Ohio House Bill 153, one of John Kasich’s partisan budget bills, added new criteria for ranking Ohio’s school districts.  Back in 2011, we posted a series of articles looking at the ranking system as it was initially introduced.  Since then, some minor modifications have been made to the rankings, and the State Board of Education adopted a set of standards to clarify how the new financial ranking components would be implemented.

Once again, Ohio’s urban districts will be penalized by the state’s push to expand charters.

Going into effect in June 2014, districts will now be ranked based on expenditures in a variety of ways.  The relevant pieces of the law can be found in Ohio Revised Code 3302.20.

(C) Using the standards adopted under division (A) of this section and the data reported under sections 3301.0714 and 3314.17 of the Revised Code, the department shall compute annually for each fiscal year, the following:

(1) The percentage of each district’s, community school’s, or STEM school’s total operating budget spent for classroom instructional purposes;

(2) The statewide average percentage for all districts, community schools, and STEM schools combined spent for classroom instructional purposes;

(3) The average percentage for each of the categories of districts and schools established under division (B) of this section spent for classroom instructional purposes;

(4) The ranking of each district, community school, or STEM school within its respective category established under division (B) of this section according to the following:

(a) From highest to lowest percentage spent for classroom instructional purposes;

(b) From lowest to highest percentage spent for noninstructional purposes.

An important thing to point out at this point is that charter school funds “pass through” a district’s budget and are classified as “purchased services” when looking at a district’s expenditures.  Other expenditures that show up as “noninstructional” and that cost a district are related to transportation of students and can be found on a district’s books, too. These expenses are clearly spelled out in ODE documentation:

3.0 Expenditures
3.010 Personal Services – Employee salaries and wages, including extended time, severance
pay, supplemental contracts, etc.
3.020 Employees’ Retirement and Insurance Benefits – Retirement for all employees, Workers
Comp., early retirement incentives, Medicare, unemployment, pickup on pickup, and all
health-related insurances.
3.030 Purchased Services – Amounts paid for personal services rendered by personnel who are
not on the payroll of the school district, and other services which the school district may
purchase. Examples include but are not limited to legal fees, maintenance agreements,
utilities, and tuition paid for students attending other school districts, including open
enrollment and community schools.
3.040 Supplies and Materials – Examples include but are not limited to general supplies,
instructional materials including textbooks and media materials, bus fuel and tires, and all
other maintenance supplies.
3.050 Capital Outlay – This line includes expenditures for items having at least a five-year life
expectancy, such as land, buildings, improvements of grounds, equipment,
computers/technology, furnishings, buses, and vehicles.

In December 2012, when the State Board of Education adopted the standards for establishing the calculation of expenditures for the ranking of school districts, they DID apparently make an effort to remove the direct charter school funding from the ranking process.  Below is a section of those standards:

For purposes of classifying expenditures, annual operating expenditures shall include all expenses related to the delivery of educational services during the fiscal year. Non-operating expenses shall include debt service and capital outlay or other expenses inherent to the operation of the school or district but unrelated to delivery of educational services. Expenditures made by a school or district on behalf of, or in support of, another school, district, or governmental unit shall not be included in annual operating expenditures. Therefore, operating expenditures include such expenses as salaries for school personnel, student transportation, textbooks and materials, and energy costs, but excludes capital outlay, interest on school debt, payments to private schools, and payments to public charter schools.

Sadly, this effort by the State Board doesn’t go nearly far enough and merely demonstrates an ignorance of the true expenses that Ohio’s urban districts incur by having large numbers of charters within their district boundaries.  Remember, the districts are responsible for providing the transportation of these charter students to their respective schools.  With that in mind, the same standards document explains that all pupil transportation costs are NOT excluded from the calculation of a district’s non-classroom expenditures:

4. Non-classroom expenditure shall equal the total of current operating expenditures in the following categories:
a. General administration;
b. School administration;
c. Operation and maintenance of plant;
d. Pupil transportation;
e. Other and non-specified support services; and
f. Food Service

What this means for the large urban districts, like Columbus, is that their total non-classroom expenditures, and subsequently the percentage spent on classroom and non-classroom expenditures, will always take a hit for providing the transportation to the plethora of charter schools within their district boundaries.

And lest you think this is a small amount, consider the numbers.  In Columbus, approximately 16,000 of 67,000 resident students attend charter schools.  Given that the district is responsible for transportation, and even accounting for online schools, this still means that roughly 22% of the district’s transportation budget could be attributed to the existence of charter schools.  Add in the obvious cost of hiring additional staff simply to manage the massive transportation process, and the district’s figures are skewed in the ranking system, ultimately resulting in a lower ranking for both per pupil expenditures AND the percentage of expenditures in both of the reporting categories — classroom and non-classroom.

Conversely, the charter schools don’t incur these non-classroom expenditures, they are subsequently able to claim that they spend more of their money on classroom expenditures and the end result is that the charter schools will receive more favorable (and erroneous) rankings in Kasich’s system.

When will Ohio’s charter schools be held to the same standards as Ohio’s urban schools?  And now that Kasich controls the State Board of Education, can we believe that this is simply an “oversight”?


An additional note: Districts also provide transportation to non-public schools, so Kasich’s exponential increase in the availability of vouchers is also increasing the urban schools’ transportation expenditures while not exempting those costs from this equation.