School funding in Ohio relies on a combination of state and local revenue sources. The bulk of education funding comes from the state, but local school districts are expected to contribute a share of funds as well. The state employs a foundation formula to determine the basic per-pupil funding amount that each district should receive, with adjustments made based on local property values and incomes. Districts then supplement state aid with revenue raised through local property taxes. Other local funding sources can include income taxes, grants, and private donations.
What are the main sources of K-12 education funding in Ohio?
There are three primary sources of K-12 education funding in Ohio:
- State funding – Provided through the state’s foundation funding formula. Accounts for around 47% of total education funding in Ohio.
- Local property taxes – Levied by school districts and accounts for about 44% of total K-12 funds.
- Federal funding – Around 9% of Ohio’s education budget comes from federal Title I and IDEA funds.
In addition to these major sources, districts receive limited funding from other local revenue streams like income taxes, as well as private grants and donations. But the bulk of operational funding originates from state distributions and local property taxes.
How does Ohio’s foundation funding formula work?
Ohio uses a foundation formula to determine the basic per-pupil funding amounts that school districts should receive from the state. The formula aims to even out funding disparities between wealthier and poorer districts by setting a uniform base cost per student.
The foundation formula calculates the funding level for each district in several steps:
- First, a uniform statewide base cost per pupil is set based on the average spending of successful districts.
- The formula then calculates a target foundation funding amount for each district by multiplying the per-pupil base cost by the district’s enrollment.
- Next, the amount of funding districts can raise through local property taxes is deducted from their target funding amount.
- Finally, additional adjustments are made based on local incomes and property values to channel more funding to lower wealth districts.
By going through these steps, Ohio aims to equalize funding across districts while still requiring a local contribution. Higher property wealth areas receive smaller amounts of state aid, while lower wealth districts get more funding to make up the difference.
What local funding sources do school districts use?
While the state provides nearly half of Ohio’s education funding, school districts are still responsible for raising a significant portion of their budgets locally. The two main local funding sources are:
- Property taxes – Local property tax levies account for about 44% of total education funding in Ohio. Districts submit levy proposals to voters to raise mills for school operations and bonds for facilities.
- Income taxes – Some districts levy a local income tax of up to 1.5% to supplement other funding. This accounts for a small (around 3%) share of education revenue.
Districts may also bring in limited revenue from:
- Investment earnings
- Rental fees and gate receipts
- Foundation grants and private donations
But property taxes make up the bulk of locally raised education funds in Ohio.
How do property taxes work for school funding?
Property taxes are the largest local funding source for schools in Ohio. Here’s how they work:
- Each county has an auditor that assesses the value of taxable property.
- School boards propose levy millages to raise revenue from property taxes.
- Voters in the district must approve new levies and renewals.
- Approved levies add mills to property tax bills for homeowners and businesses.
- Districts receive disbursements from collected property taxes.
School districts can propose levies for general operations funds or bonds for facilities and construction. Some key points on property tax levies:
- Operating levies renew every few years and must be re-approved by voters.
- Bond levies last for decades and pay for capital projects.
- Levies can increase, decrease, or renew existing millages.
- Tax bills state the levies and mills going to each district.
What are some challenges with local funding?
Reliance on local property taxes to fund schools presents several challenges in Ohio:
- Wealth disparities – Poorer districts have lower property values and collect less than affluent areas.
- Tax burdens – Heavy reliance on property taxes leads to high tax bills in some districts.
- Cyclical budgets – Funding fluctuates with economic cycles as property values rise and fall.
- Unstable revenue – Levies may fail, creating uncertainty in budgeting.
- Inequities – Funding is often still unequal even with state aid adjustments.
These issues have sparked ongoing debate about modifying Ohio’s education funding system to reduce over-reliance on local property wealth.
How much funding do school districts receive in Ohio?
In the 2022 fiscal year, Ohio distributed around $7.9 billion in state foundation funding to public school districts. Another $6.9 billion in funding was raised locally, mostly through property taxes. This amounted to total per-pupil funding averaging:
- $4,720 per pupil in base state foundation aid.
- $11,422 in total per-pupil funding including local funds.
However, funding varies significantly between districts based on local wealth. For example, for fiscal year 2022, high poverty districts like Cleveland Municipal received around $15,000 per pupil. More affluent suburban districts often received between $20,000-$30,000 per student.
State funding trends
State education funding in Ohio declined steadily during the late 2000s recession but has rebounded in recent years:
- FY 2009 – $7.2 billion in state aid
- FY 2012 – $6.5 billion in state aid
- FY 2022 – $7.9 billion in state aid
Increases in foundation funding since FY2020 came after the passage of the Fair School Funding Plan, which amended how the state formula calculates district funding levels.
Local funding trends
Meanwhile, funding from local property taxes has increased gradually over the past decade and now makes up a larger portion of district budgets:
- FY 2012 – $6.2 billion in local funds
- FY 2017 – $6.5 billion
- FY 2022 – $6.9 billion
In many districts, local taxes now account for over half of total revenues as state aid has not kept pace with inflation.
How is education funding spent in Ohio school districts?
School districts put their state and local funds toward a variety of expenditures. On average, Ohio school districts spend:
- 64% on instruction
- 21% on support services (transportation, administration, etc.)
- 9% on overhead and district expenses
- 6% on operations and maintenance
Teacher salaries make up the largest portion of instructional costs. The table below shows average spending per pupil across major categories:
|State Average Spending Per Pupil
|Operations and maintenance
|Central and other expenses
Schools devote the most resources directly to classroom instruction. But non-instructional categories like administration, transportation, and facilities still account for over one-third of spending.
How equitable is Ohio’s school funding system?
Ohio has faced ongoing criticism that its education funding system is inequitable and underfunds lower-income districts. Concerns about fairness center around two main issues:
- Overreliance on property taxes – Poorer districts cannot raise as much local funding as affluent areas.
- Funding gaps – State aid adjustments do not fully equalize disparities between districts.
This leads to major differences in per-pupil spending between wealthier suburban and poorer urban districts. For example:
- Cleveland Municipal – $15,129 per pupil
- Upper Arlington City – $23,322 per pupil
To improve equity, proposals have included modifying the foundation formula calculations, capping local taxes, and increasing state aid. But major gaps remain under the current funding model.
DeRolph school funding case
Funding inequities in Ohio came under scrutiny in the 1990s with the DeRolph v. State of Ohio case. The lawsuit asserted that:
- Reliance on property taxes was unconstitutional.
- Overreliance on local funds caused wealth-based disparities.
- The state failed to provide a “thorough and efficient” education system.
The Ohio Supreme Court ruled four times between 1997 and 2003 that the funding system violated the state’s constitution. But the court did not retain jurisdiction, and the legislature made only modest funding formula changes in response to the case.
Some steps Ohio has taken recently to improve funding equity include:
- Increasing base per-pupil funding levels
- Enacting the Fair School Funding Plan
- Adding funding weights for student poverty
- Establishing the Cupp-Patterson school funding workgroup
But major gaps persist, and advocacy groups continue to call for more equitable funding distribution models.
What are the challenges and issues with Ohio’s school funding system?
Key challenges and issues with Ohio’s K-12 education funding model include:
- Funding gaps – Continued disparities between wealthy and poor districts.
- Overreliance on property taxes – Leads to unequal local revenue capabilities.
- Tax burdens – Heavy reliance on local taxes contributes to high residential property tax bills.
- Revenue instability – Levy failures and economic swings create budget uncertainty.
- Inflation – Flat or declining state aid has not kept pace with rising costs.
- Complexity – Ohio’s funding formula is overly complex and non-transparent.
Proposed solutions have included modifying the foundation formula, increasing state aid, capping local taxes, and consolidating districts. But political barriers have slowed major systemic reforms.
How could school funding be improved in Ohio?
To improve the equity and adequacy of Ohio’s school funding system, groups like the Cupp-Patterson workgroup have proposed reforms such as:
- Increasing base per-pupil funding levels
- Updating formula calculations for demographics, inflation, and other factors
- Imposing a cap on reliance on local property taxes
- Creating more predictable five-year budgeting cycles
- Phasing in changes over time to allow districts to adjust
Other options that have been suggested include:
- Consolidating smaller districts to improve efficiency
- Shifting some funding sources from local property taxes to state income or sales taxes
- Improving oversight and auditing of district spending
But school funding reform faces political barriers due to disagreement on solutions. Near-term changes likely need bipartisan compromise to address identified gaps and inequality issues.
Ohio relies on a complex mix of state aid and local taxes to fund K-12 education. But criticism persists that dependence on local property wealth perpetuates funding gaps between affluent and poorer districts. Ongoing proposals aim to modify foundation formula calculations, increase state funding, and cap local taxes to improve equity. But moving the needle on substantive reform remains challenging politically. Stakeholders agree that Ohio’s school funding system needs upgrades but must still reach consensus on solutions to overcome district wealth disparities in practice.