Jul 11, 20225 min read

School Funding

Updated: Mar 13, 2023

The Issue

Article VI: Section 2, Ohio Constitution:

The General Assembly shall make such provisions, by taxation, or otherwise, as, with the income arising from the school trust fund, will secure a thorough and efficient system of common schools throughout the State; but, no religious or other sect, or sects, shall ever have any exclusive right to, or control of, any part of the school funds of this State. (1851)

Funding a system of public education is state government’s paramount responsibility. It is established in the Ohio Constitution. In 1997 the Ohio Supreme Court made the first of four rulings finding the state’s funding system to be unconstitutional. Despite some notable improvements, funding remains unconstitutional.

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Funding public education is a shared responsibility of the legislature and local communities. A fair funding system increases the contribution made from state sources and reduces reliance on local property taxes. The DeRolph decision called for the state to assume a larger share of the overall investment in public schools.

An on-going problem with education funding is that it relies more heavily than ever on local sources when the state contribution should be the primary resource.

Source: Steve Dyer, LWVO Forum Presentation, March, 2022

The Fair School Funding plan introduced in 2020 addresses the limitations of the state funding policy identified in the DeRolph case. It was partially adopted in 2021.

The structure of the public system recognizes the importance of local oversight and investment, making public education a shared responsibility of the legislature and local communities. A fair funding system increases the contribution made from state sources and reduces reliance on local property taxes. While a constitutional system requires the state providing a larger share of funding than the local

community, in 2021 local taxpayers shouldered the highest share of the cost since the DeRolph decision was made in 1997.

LWVO Positions on School Funding

LWVO supports the following principles for the state investment in the K-12 public education system:

a guarantee by the state of a realistic level of per pupil expenditure in all school districts, including compensatory education programs where needed.
state aid should be distributed to compensate for variations among school districts in their ability to raise local revenue to fund education.
The state aid formula should be calculated to reflect:
- the actual costs to school districts for state-mandated programs;
- meeting the educational needs of the children within the district;
- consideration of the economic/geographic characteristics of school districts statewide.

LWVO supports the following principles for the role of the local community in financing elementary and secondary education in Ohio:

Individual school districts should be required to assume a reasonable share of the financial burden and should retain the option of increasing per pupil expenditure beyond this level through local taxes.

Focus for Advocacy:

Advocate for state school funding policy for K-12 education that is constitutional.

The Fair School Funding Plan will be constitutional when all elements are approved, it is fully funded, and it is permanent.

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School Funding Basics

Property taxes are the primary revenue source used to fund the local investment in education. The value of the tax base and income of local taxpayers in each school district varies widely across the state. An important function of the state investment in public education and the way it is distributed, is to ensure that all children have access to an Ohio public school with sufficient resources to offer a high-quality education, regardless of the community’s ability to fund its public schools. The state investment helps to ensure that the local tax burden is fair to taxpayers and does not undermine equal opportunity.

In 1997 the Ohio Supreme Court found the school funding system to be unconstitutional because it failed to provide adequate resources and to distribute state resources in an equitable manner. The court specifically criticized the funding mechanism for its over-reliance on property taxes as a barrier to equitable funding. Two essential components of a constitutional system are for the state to contribute more to funding public schools, and to base the state’s investment on the actual cost of education.

Recent Legislative Activity: Fair School Funding Plan

In 2017 Rep. Bob Cupp(R.- Lima) and Rep. John Patterson (D. -Jefferson) convened a working group of school practitioners to craft a school funding plan that met Constitutional requirements. They developed a formula that addressed transportation, defined the contents of a high-quality education and its costs, and included the unique extra costs of meeting the needs of certain categories of students. It also proposed that the state replace the “deduction method” for funding vouchers and charter school tuition which required local communities to pay for part of the cost, with direct funding from the state budget. The architects proposed a six-year phase in of the total increase in state spending needed to fully fund the plan. The estimated increase was about $2billion over the level provided in the budget for 2021.

Source: Ryan Pendleton, LWVO Forum, March 2021.

The Fair School Funding Plan was introduced as HB 305 in 2020, and cleared the Ohio House with 87 votes. The Senate refused to consider the legislation before the end of the session. Rep. Patterson’s term ended at the same time. Two new sponsors, Rep. Bride Sweeney and Rep. Jamie Callender introduced the bi-partisan plan as HB 1 at the start of the 134th General Assembly, in January of 2021.. The funding plan was then included in HB 110, the state budget bill for fiscal years 2022 and 2023.

When adopted, the state budget included three significant features of the Fair School Funding Plan. First, it retained the formula for defining the state investment per pupil based on a full assessment of actual education costs. It set the base cost at about $7,200 – a 20% increase from the $6,010 funding level. It uses the property wealth and the income level of taxpayers in each school district to define the local contribution to the base funding level. Finally, it ends deduction funding for vouchers and charter school tuition, freeing local school districts from subsidizing these options. The legislature also approved several additional cost studies for determining future levels of categorical aid. Privatized education also received a boost in the per pupil contribution by the state.

The Legislature only approved the formula for two years, funding 17% in year one, and 33% in year two. They postponed any increases in disadvantaged pupil aid until 2023 and failed to fund a cost-study to define the appropriate funding to meet the needs of children living in poverty.

Completion of the Fair School Funding plan is a LWVO priority for the 2023 legislative session. Gov. DeWine called for the continued phase-in of the plan as part of his budget proposal, and Rep. Bride Sweeney and Rep. Jamie Callender introduced HB10 which “expresses the intent of the General Assembly to continue phasing in” the school funding system adopted in the previous budget. The bill calls for the legislature to fully fund the plan in this budget “if practicable.”

LWVO supports HB10 and recommends that the legislature also include in its public school funding policy, increases in categorical aid recommended in a variety of studies it funded in the last budget.

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