Legislators abandon Fair School Funding Plan, funnel state support away from high-poverty districts
Great public education isn’t cheap, but Ohio spends far more on tax breaks for the wealthy and corporations
Every child deserves a supportive, well-resourced learning environment where they can thrive. In Ohio, access to high-quality education too often depends on where a child lives, their race, or how much money their family has in the bank. The Fair School Funding Plan (FSFP) was designed to fix that decades-old, unconstitutional[1] disparity. This year, Ohio’s legislature abandoned it.
The FSFP determines the amount of state funding provided to Ohio’s public-school districts based on local capacity and the actual cost of educating Ohio’s kids. [2] Instead of adequately funding critical investments in public schools, Ohio legislators prioritized a billion-dollar giveaway to Ohioans making six figures or more.
The FSFP’s formula considers each district’s capacity to raise revenue through local funding streams, like property taxes or tax levies, and delivers additional state support to districts with lower levels of community wealth. The legislature’s departure from the FSFP strips resources from districts that need them most, creating an uncertain funding landscape for all school districts in the future. By refusing to fully fund the FSFP, legislators ensure further cost-shifting to local revenue sources with less state support in future budget cycles.
Based on FY 2025 funding levels, the FSFP would have increased state funding for K-12 public schools by $3.04 billion over the biennium. Legislators chose instead to approve an increase of just $281.9 million, underfunding Ohio’s schools by more than $2.75 billion.
Of the 609 school districts in Ohio, 161 will receive more state funding over the biennium, compared to what the FSFP would have delivered. More than 60% (63.4%) of the districts that will see a funding increase have very low or low student poverty levels. At the same time, this budget cuts funding for very high poverty districts by $34.6 million over the biennium, leaving a $570.2 million funding gap. Because legislators opted to dismantle the FSFP, which was based on real and current costs of educating all students, accounting for districts’ unique needs, districts that rely on state support the most will see funding cuts, while wealthy districts will see increases in state support.
The figure below shows the change in total state funding from FY25 by school districts’ poverty level, comparing what this budget provides to what districts would have gotten under the FSFP.
Figure 1
In addition to underfunding nearly 75% of Ohio school districts, this budget plan disproportionately favors wealthier districts through an enrollment growth supplement and a so-called “performance supplement.” For qualifying districts,[3] the enrollment supplement delivers an additional $225 per student in 2026 and $250 per student in 2027. The performance supplement, which was added outside of the school funding formula as a supplemental funding source for qualifying districts, represents 38.3% of the $281.9-million increase over the biennium, estimated at $53.9 million per year. Instead of delivering funding corresponding with local need, the amounts allotted to local school districts are based on enrollment and districts’ grades on the Ohio School Report Cards. School districts’ report cards use a range of metrics to determine their overall performance ratings, including student achievement, performance progress, early literacy, graduation rates, and post-graduation readiness.
The problem with basing funding on school report cards is that districts’ performance ratings strongly correlate with social and economic contexts in their surrounding communities. In fact, the vast majority of students in lower-performing school districts are identified as economically disadvantaged. Figure 2 shows how the share of economically disadvantaged students decreases as districts’ star ratings increase. As a result, these new performance supplements implemented by the legislature effectively funnel more resources to already well-resourced schools, leaving poorer districts farther behind without providing the state support they need to catch up.
Figure 2
Because the new performance supplement formula favors wealthier districts with more capacity to raise local revenue, lower-income districts don’t get their fair share of state funding under this budget plan. Districts with the lowest student poverty levels and more community wealth are the beneficiaries of over 2/3 of state spending on the performance supplement component (67.1%), though they represent less than half of Ohio students (48.8%). Figure 3 compares the difference between the shares of statewide performance supplement totals and shares of Ohio students, by districts’ student poverty level.
Figure 3
Without sufficient state support, school districts become increasingly reliant on local revenue sources, putting poorer districts that lack the local tax base to raise sufficient revenue in an impossible position. The performance supplement methodology exacerbates the cyclical impacts of chronic disinvestment in low-income school districts. This deviation from the FSFP will ultimately harm already under-resourced districts’ progress, creating potential budget shortfalls due to dwindling state support.
Ultimately, Ohio lawmakers failed to follow through on their responsibility to Ohio’s kids, especially those in low-income districts. A recent study on the educational costs of meeting the holistic needs of Ohio’s economically disadvantaged students[4] – released after the budget was enacted – found that the previous Disadvantaged Public Impact Aid (DPIA) funding formula was already inadequate.
To level the playing field for students who are economically disadvantaged, the study recommended a range of changes to the DPIA formula, such as establishing a minimum funding level between $3,294 and $4,725 per economically disadvantaged student or replacing the formula completely. The needed rehaul of the existing DPIA formula would have generated more equitable outcomes for all Ohio students, enabling schools to be more responsive to the unique needs of the students they serve.
Instead, lawmakers did the opposite: The budget adjusts how economically disadvantaged students are counted, using a direct certification process that designates students as economically disadvantaged if they participate in public benefits programs, like SNAP or Medicaid. Students are also directly certified if they are in the foster care system or if they are unhoused. Previously, students were identified as economically disadvantaged if they qualified for free or reduced-price school lunch, determined by a household income application. This change undercounts low-income students, with a corresponding cut to DPIA estimated at over $200 million over the biennium, based on FY25 funding levels.
At the same time, the legislature has threatened to override Gov. DeWine’s vetoes of several harmful property tax measures in the weeks following the budget’s enactment. If successful, these veto overrides risk even deeper cuts for more than 200 school districts. Ohio schools could lose nearly $203 million in local property tax revenue over the biennium, with an additional $126.7 million at stake in 2028. Lawmakers are selling this plan as property tax “relief,” though these provisions only affect 39% of Ohio school districts. This means homeowners in the majority of Ohio school districts wouldn’t see any changes to their property taxes, while impacted districts would face even more hurdles to raise sufficient revenue at the local level.
While it may appear that some school districts came out on top in this budget cycle, this school funding plan has no real winners. Now that the legislature has abandoned the FSFP entirely, state lawmakers wield more power to further dismantle Ohio’s public education funding in the next budget. By upholding Ohio’s inequitable, unconstitutional school funding system, districts become increasingly strapped for resources needed to enable all students to thrive.
Policy Matters Ohio will continue to monitor the budget’s impacts on Ohio schools, along with further efforts to undermine local funding mechanisms. Be sure to join our mailing list for continued updates and get involved with Parents United for Public Schools to join the fight for fair school funding.
[1] See the History of DeRolph, the Ohio Supreme Court case that resulted in an opinion declaring Ohio’s school funding system unconstitutional in 1997, summarized by the Ohio Coalition for Equity & Adequacy of School Funding.
[2] The FSFP made broad changes to Ohio’s school funding formula, updating calculations for the three major components: 1. The base cost, or the amount of funding per pupil needed to provide a quality education; 2. The state and local share, determined by districts’ respective ability to raise local revenue through tax levies, considering property values and individual income levels; and 3. Categoricals, or additional funds needed to better serve students in special education programs, English Language Learners, economically disadvantaged students, and gifted students, along with transportation funding. The FSFP was supposed to be phased in over six years – three budget cycles – using current data on student demographics, property values, districts’ personal income levels, and updated base costs. The FSFP additionally includes several “guarantees” using historical funding data to prevent school districts from approaching a funding cliff as the FSFP is phased in over time. For more details, see the Fair School Funding Plan Questions and Answers.
[3] To qualify for the 2026 supplement, districts must have experienced at least 5% enrollment growth from 2022-25. For the 2027 supplement, they must have seen a minimum 3% increase from 2023-26.
[4] Study of the Educational Costs of Serving Students Who Are Economically Disadvantaged, American Institutes for Research, August 2025.