Property owners carry the majority of the districts’ financing through levies and bond issues. Like many other states, Ohio has a funding problem. For too long, the state has depended upon local property taxes as its financial mainstay for education.
A shortcoming of the funding system is what is known as “phantom revenue.” When a district’s tax base increases due to inflation (houses appreciate in value), the additional available revenue is limited by law (H.B. 920). Thus, state aid is reduced faster than the growth of local revenue.
The question of funding first came to Ohio courts with Board of Education v. Walter (1979). This decision supported the funding system as constitutional and the two-tier method — the use of local and state money — as acceptable.
In 1992, DeRolph v. State of Ohio was filed as a class-action suit. More than 500 school districts and vocational schools were listed as plaintiffs. It was filed under the umbrella of the Ohio Coalition for Equity and Adequacy of School Funding.
On July 4, 1994, Perry County Common Pleas Court Judge Linton Lewis Jr. found the state’s funding system unconstitutional. He stated that free public education was the right of each child in Ohio.
Judge Lewis charged the state legislature to present two alternative funding plans. The court cannot require specific laws, but can require those declared unconstitutional to be revised to match the state’s constitutional guidelines.
The governor, on behalf of the state, appealed the decision, saying the appeal was needed for purposes of clarification. The Ohio Department of Education urged Gov. George Voinovich not to appeal the ruling and to work with it to restructure the funding program. That did not occur.
The two alternative plans were included in the biennial budget bill (Sub H. B. 117). The first included a change in the equity program. It would increase the allocated funds, as well as expand the number of eligible school districts.
The second plan was designed to increase the charge-off millage of the district. The wealthier the district, the less it would receive from the state. The legislature began to tinker with the funding system rather than addressing its core problems.
The Ohio Supreme Court heard DeRolph (I) in 1997, DeRolph II in 2000 and DeRolph III in 2001. On Dec. 11, 2002, it again found that the funding system was unconstitutional. That case was referred to as DeRolph IV, since it was the fourth time it had come before the court.
The justices relinquished jurisdiction over the case, which meant they would not compel the state to change the system, even though it was unconstitutional.
Until that change occurs, two groups that should be allies — voters and school districts — will retain their adversarial roles.
A number of suggestions have been proposed and additional funds have been provided, but increasing revenue is merely a stop-gap solution. The funding structure is the problem.
Until money from sources outside of the state’s funds are used, the difficulties will remain.
Local school districts have as their primary mission the education of those in their care. Allowing these institutions to focus on academic pursuits instead of financial concerns will improve the learning process.
George B. Simon II, Ph.D., is a retired school administrator and collegiate instructor.
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