Schools scratching heads, crossing fingers over new ed. plan costs

Two years in the making, it will probably take local school officials at least two years to figure out all the changes in the state's new "evidence-based" education model.

School officials have to wrestle with new concepts such as organizational units. There's a new funding formula to learn, new student-teacher ratio requirements, a mandate for all-day kindergarten, as well as plans for different accountability and testing systems. 

"It's going to be challenging because of the different way in which schools will be operated," said Akron City School District Superintendent David James.

School officials, however, seem more interested in understanding the new education requirements than in criticizing them. Gov. Ted Strickland's evidence-based model has several goals - the most important of which is molding Ohio's K-12 education system to mirror what the governor's education experts say works, according to the evidence they have accumulated. There is plenty to dispute over the so-called evidence (see here) but opponents, including the Thomas B. Fordham Institute, lost that fight in the General Assembly.

James said he is willing to give the model a chance. Valid or not, it will try to bring regularity to public schools, which James appreciates. The uncertainty lies in the idea of organizational units that seek to organize elementary, middle, and high schools into the most efficient groupings for staffing. It's possible to have more than one organizational unit in a school but basically, one organizational unit is the same as a school building.

For example, the state calls for an elementary organizational unit of 418 students, although Akron has tried to keep its elementary schools smaller. The requirement is about pre-determined inputs that the state feels are necessary, although local school districts may not. "We have tried to keep ours near 350 [elementary students in a building]. If they're saying 418 students are optimal, the higher we go in terms of school population you have to expand school boundaries. If we expand boundaries we must transport additional kids and that drives up our costs," James said.

Much depends on how the Ohio Department of Education writes rules to implement the new law. School finance officials especially need to understand how the new funding formula works because they will soon be asking voters to approve new levies, said Damon Asbury, a lobbyist with the Ohio School Boards Association, which supports the new state plan. No one really knows yet, since the Ohio Department of Education hasn't finished the official form that districts must complete to calculate their state funding. The department promised the form would be ready in September, then October. In all likelihood it could be January before the job is done.

A new wrinkle gives districts a five-year window in which to ask voters to approve converting one or more existing levies to allow the levies to produce more income automatically as property grows in value. That hasn't been allowed in Ohio in decades and it's now a very foreign concept. Despite levies being organized on the basis of millage, voters actually approve a dollar amount - say $1 million a year for five years. The school district can never collect more on that levy, and as property values increase property owners don't pay any more.

To take advantage of the increased value, districts have to pass another levy. Converting an existing levy to a conversion levy, however, would allow the district to collect more to take advantage of increasing property values. It seems odd to think about it right now since property values have declined so dramatically as a result of the recession. School tax collections have suffered with the decline in property values.

"At some point we're going to have to have a levy on the ballot. A conversion levy would allow our revenue stream to grow a little bit," James said. "It's absolutely critical to have new money as we look out at projected deficits." Akron, which carved $10 million from its budget last year, is facing a $10 million deficit in fiscal year 2011, a $49 million deficit in 2012, and a $99 million deficit in 2013.

Despite Gov. Strickland's desire to give districts some breathing room in having to constantly ask voters for money, it seems unlikely that taxpayers will allow themselves to be taxed without the chance to vote on the future increases. "Right now in Akron, nothing is going to pass when you look at the state of the economy. I just don't see it happening," James said.

To placate funding fears, the state's new, two-year budget promises districts they will receive per-pupil funds based on last year's funding levels - minus one percent. So district treasurers have a general idea what kind of money they'll have to work with - at least if current state income estimates prove reliable. Still, districts won't know precisely what that amount is until district student counts are conducted in October. 

Looking ahead to October, Columbus expects state funding in the new school year to equal what the district received last year, according to district spokesman Michael Straughter. State funding counts for about 32 percent of the district's budget. Akron, which receives about 61 percent of its budget from the state and federal governments, will receive about two percent ($3 million) less in state funds, James said.

The state's new operating budget provides Ohio's charter schools with funding close to last year's levels. The schools are also exempt from many of the mandates of Governor Strickland's evidence-based funding model.  But no matter what happens financially for charters there will be fewer operating in the next several years as the state's academic death penalty closes chronically low-performers. Sixteen schools face automatic closure after the current school year (see here). This bodes well for the overall health of charters since pruning the weak schools should result in a stronger charter tree.

The new state plan is only able to provide level funding for the next year - and perhaps the year following -- because it relies on one-time federal stimulus money, funds that will be gone in two years. Democrats are gambling that the state's economy, which was in the doldrums well before the recession hit, will recover in time to support funding when the stimulus money runs out (see here). That's a huge "if." There's little guarantee that the planning for the new $50.5 billion, two-year budget will make it past December because of anemic tax collections stemming from Ohio's still-sick economy.

The budget allocates a bit more than $16 billion in state funding for K-12 education over the next two years. "If it weren't for the stimulus money there would be draconian cuts (in education)," Asbury said. Tax collections may not recover in time and gambling, including the Ohio Lottery, may not produce the $933 million the state hopes to collect. Keno, for example, has failed to bring in anywhere near the amount of income its supporters predicted (see here). In fact, gamblers are holding onto their money more tightly than the state. In nearby West Virginia, for example, the Mountaineer Casino has laid off more than 200 employees as a result of slower gaming during the recession.

There are also two imminent legal threats to the budget. The state faces a pair of Ohio Supreme Court cases that, if it loses, could cost $1.6 billion in tax collections and really harm state spending plans (see here). First, the Ohio Grocers Association wants to overturn the Commercial Activities Tax levied against them. And second, should the Ohio Supreme Court force a voter referendum on the use of slot machines at race tracks, the state could suddenly be faced with $1 billion in cuts to the budget. Both cases will be heard in the high court this week.

Bill Wright, the business manager for the Sugarcreek Local School District in suburban Dayton, said the passage of a local levy last year means his district doesn't have to wring its hands over what may eventually roll out of Columbus. In fact, any across-the-board cuts in state funding would hurt districts that rely more heavily on the state than Sugarcreek. Sugarcreek receives about 35 percent of its operating budget from the state.

"Overall, we are not helped much by state money. They (the state) consider us a rich district," Wright said. "We're not rich because we don't have a large carryover. We've had to cut $3 million out of a $21 million budget over the past year. We've done that by not replacing people who are retiring, cutting out professional meetings, cutting some bus routes."

Still, Wright and other district treasurers are trying to figure out, for example, how many employees they'll have on their payrolls since the state mandates more jobs such as teachers to meet new student-teacher ratios in grade K-3.

Of top concern is whether the new funding formula will wind up costing districts more money, either because of an eventual decrease in state funds or because local taxpayers will be asked to pick up new costs. The Canal Winchester Local School District, in Fairfield County, southeast of Columbus, will receive more state money for teacher salaries but other mandates will force a net loss of about $135,000 (see here), school board members learned last week, according to This Week Community Newspapers.

Some districts need new state-mandated positions called family and community liaisons. The Canal Winchester district will have to hire 11 employees for the positions at a salary of $38,633 each. But the district's superintendent told school board members she was flummoxed.

"I have no idea what they would do," Kimberley Miller-Smith said (see here).

That prompted this response from board Vice President Chuck Miller: "You mean we'll be spending $400,000 for a category of employee that we don't even know about?"

Akron and other under-achieving districts will have to hire for a position called a linkage coordinator, a person whose job is to help close the achievement gap between black and white and rich and poor kids, James said. The state will provide $38,633 for each position - at least for the first year the jobs are required. That may not be enough.

In fact, given the responsibility of the position, it doesn't seem like nearly enough money, especially in hiring for tough, low-performing inner-city districts. If a district can't attract a qualified person to the job, the local school board will have to pay the difference, he said. To limit the financial damage, James said, the Akron schools might transfer an existing counselor to the job saving the need to hire an additional person.

"We're going to have to sit down with the teachers union and figure out how bargaining agreements are impacted," he said. Overall, however, James doesn't see the new state requirements adding many, if any, new positions. Akron and other big city Ohio districts have been losing students and shrinking for years.

Districts rated Excellent or Excellent with Distinction, the two highest state ratings, can opt out of the new mandates when they kick in for the next school year. The worst districts in the state - those in Academic Emergency and Academic Watch - will have to meet all the mandates. Districts in the middle rated Effective or Continuous Improvement will most likely have to meet a great many of the requirements, Asbury said, but perhaps not all since State Superintendent Deborah DeLisle has said she wants to provide as much flexibility as possible.

Some districts, such as Akron, already offer all-day kindergarten, but they'll have to meet other requirements such as lower student-to-teacher ratios in grades K-3. No one knows exactly how all these mandates will be implemented and district superintendents are literally learning more every day.

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