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Ohio doesn’t fund its public schools like it’s supposed to. Now many in southeast Ohio are facing shortfalls.

By: Theo Peck-Suzuki | Report for America
Posted on: Friday, April 11, 2025

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ATHENS, Ohio (WOUB/Report for America) — There’s a pattern emerging at school board meetings across southeast Ohio: Districts are losing money, and they’re cutting staff to stay afloat.

Some districts, such as Meigs and Alexander, have made these cuts quietly, through a process called attrition: If a staff member retires, the district doesn’t hire someone new. For other districts, attrition isn’t enough. The cuts are bigger and bring sudden, often painful changes.

Parents don’t always take this well. Federal Hocking’s decision in mid-March to cut and merge seven teaching positions provoked strong criticism from the community. Residents of Morgan Local Schools reacted with outrage in January when the superintendent suggested eliminating the vast majority of the district’s career tech programming. The board rejected the superintendent’s proposal, but it still let several popular career tech teachers go to stave off an impending multimillion-dollar deficit.

When cuts happen, residents tend to blame the district for not managing its finances well. Sometimes this is the case: Trimble has a deficit of almost $3 million, and everyone agrees its finances were wildly mismanaged. Not every district has such a clear culprit. Many Morgan residents blame the district’s new stadium for its career tech losses, but an independent consultant found canceling that project would only have staved off the deficits by a year or so.

There are many, many factors that play into school funding. Some of them, districts can control; others, they cannot. One problem they can’t control: how they are funded by the state of Ohio.

“Fair funding’s never got fair. Let’s just be realistic,” said Morgan board member Bryon Griffin. “This (budget shortfall problem) is happening all over the state, and a lot of it has to do with the way that the funds are dispersed from Columbus.”

Griffin was referring to the Fair School Funding Plan: the state’s formula for calculating how much money public schools need to function well. Using the most up-to-date data, this formula shows schools are short at least $1 billion statewide. The formula says the state should pay that out — but the state isn’t, and likely won’t. State legislators say the money just isn’t there; critics say what’s really lacking is the political will to invest in public education.

Districts have just two ways to fill the gap themselves: Cut staff, or put levies before voters already unhappy about rising costs.

What the state funding formula is supposed to do

School funding is enormously complex and involves several overlapping streams of revenue. Broadly speaking, however, most of the money comes from two sources: the state and local taxpayers.

How these two balance out was the subject of multiple decisions from the Ohio Supreme Court from 1997 to 2001. The court found Ohio relied too heavily on local communities to fund schools, which meant poorer districts had far fewer resources compared to wealthier peers. The court ruled that the quality of a child’s education should not depend on where they live and ordered legislators to design something better.

This set the stage for what eventually became the Fair School Funding Plan, which the Legislature began rolling out in fiscal year 2022. Ohio Education Association President Scott DiMauro said the plan had two goals.

“Number one, identify the cost of providing a quality education to every single student in the state,” DiMauro said. “Looking at the actual components, things like class size and teacher quality, access to technology, the access to extra supports that we know through our experience, through science, through research, really work. And then the other thing … was to have a more fair way of distributing state aid based on the ability of local communities to pay.”

The plan is supposed to work something like this:

Step 1: The state calculates the base cost to educate one student in a district.

Step 2: The state calculates how much the local community can raise in taxes.

Step 3: The state pays the difference.

This means poorer communities should get more state funding, and wealthier communities should get less.

“This is not an exceeds expectations, pie in the sky thing,” said Ali Smith of the policy research institute Policy Matters, which is lobbying legislators on behalf of public schools. “This is like, ‘Here’s what you have. Here’s what it costs. Here’s what you should have to do that.’”

District administrators and advocates say that in theory, the Fair School Funding Plan should work pretty well.

This is why it doesn’t.

Problem one: The state isn’t actually paying the difference

This means districts get less money than they should on paper.

For example: The state calculates the base cost of educating one student at Federal Hocking is $8,829, according to district Treasurer Bruce Steenrod. It also estimates the community can cover $4,445 of that through local taxes. The state agrees to cover the remainder ($4,384) for each student itself. Steenrod said this comes out to $3.47 million in total.

Except, Steenrod said, the state isn’t actually paying $3.47 million. That’s because the Fair School Funding Plan is only partially phased in. Right now, the state is only paying $3.25 million. This means Fed Hock is getting about $220,000 less than it should.

This is a significant amount of money. Fed Hock is projected to come up roughly $350,000 short by the end of the school year, which is why the board recently cut seven teaching positions. Some class sizes at Fed Hock will increase as a result, most notably at Amesville Elementary, where one second-grade class will have an estimated 28 kids to one teacher.

If this is confusing, here’s a simple analogy:

Imagine you go out to dinner with a friend. The two of you agree to split the bill 50-50. You’re about to order $40 of food — that’s $20 each.

Right before you order, your friend says they can only pay $15. They haven’t fully “phased in” their plan to pay for dinner. Now you have to either pay the remaining $25 yourself or order something cheaper.

This is more or less what is happening to Federal Hocking as well as other public schools throughout the state. Nevertheless, the Legislature gets to decide how to implement the Fair School Funding Plan as it balances a biennial budget of over $200 billion. The original idea was to phase in the plan over a period of several years, with the full phase-in occurring in fiscal years 2026 and 2027. That now appears unlikely as state leaders have said they don’t feel there is enough money.

Problem two: The state uses old data

This lowballs a district’s costs, which again results in the state paying less money.

When the state calculates the base cost of running the district, it uses data on things like salaries, benefits and supplies — from 2022. Costs in 2022 were much lower than 2024 (the most recent data available) thanks to years of inflation. This makes the base cost look lower than it really is, which in turn makes the state’s share smaller than it should be.

To put it another way: When the state calculates the base cost of effectively running a district, it gets the cost of running the district in 2022, not today. It only covers the cost of running the district in 2022, not today. There’s a big difference: House Finance Committee Chair Brian Stewart said using 2024 price data would cost an additional $1.8 billion. The Legislative Services Commission puts the difference between 2022 and 2024 closer to $1 billion.

Here is another analogy:

Say you and a friend go to dinner. You agree to split the bill 50-50, and the final price is $40. But your friend pulls out a menu from 2022 and notes that, if you had ordered your meal back then, it would only have cost $30. Your friend will only pay half of that, or $15, even though that leaves $25 for you to cover.

Once again, this is more or less what districts are facing, except with much bigger numbers. Steenrod said the cost of health insurance alone has gone up about 40% at Fed Hock in the last two years. That equates to an additional $1 million. The district has to cover that itself.

“So that’s a million dollars directly that we just had to put towards healthcare … and that’s money you don’t have available for other things,” Steenrod said.

Problem three: Districts can’t always raise enough to cover their share

Steenrod described this as the “phantom revenue” problem. “They say we should have this much (in local revenue), but we’re not getting that much,” he said.

The wealthier the district, the more it is supposed to pay itself. That’s the whole point of the Fair School Funding Plan. The state figures this out by measuring property values and income levels in each district. The higher those are, the more the state expects the district to raise through levies.

But that assumes voters in that district will approve new levies. If they don’t, the district can’t raise more revenue. It will eventually fall behind — even if the state pays its full share with updated costs.

Say property values in a district just went up significantly. The state now believes there is enough local wealth for the district to raise $3.5 million in levies. However, the district’s existing levies only raise $3.2 million. The remaining $300,000 is “phantom revenue” — the state thinks it’s there, but it isn’t. The state won’t pay it. The district can’t pay it. And so it doesn’t get paid.

There is only one way to cover that $300,000 gap, and that is to pass a new levy. The problem is, voters may not approve it. If they don’t, the district is out of luck.

DiMauro of the Ohio Education Association said the statewide trend on levies is not promising.

“More and more, they’re going to voters asking for increases in property taxes, and it’s becoming harder and harder to get those levies passed. Even renewal levies, which used to be almost automatic, are failing at increasing rates,” DiMauro said.

Alexander passed a new levy by one vote in 2019 after years of trying, but that levy failed its renewal vote twice, prompting the district to abandon the effort last year. Meanwhile, Morgan school board President Jason Drobina said a levy in his district would be a “last resort.”

“We don’t know that levy would stand a chance in Morgan County right now,” his colleague Bryon Griffin said.

Problem four: The state doesn’t fund special education enough

This is separate from the base cost calculations in the first three problems. It’s a different pot of money the state is also supposed to pay into.

“There are additional weights that are supposed to be added on for certain categories of students,” said Policy Matters Executive Director Hannah Halbert. “That’s one of the big drivers when we’re looking at these districts where there’s a gap between what is needed and … what they’re given.”

Consequently, Halbert said, “we have districts having to pull funding from all kinds of other places to meet the mandatory requirements of special ed services.”

Public schools worry the next state budget will make things worse

The Ohio House of Representatives has already passed its version of Ohio’s biennial budget for fiscal years 2026 and 2027. Public school advocates do not like what they see in it.

Ali Smith of Policy Matters said the House version does not address any of the problems with how the Fair School Funding Plan works today. Instead, she said, it abandons the plan outright.

“We’ve spent a quarter century at least since the (Ohio Supreme Court) decisions working to solve the unconstitutional way that Ohio chooses to fund public school districts,” Smith said. “This completely scraps all that work. It does use a little tiny bit of the Fair School Funding Plan to do some really egregious math and arrive at a new number for school districts. But it really is a clean break.”

“I would say that it has morphed into the beginnings of a new formula,” said Ohio Rep. Kevin Ritter, who voted in favor of the House plan. “The old formula, the Fair School Funding Program, simply isn’t tenable economically.”

Smith said under the House plan, districts whose enrollment has grown over 3% would see a noticeable funding increase. That doesn’t apply to most districts in southeast Ohio, where enrollment has declined since the pandemic.

Halbert described the House plan as a “reverse Robin Hood.”

“We see that the wealthier districts are getting far more than they would have,” Halbert said. “And then some of the neediest districts in the state … are seeing an expanding gap.”

Meigs Local Schools Treasurer Roy Johnson said he estimated his district would receive about a 1.6% increase under the House plan. That’s down from the 3% he estimated under Gov. Mike DeWine’s proposed budget earlier this year.

(Smith also called DeWine’s proposal “wholly inadequate.”)

According to Johnson, Meigs will likely have to consider a reduction in force in a year to 18 months if the House plan becomes law.

Ritter, whose district includes Meigs County, said the House plan aims to give schools as much of a boost as is feasible within the constraints of the larger budget.

“Full implementation (of the Fair School Funding Plan) would be $1.8 billion, and the state’s simply not in a position to do that. So, we had to sit down and begin to make the tough decisions: How do we do what’s best for the kids that are in our public schools?” Ritter said.

Critics don’t buy that.

“The state does have it,” said DiMauro of the Ohio Education Association. “The state has the resources. Legislators just don’t have the political will to direct the resources where they’re needed.”

DiMauro said private school vouchers are getting a $500 million raise legislators could otherwise put toward public schools. Almost no voucher money comes to southeast Ohio because there are so few private schools here. DiMauro expressed concern that the vouchers are mostly being used by affluent families, not low-income Ohioans who continue sending their kids to public school.

DiMauro also pointed out that the House budget plan doles out $600 million in bonds for the new Browns stadium. The state will eventually have to pay the bonds back, which will cost an estimated $1 billion.

Ritter said he opposes the funding for the stadium, but he defended its inclusion, saying the Browns would eventually pay the money back to the state with interest. As for private vouchers, Ritter himself co-founded a private school, though it did not take vouchers when he was there. Still, he defended the voucher program as a way to ease costs for private school families, who still pay public school taxes on top of tuition.

Ritter said the House prioritized ensuring no public school district received a cut.

“Every school in the state, 611 school districts, see some sort of bump. So nobody is below water,” Ritter said. In total, “We’re talking about roughly $552 million over the biennium.”

Policy Matters has published estimates of how each district will fare under the House plan as compared to fully funding the Fair School Funding Plan. Smith said the numbers come from the Legislative Services Commission.

According to Policy Matters’ calculations, Meigs would receive a jaw-dropping $8 million raise over two years if the state fixed all the problems with the Fair School Funding Plan. Under the House plan, Meigs will get an additional $875,000 over that same period.

Here are Policy Matters’ calculations for other districts mentioned in this article:

Fed Hock: $3.1 million over two years under the full plan, $140,000 under the House plan.

Morgan: $1.2 million under the full plan, $75,000 under the House plan.

Trimble: $5.4 million under the full plan, $652,000 under the House plan.

Alexander: $3 million under the full plan, $67,000 under the House plan.

There is one other point of concern for public school advocates in the budget: a change in how much money districts can hold in cash reserves. Under the House plan, districts would be capped at holding 30% of their total operating budget. Any remainder would be returned to local taxpayers.

That means if a district’s budget is $10 million, it cannot hold more than $3 million in cash.

Ritter said the idea is to give taxpayers relief in the face of surging property values. When those values go up, school district taxes may, as well, thanks to a complicated but important rule called the 20-mill floor. Under the House plan, taxpayers get back any excess money the district collects.

Except the House’s proposed cap could cause other problems, according to Lawrence County Auditor Chris Kline.

“This policy would severely hinder a district’s ability to maintain a top-tier credit rating, as AAA ratings generally require a minimum of 25% in reserves,” Kline wrote in an email. (The House initially proposed capping cash reserves at 25% before raising it to 30%.)

“Every district has unique operational needs and revenue flows, and a one-size-fits-all cap simply doesn’t work,” Kline added. “Unlike businesses or other government entities with consistent monthly revenue, school districts receive property tax revenues only twice a year. This irregular cash flow creates a need for higher reserves to ensure stable operations throughout the year.”

Johnson said Meigs’ cash reserves are around 20%, which means residents of that district wouldn’t see any tax relief from the House plan anyway.

The County Auditors Association of Ohio, of which Kline is a member, has proposed an alternative plan for property tax relief. This would change the way the 20-mill floor is calculated to make sudden spikes in property values much less impactful.

Kline acknowledged this could still negatively impact revenue for some districts, but argued it would still be equitable — as long as the state pays what it should.

“The state does need to pony up and look to their expectations of paying their fair share of the cost of education,” Kline said. “And I think that’s also part of the problem.”

The state budget now goes to the Senate.