When it comes to facilities, Ohio’s public charter schools have long gotten the short end of the stick. They’re excluded from the state’s main school construction program, which has sent billions to school districts for high end facility upgrades over the past couple decades. Unlike districts, charters don’t receive any local taxpayer support for capital improvements either. Thankfully, the state does provide a per-pupil facility allowance that covers a portion of charters’ building expenses (e.g., rent and utilities). But their meager resources overall thwart more ambitious building projects that would allow them to occupy more suitable educational spaces and expand to serve additional students.
Recognizing these challenges, Ohio policymakers have made efforts to help charters access vacant or underutilized district-owned buildings via right of first refusal laws.[1] As outlined in statute, districts must offer to charters[2] buildings that meet one of two conditions: (1) any type of facility (e.g., instructional or administrative) that has not been used for one year or (2) an instructional-use facility in which less than 60 percent was used for “direct academic instruction” during the previous year. When a building meets one of these conditions, it’s deemed “unused” and the district must offer it to charters located within its territory for lease or purchase (the district decides which one).
High-performing charters[3] are first in line for an unused facility. If more than one is interested, an auction (for a sale) or lottery (for a lease) is held to determine the buyer. When no high-performers are interested, other local charters are next in line (with the same auction or lottery process if multiple entities are interested). Should there be no interest whatsoever in the facility, the district may either auction it to other entities or retain ownership. The facility must be sold or leased for at least “appraised fair market value.”
Having these provisions on the books is an important first step. Yet questions have emerged about just how accessible unused facilities are for charters in practice. For one, there are concerns that districts, which are loathe to compete with charters, are sidestepping these requirements and withholding buildings. Back in 2016, nearly half of charter leaders reported that districts were “generally uncooperative” in making facilities available. In 2019, former Auditor of State Dave Yost noted in a report that “efforts by school districts to prevent charter schools from employing unused district school buildings is an issue.” In 2020, the Columbus Dispatch ran a troubling story about the city’s school district giving the high-performing United Schools Network (whose schools Fordham authorizes) the runaround after it expressed interest in purchasing a vacant school.
A look at recent enrollment data also raises questions. In Youngstown, for example, East High School enrolled just 522 students in 2022–23, while it enrolled more than 1,300 students eight years ago. In Cleveland, Collingwood High School enrolled just 304 students last year, but enrolled 600 students a decade ago. And in Columbus, Innis Elementary School enrolled 214 students last year but served more than 400 students in 2014–15. These aren’t the only underenrolled schools, of course, and others could fall into that category if district enrollments continue to slide. How many schools operate at less than 60 percent capacity, but haven’t been offered for lease or purchase?
Finally, cost issues remain for charters seeking to purchase an unused facility. In some circumstances, the market value of a school building can run into the hundreds of thousands or even millions of dollars, making a purchase—plus possible repair and renovation expenses—cost-prohibitive. This, along with the restrictive language allowing only local charters to vie for the facility, may be why districts often end up selling unused facilities to other entities. It may also explain why only a handful of charters are located in former district buildings.
To address these issues, state lawmakers should work to strengthen the right of first refusal law in the following ways.
- Require districts to report unused facilities to the Ohio Department of Education and Workforce, and then require the department to publish a list of such facilities and verify that they’ve been offered first to charters. Currently, there is no centralized record of which facilities are “unused” or confirmation that districts have indeed offered them to charters. Increased transparency and a verification process would help confirm that districts are following the law. A regularly updated list of unused facilities would allow charter leaders to know which buildings are available at a given time.
- Tighten the language around what it means for a building to be operating at less than 60 percent capacity. Current statute that designates a severely underutilized building as “unused” is too vague and could allow districts to avoid offering such schools to charters based on technicalities.[4] For instance, a district could claim that 65 percent of the classrooms in a building are in use even if classrooms meant for twenty-five students are being used for just five. To make the capacity provision more concrete and enforceable, legislators should create a clearer enrollment- or occupancy-based standard (e.g., building enrollment is below 60 percent of its designed enrollment capacity).[5]
- Allow all Ohio charter schools—no matter their location—to seek an unused district facility. As noted above, only charters located within a district’s boundary can purchase or lease an unused facility. To be sure, high-performing charters located in the district should continue to have first priority. But should no local high-performers express interest, all charters in the state and out-of-state charters that received approval to open should be able to buy or lease the building. This would allow Columbus-based charters to more easily expand into Cleveland (and vice-versa). It would also give existing charters an avenue to secure facility space in districts where charters have never had a significant (or any) presence.
- Require districts to sell or lease the building for an amount less than the “appraised fair market value.” This would make acquiring a facility more affordable for charters, especially in areas with higher real estate values. Remember, taxpayers have already paid for these facilities, so providing them to charters at low cost isn’t a financial loss to the district. As for what the value should be, legislators could follow the Indiana model, which requires unused buildings to be offered for $1. If that isn’t politically workable, they could require sale or lease at half the building’s market value, or an appraised value as an educational facility (not private development). Lowering the price point would encourage more interest from charters and better ensure that school buildings retain their original purpose—to educate a community’s students.
- Move to a lottery system to determine which charter (whether among high-performers or all charters) may purchase an unused facility. This shift, which would follow the current process for determining a lessee, would avoid an auction in which the price could get bid up beyond the fair market value (or some percentage of it, if recommendation four is adopted). An auction likely advantages more established charters over smaller startups that operate on tighter budgets, even if both are well-positioned to put the facility to good use. A lottery would put charters on equal footing when multiple parties have interest in the building.
- Create a credit enhancement and/or revolving loan fund to support facility purchases. Expensive capital projects typically require charters to seek financing, as they aren’t likely to have saved enough for such projects. Legislators can defray financing costs for charter schools by creating a credit enhancement and/or revolving loan program. This would make the purchase of an unused district facility that needs major repairs more financially viable (as well as purchases and renovations of other types of properties—e.g., a commercial building). It would also allow charters to keep more money in the classroom instead of paying debt service.
Ohio’s right of first refusal law provides an avenue for charter schools to obtain purpose-built educational facilities often at more reasonable cost than other building options. It also helps ensure that districts are not hoarding vacant properties, perhaps letting them deteriorate from neglect, or spending inefficiently by operating half-empty buildings. However, the policy has not opened access to unused district buildings in quite the way that one might hope. With some modifications to this section of law, more charters—whose enrollments are swelling—will be able to breathe new life into buildings that have long served students in their communities.
[1] This piece focuses on a mandatory disposal of a district facility. Districts may also choose at their own discretion to dispose of a facility. Local charters also have the right of first refusal in those cases, too.
[2] Independent STEM schools also have a right of first refusal alongside charters. However, there are only eight such schools in the state, so this piece focuses on charters’ access to unused district buildings.
[3] In general, a “high-performing” charter school under this section of law earned at least three stars on the state’s performance index and at least four stars on the state’s value-added growth measure on its most recent report card.
[4] The exact language is: “Any school building [is ‘unused’] that has been used for direct academic instruction but less than sixty per cent of the building was used for that purpose in the preceding school year.”
[5] Indiana legislation has a much clearer occupancy- or enrollment-based standard to determine whether a school is underutilized (see page 10).
