ODE Update

Aaron Rausch, Budget and School Funding

Marjorie Yano, Policy and Legislative Affairs

House Bill 110

• Conference Committee unanimously reported on June 28.
• Senate approved 32-1.
• House approved 84-13.

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• Governor signed on June 30.
• 14 vetoes, 4 related to education.
• Some provisions effective immediately, others on September 30, 2021 (90 days).

State Budget Bill �Funding Provisions

Increased Funding for �K-12 Education

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• Compared to estimated FY21 spending, HB 110 increases state spending on K-12 Education by $534.7 million (5.6%) in FY22 and an additional $203.8 million (2.0%) in FY23.
• The final passed budget adds an additional $1.28 billion in new state spending in the 22-23 biennium compared to estimated FY21 spending.

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Note: State spending is comprised of GRF, Lottery, and Dedicated Purpose Funds with GRF cash transfers.

School Funding – Key Changes

• Implements the Fair School Funding Plan for FY22 and FY23.
• Direct funding for Community Schools, STEM Schools, Scholarship Programs, and Open Enrollment (fund students where they are educated).
• Establishes a base cost methodology based on student teacher ratios, minimum staffing levels, and actual costs.
• Implements a new state and local cost methodology using property and income for all districts.
• Revises categorical aid and restricts funds for subgroups.

Base Cost

As Passed in HB 110

• Using an input-based and professional judgement approach to a base cost.
• Each school district will generate a different base cost amount.
• The Legislative Service Commission (LSC) estimates that, as included in HB 110, the average base cost per pupil will be $7,202 (if fully phased-in).
• Calculated using the higher of prior year enrolled ADM or a trailing three-year average, whichever is higher.

Current Law

• Since the 2013-14 school year, this element of the formula is referred to the opportunity grant or formula amount.
• In FY19, the per-pupil amount was $6,020.
• Calculated based on the current year resident district ADM (formula ADM).
• The per-pupil amount has received criticism because it is not connected to the actual cost of educating a student.

Base Cost

• The practitioner developed base cost model uses actual district costs (teacher salaries, average expenditures across districts), establishes minimum service levels, and student-teacher ratios to calculate a unique base cost for each district. Base cost funding includes five areas:
• Teacher Base Cost
• Student Support (including a restricted Student Wellness and Success component)
• District Leadership & Accountability
• Building Leadership & Operations
• Athletic Co-Curricular (contingent on participation)

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State/Local Share

As Passed in HB 110

• Replaces the state share index with a variable charge-off amount and a derived state share percentage.
• A range of 5% for the wealthiest districts in the state and no maximum.
• Uses property values (60%) and two measures of income (40%) for all districts to determine state share percentage.
• Updates the state share for each year of the biennium.
• Reduces the comparative nature of the state share index.

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Current Law

• State share index serves as a measure of a school’s wealth and capacity and serves as the state contribution to the calculation of various funding components.
• A range of 5% for the wealthiest districts in the state and 90% for the districts with the lowest capacity.
• Calculated based on a relative comparison of three-year average property values for all districts adjusted by income for some districts.

Targeted Assistance/Capacity Aid

As Passed in HB 110

• Combines the concept of capacity aid and targeted assistance.
• Provides additional funding based on a wealth measure using property (weighted at 60%) and income (weighted at 40%).
• Provides supplemental targeted assistance to lower wealth districts whose enrolled ADM is less than 88% of its total ADM for FY19.

Current Law

• Provides scaled targeted assistance funding to schools based on a wealth per pupil measure using average property and income (weighted equally).
• Supplemental targeted assistance is more than 10% of real property value is from agriculture values.
• Capacity aid funding for schools who generate local revenue for 1 mill of voted property tax that is less than the statewide average.

Categorical Aid

As Passed in HB 110

• Provides additional funding beyond base cost for:
• Economically disadvantaged students (increased per pupil amount and renamed disadvantaged pupil impact aid)
• Gifted students - restricted and adopt 2018 cost study
• English learners – restricted, expanded and convert to weights
• Students with disabilities – increased per pupil amounts and convert to weights
• Career-Technical Education – convert to weights

Current Law

• Provides additional funding for:
• K-3 Literacy
• Economically disadvantaged students (restricted funding)
• Gifted students
• English learners (3 categories)
• Students with disabilities (6 categories – restricted funding)
• Career-Technical Education (5 categories – restricted funding)

Student Wellness and Success Funding

Current Law

• Student Wellness and Success Funding is a stand-alone item designed to serve all students.
• May be used for certain designated initiatives, based on a plan developed with two community partners.
• The Governor proposed $1.1 billion for Student Wellness and Success Funding over the next biennium.
• Per-pupil funding scaled based on census poverty data.

As Passed in HB 110

• Moves Student Wellness and Success Funding initiative into the DPIA funding.
• Allows funds to be spent on certain initiatives, including those previously designated under the Student Wellness and Success Funding.
• Requires that districts develop implementations plans with a community partner as to how they plan to use these DIPA funds. This is like the requirement that existed under the stand-alone Student Wellness and Success.
• Unspent funds from FY20 and FY21 continue to be restricted for SWSF purposes.

Transportation

Current Law

• Provides funding based on the greater of:
• Statewide average cost per mile
• Statewide average cost per rider
• Funds all resident district students transported more than 1 mile (traditional, community school, STEM school, and nonpublic student).
• Provides supplemental transportation for low-density districts.
• Establishes a 25% minimum state share.

As Passed in HB 110

• Maintains funding based on the greater of the cost per rider or mile.
• Funds all resident students who ride the bus (preschoolers and students who live within 1 mile of school).
• Provides additional funding for districts transporting community school, STEM, and nonpublic students.
• Targets supplemental transportation funding to low density districts.
• Provides additional funding for transportation efficiency.
• Increases the minimum state share to 29.17% in FY22 and 33.33% in FY23.

Funding for Scholarship Programs

Current Law

• Funding for traditional EdChoice, Autism and Jon Peterson Special Needs scholarships are funded through a deduction from the student’s resident school district.
• The Cleveland Scholarship Program is funded both through a deduction from the Cleveland Municipal School District and direct state payments.

As Passed in HB 110

• Implements direct funding for traditional EdChoice Scholarship Program, Autism Scholarship Program, and Jon Peterson Special Needs Scholarship Program.
• Implements direct funding for Cleveland Scholarship Program.
• Increases the maximum scholarship amount for all programs.

Eliminated Funding Components

• K-3 Literacy
• 3^rd Grade Reading Proficiency Bonus
• High School Graduation Bonus
• Capacity Aid (merged with Targeted Assistance)

Funding for Other Education Models

• Community Schools, STEM schools, joint vocational school districts, and educational service centers (ESCs) all have new funding methodologies.
• Substantially similar to the methodology used for traditional school districts, with some differences to account for the differences in the model.

Phase-In Approach

• While House Bill 110 does not include a cap – the full amount calculated by the formula is not paid out to schools and districts. This is executed through a phase-in.
• Most components subject to, “general phase-in percentage” of 16.67% in FY22 and 33.33% in FY23.
• DPIA phased-in at 0% for FY22 and 14% for FY23.
• Transportation funding not subject to phase-in.
• Community Schools and STEM schools subject to phase in (new).

Formula Transitional Aid

• Often referred to as the “guarantee,” the final version of HB 110 includes a number of guarantees in both temporary law and permanent law to ensure no school receives less than FY21.
• For districts, this is an aggerate calculation of state foundation funding – (with funding cuts restored), net of transfers and deductions, plus Student Wellness and Success Funds and other additional aid items.
• For community schools and STEM schools, this is calculated in a similar way but on a per pupil basis (new).

School Funding Related Changes

• Provides additional funding for:
• Preschool special education (eliminate proration)
• Special education transportation (simplifies calculation, increases minimum state share, and eliminates proration)
• Catastrophic Cost Reimbursement (withholds a portion of special education funding)
• Establishes new funding for:
• Transportation collaboration grants
• Career awareness and exploration funds

School Funding Related Changes

• Includes funding for school bus purchase ($50 million).
• Provides executive recommended amounts for Quality Community School Support ($54 million)
• Increases Community School Facilities Funding from $250 to $500 per pupil ($42.0 million)
• Restored Industry Recognized Credential funding ($20.5 million annually)
• Increased funding for non-public school via Auxiliary Services and Nonpublic Administrative Cost Reimbursement and allowance for direct funding.

Implementation of HB110

• Initial changes in July/August payments.
• Net out Scholarship, STEM, and Community School Payments.
• Update appropriation limits.
• Full implementation by October.
• Revised payment reports.
• Move to updated calculations.
• Future changes to related school finance programs, five-year forecast impact, maintenance of effort impact.

Impact of Direct Funding (Before)

Impact of Direct Funding (After)

What factors influence �district aid?

Property Valuation

Student Population and Demographics

Personal Income of District Residents

Historical Funding – Caps and Guarantees

Change in Total ADM in public sector, FY16-20

Change in Property Valuation, TY15-TY19

*Bottom quintile capped at -0.1%

Change in Public Utility Personal Property Valuation, TY14-TY19

State Budget Bill �Policy Provisions

EdChoice

• Establishes direct funding for all scholarship programs (including traditional EdChoice).
• Expands eligibility to include students in foster care, kinship care or who are placed with a legal custodian or guardian, plus children living in the same home as any of these students.
• Increases scholarship amounts across scholarship programs.

Community Schools

• Removes restriction that community schools may only be established in a “challenged school district.”
• Some COVID-related flexibilities: waiving automatic withdrawal for students who failed to test during the 2020-2021 school year and waiving automatic closure based on recent report cards.
• Allows “exemplary” rated sponsors to open 2 dropout prevention and recovery e-schools per year (but not more than 6 in a 5-year period).

Computer Science

• Creation of a committee to develop a state plan for computer science education.
• Committee shall include stakeholders representing career-technical education, teachers, institutions of higher education, businesses and state and national computer science organizations.
• Plan shall consider best practices and challenges for computer science education, workforce needs, data collection needs.

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Academic Distress Commissions

• Pathway out of ADC status for all 3 ADC districts.
• Creation of a plan (approved by State Superintendent).
• 3 years to implement, State Superintendent may grant two 1-year extensions.
• Based on meeting improvement benchmarks.
• If not met by the end of the improvement period, revert to ADC status.

District Online Learning Schools

• Sets parameters for districts that want to continue remote learning after the pandemic.
• If engaging in online learning, a district must provide students with a computer, internet access, orientation for families.
• Must have 910 hours/year and track engagement through a learning management system.
• Notify ODE by August 1 for the 2021-22 school year.
• State Board is charged with updating operating standards to account for online learning.

Educational Savings Accounts

• Establishes the Afterschool Child Enrichment (ACE) Educational Savings Accounts Program.
• Using federal COVID funds - $500 for students for supplemental academic and extracurricular activities.
• ODE will contract with a vendor to implement.

Licensure

• Permits State Board to take action against the license of a school employee that assists a student in cheating on an assessment.
• Adds human trafficking to the list of offenses for which a license must be revoked or denied.
• Prohibits a school representative from assisting an individual in obtaining school employment if the representative has cause to believe the person has committed a sex offense involving a student.

Let’s Stay Connected

Aaron.Rausch@education.ohio.gov

614-995-9936

@OHEducation