Ohio’s new budget proposal is set to phase in fair school funding, yet somehow, this results in some districts losing funding. Jan Resseger untangles the mystery. Reposted with permission.
Here in Ohio in early February, Governor Mike DeWine proposed a new biennial state budget, which included the final phase-in of a new school funding formula, whose first two phases were completed in two previous budgets, the first phase in 2021 and the second in 2023. Because, back in January, powerful House Speaker, Matt Huffman had shockingly declared the full phase-in of the Fair School Funding Plan unsustainable, public school supporters were grateful to learn that the governor supported the full phase-in of the new formula, developed by an expert panel over several years.
However…
Now that this year’s budget negotiations have begun, a mystery has developed. We learn that, although the governor included the completion of the phase-in of the Fair School Funding Plan in his proposed budget, DeWine’s proposed budget actually cuts state funding over the next two years for the majority of Ohio’s public school districts. This is despite that experts agree that the primary reason Ohio needs a new formula is that the state has been underfunding the public schools for decades.
The Statehouse News Bureau‘s Karen Kasler explains: “Gov. Mike DeWine’s proposed budget would spend $23.4 billion on education, and DeWine said it would fully fund the final phase-in of the school funding formula that was first implemented in 2021. But an analysis of the numbers shows there are actually cuts to traditional K-12 public schools, but almost half a billion dollars more for vouchers and charter schools… An analysis of information from the Legislative Service Commission… shows traditional public schools will get $16 billion. But that includes a cut from current spending adding up to $103.4 million over two years, with more than half of districts getting less state funding. And a fifth of those schools receiving less state funding actually grew their student populations in the last year.”
None of this computes. The formula is based on a per-pupil base cost, and its very purpose is to ensure, for the first time in decades, that the formula, which includes both a state and a local contribution, will ensure that all of the state’s 609 school districts—no matter their property tax base or the wealth or poverty of the families in their district—will be able to provide a “thorough and efficient system of common schools,” a requirement of Ohio’s 1851 state constitution.
To calculate each school district’s local funding capacity, the new formula is designed to measure the school district’s property valuation as well as the average income of the district’s residents (to measure their capacity to pass local school levies). The new formula is also designed to factor in what each school district must spend—its costs—to provide an adequate education. The problem this year, even if the Fair School Funding Plan is fully phased in, is that although the state is accurately measuring the factor that includes school district tax base and family income—its capacity to contribute a local share, the state is using old, outdated numbers from 2022 to measure each school district’s costs. Because inflation has increased property valuation in many school districts as well as increasing family income, the formula shows that school districts have more local money. However, because the state has not updated data to show that schools’ costs have also grown through inflation, the formula makes it mistakenly appear that school districts don’t need so much state money.
In a new report for the Ohio Education Policy Institute, economist and Ohio school finance expert, Howard Fleeter explains how the governor’s proposed budget cheats Ohio’s public school students by failing to update the cost data:. “Fiscal Year 26 and FY27 will now make 3 consecutive years in which the base cost (intended to reflect the cost of educating the ‘typical student’) for each school district has not been updated. Additionally, because the statewide average base cost is also used for funding students with disabilities, English learners, gifted students, and career technical education students, the foundation formula proposed in the FY26-27 Executive (budget) does not provide for increases for typical students or for those with additional needs. As a result, despite the completion of the planned 6-year phase-in, it cannot be plausibly claimed that the Fair School Funding plan is fully funded in FY27 because the parameters of the foundation formula are based on data that is 3 years out-of-date.”
Fleeter concludes: ‘The Fair School Funding Plan was designed for all of the data to be updated annually so that the funding adequacy and state/local share sides of the formula work in tandem. The failure to update the input data used for the base cost calculation (the per-pupil cost) in parallel with the data used for the state/local share calculation has caused the decline in the state share.”
Fleeter lays out the numbers and shows that as the state uses increasingly old and outdated cost numbers, the school funding formula will fall farther and farther behind, making each school district less and less able to afford teachers and other necessary services: “(T)here is a $31.6 million reduction in foundation formula funding for Ohio’s traditional school districts from FY 25 to FY 26, and an additional decrease in formula funding of $40.2 million from FY 26-to FY27. FY 27 foundation formula funding for traditional districts is $71.8 million below FY 25 levels ($31.6 million + $40.2 million) and thus, over the biennium, foundation formula funding for traditional school districts is $103.4 million lower than current FY 25 formula funding levels. In contrast… funding for vouchers increases by $265.4 million over the FY 26-27 biennium compared to current levels….”
In testimony he presented Tuesday, March 4, 2025 to the Ohio House Education Committee, Fleeter documented why the budget projections in the governor’s proposed state budget are of such concern: “The problematic nature of data of the FY 26-27 Executive Budget updating the property and income data used to compute the state/local share… but not the base cost input data… can be seen in the figures below. In FY 26, 531 of the 609 districts…. have their state share go down…. Only 3 districts have their state share increase in FY 26… In FY 27: 506 of the 609 districts (83.1$) have their state share go down… Zero districts have their state share increase in FY 27.” Fleeter adds that, according to the governor’s budget proposal: In FY 26, the state will be paying for 35% of the cost of educating Ohio’s public schools; in FY 27, the state will be covering only 32.2% of the cost. He adds: “It is almost certain that the… average state share has never been as low as 35% or (or 32.2%) for the last 35 years at least.” When the state implemented the first two phases of the Fair School Funding Plan, based on accurately updated cost data, the state share was significantly higher: 41.6% in FY 22, 40.6% in FY 23, 43.3% in FY 24, and 38.4% in FY 25.
The executive director of Policy Matters Ohio, Hannah Halbert explains that a mathematical school funding formula cannot perform accurately if it is made to operate on inaccurate data: “Lawmakers cannot fulfill their promise to Ohio’s children by passing the budget Gov. DeWine presented. In order to work, the Fair School Funding Plan’s formula must be based on updated cost components and must account for the cost of educating students with special needs, economically disadvantaged students and English language learners. Otherwise, the formula is broken. Without updating the formula to reflect the real costs of educating our kids, we will repeat the mistakes of the past of overrelying on local funding or underfunding our schools and shortchanging students, especially those in Black, Brown, low-income, and rural communities. We cannot accept a system that leaves children behind.”
The ranking member of the Ohio House Finance Committee, Bride Rose Sweeney explains what would be the the impact for school districts if the legislature were to pass the governor’s budget without updating the formula to reflect the actual costs faced by school districts across the state: “Failing to fully fund public schools while increasing funding for less-accountable education alternatives disregards the needs of the vast majority of Ohio students who are served by public schools and is unfair to Ohio homeowners who will be asked to pay (in local property taxes) for the state’s failure to account for inflation… The state has the means to fully fund all educational options without shortchanging public schools. If the legislature chooses not to fully fund public schools, Ohioans will face even higher property taxes, fewer opportunities for students, and long-term damage to Ohio’s economic future.”