HB 110 Ed Choice Voucher Program Changes

OEPI’s Fall 2020 Newsletter included an article which provided an overview of Ohio’s 5 voucher programs (Performance-based EdChoice, Income-based EdChoice Expansion, Jon Peterson Special Needs, Autism, and the Cleveland Voucher program). This article can be found here.

Since the inception of the Cleveland Voucher program in FY97 (with 1,994 students at a cost of $4.3 million) Ohio’s various voucher programs have expanded to include approximately 54,600 students in FY21 at a total annual cost of nearly $400 million.

As discussed in the Fall 2020 newsletter article, Jon Peterson, Autism and performance-based EdChoice voucher programs have all been funded since their inception through the same “deduction” mechanism Ohio has used to fund community schools for more than 20 years. As most readers of this newsletter already know, the deduction method worked by including the voucher (and community school) students in the district’s Formula ADM and then deducting the corresponding per pupil funding amounts from each district’s state aid. This funding mechanism has been roundly decried by public school advocates for years as it effectively deducted both the state and local share of voucher (and community school) funding from the districts state aid. However, House Bill (HB) 110 as part of the implementation of the Cupp/Patterson Fair School Funding Plan eliminated the deduction mechanism and replaced it with direct funding by the state of all voucher (and community school) students.

The performance-based EdChoice voucher program is the largest of the state’s five voucher programs, both in terms of cost and the number of students participating. Table 1 below provides a summary of the number of students in Ohio’s four statewide voucher programs from FY17 to FY21.

Table 1 shows that the EdChoice voucher program which began with 3,100 students in FY07 has now grown to over 32,000 students in FY21. Table 1 also shows that EdChoice enrollment increased by 6,448 students (28%) from FY19 to FY20 and by 2,923 students (9.9%) from FY20 to FY21. These large increases were the result of the changes made in 2019 to the EdChoice eligibility criteria which made the EdChoice voucher program available to significantly more students.

Table 1: Participation in Statewide Voucher Programs FY17-FY21

Sources: EdChoice, Jon Peterson and Autism data from ODE FY21 June #2 SFPR. EdChoice Expansion data was provided by ODE.

The Senate’s FY22-23 budget proposal made a series of changes to the EdChoice voucher program, nearly all of which were enacted in the final version of the FY22-23 budget.  The main changes are summarized below:

• An increase in the K-8 per pupil voucher amount from $4,650 to $5,500 and in the grade 9-12 per pupil voucher amount from $6,000 to $7,500. In addition, these per pupil voucher amounts in future years are now set to increase by the same percentage that the statewide average base cost amount in the school funding formula for traditional school districts increases. LSC estimates the cost to the state of the increase in the EdChoice voucher amounts to be $77.0 million in FY22 and $86.5 million in FY23.
• Elimination of the cap on the number of EdChoice vouchers that can be awarded, which had been previously set at 60,000.
• Siblings of students who are currently receiving an EdChoice voucher are now eligible to receive a voucher regardless of whether or not the school building whose attendance area they are in is on the EdChoice eligibility list based upon its academic performance.
• Phasing out of the requirement that students must have attended a public school in the year prior in order to be eligible to receive an EdChoice voucher. This criterion had already been removed for high school students (including incoming 9^th graders) and will now be extended over a four year period to apply to K-8^th grade students. By the FY26 school year no student would be required to have attended a public school in the year prior in order to be eligible to receive an EdChoice voucher. LSC estimates the cost of the change to the sibling policy and of the elimination of the “must have previously attended a public school” requirement, along with several other clarifying changes to EdChoice eligibility, will be $53.0 million in FY22 and $65.7 million in FY23.
• Change in the EdChoice building performance eligibility standard to now make all buildings eligible that rank in the lowest 20% of district buildings (not including community school buildings) on the ODE Performance Index report card measure. Because it is not clear how many buildings will be eligible in future years under the new performance criteria (and hence how many students will be eligible), LSC was unable to provide a cost estimate of this change.
• Change in the EdChoice application window from the current 75 day period beginning on February 1^st to a rolling window with no closing date also beginning on February 1^st of each year.

While these changes are all expected to increase the number of EdChoice vouchers, at least the state will now be paying for the EdChoice voucher program since the previous “deduction method” of payment has now been eliminated (as described above). Totaling the LSC estimates above results in an estimated increase in cost to the state of $130.0 million in FY22 and $152.2 million in FY23.

Furthermore, while the new funding formula eliminates the voucher and community school deduction method, the impact of that method will continue to linger for several years. This is because the baseline funding amount to be used to compute the phase-in of the Fair School Funding Plan in FY22 and FY23 incorporates the FY21 voucher and community school deduction amounts. This means that a district which experienced an increase in choice students from FY19 to FY21 (when the funding formula was frozen under prior law) will see those increased deduction amounts effectively lowering their baseline level of state funding which defines the starting point for the phase-in of the new funding formula. This in turn means that the amount of funding the district receives in FY22 and FY23 is lower than if the FY19 deduction amounts had been used. Note that this issue only applies during the phase-in period and becomes irrelevant once the new school funding formula is fully funded (hopefully in FY27).

Finally, while many people may focus on the increase in the per pupil voucher amounts, and some may focus on the impact of using the FY21 deduction amounts, it is likely that the most significant of the changes outlined above will prove to be the elimination of the requirement for voucher recipients to have previously attended a public school. This change significantly alters the EdChoice program from one of providing additional educational options to students attending low performing schools to one where the state is increasingly paying for a private school education for students whose families have already demonstrated that they can afford to do so themselves.