School district leaders have an opportunity to testify on the biennial budget next week in Senate Finance Committee. The committee will hear testimony on House Bill 33’s education-related items on Wednesday, May 31, at 9 a.m. This is the last opportunity to be heard prior to the Senate releasing its substitute bill on or around June 6.
Please consider submitting written or in-person testimony to ensure legislators hear from the public school community. See the testimony template in the resources section below. Whether you are submitting in-person or written only testimony, please complete the witness slip provided below and send it with your testimony to Elizabeth.Baumgartner@ohiosenate.gov no later than Tuesday, May 30, at 9 a.m.
It is critical that senators hear from local leaders about the importance of keeping the updated fiscal year (FY) 2022 base cost inputs included in the House-passed version of the budget bill. Your stories about what this funding means to students at the local level have a meaningful impact.
To help prepare for testimony, we are providing topics of interest to legislators. You may receive questions on these topics from committee members.
Student Enrollment, Teacher, and Administrator Data
There have been statements/questions recently about the numbers of teachers and administrators serving in our schools. The Legislative Service Commission recently released Ohio and national data on the number of students, teachers and district administrators. Ohio public schools saw a 10.4 percent decrease in teachers and a 19.3 percent decrease in administrators between FY 2001 and FY 2020.
Based on the questions related to Elementary and Secondary School Emergency Relief (ESSER) dollars and cash balances in Senate committees, be prepared to discuss your district’s cash balance and ESSER plans. Explain why Ohio students need the legislature to continue implementing the Fair School Funding Plan. The cash balance whitepaper provided below was recently updated by the OASBO Ed Finance Committee. It provides various reasons school districts must carry a cash balance, including:
- Unpredictability of the school-funding formula
The need for school districts to be conservative in their spending and to build cash reserves has been reinforced by the unpredictability of Ohio’s funding formula. Uncertainty around state funding results in school districts building their cash reserves to help ensure educational programming for students continues.
- Levy Cycles; House Bill (HB) 920
One of the main reasons that school districts need cash balances is the school funding system itself. School districts must raise their local share of revenue, which is primarily accomplished through property tax levies.
In Ohio, many school districts do not receive revenue growth from the reappraisal of property due to HB 920. This results in new construction being the only source of new revenue (in the year of the new construction), which for many school districts does not provide for inflationary increases. Thus, tax revenues may not keep up with increases in operating costs. Particularly when expenditures typically increase 3-5 percent (or more) annually. Therefore, school leaders are often forced to implement levy cycle strategies aimed at keeping up with the increase in operating expenditures.
This is commonly referred to as the "levy cycle", the result is higher cash balances for a period of time after a passage of a levy, which is then spent down due to increasing expenditures and inflation, and the inability to benefit from inflationary increases in property values (i.e., H.B. 920), which then results in a need for another levy to replenish the funds.
- ESSER, Five-year Forecasts, and Cash Balances
ESSER dollars are not reflected in a school district's five-year forecast directly. The five-year forecast includes a district's general fund only. However, many forecasts will be impacted upon the expiration of the ESSER funds, with expenditures potentially returning to general fund and decreasing a district's cash balance:
- Many districts utilized ESSER funds to redirect general fund expenditures (such as salary and benefits, technology, transportation costs, etc.) in accordance with federal guidance. For these districts, the five-year forecast will need to reflect these costs returning to the general fund and will impact future five-year forecasts.
- In addition to redirecting general fund expenditures, districts utilized ESSER funds to add programs in response to learning loss and other student needs. For these districts, they must determine if the new programs/personnel will continue (impacting future five-year forecasts) OR will cease.
- Many districts utilized ESSER funds for capital expenditures (HVAC improvements, etc.) and will have ongoing costs for those improvements that will likely impact general fund and future five-year forecasts.
- Cash Reserve Policies (i.e., a district’s rainy day fund)
The 2008 financial crisis highlighted the importance of managing disruptions, resulting in more conservative spending by school districts. As a result, districts created cash reserve policies following best practices outlined by the Government Finance Officers Association, Moody’s Investors Service, Standard & Poor’s and others. Note: Cash reserve policy samples are included as an appendix in the whitepaper.
Thank you for your continued advocacy on behalf of Ohio’s public school students. Your voice makes a difference!
Please contact us with any questions.
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