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Ohio K-12 State Funding: Analyzing Hold Harmless Guarantees

By Meghan Homsher posted 23 days ago

  

by Meghan Homsher and Ernie Strawser, Senior Analytics Advisors, Frontline Education 

Key Learnings
•    Local Per Pupil Capacity Increased: Ohio's K-12 state funding for fiscal year 2025 shows that, on average, local calculated capacity per pupil increased 10% over FY 2024.
•    Property Value and Taxpayer Income Increased: Local changes in district property values and taxpayer incomes serves to shift funding burden from the state to local districts.
•    More Districts are ‘Guaranteed’: FY 2025 reveals that approximately 184 districts are now on the FY 2020/21 funding guarantee.

What's Behind the Numbers?
Ohio's FY 2025 funding report (SFPR Dec#2) reflects the most recent property values. Increases in property values and taxpayer incomes can result in higher calculated local capacity (share) of per pupil funding. When the local share increases, the state’s share decreases. The FY 2025 SFPR reflects a significant increase in district per-pupil capacity (local share). By district typography, rural and Urban districts saw the largest increases in per-pupil capacity from FY 2024 to FY 2025. The impact can be less per pupil state funding and possibly ‘guarantee’ status.

Deeper Look:
Districts with current-year calculated state funding that is less than 2020/2021 are placed on a hold harmless guarantee. Since per pupil funding (base cost) was not increased for FY 2025, the increase in per pupil capacity demonstrated above can reduce a district’s funding. In some cases, the reduction can be sufficient to return them to their 2020/2021 level of state funding. In FY 2025 there are approximately 185 districts on the guarantee, an increase of 33 over FY 2024. When grouped by district typography, the rural districts saw the largest increase in the number of guaranteed districts.

The Challenge of “Presumed” Vs. Actual Local Revenue
Despite state calculations showing increased local capacity, local revenues don't automatically adjust to match, or actual revenue growth is less than the state calculated amount.
With reduced state funding, elimination of Federal Pandemic Relief (ESSER) funding, and inflationary pressure on program costs - districts face challenging financial conditions going forward.


Moving Forward: Strategy and Messaging Points for School Leaders
As state budget discussions progress, K-12 leaders should be prepared to communicate their financial realities to legislators. Key points to emphasize include:
•    Specific State Funding Outcomes: Highlight how your district's state funding aligns with or diverges from the statewide averages.
•    Balancing State and Local Funding Responsibilities: Advocate for more predictable updates to base costs and local capacity to help align state support with actual district needs.
•    Revisiting Local Capacity Calculations

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