School Finance

Fordham’s gadflies have been buzzing over the past weeks, discussing Governor Kasich’s budget, Common Core, and Student Nomads. If you’ve missed any of these items, here’s your chance to catch up!

  • In a Columbus Dispatch editorial, Terry Ryan wrote in favor of the governor’s school funding plan. The plan, Ryan argues, is worthy of support because it “recognizes the fact that more and more of the state’s students attend schools other than their neighborhood district schools.” And by acknowledging this fact, Governor Kasich’s plan attempts to “target children and their schools as the locus of public funding, as opposed to funding just school district.” For more analysis of the governor’s funding plan, please see Steps in the Right Direction, a report conducted by esteemed school finance professor Dr. Paul Hill.
  • Emmy Partin was a guest on National Public Radio’s The Sound of Ideas, discussing Ohio’s impending transition to the Common Core State Standards in 2014-15. The conversation, which included representatives of the Ohio Department of Education, State Impact Ohio, Cleveland Teachers Union, and callers from the general public, spotlighted changes in classroom instruction, Ohio’s standardized exams, and graduation requirements that are and will occur under the new academic standards.
  • Fordham facilitated a community discussion around student mobility in Dayton and Cincinnati, the third and fourth in a series of such conversations about mobility. (See here for the recaps of the Columbus and Cleveland events.) The discussions, which included Dayton Public Schools’ superintendent
  • ...

Governor Kasich’s budget plan, now being debated in the House, calls for expanding the state’s Educational Choice Scholarship program. This statewide voucher program is one of four public voucher programs currently available to parents and students in the Buckeye State. Together these programs allow about 22,500 students to use publicly funded vouchers to attend a private or parochial school of their choice. The governor’s proposal would provide, on a first come first serve basis, vouchers starting in 2013-14 for any kindergartner with a household income less than 200 percent of the federal poverty level – about $46,000 a year for a family of four. Voucher amounts would be up to $4,250 a year, and participating schools could not charge tuition above this amount.

In 2014-15, voucher eligibility would extend to all students in grades K-3 in a school building that gets low marks in the early literacy measure on the state’s new report card. The funding for the voucher will not be deducted from a school district’s state aid, but rather be paid out directly by the state. Kasich’s budget allocates $8.5 million in fiscal year 2014 for 2,000 new vouchers and $17 million in 2015 for up to 4,000 new vouchers.

Despite the modest scale of this proposed growth, and the fact the state will cover the voucher amounts, district educators are up in arms about the expansion. Yellow Springs’ Superintendent Mario Basora captured the view of many district officials across the state when he told the Dayton Daily...


Over the last decade the state of Ohio has invested over $10 billion in new school construction. Some of these school buildings opened in the mid-2000s, only to be shut down or repurposed just five or six years later. The Dayton Daily News reported in August 2011, for example, that “Trotwood-Madison is closing two elementary schools this fall. The Springfield City School District and Tecumseh Local schools are repurposing a new school building each because they didn’t have the students to fill them.”

This story of new public school buildings being built, and closed in just a few years, is important to understanding the logic behind Governor Kasich’s “Achievement Everywhere” school funding plan. His plan is remarkable because it actually tries to target children and their schools as the locus of public funding, as opposed to funding just school districts. The Kasich plan recognizes the fact that more and more of the state’s students attend schools other than their neighborhood district schools. As such, funding for their education should follow them to their respective school or educational program.

To understand what a shift in thinking this represents a little history is necessary. The public conversation around school funding in Ohio for decades has revolved around issues of “equity” and “adequacy;” between “rich” and “poor” school districts. The first “DeRolph” decision in 1997 by the Ohio Supreme Court, for example, ruled that school funding depended overmuch on local property taxes and thereby perpetuated unacceptable inequities across school districts. Since then, consecutive General Assemblies...


Social-impact bonds (SIBs), or pay for success financing, are innovative financial arrangements
that could provide a cutting-edge way to fund experimentation and expanded opportunities in
public education.

SIBs are entirely contingent on the performance of the service provider and promise returns to
private investors only if performance objectives are met. They were first pioneered in England
in 2010. Today they are being used to achieve goals such as decreasing homelessness in
England and reducing recidivism at Rikers Island prison in New York. There is growing
interest in SIBs: According to The Economist, when Harvard University professor Jeffrey
Liebman, who assisted in the set-up of several American SIBs, invited other states and local
governments to apply for his help setting up their own, he received 28 applications.

Social-impact bonds have many designs, but have at least three fundamental, common
• A definable, verifiable outcome to be achieved by the social service provider, the
recipient of the funds;
• An initiating party, such as a government agency, that issues the bonds and is
responsible for making payments to the organization and investors; and
• Authority and discretion is granted to the service provider in how it goes about achieving
the desired goal.

So how might this unique funding model benefit education? Consider the hypothetical case of an
independent, education-focused organization—perhaps a foundation—that wants to help launch
more “early college” high schools in a state. That organization would work with a bond-issuing
entity, like state government, to develop a social-impact bond. Meanwhile,...


Yesterday was the first day of public testimony on Governor Kasich’s budget proposal before the Ohio House Finance Primary and Secondary Education Committee. Terry submitted testimony on behalf of the Fordham Institute, as did Students First and others.  Following is a good recap from Gongwer News Service:

Terry Ryan, vice-president for the Thomas B. Fordham Institute, offered support for the budget, saying the funding offered through the formula would outpace that of almost every other comparable state in FY 14. He also offered suggestions for use in the budget or as the subjects of future legislation.

Firstly, he said all dollars should follow students to the schools they actually attend, but funding is still stuck in categorical programs and flows to the district but not necessarily the building attended.

Mr. Ryan also called for annual academic return on investment reporting for all public schools, both districts and charters. "Just as some districts are more productive than others so are some schools and these should be acknowledged and better understood," he said.

More mandates related to regulations, laws and contract should be eliminated if they force funds to be spent in certain ways in all schools regardless of student characteristics. He said the flexibilities of the Cleveland Plan should be expanded to all districts.

Like the administration, Mr. Ryan said the state should move away from hold harmless provisions and guarantees "that provide funding to districts for phantom students."...


Terry Ryan offered written testimony to the Ohio House Finance Primary and Secondary Education subcommittee today. Testifying in support of Governor Kasich’s Achievement Everywhere school reform plan, Terry outlined four reasons that the Buckeye State should support the Kasich plan (testimony can be downloaded here): Governor Kasich’s plan

  1. Calls for new investments in public schools. In fact, it seeks an increase in K-12 funding of nearly 10 percent over two years. This is generous in tough fiscal times.
  2. Recognizes the need for getting at, and reporting on, Academic Return on Investment (ROI).
  3. Promotes innovations and innovators through its Straight-A fund.
  4. Removes some of the shackles off educators. Specifically, under the proposed “Free to Advance” provisions some regulations will be lifted so districts and schools can make more effective use of state dollars.

In addition, Terry also offered five recommendations to improve the Kasich education plan:

  1. Get all dollars to follow kids to the schools they actually attend.
  2. Require annual Academic ROI reporting for all public school buildings in the state – district and charters. Just as some districts are more productive than others, so are some schools and these should be acknowledged and better understood.
  3. Further eliminate mandates – regulations, laws, contracts – that force funds to be spent in particular ways across all schools regardless of student characteristics.
  4. Rapidly move away from “hold harmless” provisions and guarantees that provide funding to districts for phantom students. An obvious downside to such policies is that they
  5. ...

This latest installment in CRPE’s “Making Ends Meet” policy-brief series laudably infuses a dram of reason into the class-size whirlpool. The brief counters the common and mistaken belief—spurred on by knee-jerk sensationalism and politicking—that class sizes are “skyrocketing”; rather, according to the report’s estimates, class sizes in 2011–12 were actually slightly smaller than they were in 1999–2000. This misconception aside, the authors then set out to determine if the benefits of small class sizes (more individual attention per student) outweigh the costs (both monetary and the cost of saddling students with lower-performing teachers in order to keep class sizes small). The authors demonstrate that increasing the nation’s average class size by just two students could free up $15.7 billion—enough to raise average teacher salary by $5,000 per teacher, provide a laptop for every student, or lengthen the school day in the poorest quintile of schools. Tony Bennett, heads up. (Tom Torklason and leaders of other states with class-size mandates, you too.)

SOURCE: Marguerite Roza and Monica Ouijdani, The Opportunity Cost of Smaller Classes: A State-By-State Spending Analysis (Seattle, WA: Center for Reinventing Public Education, December 2012)....


That the arcane issue of teacher pensions has turned into an emotional battleground can be evinced by recent headlines:

“Don’t demonize teachers because of pension system’s faults” (October 21, 2012, Los Angeles Times)
“Pension reform could hit oldest retired teachers the hardest” (February 3, 2013, Chicago Tribune)
“Cuomo Pension Plan Sparks Fight With New York Unions” (March 14, 2012, Huffington Post)
New teachers should have the opportunity to select their own pension plan.
Photo by kenteegardin

In an era of budgetary belt tightening, state and local policymakers are finally awakening to the impact of teacher-pension costs on their bottom lines. Recent reports demonstrate that such pension systems across the United States are burdened by at least $390 billion in unfunded liabilities. Yet most states and municipalities have been taking the road of least resistance, tinkering around the edges rather than tackling comprehensive (but painful) pension reform.

Many have suggested that one solution to the pension crisis is to offer teachers the option of a 401(k)-style plan (also known as a “defined contribution” or DC plan) in lieu of a traditional pension (known as a “defined benefit” or DB plan). There is merit in that approach, but would this alternative appeal to teachers? Would certain types of teachers—new, veteran, more educated,...


When then-Governor Ted Strickland issued his Evidence-Based Model (EBM) of school funding reform in 2009 we engaged Professor Paul Hill to provide an analysis of the proposals. We couldn’t think of anyone better to do the work than Professor Hill. His credentials are impeccable. He is founder and recently retired director of the University of Washington’s Center on Reinventing Public Education, and a former Senior Fellow at Brookings and RAND. Further, Professor Hill has roots in Ohio as a graduate of Ohio State University. He also has family in Dayton.
Professor Hill’s analysis of Strickland’s plan was largely informed by the research project he led, Facing the Future: Financing Productive Schools. That six-year effort, funded by the Bill & Melinda Gates Foundation, was the most comprehensive study of its kind ever conducted. It concluded that America’s public-school finance systems are burdened by rules and narrow policies that hold local officials accountable for compliance but not for results. Facing the Future was the work of more than 40 economists, lawyers, financial specialists, and education policy makers. It included more than 30 separate studies, including in-depth looks at Ohio, North Carolina, Texas, and Washington.
Based on findings and recommendations from Facing the Future we asked Professor Hill to develop a “crosswalk” between the key findings of that seminal report and the policy recommendations in the Strickland’s Plan. Professor Hill’s analysis of Governor Strickland’s EBM was not kind. It stated bluntly, “Though Governor Ted...

Dr. Paul Hill evaluates Governor John Kasich's education budget proposal.