SCHOOL FINANCE 101

School Funding

• Where does school funding come from?

• Where does it actually go?

Basics of School Finance in Ohio:

• School funding in Ohio is a “SHARED” responsibilitybetween the state and the local community

• The local share is collected through property taxes and the state share is distributed through the State Foundation Program

• The wealthier a local district is, the less the state contributes for each student

• Wealth for a local district is determined by property value (valuation)

Where do Schools Get Money

• Local Funding– Real Estate Levies

– Tangible Personal Property Tax (eliminated by State)

• State Funding– Foundation

– Homestead and Rollback

• Federal Funding– Grants, Title I, IDEA 6B

Current: Local Revenue

• Local revenue is largely from property taxes– Pros:

• Stable base

– Cons: • Unpopular tax – by both payers and receivers

• Not reflective of ability to pay

• Rules severely limit growth (above 20 mills - HB 920)

• Outlet for voter discontent

• Tax effort is variable across state1 mill (fy15 CUPP data) = Windham 44,500, Warrensville = 395,000, Twinsburg 790,000

Current: State Revenue

• State revenue is largely from sales, corporate and income taxes; – Pros:

• Generally grows with economic growth• Voter impact is indirect• More reflective of ability to pay• Serves redistributive role

– Cons: • Distribution is complex • SUBJECT TO POLITICAL CLIMATE –

DeRolph, HB66, SB5, CAT Tax, Lottery

Current: Federal Revenue

• Federal Revenue is Targeted Assistance

• Title I – Economically Disadvantaged

• IDEA-6B – Special Ed. Assistance – Pros:

• Additional Funds

– Cons: • Strings Attached – May not qualify

• Supplement vs. Supplant – Maintenance of Effort

• Rules limit how funds can be spent. Single Audit

Types of School Levies

What are the different types of school levies? And how can they be used?• Operating: General Fund - Day-to-day operating expenses

– These dollars can be used for items such as wages, benefits, textbooks, utilities, transportation and supplies

– Continuing– Emergency – Income Tax

• Bond: Debt Service - New construction and renovations • Permanent Improvement:PI - Capital improvements and

major purchases that will last a minimum of five years– These dollars can be used for items such as buses, long-term

technology projects, parking lots, roofs, etc.

State Formula AidFormula Aid is made up of two main

components:1. Per pupil amount ($6,000)

2. Average Daily Membership

- Charge-off

+ Categorical Aid, Sp. Ed,

Transportation, Preschool, etc.

3. Twinsburg CSD received $5.2 millionor $1,283 per pupil (not the $6,000 per pupil amount)

Since September 2010 - There have been four State enacted School-Funding Models (SF-3, PASS, Bridge, and SFPR) and four iterations of the TPP Phase out calculations.

School Funding - Conceptual

State Share

Local Share

Local Wealth Property Values

Charge-Off Line

Low High

State Basic Aid

Formula Amount $6,000 (SFPR Nov. 18, 2016 )

$24.5 million ($6,000 * 4,097 ADM) $5.2 million ($1,283 per student)

TCSD $1,283 per pupil amount

What is House Bill 920?

• How does it impact our schools?

• What does it mean for homeowners?– HB 920 is legislation passed by the Ohio

General Assembly in 1976, eliminated annual revenue growth generated by an existing levy due to increased property values. (reappraisal, sales, inflation, etc.)

Impact House Bill 920

As Property Values Increase – Collections Remain Flat due to the HB 920 effect.

Personal Property Taxes

Starting in 2004 per HB66; TPP and the State TPP Reimbursement will be eliminated by 2023. (TPP Tangible Personal Property – tax on business equipment, furniture and fixtures. Help businesses?? CAT Tax)

Tangible Personal Property Phase-Out – HB66

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$9.8

mill

ion

$6.2

mill

ion

TPPCAT

$1

3,2

27

,54

2

TPP is Tangible Personal Property Tax CAT is Commercial Activity Tax

Nov. 6, 2012

4.9 mill Levy$3.823,614

Tangible Personal Property Phase-Out – HB66

• The chart shows a reduction of $3.6 million on an annual basis.

• These dollars are redirected to backfill the State’s coffers at the expense of Local Governments (cities, schools, libraries, etc.)

• The State has eliminated a tax once under local control (TPP), substituted it with a State controlled Commercial Activity Tax (CAT) that they are retaining for their own purposes.

School Funding

• Where does school funding come from?

• Where does it actually go?

Salary & Benefits % of Expense

Budgetary Law - Ohio Revised Code

• January – Budget Hearing

• April – Accept Amounts and Rates set by County

• July 1 – Certificate Amounts Available

• Sept – Certificate of Estimated Resources

• Permanent Appropriation Resolution

• Purchase Order Process

– Expenditures limited by Available Resources

Budgetary Law - Ohio Revised Code

• Budget Process

• Salaries, Wages and Benefits ~ 84%

16% for everything else

• Curriculum –Text books, Work books, Testing

• Operations –Utilities, Maintenance, Transportation

• Professional Services –Legal, Nursing, Sp.Ed.

• Building Budgets –Purchase Order Process

Five Year Forecasthttp://education.ohio.gov

Citigroup Adjusts Third Quarter 2014 Financial Results Downward Oct. 30, 2014 NEW YORK-BusinessWireIntel Earnings Fall Short of Street Estimates USA TODAY July 17, 2013

Click Here

Political Climate

• How does it impact schools? And Then What

– Homestead and Rollback carve out on new levies

– Cuts to State Income Tax Rates= reduction of dollars flowing to local governments thus local services

are reduced or increases to local taxes and new levies and income taxes

– Expansion of Charters (Originally alternative to Failing Schools)

Education Choice– Funds follow the child – Deregulation (ENRON 7th $70b) ….87 percent of Ohio children who attend a charter school attend one that earned a D or an F on the Ohio Dept. of Ed. school report cards. If the original plan was as an alternative to failing schools then how canthis be permitted. Over $900 million of school district funds transferred to charter schools this school year.

– Term Limits – Pros and Cons Career Politicians – Lost Historical Perspective – Learning Curve – Lobbyists

Republican legislators signed anti-tax promise of anti-tax lobbyist Grover Norquist, Founder of Americans for Tax Reform. Steve LaTourette has established a PAC, Defending Main Street. The PAC was created to curb the influence of

the anti-tax movement within the Republican Party and put forth a moderate perspective .

CONCERNS

• THIRD GRADE READING GUARANTEE

• STUDENT LEARNING OBJECTIVES

• NEXT GEN ASSESSMENTS

• NEEDED ACADEMIC OPPORTUNITIES –

AP COURSES – DUAL CREDIT – CC+

• OTES TEACHER EVALUATIONS – EXTRA RESOURCES

• SPECIAL ED - SCHOLARSHIPS AND TUITION

• COMMUNITY SCHOOL DEDUCTIONS

• NON-CORE OPPORTUNITIES SHRINK

By TERESA SALIZZONI Logan Daily News Reporter tsalizzoni@logandaily.com | Posted: Monday, March 3, 2014 9:30 pm

LOGAN - Although the Logan-Hocking School District's state grade card surpasses that of the Electronic Classroom of Tomorrow (ECOT), local tax dollars are being sent out of Hocking County for students attending online schools.

While LHSD receives $5,334 per student from the state, $7,173 is deducted when a student chooses an alternate school such as ECOT. That takes the difference ($1,839) out of local tax dollars per student.

"The base amount is deducted from state funding to the local district, and that amount goes to the charter/community school that is educating that student," said Ohio Department of Education Associate Director for Media Relations John Charlton.

"We are losing over $712,000 to charter schools," LHSD treasurer Paul Shaw said at a recent school board meeting. "Of that, $185,550 are local property taxes being sent out of the county."

Shaw explained that LHSD is spending $163,000 more than forecasted in the first seven months of the school year in part due to the charter schools' enrollment of children living in the district.

"These are alarming statistics we can't control," Shaw said. "The school board is working to solve the deficiencies at the local level, but the problem is statewide. This is not just happening to larger schools; it is happening here."

Shaw testified in the spring of 2013 in opposition to the expansion of charters/vouchers due to Gov. Kasich's increases to charter school funding by $57 million over the amount allotted in the 2011-2012 year.

The LHSD report card obtained from the Ohio Department of Education revealed 93.6 percent of ninth-graders graduated in four years and 97 percent graduated in five years. Both are A grades.

But the ECOT report card also showed that 35.3 percent of ninth-graders graduated in four years and 37.8 percent graduated in five years. Both are F grades.

When comparing achievement on how many students passed the state test on the performance index the number was 81 percent, a B grade.

The second part of the achievement compares how well students did on the state test, which the indicators met, getting a C grade of 75 percent higher for LHSD.

ECOT received a performance index grade of 68.1 percent, a D grade, and a 12.5 percent on the indicators met, an F grade.

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Thank You!