Kasich escalates public ed defunding

Ohioans would see income taxes fall, but would pay for them through higher sales and property taxes in the final Republican proposal

That's how the Cincinnati Enquirer opens its report on the massive last minute tax plan the Ohio GOP are planning to dump on the state, after months of internal disagreements.

Of particular concern to those who support public education, the budget conference committee decided not to restore the historic school funding cuts they made in the previous budget, but instead build upon it. Here was their starting point

FY12 (2011-2012 school year), which was the first year under Kasich's budget, saw a total of $7.52 billion in total state revenues. That's an 8% cut in total state revenue -- easily the largest cut since ODE started keeping these total state revenue figures in 1995.

And the bad news for districts is that FY12 won't represent the entire state divestment from education during Kasich's first budget. That's because the governor's budget phased down the Tangible Personal Property and Killowatt Hour tax reimbursement payments over two years. So the cut will be likely continued in FY13, pushing the total revenue figure down even lower.

As it stands, that $7.52 billion is the lowest amount provided by the state since the 2007-2008 school year.

Where they have ended up is even worse. In order to pay for their income tax cut, they have decided to eliminate the 12.5% property tax rollback.

The elimination of the property tax rollback will make future school levies harder to pass and more expensive, further shifting the burden from the state to local communities already struggling to support the needs of their students.

Eliminating the 12.5 percent property tax rollback for new taxes could make school levies harder to sell to voters. For example, without the rollback, last year's 15-mill Cleveland school levy would have cost $263 a year instead of $230 for the owner of a $50,000 home, and $525 a year instead of $459 for the owner of a $100,000 home.

The Governor and his legislative allies continue to shift the burden from millionaires to working people and their communities. We're going backwards at a time when the state can afford to move forward.

Budget announcement analysis

Yesterday, is a carefully orchestrated rollout, the Governor revealed elements of his school funding plan. He could have titled it "Under-investment is our new normal in school funding".

His plan involves a new mechanism for allocating state dollars to public schools, but before we get to that, let's take a look at the actual funding levels he is proposing.

The 2011 school GRF budget allocated $6.3 billion for fiscal year 2012, and $6.4 billion for fiscal year 2013. This produced the largest school funding cuts in state history which, according to an Innovation Ohio study, has led to voters having to consider $1.1 billion in new property and income taxes for schools. Voters passed just over 40% of that amount, approving school levies equal to $487 million in new taxes. With that as a backdrop, supporters of public schools were hoping for significant restoration of that funding and alleviation of local property tax burdens. So what did the Governor unveil?

Dick Ross and Barbara Mattei-Smith, two of Kasich's main education advisers, said the long-promised plan calls for $6.2 billion in basic state aid for the 2013-14 school year, [...] and $6.4 billion for 2014-15

At best that appears to be a status-quo under-investment of Ohio's public schools. However, during the presentation the Governor and his aides all expressed the following

If approved by the Ohio General Assembly, school districts would not experience any drop in funding in the next two years (July 1 to June 2015). However, Ross said, that level of funding would not be sustainable and would have to eventually decline.

The Governor reiterated that funding guarantees would be eliminated after this budget and districts should expect more cuts. To a system that has already suffered $1.8 billion in cuts that ought to be chilling. To avoid some of the rollout day chills, the Governor did not have district level funding numbers available - they should be available later next week.

Along with this basic GRF funding the Governor did announce a number of new programs and program expansions

Additional items, including $300 million for grants to encourage innovation in districts, bump the total cost of the plan to $7.4 billion for 2013-14 and $7.7 billion for 2014-15.

Much of this money is one-time, requires grant applications to be approved, or is ear-marked for specific purposes, such as

• Funding of $190 million for special needs students, plus $45 per pupil in every school to fund gifted students;
• Additional support of $207 million for 3- and 4-year-olds with disabilities;
• New funding of $185 million for districts with the least amount of access to public preschool programs.

While this is welcomed, there is also a significant expansion of money going to charter schools and vouchers.

Vouchers

Included in the proposal are several provisions that dramatically increase the availability for school vouchers in the state, including a statewide income-based scholarship for families earning less than 200% of federal poverty (roughly $46,000 for a family of four) and a literacy-based scholarship for students who consistently fail the state's third grade reading test. A full 1.8 million students would qualify for the new plan's income requirements

The new vouchers would give about $4,250 a year toward private-school tuition to any kindergartener in the first year and first graders in the second year. The extra cost would be about $8.5 million in the first year, and $17 million the second year.

Charter Expansion

While new charter school accountability mechanisms were missing from the Governors proposals, extra money for them was not. For-profit charter schools will see an increase in state funding with those schools receiving the same dollar amount per student as their public counterparts, along with $100 more per student to help pay for facilities.

The $100 per student facilities payment will amount to around $13 million dollars. The "Money follows the child" provision will cause significant hardship to poorer districts that can least afford to lose state aid to low performing charter schools, which brings us to the new formula.

The Funding Mechanism

The Governor has moved away from trying to determine the cost of a quality education and funding it at that level to instead considering a communities ability to pay and having the state attempt to equalize that across school districts. The Plain Dealer describes is like this

Mattei-Smith said this plan tries to reduce the difference through a complicated formula to provide aid to districts with lower property values in two stages. The first takes the 20 mills of property taxes that most every district in Ohio charges at a minimum. Though Mattei-Smith said only 24 districts in Ohio have $250,000 of property value per student -- an amount that raises $5,000 per student with the 20 mills -- the plan will raise every district to that amount.

The state will cover the gap between the $5,000 figure and what 20 mills raises per student in that district. Because charter schools can't use property taxes, the state will cover the entire $5,000 as their base funding.

The second phase aims to equalize residents' ability to pay property taxes in addition to the 20 mills. Districts typically have about 35 mills billed to residents, but Kasich's staff said many residents don't have the income to afford those added taxes.

The plan ranks districts in wealth based half on property vales and half on household income, then separates the bottom 80 percent from the top 20 percent. The top 20 percent will receive no additional state aid.

The plan aims to boost the remaining 80 percent of districts, with those at the top getting state aid equivalent to charging another 5 mills in taxes. The lowest ranked districts will receive state aid up to the equivalent of as much as 15 mills.

This extra money will "follow the student" -- to use a phrase that Kasich and his staff used in the weeks leading up to Thursday's announcement -- as they go to charter schools. That means that a charter school, whether it be in a building or online, will receive more money for students from a poor district like Cleveland than it would from a richer one like Beachwood or Westlake.

The non-partisan, highly respected KnowledgeWorks released this statement, which captures the essence well.

Ohio Governor John Kasich’s proposal for a new school funding formula for primary and secondary public education includes many good ideas to help propel Ohio’s public education system forward but fails to ensure all students have adequate resources to succeed, Ohio Education Matters said today.

While more details are needed to fully assess the plan, which was released today in a Columbus briefing, the initial reaction is that the school funding plan does nothing to assure that students have enough resources to meet higher standards and expectations, said Andrew Benson, Executive Director of Ohio Education Matters, a division of KnowledgeWorks.

There appears to be many devils hiding in the not too clear details, but what is clear is that under funding Ohio's students education is now the new normal.

Here's the Presentation the Governor gave

2013 Ohio Gov. School Funding Plan Presentation by

Like shoving a pig through a snake

Greg, over at Plunderbund.com has an interesting piece discussing the many, many "top priorities" attempting to be implemented in Ohio K-12 education right now. He lists common core, new state tests, PARCC assessments moving online only, teacher and principal evaluations, teacher retesting and the new report card grading system, 3rd grade reading retention, voucher expansion, to name just a handful.

Having so many "top priorities" with imminent implementation dates, makes their individual success less likely, Greg smartly argues, using business management guru, Patrick Lencioni's writing

Most organizations I’ve worked with have too many top priorities to achieve the level of focus they need to succeed. Wanting to cover all their bases, they establish a long list of disparate objectives and spread their scarce time, energy, and resources across them all. The result is almost always a lot of initiatives being done in a mediocre way and a failure to accomplish what matters most.

When a CEO announces that her company’s top priorities for the year are to grow revenue, improve customer service, introduce more innovative products, cut expenses, and improve market share, she is almost guaranteeing that none of those objectives is going to get the attention it deserves.

Right after reading this, we read this article in the Plain Dealer, titled "Ohio schools prepare for another budget hit"

For the past year, many school districts across Ohio have been asked to do more with less after the state budget suddenly reimbursed them far less for lost business taxes -- called tangible personal property taxes -- than they had been getting. While keeping basic state aid flowing to schools, Gov. John Kasich made the change to help avoid a multibillion-dollar deficit.
[...]
The state had set up the reimbursement plan years before when it replaced tangible personal property taxes with a different business tax -- the commercial activities tax. Revenue from that new tax goes to the state instead of directly to districts.

The result will be a fiscal crunch for schools for the second year in a row.

Northeast Ohio's 97 districts will take a harder hit than some other parts of the state.

They'll see an increase of more than $9 million in basic state aid next school year -- about 15 percent of the statewide increase. But they will receive almost $74 million less in business tax reimbursements -- about a third of the loss statewide.

It's challenging enough to continue to provide a quality education in an environment of deep, widespread, funding cuts, but when coupled with a huge list of "top priorities" it is a recipe for disaster.

What is missing from the list of "top priorities", and missing from the legislatures mid biennium review (MBR) is a constitutional school funding mechanism that will prove to be fair, equitable and adequate to implement not only a quality education for all, but fund all these other pet project "priorities".

The Governor and his legislature have placed an incredible burden on school districts and their administrative and teaching staff, and simultaneously failed to provide the requisite support. That needs to change.

Swing state education survey

Some poll results were released recently that delved into the minds of voters in swing states, and their attitudes towards various education topics. There was a lot of positive views expressed, that perhaps run counter to many of the news stories one reads in the local papers.

Here's some select findings

• Education is a top tier issues. 67% say education will be extremely important to them personally in this year’s elections for president and Congress.
• Education is a major economic issue. 34% of voters select “improving education at the elementary, secondary, and post-secondary levels” as one of the top two priorities for getting America’s economy back on track, which ranks in the top tier with “reducing our dependence on foreign oil” (39%) and “reducing the federal budget deficit” (32%). These goals rank as higher priorities than reducing taxes and regulations on business, addressing trade issues, or modernizing transportation infrastructure.
• In light of the previous topic, law makers should note that 78% of voters say that increased funding for education is necessary, including 44% who say it is definitely necessary. Just 21% say it is not necessary.
• 55% say they would be willing to pay $200 more per year in taxes to provide increased education funding
• A note to Cleveland Mayor Frank Jackson, at least half of voters feel it is extremely important to make sure schools continue to provide arts, music, and physical education classes for all students (59% extremely important)
• And a note to the union bashers. When asked which one or two of seven groups have the greatest responsibility for improving education, slightly more than half (52%) of voters hold parents of students most accountable. This notably surpasses the proportion who place responsibility on the shoulders of teachers (31%), elected officials (26%), and society in general (22%). School administrators (15%), students (13%), and teachers unions (5%) are cited least often.
• 90% of voters feel it is extremely (69%) or fairly (21%) important for their governor and state legislature to address the issue of education as a matter of state policy.
• 44% of voters say that the Democratic Party reflects their priorities on the issue of education very or fairly well, while 31% feel the same way about the Republican Party. Among the crucial bloc of independent voters, 40% feel that the Democratic Party reflects their priorities, while 26% feel that way about the Republican Party.

You can read the entire survey below.

College Board Education Survey Key Findings

How corporate tax loopholes defund the American Dream

Note: This is the first installment in a series on how corporate tax loopholes undermine the middle class—and what can be done about it. You can read the second article in the series here, and read the third article here.

By Amanda Litvinov and Dwight Holmes

As more middle class Americans than ever before wring their weary hands over whether to pay down their student loans or make their next mortgage payment, corporations are also experiencing a history-making moment. They’re sitting on record profits, and are taxed at historically low rates.

Between 2001 and 2010, corporate profits in America increased by 125%. Meanwhile, the median family income went down by 4.6% in the same time period. How was such growth in corporate profits possible, given the economic meltdown that started in 2007? Here’s the quick and dirty answer: They stacked the deck.

For decades, some of the nation’s most successful companies and CEOs have financed and lobbied enough politicians to curry a shocking level of influence over how laws are written and which ones pass. They’ve molded a system in which they can keep an ever-increasing share of profits for themselves, stunting the paychecks of working Americans and putting more burden on small businesses.

See the sources for the information used in this graph.

On top of that, corporations are contributing less in taxes to the federal government and to the communities where they conduct their business, meaning less money for serving the public good through education and other services. (A recent report shows 30 of the most profitable Fortune 500 companies pay more to their lobbyists than they do in federal taxes.)

“The middle class is being harmed by the structure of the economy, the structure of the tax burden, and the erosion of social services, including education,” said Robert Kuttner, a co-founder of the Economic Policy Institute and distinguished senior fellow at the non-partisan public policy center Demos.

When corporations don’t pay their fair share in taxes, Kuttner said, there are only three alternatives: “You either cut the services, you add to the deficit, or you make someone else pay—in this case, the middle class.”

We’re not talking chump change here. The Institute on Taxation and Economic Policy estimates that in the past three years, the federal tax revenue lost through corporate tax loopholes is $222.7 billion, which represents a loss of as much as $9.8 billion to public schools. State tax revenue from just the 265 largest companies saw losses of $42.7 billion in three years, roughly $15.4 billion of which would likely go to public schools if the loopholes were closed (see source 1 below).

Our economy was once much more balanced. Between 1948 and 1973, as productivity increased, worker wages grew at the same pace—in other words, American workers got a fair share of the growth. Between that and programs like the G.I. Bill and Social Security, America’s thriving middle class and vibrant public education system astonished the world. Then things changed. It’s more accurate to say that things were changed, by small but powerful groups, including ALEC and other right-wing organizations, and business leaders who wanted to see their companies’ already healthy profits grow exponentially.

To be clear: The concentration of power now in the grips of corporate America and the resulting unprecedented economic inequality we see today is no accident. For the past 30 years, we’ve all been trudging down a path that was carefully plotted for us by those who bought political influence for the express purpose of putting business profits above the well-being of America’s middle class.

They promised us tax cuts would lead to more revenues, greater investment and more jobs. Instead we have unprecedented deficits, falling family incomes, and four job-seekers for every open position.

Americans’ optimism about their children’s futures has reached an all-time low for good reason. Working hard and playing by the rules just doesn’t pay off like it used to; in past eras, greater equity in the distribution of income made for an economy that worked better for everyone. Our best hope for restoring balance is to demand change from our elected leaders.

“We need adequate levels of public spending that are not financed by taxes that come out of the pockets of the middle class,” says Kuttner. “And there are two sources to get those revenues: From wealthy people in their role as individual tax payers … and corporate income taxes.”

Raising our collective voice is the only hope we have in countering the other voices lawmakers hear every day—those of corporate lobbyists and influential business execs who are asking for even more tax breaks. Do you think they have your sons’ and daughters’ educations in mind?

Unworkable "solutions"

This letter is in response to a Dispatch Op-Ed column published Wednesday, January 25th.

Dear Ms. Smith,

Your January 25 Dispatch column starts by lamenting “More and more money, a lot of tinkering, constant reforms and so little change,” and worrying because “The recession and state budget woes set off alarms, warning that many education needs can’t be met if we keep this up.” But then your suggestions are in large part old suggestions, unworkable, or expensive.

Year-round school, four-day school weeks, education via technology, state-leveraged purchases (buses, etc.), “best practices”/reports, and prefab buildings (“trailers”) have all been around for a while. And who will pay for the air conditioning needed for year-round school? How much expensive investment will techno-ed require if it is broadly applied in all schools? And many schools already temporarily use prefab classrooms to address population fluctuations.

You mention exempting prevailing wage. So, is it a new idea to pay for tax cuts by taking it out of working people’s income? You complain about “More and more money,” but apparently money taken from workers doesn’t count. Your suggestions don’t really seem to be against spending money. How will orphanages be paid for? Don’t you think that eliminating grade levels would require greater expenditures on personnel, software, and planning/ oversight? Do you agree with the governor that this could all be paid for by effectively eliminating collective bargaining for educational employees?

Statewide collective bargaining for salary or salary and fringes would be interesting. Do you actually think the well-to-do suburban schools would reduce their present levels to some overall average? Would the state raise all poor schools to the level of Upper Arlington, or even to a state-average level? We already have a ridiculously low minimum salary schedule.

Moreover, collective bargaining involves many more IMPORTANT aspects beyond salary, such as working conditions, fair and professional treatment, due process in discipline, sensible educational policy, and more. How would a state-level bargaining entity deal with such questions coming from over six hundred districts? Either the local boards would have to deal with this – eating up much of the “savings” – or you intend that such matters would no longer be considered. If the latter, then you would diminish the profession.

Without these options teachers have no way to demand respect, no real way to help mold policy, no way to counteract prejudice, nepotism, vendettas, foolish board policy, and other matters that harm teachers, students, and the educational process.

You end with: “Ohio can either greatly increase systemwide productivity or continue to rely on more local taxes, more district cuts and doing less with less.” Are those the only options? Why are you willing to frame the options as increase local taxes and make district cuts versus taking needed funds out of workers’ standard of living (I know: part of it – you think – would come from “productivity”)– but you don’t even mention calling for higher, progressive taxes to “stop the cuts in important areas such as preschool, the arts and foreign languages”? Is this any different from Tea Party types who MUST balance the budget by cutting the safety net but won’t touch taxing millionaires?

Finally, I am shocked by your asking a Republican governor and legislature, which supposedly hates “big government,” “Tzars,” and the federal Department of Education, to set up a “a board, which would have authority over early childhood, elementary, secondary and higher education, and could make the system function more cohesively.” What happened to “local control”? And even if local boards continue to exist in some form, isn’t this super board, as conservatives like to say, “just another level of worthless, expensive bureaucracy”?

All in all, I don’t think Einstein would be pleased with your column. It doesn’t seem that different from the same old easy (to say) fixes and politically oriented silver bullets. Much of it is entirely impossible to implement - for political and economic reasons; some cannot be universally or properly implemented; some is destructive of a valuable profession.

And your selection of types to serve on the “expert panel” is astounding: “certified public accountants, economists, futurists and technologists and perhaps be chaired by Ohio’s state auditor.” These are the “experts” – not one of them is connected to education in any way. None of them is qualified to understand education! Clearly, you are looking at money, not the education of kids. Would you make the same recommendation regarding a medical practice “expert panel” and keep everyone connected to medicine off the panel? Maybe, if you worked for a health insurance company.

Education doesn’t change because the power structure won’t deal with the real problems and people who have a public platform make proposals like yours that serve the power structure.

Yours - Tom Harker
Retired School Teacher.