the upcoming days.

Patterson explained that there won’t be formal legislative hearings until after the election, but that the Senate cannot have a hearing until after the bill is introduced. Once Senators bring forward the bill and refer it to a committee, and once officials return to session, there can be coinciding hearings in the House and Senate. Advocates hope that would get the measures for reform passed before the end of the legislative session in December. If that does not happen, the bill would go back on the shelf and lawmakers would have to start the process all over again.

“This is critically important,” Patterson said. “This is important for our kids. It's important for their future. It's important for Ohio's future that we get this right. Our most precious natural resource is our students. And if we really believe in the future of Ohio, we have to invest in our students today.”