Budget impact on Ohio schools: an analysis

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Most observers by now understand that, despite the administration’s claims, state funding for K-12 education is not going up. On the whole, dollars flowing to Ohio’s public school districts are going down — way down — as a result of the loss of federal stimulus funds, the scaling back of the state’s reimbursement for ending the tangible personal property tax, and redirection of revenue from other, more obscure taxes that funded schools. Combined, schools stand to lose $3.1 billion in this budget.

The $3.1 billion figure and much more come from an analysis prepared by the Ohio School Boards Association and Ohio Association of School Business Officials explaining to their members what the budget means to public education in Ohio. We reproduce it here in its entirety for those who haven’t had a chance to really dig into what this budget means for Ohio schools.

To:       School Board Members, Treasurers and other School Business Officials

From:   Damon Asbury, Director of Legislative Services, OSBA

Barbara Shaner, Associate Executive Director, OASBO

CC:       School Superintendents

Date:    Mar. 16, 2011

Re:       Biennial Budget Proposal

Gov. John Kasich has released the Blue Book outline of his biennial budget proposal for FY 2012/FY 2013. It contains total line-item amounts for education programs but no details are available that show district-by-district amounts. Placeholder legislation was introduced in the House — House Bill (HB) 153 — but no bill language has been released. Reports indicate that language will be available within the next couple of weeks, and the Office of Budget Management (OBM) has promised district-by-district simulations within the next few days.

Some priority and programmatic details of the governor’s proposal have been shared verbally with the press and in the town hall meeting held Tuesday evening. However, we cannot determine the real impact of any changes on schools until the bill language is available.

We differ with the governor’s portrayal of the basic aid funding for education in his proposal as an “increase” in state funds. The decision not to replace federal stimulus monies, which supported the school funding formula along with state dollars in the last state budget, results in a loss of $1.4 billion for school districts over the biennium, compared to FY 2011 levels. This, along with an approximately one half reduction in replacement dollars for the loss of the local tangible personal property (TPP) tax, puts the cuts to education at more than $3.1 billion over the biennium. This results in a net loss in education funding. Click here <http://ealerts.osba-ohio.org/files/file/As%20Introduced%20Education%20Funding%20Summary.doc> for a link to a chart that lays out the reductions.

The $3.1 billion loss in funding cannot be absorbed without major cuts to programs and staff over the next two years. While school districts had been preparing for a reduction in state aid, the realities of this proposal are alarming. Districts will be forced to shift a bigger burden of the cost of funding their education programs to local taxpayers, while the public is being told that state funding for education is increasing.

We do not have details at this time about the proposed legislative changes aimed at helping school districts reduce costs that have been cited by the governor and his staff. However, it is unlikely that those mentioned — health care pooling, changes in procedures for reduction in force and new regional shared services — will make any substantive difference within the upcoming budget cycle. Additionally, it appears that districts are being asked to find other ways to fund programs like gifted education, even though the state would eliminate gifted education funds to local districts, according to the governor’s proposal.

The following is a brief list of some observations about the proposed budget, as we understand it so far:

The total education budget for FY 2012 is 11.5% lower than in FY2011 and 4.9% lower in FY 2013 than in FY 2012 (includes all education line items for public, private and charter schools, as well as the Ohio Department of Education operating budget).

The line item for TPP tax reimbursement is reduced by 37.2% in FY2012 and 34.2% in FY 2013, an accumulated one half reduction from FY 2011.

It appears that there will be a 2% cap on the amount of total revenue LOSS districts could experience as a result of the TPP tax reimbursement reduction. An OBM source has clarified that generally, the calculation will be based on total resources available to the district. The reduction of the TPP tax reimbursement payments will be limited to no more than 2% of the total of amount of those resources.

The administration’s reported comments from yesterday’s activities also noted a new 15-year phase out of the payments for those districts that rely heavily on TPP tax replacement.

However, districts that do not meet the 2% threshold would not receive any TPP tax replacement payments in this biennium.

The same formula will also apply to the utility TPP tax and the kilowatt-hour tax.

The career-tech foundation funding line item is flat-lined in both years of the budget.

Gifted education funding is eliminated, except for $8.1 million for educational service centers.

The Ohio Evidence Based Model for funding education would be repealed.

Contribution levels for the five state retirement systems would be changed to 12% for both employees and employers.

The two Ohio Education Matters (KnowledgeWorks) studies were cited by the administration as providing ways for school districts to weather the funding reductions.

Reductions in force for teachers would focus on evaluation, rather than the current first-in, last-out practice.

The available Education Choice Scholarship voucher program numbers would be doubled.

Caps on the number of charter schools would be lifted.

Details about the expansion of “choice” are not yet available, but it is likely that the increase in the number of students taking vouchers or attending charter schools would be funded through deductions from school district state funding (emphasis ours).

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