- Associated Press - Tuesday, February 3, 2015

COLUMBUS, Ohio (AP) - More than half of Ohio’s public school districts would get less money from the state under Gov. John Kasich’s proposed education budget as the administration seeks to adjust the funding formula to better reflect district incomes, state officials said Tuesday.

The cuts come even as Kasich’s $72.3 billion operating budget calls for increasing state foundation funding from $11.9 billion in the current budget cycle to $13.3 billion for the two-year span starting July 1.

Budget director Tim Keen told the Ohio House Finance Committee that the income adjustment as it exists in the current formula is more likely to benefit districts where property values are higher.

“Clearly, if our theory is that we should be allocating our limited state resources to districts with the least capacity to generate local revenue, this outcome is not acceptable and cannot be continued,” he said.

During the hearing, state Rep. Mike Dovilla, a Berea Republican, said he represents four districts that could potentially fall on the so-called higher capacity end of the scale, and asked Keen whether adding income into the formula along with property values would substantially change things.

Dovilla said Berea had a median income of $43,000, and while others parts of his district might have higher median incomes, they aren’t necessarily wealthy.

“It just strikes me that the Robin-Hood effect may yet be continuing in this process, where we’re forcing those districts that already have high property taxes to send a good deal of their wealth down to the state, which is then redistributed somewhere else,” he said. “And then on top of that, to add insult to injury, we’re forcing those folks to then raise their property tax as well.”

Keen said, in general, taxation introduces a Robin Hood effect - taking from one group and giving to another.

Kasich’s budget proposal also reduces from 100 percent to 99 percent the amount of previous year revenues that districts receive under the state guarantee. It further resumes phase-out of two revenue streams that districts have been receiving - the tangible personal property tax and utility deregulation replacement payments, reducing state payments in those areas by $235 million over the two years.

Keary McCarthy, executive director of Innovation Ohio, a liberal think tank, anticipated that many districts would be surprised by the cuts that result when Kasich’s education budget calculations are released.

“There’s going to be a lot of sticker shock,” he said.

When the combined changes are accounted for, the Ohio Department of Education said in a separate conference call with reporters that 287 school districts would see funding increases under the proposal, while 323 would see funding reduced.

“If you are a poor school district, you are more likely to see an increase in your state aid,” said Aaron Rausch, the department’s budget and school funding director. Officials said that doesn’t mean every poor district will get more money in the budget and every wealthy one won’t, but that’s what generally will happen.

Rausch said the 20 percent of districts with the least capacity to raise local revenue would see an increase of $188 million in the first year of the budget and $162 million in the second. By contrast, the 20 percent of districts deemed most able to raise local money would collect only about 2.5 percent of the total increase in state aid.

Dovilla said he appreciated the philosophical position “but ultimately there’s only so much we can squeeze out of those who are successful and who are working hard and who are paying the tax bills for others.”

Keen said he lives in a district that will fall off the guarantee under the budget proposal and have to rely more heavily on local dollars. He said he “would just as soon pay taxes locally to my school district, where 100 percent of those tax dollars will be kept by my district and directed by my district the way that my neighbors and myself feel they ought to be directed” than “fighting to get nickels and dimes back (from the state) through the foundation formula.”

Kasich’s education proposals also include changing the name of the Ohio Board of Regents, the state agency that oversees public colleges and universities, to the Department of Higher Education and changing the title of its leader from chancellor to director.

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Associated Press writer Ann Sanner contributed to this report.

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