Gov. DeWine mulls underfunding schools by $2.86B

Ohio legislators sent a budget to Gov. DeWine that gives a billion-dollar annual tax break to Ohioans earning six figures. This tax cut is possible, in part, because the legislature is underfunding schools by $2.86 billion, as compared to the amount the Fair School Funding plan says schools need to provide an adequate education, regardless of their zip code. The proposal fails Ohio students and leaves those with the greatest need furthest behind. Policy Matters will have district analysis of the final enacted bill.

The conference committee largely retained the school funding formula passed by the Senate. The legislation sitting before Gov. DeWine changes contains the following changes to school funding in Ohio:

1. Costs and property tax inputs are out of sync, outdated. The plan relies on 2022 cost inputs. However, the proposal continues to update the property tax value and income data used to determine how much additional funding the district needs from the state to reach an adequate level of funding. There are also no updates of the weights and costs of Special Education and English Language Learners, as prescribed by the FSFP and cost studies.

This is a departure from the FSFP and one of the primary ways lawmakers are shifting costs from the state back to local communities. It reverses progress made toward constitutionality and fosters ever greater disparities in basic education.

This cost shift is a driver of increasing property tax levies as districts must fill the funding gaps left by the state or cut education resources for local kids. Gaming the formula to shift costs of education onto property owners allows the state to continue to cut the state income tax. 

At the same time, this proposal includes several provisions that will restrict local district’s ability to pass levies. This will leave many districts with no choice but to make cuts. In total, this proposal will further weaken what should be a world-class public school system.

• Eliminates “supplemental targeted assistance.” Supplemental targeted assistance is funding provided under the FSFP to districts with low wealth and high shares of students attending schools outside of their home district. This supplement primarily helps equalize school funding in poor urban districts.⁹ The House and Senate scrap this crucial support when calculating a district’s funding. This is another element that erodes the fairness and the constitutionality of the plan, and according to LSC analysis will take an estimated $105 million out of those districts.
• Restores guarantees. The proposal restores elements of the FSFP that ensure no district is funded less than they were in 2020 or 2021. These promises primarily benefit districts that have high local tax and income capacity. This ensures that those districts are not harmed as the FSFP is implemented. These protections should remain in place at least until all elements of the plan are updated — including the revision of categorial cost weights for serving Special Education, English Language Learners, and Economic Disadvantage Students. Over time, as costs and the state share of those costs change, fewer schools would depend on the guarantees. Gaming the inputs, however, will keep growing the number of districts reliant on them.

• Changes how Disadvantage Pupil Impact Aid (DPIA) is calculated but eliminates a requirement to use 2025 data. This is funding that comes from the state to ensure schools can provide the additional services low-income students need to succeed, reading intervention, physical and mental health services, and learning loss. The LSC estimated this change will cut more than $200 million in DPIA funds over the next biennium, from FY 2025 levels of support.

• New supplements distort the purpose of the FSFP but do so less dramatically as the conference committee reduced per pupil supplement amounts. Instead of updating costs of educating Special Education, English Language Learner, or Economically Disadvantaged students, the legislature is prioritizing enrollment growth and “performance.” Both could be great ways to top-off support to schools once the state fulfills the basics on cost-based funding. These two provisions, particularly the “performance” based supplement, on average however direct state funding away from schools with the biggest state funding gaps and the highest levels of student poverty to schools that have average or low student poverty and need less from the state to cover the basic costs of providing an adequate education. 

This flips the FSFP on its head, and much like the changes to the tax code, sends state resources to places that are relatively well-off rather than to the areas of greatest need. The Enrollment Growth Supplement would send $225 per student to districts with a 5% enrollment growth in 2026, and $250 per student to districts with a 3% increase in 2027.

The Performance Supplement was also retained in the conference committee, but several changes were made. First, the supplement will be funded outside of the formula, by earmark, and the per pupil amounts are reduced to $13 from $26, as proposed in the Senate. These changes cut this formula by $53 million in both years of the biennium, according to LSC analysis.

The performance supplement presupposes two things that are grossly incorrect: that all schools already have what they need to meet the costs of an adequate education; and that schools alone can offset the trauma, harm, and educational consequences of chronic generational disinvestment in Ohio’s most underserved communities.

The figures below show how different types of school districts are impacted by the conference committee changes.

The green bar represents the amount of funding different categories of districts will receive under the plan now before Gov. DeWine. The blue bar is the gap between the current plan and what is called for under the Fair School Funding plan. Districts with very low student poverty, for example, in aggregate, will receive just 34% of the funding they need according to the cost-based model. Districts with very high levels of poverty, however, will be cut from their 2025 levels of funding, so they are showing a 107% gap between what they will get and what they need.

The second figure further disaggregates district types by typology. It shows that urban districts, with high levels of poverty are targeted for harm by this budget, while suburban districts, with low student poverty will have the smallest gap between what they are given by politicians and what they need for educational adequacy.