Are Ohio’s poorest districts underfunded?

In a recent report, school-funding expert Howard Fleeter analyzes Ohio districts’ revenues stretching back to 1999. His study concludes that, in the two decades after the DeRolph school-finance litigation, Ohio made only moderate progress in creating an equitable funding system. According to his calculations, the gap in state and local revenue that the wealthiest districts generate versus the poorest narrowed from 8 percent in 1999 to 5 percent today. In an interview with the Columbus Dispatch, he sums up the results: “We lowered the gap, but not by a whole lot. Getting them [the poorest districts] to the same (level) of the high-wealth districts still isn’t adequate ... because their costs are higher. They have kids who cost more to educate.”

Those of us at the Thomas B. Fordham Institute agree with Fleeter that schools serving more disadvantaged children should receive more public aid. And we respect his more than two decades of work on school finance; his voice is highly influential in the ongoing funding debates, and appropriately so. But all this doesn’t mean that his results should go without challenge. In this piece, I wish to raise a few questions about his analyses and share some skepticism as to whether the state’s poorest districts are underfunded.

Let’s first take a closer look at the key chart in Fleeter’s report, displayed below. The focus of his analysis is on local and state revenues for districts in quintiles 1 and 5—i.e., the poorest and wealthiest 20 percent of districts, respectively, in terms of property values. In FY 1999, the chart shows that Ohio’s poorest districts received $6,033 per pupil in state and local aid, while the wealthiest received $6,524 per pupil—an 8 percent gap. Fast forward to FY 2019[1] and the poorest districts now receive $7,808 compared to $8,192 per pupil for the wealthiest—a 5 percent difference. Bearing in mind the notion that poorer schools should receive more (not less) in public funding, these results appear to be discouraging in terms of achieving funding equity goals.
 

​

A few observations and questions, however, are in order:

• First and most striking is the decision to deflate FY 2019 dollars to 1999 dollars, rather than inflating the older to the more current (the standard practice). While Fleeter’s method is not technically incorrect, it vastly understates the current levels of school funding. For example, the chart above displays a statewide average of $7,567 per pupil in state and local revenue, even though in FY 2017 this amount was about $11,500 per pupil. Regrettably, the “deflated” amount made it into the Dispatch’s coverage of this study, an egregiously misleading statement of funding levels, especially given that the public already underestimates true amounts of school funding.
• Second, note that federal revenues are excluded even though they are part of the overall equity picture. While these revenues pale in comparison to state and local revenues, poor districts tend to receive more federal aid than wealthier ones, so excluding these dollars results in an incomplete picture.
• Third, the poorest districts in this analysis are defined only by their property wealth. This is one way to look at poverty, and it may have been the only “wealth” variable available from 1999 to 2019. But it’s also possible that this measure may not capture districts that are actually educating the state’s poorest students. For example, Columbus and Cincinnati have relatively high levels of property wealth, but they also serve predominantly low-income children. Would the results change based on different definitions of “poor”?

With these points in mind, let’s take another look at the situation. What follows focuses on funding amounts in FY 2017, the most recent year in which we have full datasets. Instead of just considering state and local revenues, the following figures rely on the “total expenditure per pupil” statistics produced by Ohio Department of Education, which also include the spending of federal dollars. These data represent all operational spending, and they exclude capital expenditures, as well as the spending and enrollments of charter schools (save for a small number of “conversion” charters sponsored by districts).[2] The following set of charts show districts’ average expenditure per pupil based on four indicators of (dis)advantage; districts are ranked along these metrics and then divided into quintiles of roughly equal enrollments.[3]

The first two charts focus on districts’ property values per pupil and their median incomes. Figure 1 shows that the poorest districts in property values—quintile 1—slightly outspend their counterparts in the top quintile. Specifically, they spend $12,771 compared to $12,235 per pupil in quintile 5—a small advantage of $536 per pupil.

Figure 1: Operating expenditure per pupil by district property valuation per pupil (FY 2017)
 

​

Of course, property wealth or the lack thereof is not the only equity measure that policymakers might care about. When examining median incomes, Figure 2 shows that districts with the lowest incomes spend more than those with the highest—a more sizeable advantage of $1,167 per pupil.

Figure 2: Operating expenditure per pupil by district median income (FY 2017)

​

One might also want to consider whether districts educating disproportionate numbers of higher-need students spend more. Key indicators of student need are whether a child is economically disadvantaged (ED), black, or Hispanic. On average, these student groups achieve at lower levels than their peers and may need additional resources. Both Figures 3 and 4 indicate that the highest-need districts—quintile 5 in these charts—spend substantially more than districts with the lowest fractions of ED or black and Hispanic populations (quintile 1). Figure 3 shows that districts serving the highest percentages of ED students spend on average $13,962 per pupil, or $2,454 per pupil more than the lowest ED districts. Meanwhile, Figure 4 indicates that districts enrolling the highest percentages of black and Hispanic students spend upwards of $14,000 per pupil—or $3,810 per pupil more than districts with the lowest percentages of students from these race/ethnicities.

Figure 3: Operating expenditure per pupil by percentage of economically disadvantaged students (FY 2017)

​

Figure 4: Operating expenditure per pupil by percentage of black and Hispanic students (FY 2017)

​

***

These charts, of course, cannot tell us whether funding equity has improved or weakened since the conclusion of the DeRolph cases—one of the main concerns in Fleeter’s analysis. Nothing in the piece here suggests that his calculations of state and local revenues are incorrect. But by looking at total operational expenditures, which include federal dollars, and analyzing different indicators of disadvantage, we see the picture can change dramatically. As other studies have concluded, examined in various ways, Ohio’s funding system looks quite fair.