Ohio House Budget Passes, Moves to Senate
The Ohio House has passed a version of the state budget, House Bill 96, that fundamentally changes how school districts manage finances, Chardon Schools Superintendent Mike Hanlon said April 21.
The Ohio House has passed a version of the state budget, House Bill 96, that fundamentally changes how school districts manage finances, Chardon Schools Superintendent Mike Hanlon said April 21.
“The actions of the house basically paused the phase-in of the (Fair School Funding Plan) and did not update the base costs elements,” Hanlon said.
Ohio has gone through multiple school funding formulas, with the current one, the FSFP, in year four of a six-year phase in.
Under Ohio’s constitution, the cost of educating a student is a shared responsibility split between the state and local district. By not updating the current formula’s base costs, districts appear wealthier on paper than they are in reality, resulting in less state funding and a greater weight on local communities, school officials previously said.
“These are the costs that it takes to operate across the state of Ohio school districts when we look at things like the average teacher costs, the instructional supplies and materials that are used, technology, a variety of different things that factor into what it takes to operate,” Hanlon explained. “Those base costs elements are used to determine the amount of funding that school districts receive.”
These changes undermine the intent of the plan and shift more funding responsibility to local taxpayers, he said.
“The state’s share of funding students will dip to almost 32% of the cost to educate students, meaning the other 68% is coming from local districts, and that continues to drop as a result of what the House is doing,” the superintendent said.
The House is also looking at tax reform via a district’s carryover balance, a move Hanlon said lacks an “understanding of how school districts manage money.”
The proposed action limits a district’s carryover balance to 30% of a prior year’s general fund expenditures, he explained.
“It would allow the county budget commission to reduce tax collection for current expenses by that excess amount, even if a district is below the 20-mill floor,” he said.
Chardon is projected to finish out the current fiscal year with a cash balance in the range of $18 million, Treasurer Deb Armbruster said, providing some context.
If the district were under the 30% cap, the number would need to be closer to $12 million, she said.
“There’s some variables we don’t know. (We don’t know) which expenditure line they’re going to use on the forecast,” Armbruster said. “I used the most conservative one to come up with that figure, so it might be closer to $14 million.”
By stalling the FSFP and capping budget reserves, districts who have managed responsibly will be penalized, even when their cash management practices have been guided by board policies, Hanlon said.
“Locally-approved levies could be reduced before a single dollar has been collected,” he said.
There will undoubtedly be more levy attempts as a result, as a traditional levy cycle will be shortened, Hanlon said.
The Ohio Senate will now begin to develop its own version of the bill, which may or may not align with the House version, he said, adding both versions of the bill will then go to the Conference Committee to iron out any differences and the final version of the bill would then go to a floor vote with the full legislature.
After that, it goes to the governor for a signature or line-item veto, Hanlon said.
The process is only a third to half way through, he said.
When discussing trends in the House and Senate, board member and legislative liaison Todd Albright also touched on Senate Bill 93, which is currently in the Senate committee and would declare the General Assembly’s intent to create a new school financing system through property and sales tax.
The bill outlines how it would do so, including eliminating a district’s ability to levy property and income taxes and establishing a single statewide property tax.
“The (Ohio School Boards Association) legislative tracker that’s on this board report has a long list of things that probably would be concerning to some people in some way,” Albright said. “Namely … if the ability to levy property and income taxes is taken away, then I don’t know how a school district could be self-directive in the direction it wants to go for the education of the district’s students.”
That alone should warrant phone calls and letters, he said.
