In today's Ohio Education Gadfly former Ohio lawmaker Jeff Jacobson and I share findings from our review of Ohio's school funding system. One of the most interesting, and indeed troubling, things we came to understand is that school funding in Ohio is in trouble because school spending is outstripping revenue growth at an accelerating rate. The gap is growing and the challenge will have to be addressed during the 2011-12 biennial budget process that kicks off in early spring next year.

To illustrate the problem, compare annual per-pupil revenue for K-12 education in Ohio over the past decade to the rate at which state revenue has changed over the same time. The black bars in chart 1, below, show real per-pupil K-12 revenue since 2000. The gray bars show what each year's K-12 revenue would have been had school spending increased (or decreased) according to the growth of the state's resources. The two aren't far apart in the early 2000s, when Ohio's economy was humming along and property values hadn't plummeted. But by 2010, the gap between the two tops $2,700 and is widening. Similar gaps plague many Ohio school districts as most have seen stagnant or declining property values in recent years.

But bringing school spending in line with the realities of state revenue isn't as easy as it sounds. We identify several well- entrenched obstacles hampering efforts at getting spending under control ??? specifically, personnel costs, which in most school districts represent upwards of 85 percent of school spending. It is the personnel budget and especially teacher salaries that drive the unremitting cost increases. In our piece we show highlight ways in which personnel policies cement current school spending trends in place.

  1. Longevity-based step increases combine with regularly negotiated cost-of-living adjustments to make salary spending grow regardless of economic conditions.
  2. A multi-year levy cycle in most districts leaves spending at the end of the cycle significantly higher than current revenue; thus another tax levy is needed whether or not spending is increased???and to get the levy passed, personnel cost increases will have to be promised.
  3. Collective bargaining laws make a district's ???YES??? to the union contract trump the taxpayers' ???NO?????? regardless of the fiscal circumstances.

To read more about each of these three barriers (no doubt there are other states facing similar obstacles) as well as some historical context behind perpetual spending growth, see here.

- Terry Ryan

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