Recent changes by the USDA to the Community Eligibility Provision (CEP) have significantly affected Ohio school districts. The change in eligibility requirements from 40% to 25% led to an additional 90 districts joining the program, which provides free breakfast and lunch to all students. These changes have also impacted Disadvantaged Pupil Impact Aid (DPIA) funding for districts that were part of the CEP before FY2025. While new CEP districts have received more funds, non-CEP districts have seen decreased funding due to the inflation of the statewide average percentage of Economically Disadvantaged (ED) students.
Source: ODEW1
Understanding CEP and DPIA Funding History
To grasp the current situation, it’s essential to understand the history of CEP and its relationship to ED students and DPIA funding. When districts join CEP, the State of Ohio identifies all students in those districts as economically disadvantaged, raising a district’s ED percentage from, for example, 60% to nearly 100%. This shift triggers a domino effect on DPIA funding across the state because of how the funding formula is structured.
The USDA began phasing in CEP under the Healthy, Hunger-Free Kids Act of 2010, with Ohio joining during the 2012-2013 fiscal year2. As a result, the statewide percentage of economically disadvantaged students (Statewide ED%) has steadily risen since then.
The Recent Changes
In FY2024, Ohio added Medicaid-eligible students to the Direct Certification list, increasing the number of districts eligible for the 40% CEP threshold. Then, in FY2025, the USDA lowered the threshold to 25%, making CEP almost universally available to districts. This change has exposed the direct correlation between CEP eligibility and the rising Statewide ED%, as districts on CEP must identify all students as economically disadvantaged.
DPIA Calculation and Its Impact
The current base funding amount for economically disadvantaged students is $422 per pupil, an increase from $272 after the Fair School Funding Plan was implemented. However, DPIA funding is affected by a district’s ED percentage, which is divided by the Statewide ED% and then squared to account for the higher costs of educating economically disadvantaged students. As the Statewide ED% increases, the squaring effect decreases, which reduces funding for all districts.
Anticipated Funding Adjustments for FY2025
In preparation for the increased Statewide ED% in FY2025, the Ohio Department of Education and Workforce (ODEW) adjusted the ED% to 60% for funding calculations. This eliminated the potential for claw backs once actual FY2025 EMIS data is used. As shown in Illustration 2, a sample district experienced a funding loss of $52,550.52 solely because of the increase in the Statewide ED%. This change was made after receiving the FY2025 CEP Applications so that upcoming enrollment and identification rates could be accurately estimated.
Long-Term and Short-Term Impacts of CEP on DPIA Funding
The rapid expansion of CEP eligibility has had both positive and negative effects. While CEP districts have benefited from increased funding, non-CEP districts have seen reduced DPIA funding due to the inflated Statewide ED%. The following charts demonstrate how a district’s DPIA funding changes depending on CEP eligibility. The reduction in DPIA index for CEP districts, from 4.3256 in FY2012 to 2.5600 in FY2025, shows the significant financial impact.
Addressing the Funding Distortion
This long-term issue, rooted in the inflation of Statewide ED% caused by the CEP, is under review. The recently completed Economic Disadvantaged Cost Study aims to provide recommendations for improving the identification of economically disadvantaged students and better aligning funding with actual needs.
A Potential Short-Term Solution
One potential short-term solution is to increase the ED Base Funding Amount, which has remained stagnant since FY2022. As shown in the illustrations below, an $87 increase to the base funding could help districts avoid significant budget shortfalls caused by the expansion of CEP eligibility. This increase should be considered for FY2025 to prevent further financial strain on school districts.
https://www.cbpp.org/sites/default/files/atoms/files/10-1-13fa.pdf