Final budget analysis

Our Friends at OEA have put togerher a great analysis of all the education related elements contained in the budget that the Governor signed.

House Bill 59 (State Budget) As Signed by the Governor – June 30, 2013 The final budget does not contain numerous provisions proposed by the Governor and/or passed by the House that would have had a negative impact on education:

  • Salary Schedules: No provision eliminating the statutory minimum teacher salary schedule and single salary schedule.
  • Five Day School Week: No provision eliminating the five-day school week.
  • Operating Standards Review: No provision requiring the State Board of Education to review and revise school operating standards by the end of the year. These operating standards include issues of great importance, such as requirements on class size, professional development and planning time.
  • School District Takeover: No provision on the School District Takeover Amendment (Am. 1622) that would have authorized the State Superintendent of Public Instruction to hand control of a local school district over to an appointed commission if the Auditor of State determined that the district knowingly manipulated student data with evidence of intent to deceive.
  • Parent Trigger: No provision expanding the untested pilot Parent Trigger statewide to schools that have been ranked in the lowest 5% of all public schools by their performance index score for three or more consecutive years.

K-12 School Funding

  • Establishes a per-pupil base of $5,745 in FY 2014 and $5,800 in FY 2015. The current level is $5,732.
  • Sets the gain cap on growth at 6.25% in FY 2014 and 10.5% in FY 2015.
    o 342 districts are subject to the gain cap in FY 2014 and 242 districts in FY 2015
    o The gain cap underfunds the school funding foundation formula by approximately $1.3 billion over the biennium.
  • Fails to restore over $515 million of the $1.8 billion in state reductions in direct support to schools from last budget cycle.
  • Places 191 school districts on the guarantee in FY 2014 and 177 districts in FY 2015
  • Fails to create an ongoing legislative process to determine the components of a high quality education, costing these provisions out and making recommendations to the legislature for changes to the funding formula.
  • Provides funding for various subgroups of students: 1) students with disabilities; 2) economically disadvantaged students; 3) limited English proficient students; and 4) gifted students.
  • Specifies that if a school or district fails to show “satisfactory achievement and progress” as determined by the state board of education (not later than 12/31/14) for any subgroup of students, the school or district shall submit an improvement plan to the Ohio Department of Education (ODE).
  • Permits ODE to require that such a plan include an agreement to partner with another school, district or education provider that has demonstrated the ability to improve the education outcome for that subgroup of students.
  • Shifts money away from the K-3 literacy component and increases the funding for the Economic Disadvantaged Funding component to provide resources for students living in poverty.
  • Requires that schools use funding that is received for economically disadvantaged students for any of the following: 1) extended school day and school year; 2) reading improvement and intervention; 3) instructional technology or blended learning; 4) professional development in reading instruction for teachers of students in Kindergarten through third grade; 5) dropout prevention; 6) school safety and security measures; 7) academic interventions for students in any of grades 6 through 12; and 8) community learning centers that address barriers to learning.
  • Includes transportation and career technical funding in the formula.
  • Restores current law regarding Average Daily Membership (ADM) counts for the 2013-2014 school year (October only). Beginning July 1, 2014, requires that school districts report rather than certify the enrollment (rather than ADM) of students receiving services as of the last day of October, March and June of each year.
  • Restores current law regarding the Payment in Lieu of Transportation for students a district deems that it can’t transport and changes the minimum amount to $250.
  • Clarifies that only districts offering all-day Kindergarten for the first time, and those districts already charging tuition for all-day Kindergarten, may charge tuition.
  • Funds the six special education weights at 90% and applies the state share index instead of a dollar amount as proposed in the Executive Budget proposal.
  • Changes the funding methodology for the catastrophic special education cost fund from self-funded by school districts to an outside the formula amount that provides $40 million in each year.
  • Provides gifted identification funding at $5.00 in FY 2014 and $5.05 in FY 2015 per Average Daily Membership (ADM). Also funds gifted unit funding at a cost of $37,000 in FY 2014 and $37,370 in FY 2015.

Teacher Evaluation and Value Added

  • Restores current law requiring the student growth factor to comprise 50% of teacher evaluations. The Senate change that set the student growth factor at 35% of teacher evaluations, with a local option to increase the growth factor up to an additional 15%, was not retained.
  • Maintains the current framework regarding the portion of the 50% student growth factor comprised of value-added data (VA).
    o The current framework sets the value-added (VA) component of the student growth factor in proportion to the part of a teacher’s schedule of courses/subjects that are VA applicable (grades 4-8, math and reading). If a teacher’s schedule is comprised only of courses/subjects for which VA is applicable, the following applies: Beginning March 22, 2013 until June 30, 2014, the majority of the student growth factor shall be based on VA; on or after July 1, 2014, 100% of the 50% student growth factor shall be based on VA.
  • Changes the number of student absences allowed before a student is no longer included in the student growth calculation used on a teacher’s evaluation from 60 or more unexcused absences to 45 or more excused or unexcused absences.
  • Changes the teacher and principal evaluation rating currently labeled “Proficient” to “Skilled.” Therefore, the four levels of evaluation ratings are as follows, from highest to lowest: Accomplished, Skilled, Developing, Ineffective.

Voucher Programs The bill contains a provision to create a statewide expansion of vouchers for students based solely on household income. Additionally, the bill expands eligibility for the existing Ed Choice program for schools based on progress on the K-3 literacy component of the report card.

Income-Based Voucher

  • Provides vouchers to students entering Kindergarten in the 2013-2014 school year and Kindergarten and first grade the following year. This proposal would expand vouchers statewide, even in the highest-performing school districts.
  • Bases eligibility solely on household income. The income threshold would be set at 200% of the federal poverty rate ($46,100 for a family of four).
  • Funds the program directly out of lottery funds, rather than the “pass-through” funding of other existing voucher programs. The appropriation in the budget is estimated to provide for 2,000 vouchers in the first year and 4,000 in the second year.
  • States that once a student receives a voucher, they have priority for a renewal each year until they graduate from high school. However, a student’s voucher amount will be reduced if household income rises above 200% of the poverty level in subsequent years. If household income exceeds 400% of the poverty level, the student will no longer qualify for renewal.

Ed Choice Eligibility

  • Expands eligibility for the Ed Choice voucher based on a school’s progress in improving literacy in grades K-3. Beginning in the 2016-2017 school year, students would be eligible if they are assigned to schools that receive a “D” or “F” on this component of the report card for two out of three years.
  • Specifies that out-of-state students and home-schooled children who would be assigned to a qualifying school are eligible to receive a voucher.

Other Voucher Provisions

  • Requires private schools to administer achievement tests to all students if at least 65% of the school’s total enrollment is participating in state voucher programs. There is a parental opt-out provision for non-voucher students at the school.
  • Requires the Ohio Department of Education to conduct an evaluation of the Jon Peterson Special Needs Scholarship Program by December 31, 2015.

Days to Hours

  • Changes Ohio’s standards for a minimum school year in the 2014-2015 school year to be based on hours rather than a minimum number of days and hours. The hour requirements would be 910 hours for all-day Kindergarten-6th grade and 1,001 hours for grades 7-12 (same as current law). The changes to the minimum school year would not apply to any collective bargaining agreement executed prior to July 1, 2014 but would require that any collective bargaining agreement or renewal executed after that date comply with those provisions.
  • Retains current law defining a school week as 5 days.
  • Eliminates the 5 statutory calamity days and allows school districts to count the time over the minimum hour requirements toward time missed due to calamity.
  • Requires school district boards to hold a public hearing on the school calendar 30 days prior to adopting the school calendar.
  • Prohibits a school district from reducing the total number of hours of instruction from the previous years, unless the reduction is approved by the district board.
  • Permits chartered non-public schools to have school on the weekends.
  • Exempts school districts from transporting students to and from chartered non-public and community schools on Saturday and Sunday, unless an agreement to do so has been made prior to July 1, 2014.

Early Childhood Education

  • Provides $78.6 million over the biennium to fund early childhood education programs for children at least three years old but not yet eligible for Kindergarten with household income below 200% of the federal poverty level.
  • Funds programs at school districts, joint vocational school districts, educational service centers, community schools, chartered non-public schools and childcare providers who are highly-rated in the state’s quality rating and improvement system (Step Up to Quality).
  • Requires the Early Childhood Advisory Council to issue recommendations regarding an early childhood voucher program by October 1, 2013, but specifies that decisions regarding the implementation of such a program must be made by the Governor’s Office of 21st Century Education.

Charter Schools

  • Appropriates approximately $57 million more to charter schools than they received in the 2011-2012 school year. It is estimated that low-performing charter schools will receive, on average, an additional $479 per pupil, while charters rated “Excellent” or higher will receive an average bump of $83.
  • Removes a provision in current law that requires any classroom teacher initially hired by a community school after July 1, 2013, to provide physical education instruction, to hold a valid license from the State Board of Education for teaching physical education.
  • Removes a funding guarantee for charter schools rated “excellent” for three consecutive years.
  • Permits the Ohio Department of Education to require the sponsor of a charter school found not to be compliant with applicable laws and administrative rules to remedy the reasons why it is non-compliant and to place temporary limits on the breadth and scope of the sponsor’s authority, including suspension of its authority to sponsor new schools, until the sponsor remedies its noncompliance, in lieu of revoking a sponsor’s authority to sponsor.
  • Specifies that a charter school contract that has been suspended is void if the school’s governing authority fails to provide a proposal to remedy issues for which the school’s contract was suspended by September 30.
  • Requires the State Board of Education to review the performance levels and benchmarks for report cards issued for dropout-recovery charter schools by December 31, 2014.
  • Changes the closure trigger for charter schools that offer any grades 4-8, but no grades higher than grade 9 by requiring that, in addition to being in academic emergency for 2 of the 3 most recent school years, the school must also have shown less than one standard year of academic growth in either reading or mathematics, as determined by ODE.
  • Specifically authorizes charter schools, including e-schools, to provide career-technical education in the same manner as school districts.
  • Allows a new charter school, beginning in the 2014-2015 school year, to accept responsibility for providing or arranging for the transportation of students who are residents of the district before it is open for its first year of operation.
  • Limits the percentage by which an e-school may increase its enrollment beginning with the 2014-2015 school year: an e-school that has 3,000 or more students may increase their enrollment by 15%; an e-school with an enrollment limit of less than 3,000 students may increase their enrollment by 25%. The bill also limits first-year enrollment at a new e-school that opens after September 28, 2013 to 1,000 students.

Straight A Fund

  • Creates a new program, appropriating $250 million over the biennium, to provide one-time grants to education entities for projects that meet at least one of the following goals: 1) increase student achievement; 2) reduce spending in the five-year fiscal forecast; or 3) utilize a greater share of resources in the classroom to “increase their operational efficiency.” The Straight A Fund would be allocated to fund projects (not on-going programs) aimed at reducing costs. This program is funded through lottery profits.
  • Creates a nine-member governing board to award the grants. Board members must have fiscal and education expertise but does not explicitly require a teacher to be selected.
  • Establishes an 11-member advisory committee to review the program annually and provide strategic advice to the governing board.
  • Caps award amount at $5 million for a single entity and $15 million for a consortium, while allowing the State Controlling Board to approve higher amounts.
  • Earmarks $10 million over the biennium to provide low-wealth, low-density school districts with funds for improving the efficiency of pupil transportation. Specifies that the funds must be distributed based on each district's qualifying ridership.
  • Earmarks $6 million of the Straight A Fund for the Cleveland Municipal School District for implementation of HB 525, the “Cleveland Plan,” passed during the last general assembly.

Post-Secondary Enrollment Options

  • Requires the Chancellor of the Board of Regents to report recommendations to establish the College Credit-Plus Program by December 31, 2013.
  • Considers students qualified to participate based on the college’s placement standards for credit-bearing, college level courses, rather than the college’s admission standards.
  • Requires the Ohio Department of Education to annually compile a list of all institutions of higher education that currently participate in Post-Secondary Enrollment Options or in other dual enrollment programs, and to send that list to school districts. Further requires school districts to provide this list to interested parents and students.
  • Allows the Ohio Department of Education to accept late application for participation in the 2013-2014 school year from home-schooled students who wish to participate during that time frame.
  • Specifies that a school district, community school or STEM school may not charge an enrolled student an additional fee or tuition for participation in a dual enrollment program.

Other Education Policy

  • Requires that human trafficking content be included in a school's in-service staff training program for school safety and violence prevention.
  • Permits a STEM school to contract for any services necessary for the operation of the school and specifies that the governing body of each STEM school must “engage the services of” instead of “employ and fix the compensation” of administrative officers, teachers and nonteaching employees. (Please Note: OEA is exploring the impact of this provision.)
  • Exempts students enrolled in Internet or computer-based schools from the physical education requirement for high school graduation.
  • Revises the composition of a Joint Vocational School District (JVSD) board by requiring that each school district or Education Service Center (ESC) in the JVSD each appoint one member representing a regional employer who is qualified to consider workforce needs with an understanding of the skills, training and education needed for current and future employment.
  • Permits students enrolled in chartered or non-chartered non-public schools and students receiving home instruction to participate in an extracurricular activity at the school of the student's resident school district to which the student would otherwise be assigned.
  • Authorizes a school district board of education to require students enrolled in chartered or non-chartered, non-public schools, students attending a STEM school and students receiving home instruction who are participating in an extracurricular activity in that district to enroll and participate in not more than one academic course at the school district as a condition of participating in the activity.
  • Requires the district board, if it chooses to implement the course requirement described above, to admit students seeking to enroll in an academic course to fulfill that requirement as space allows after first enrolling students assigned to that school.
  • Subject to a child’s Individualized Education Program (IEP), exempts a child with a disability from all of the following: 1) the physical education requirement for graduation from high school; 2) the physical activity pilot project; and 3) school body mass index screenings.
  • Allows for chiropractors to assess and clear concussed athletes.


    The tax reforms contained in HB 59 will provide nearly a $2.7 billion tax cut over the next three years predominately for the benefit of higher income Ohioans. OEA advocated that this money should be spent restoring the devastating education reductions resulting from the last budget. Further, the elimination of the state property tax rollback for new levies and the replacement of existing levies will make it even more challenging for school districts to pass new or replacement levies. The provision will shift the burden of the rollback from the state to local homeowners and will exacerbate the problem of over-reliance on property taxes to support public education.
  • Limits the application of the 12.5% property tax rollback by specifying that the rollback may not be applied to reduce the taxes due on new or replacement levies that become effective in or after tax year 2014. Property tax levies effective in tax year 2013 and renewals of these levies remain subject to the rollback. As a result of this elimination, property owners will be responsible for paying their entire tax bill. This provision impacts all local entities, including school districts and County Boards of Developmental Disabilities.
  • Changes the eligibility requirements for the Homestead Exemption for elderly or disabled owners who apply for the exemption for the first time in tax year 2014, or tax year 2015 if a manufactured home, to only those owners who have a total income of less than $30,000. Individuals who currently receive the exemption (prior to 2014) will continue to receive it under this plan.
  • Phases in a 10% income tax reduction for all brackets over three years by reducing current rates by 8.5% for taxable year 2013, 9% for taxable year 2014, and 10% for taxable years beginning in 2015 and thereafter. The top 1 percent ($335,000 and over) on average would get tax cuts of more than $6,000 a year, and the bottom fifth of Ohioans ($18,000 and below) pay $12 more a year.
  • Provides a 50% small business income tax deduction on net income up to $250,000.
  • Increases the state sales tax rate from 5.5% to 5.75% beginning January 1, 2014.
  • Subjects the sale or use of electronically transferred digital audio, audiovisual or digital books to sales and use tax. This provision does not subject cable service of video programming to this taxation as a form of a “digital good.”
  • Eliminates the sales and use tax exemption for sales of magazine subscriptions beginning January 1, 2014.