Changes in Ohio School Foundation Funding & TPP Replacement from FY11-FY21

Bottom Line: State Funding for Schools from FY11-FY21
The table on page 3 of this analysis summarizes changes in Ohio K-12 public school foundation formula funding and Tangible Personal Property (TPP) replacement payments from FY11 through FY21. Foundation formula and TPP replacement payments are the two primary forms of general purpose state funding provided to Ohio’s 609 K-12 school districts and 49 Joint Vocational Districts and Career Technical Centers (JVSDs. Note that the FY20 and FY21 foundation funding figures do include the enrollment growth supplement ($15.5 million in FY20 and $23.0 million in FY21), but do not include the Student Wellness and Success (SWS) funding for districts and JVSDs (which was $255 million in FY20 and $363 million in FY21). The SWS funding is excluded because it is targeted towards non-academic support services purposes. Note also that the foundation aid figures shown here are prior to the community school and voucher deductions and thereby include funding for Ohio’s community school and voucher programs.

State foundation formula funding increased in the aggregate each year from FY13 through FY19.  Foundation formula funding decreased in FY20 as a result of $277 million in budget reductions as a result of the Covid-19 pandemic. $152 million of the FY20 reductions were reinstated in January 2021 for a net reduction of $125 million in FY21 from FY19 levels. However, more than $1 billion in reductions in TPP replacement payments to school districts have significantly undercut the impact of these formula funding increases. The following three points summarize the main findings from reviewing this data:

• It was not until FY16 that formula funding had increased enough to offset the loss in TPP at the aggregate state level over the time period.
• Even though total FY21 formula + TPP funding was higher than it was in FY11, the increase in state funding has not kept pace with inflation. The net increase in state funding from FY11 to FY19 (prior to the Covid-related reductions) of 8.1% was only slightly more than half the rate of inflation (14.6%) over the same time frame. Furthermore, FY21 formula + TPP funding was only 6.2% higher than FY11, which is roughly one-third the 17.6% rate of inflation over that time period. And even if the $363 million in SWS funding directed to the 609 K-112 districts and to the JVSDs in FY21 were included, the funding increase is only 10.8%, still only 60% of the 17.6% rate of inflation since FY11.
• Even though aggregate state formula + TPP funding is now $489 million higher than in FY11, that does not necessarily mean that every school district currently has more total general purpose state aid now than they did in FY11.

Explanation of Table
The top three rows of the table on page 3 show foundation formula funding from FY11-FY21 for Ohio’s 609 K-12 school districts as well as for Ohio’s 49 JVSDs. FY21 figures are from the Ohio Department of Education (ODE) May #2 SFPR payment. As mentioned above, the foundation formula funding figures shown are prior to the community school and voucher deductions. The middle four rows of the table show general business and public utility Tangible Personal Property (TPP) tax replacement payments made to Ohio school districts to offset the repeal and reduction of these local taxes in previous years. The TPP replacement payment amounts in FY16 & FY17 include the TPP Supplement.

The bottom five rows of the table show total foundation formula funding + TPP funding for each year, the changes in total state funding from one year to the next, the change in annual funding (in both dollars and by percentage) in comparison to FY11, as well as the rate of inflation since FY11 for the past several years.

The table shows that foundation formula funding increased in both FY12 and FY13. However, because TPP replacement payments decreased by an even larger amount, total state funding decreased from FY11 to FY12 and again from FY12 to FY13.  From FY14 and onward, total foundation formula funding + TPP funding has increased each year (although the increases in FY18 and FY19 were rather modest) until the Covid-related decrease in FY20.

The table also shows that total foundation formula funding + TPP replacement funding in FY12, FY13, FY14, and FY15 are below the FY11 total state funding level.  State Formula Aid + TPP funding has been higher than in FY11 for each since FY16.  However, the net increase in state funding in each year has not been large enough to keep pace with inflation.

All foundation funding and TPP reimbursement data is from ODE. The inflation rate data is derived from the Bureau of Economic Analysis CPI-U inflation measure and is computed on a fiscal year basis (July 1-June 30).

FY11-FY21 School District Formula Aid & Tangible Personal Property (TPP) Tax Replacement Payments ($ in Millions)

*  Foundation Aid figures include Federal Stimulus funds of $515.5 million in FY11
** FY20 Foundation Aid amount does NOT include $248.0 million in Student Wellness & Success (SWS) funding for districts and $7.1 million for JVSDs, but does include $15.5 million in enrollment growth aid, while FY21 funding does not include $352.0 million in SWS funding for districts and $11.0 million for JVSDs, but does include $23.0 million in enrollment growth funds.

Sources: TPP Reimbursement and Foundation Aid amounts are from ODE.  Inflation rate data is based on the CPI-U and is computed on a fiscal year basis (July 1 – June 30).