Covering a gamut of issues and spanning thousands of pages, the state budget legislation is apt to contain at least a few harebrained policy ideas. Among the head-scratchers in this year’s iteration are a rule allowing show-choir participation to count as a physical education class and an Oprah-like proposal that awards every school a “B” if the state misses report-card deadlines. While the Senate removed those peculiar provisions in its version of the budget bill, it added one of its own. The upper chamber slipped in an amendment guaranteeing that school districts—beginning in fiscal year 2022—receive at least as much state aid as nonpublic schools do under Ohio’s administrative costs and auxiliary services programs.
At first blush, the idea kind of makes sense. Shouldn’t districts be assured of receiving state funds that match or exceed those of nonpublic schools? But the proposal starts from a dubious premise and ignores essential features of Ohio’s school funding system, resulting in an illogical allocation of funds that benefits a small number of wealthy districts. Most critically, they seem to have forgotten that school districts, to receive state funding, must levy a minimum property tax that generates amounts far exceeding state contributions to nonpublic schools.
To examine the proposal, we first need to understand the nonpublic-school funding streams being referenced. Ohio has long appropriated modest sums to help these schools cover administrative expenses associated with following state regulations and purchase equipment or textbooks. According to the Legislative Service Commission, nonpublic schools currently receive $1,305 per pupil through these respective programs, a relatively nominal sum that does not come close to covering the full costs of educating private-school students.
The Senate idea is to use this amount as the funding “floor”—a minimum wage of sorts—under which no district’s state aid could fall. The vast majority of Ohio districts would be unaffected. The average amount of state foundation aid was $4,770 per pupil in FY 2018. Even among the wealthiest quartile of districts, which tend to receive less state assistance because they have more local capacity to raise funds, they receive on average $2,264 per student—still above the proposed floor. These amounts include Ohio’s core opportunity grant, various categorical funds, and transportation dollars, but exclude local taxpayer support, non-tax revenues, and federal funds.
So which districts would stand to benefit? Using the most recent FY 2019 data, the table below lists twenty-six districts that receive less than $1,305 per pupil. As you can see from the third column, titled “state foundation aid,” some of the districts receive very little in direct state support; for instance, Rocky River receives just $551 per student.
Before crying foul, legislators need to realize that this isn’t the end of the story. Under state law, districts must levy a minimum twenty mill (i.e., 2 percent) property tax to participate in the state funding program—all monies that are unavailable to nonpublic schools (or public charter schools). In districts with strong tax bases, this state-required tax generates large sums of money. Among these twenty-six, it raises mostly between $5,000 and $8,000 per student, as shown in the fourth column of table 1. Rocky River, for instance, raises $6,830 per student, and a few districts raise upwards of $10,000 per pupil.
Of course, as homeowners know, the taxes usually don’t stop there. Districts, subject to voter approval, can and do levy even higher property taxes. And they also receive some additional federal and non-tax funds. Thus, when looking at the overall funding picture—the data from the “total expenditure” column[1]—the twenty-six districts that appear to be shortchanged by the state are not exactly destitute. All but five spend more than the statewide average, and in some cases far above it. For instance, all in, Beachwood and Orange—wealthy suburban Cleveland districts—spend an astronomical $20,000 per student, and under the Senate proposal would see extra money flow their way.
Table 1: Districts qualifying for Senate proposed guarantee funds based on FY 2019 data, ranked by their amount of state foundation aid
Sources: Ohio Department of Education, Traditional District Payment Reports (FY 2019, June 1 payment file); Ohio Department of Taxation; and Ohio Department of Education, District Profile Reports (FY 2018). * Denotes that the district’s state foundation aid is “capped,” meaning that the actual amounts provided by the state (displayed in this column) are less than the amounts prescribed by the formula.
In total, the Senate proposal would award an additional $47 million to these twenty-six mostly wealthy districts based on an erroneous concept of trying to achieve funding parity with nonpublic schools. To be sure, a few of these districts actually warrant further assistance. Fast-growing districts such as Olentangy and New Albany-Plain lose millions in state aid under the funding caps. But the solution to that problem is not to introduce yet another guarantee, especially one based on a false premise. Rather, legislators need to lift the cap—something that, in another budget provision, the Senate rightly makes an effort to do.
As the budget bill races to the finish line, policymakers would be smart to reconsider the wisdom of setting a misconstrued funding floor. It represents a poor understanding of the overall funding system, and inefficiently targets dollars to districts that need state aid the very least. Like government handouts for billionaires, sending a few extra dollars to high wealth districts like Beachwood, Indian Hill, and Upper Arlington simply makes no sense.
[1] I use total expenditure data to reflect overall district funding instead of total revenue statistics because the latter include state “pass through” funds for, e.g., charter schools and private-school scholarships, and results in somewhat inflated statistics.
