LIMA — Potential changes are on the horizon for how Ohio schools are funded, with a bipartisan school funding work group examining school finance reform.
They hope to introduce legislation in late spring or early summer. State Rep. Bob Cupp (R-4th District) of Lima has been spearheading the effort. Rep. John Patterson (D-99th Dist.) of Ashtabula County is working alongside Cupp to hammer out a solution both parties can live with.
Currently, they are in the exploratory stages of finding what hasn’t worked in the past and what could work in the future.
“The school funding system is all out of wack. It happened when we had the great recession [beginning in 2008]. Both state and local finances took a nosedive, so there was three or four different formulas put in place to try to bridge over that,” Cupp said.
Patterson agrees the system needs overhauled.
“There’s a great need. We both served, he was the chair and I was on the committee the last two budget cycles for the primary, secondary subcommittees on finance. Of course, we heard hours of testimony of schools that were being hurt by the tangible property tax phaseout and other factors,” said Patterson.
Funding schools varies by district
“One budget, there was no formula, as I understand it. So we came up with one, called the State Share Index, and it measures everybody’s local capacity. Then, there’s been changes in the property tax base. For a few years, the Agriculture Use Valuation was increased rather rapidly and then the tax on Tangible Personal Property was really a local tax. That was repealed by the state, and that impacted a number of districts like Bath, Shawnee and Perry being probably the most affected in Allen County,” Cupp said.
Lima schools treasurer weighs in
“One statement that I believe every treasurer will agree with is that the funding formula is very complex. With that said, your perspective of state funding will be very different, depending on what district you are in. For many years, the funding formula has been based on a State Share Index, which is based on the amount of wealth in your district. Basically, if your district has a large amount of real estate, your state share index number will be lower than a district with less real estate, such as an urban district. Being the Treasurer of Lima City Schools, I pay great attention to the funding formula, since our State Share Index is .8998,” said Shelly Reiff, Lima City Schools Treasurer.
“The difficult part that comes into play is that I prepare a five-year Forecast in October that my board adopts in October and amends in May. This is our spending plan for the next five years. In that forecast are two unknown state budgets, so my revenue could change vastly, and that is totally out of my control,” said Reiff.
With the current funding formula, there are three types of formula districts:
• Straight Formula — where the total funding the district receives is the result of the operation of the funding formula.
• Guarantee District — where the operation of the funding formula does not generate enough funding for the district to at least secure as much as the guarantee base provides.
• Capped District — where the funding formula generates more funding than the funding cap limit allows.
“When I was the treasurer at Perry Local Schools, I was in a guarantee district, so I knew that I would never receive less from the state than I had in the previous fiscal year. Since I have been treasurer here at Lima, I have experienced the other two types; last year we were a capped district, and because of the formula, we did not receive all of the funding that the ‘formula’ said we should be receiving. Since October of this school year, we are now a straight formula district and receive the exact formula amount,” Reiff stated.
Some funding sources are going away
Previously reliable sources of revenue for schools are now more uncertain.
“There was a transformation underway in terms of electricity generation and electric generating plants used to produce lots of tax dollars for the districts they were in, and some of those have shut down. These were coal-generating facilities. The nuclear power plants have been devalued, and altogether this sort of creates a huge disruption in the local property tax base on which school funding is layered,” Cupp said.
Current school funding system needs overhauled
“I had the opportunity to chair the House Finance Subcommittee on Primary and Secondary Education the last two budgets, and it became very obvious that the current formula’s producing odd results. It’s not stable. It’s not predictable. We really had to find a better way of doing it. So Patterson, a Democrat, and I agreed to keep working after this last budget,” Cupp said.
“We knew that when we were up in Sandusky for the State of the State, the first runs came back — the computer simulation model of what the formula was going to do, and Bob and I sequestered ourselves in the tourism office in the Sandusky Visitor’s Bureau so we could have office space so we could lay all of these out on a table. We realized at that point that the funding formula was broken. There was a lack of revenue. The income tax wasn’t generating as much as it did. The bottom line is we have less money and some really needy school districts, so we had to do the best we could to move money around so it wasn’t worse that it already was,” Patterson said.
Work groups and sub groups are formed
“This last fall we were able to get together a group that includes superintendents and some school treasurers and legislators and to tap into people who have studied school finance in Ohio. We put it together as a work group to take a look at the school funding formula in general, and then we divided into subgroups. It’s a group that was picked because they come from very diverse school districts. Some of them have served in different kinds of school districts so they know the problems of each. We’ve broken down into subgroups — one is working on what is the base cost, one is working on how you distribute the state money fairly. We have a technology subgroup, a transportation subgroup. We have one on open enrollment, charter schools and career tech,” Cupp said.
Finding commonality among local school districts
Ohio has more than 600 school districts, and each one has different needs.
“They all have different local characteristics, so we’re trying to find something that fits all of those to some degree,” Cupp said. “One of the questions always in school finance is how much money per pupil will the state guarantee that every district has, with a combination of state and local funds. We have a number of $6,010 for the current fiscal year and $6,020 for the next fiscal year, but we don’t know if that number has any bearing on what it actually costs to run the school to provide education programming for students.”
“We have a group that’s looking at that. How do you calculate that figure? What goes into that to determine what that number should be? Then you have all these other things — transportation, purchasing school buses. Operating school buses is a very large expense. You have education for special needs students. There are extra things that have to be provided for students that live in poverty that they don’t get at home, so that’s an extra cost. We didn’t used to have much technology in our schools, but now it’s almost essential in our society, so that’s a cost. Those are all add-ons after you get the base cost. Then you have to figure out how you distribute the state money to the school districts,” Cupp said.
The subcommittees meet as a full committee once a month so these 16 superintendents are from geographically diverse areas in terms of student enrollment, representing urban, rural and suburban districts.
“They’re giving up their own time to meet in Columbus with their peers twice a month so that’s quite an undertaking,” Patterson said.
At a recent meeting, the main focus was on the technology committee and with the growing demands of technology in schools.
“Think about this: a typical student now might have a watch, a cell phone and a chrome book all demanding broadband and more and more we’re going to see that happening. Well, what is the cost of technology? What is the cost of professional development for teachers? We have some schools in Ohio that do not have enough capabilities to meet that standard for their kids. That group has put forth some concrete ideas on how we might meet that particular goal. The transportation committee has been looking at the cost of buses and when do they break down and where the break-even point is and how we fund it then,” Patterson said.
Putting it all together
We hope to have something that is practical, better, more stable, more predictable and that can be put into effect in the next operating budget, which will be designed in the first half of 2019 and go into effect July 1, 2019,” Cupp said.
“As an urban district that is very reliant on state funding, I will be watching carefully two important things: the election of a new governor and the next state budget. Any shift in the amount of state funding that we receive will affect Lima City Schools,” said Reiff.
Reach Sam Shriver at 567-242-0409.