Changes in Ohio School Foundation Funding & TPP Replacement from FY11-FY22

Bottom Line: State Funding for Schools from FY11-FY22

Foundation formula funding 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). The graph and table of this analysis summarizes changes in Ohio K-12 public school foundation formula funding and Tangible Personal Property (TPP) replacement payments from FY11 through FY22. 

Prior versions of this analysis provided total foundation formula funding payments before the deductions were made for community school and the EdChoice, Cleveland, Autism and Jon Peterson Special Needs voucher programs. However, beginning in FY22, the deduction method of funding community school and vouchers in Ohio was eliminated and replaced with direct state funding. As a result, FY11-FY21 state foundation aid payments shown here reflect funding amounts after the community school and voucher deductions. This change not only allows the foundation formula data from FY11-FY21 to match that of FY22 but also provides a more accurate reflection of state aid payments that are actually received by Ohio’s 609 traditional public school districts.

Note that the FY20 and FY21 foundation funding figures do include both the enrollment growth supplement ($15.5 million in FY20 and $23.0 million in FY21), as well as the Student Wellness and Success (SWS) funding for districts and JVSDs (which was $248.0 million in FY20 and $359.9 million in FY21).

The data in the top row of the table shows that state foundation formula funding increased in the aggregate each year from FY14 through FY19. Foundation formula funding decreased in FY20 due to $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. Because of the addition of the SWS funding, FY21 school district foundation aid was 2.3% greater than that of FY19, despite the COVID-related cuts to formula funding. FY22 traditional district foundation aid increased by $215.4 million (3.1%) over FY21.

However, during the FY11-FY22 timeframe, there was more than $1 billion in reductions in TPP replacement payments to school districts, which significantly undercuts the impact of these formula funding increases. The following three points summarize the main findings from reviewing this data: 

  • The “Total Foundation Aid + TPP Replacement” row of the table shows that it was not until FY17 that formula funding had increased enough to offset the aggregate loss in TPP which began in FY12.  
  • Even though total FY22 formula + TPP funding is $588.3 million higher than it was in FY11, the increase in state funding has not kept pace with inflation. The $308.9 million net increase in state funding from FY11 to FY19 (prior to the Covid-related reductions) of 4.4% was less than one third the 14.6% rate of inflation over the same time frame. Furthermore, FY21 formula + TPP funding was only $365.8 million (5.2%) higher than FY11, which is just over one-fourth of the 19.0% rate of inflation over that time period. Note that inflation started its recent rapid increase in April 2021, ¾ of the way through FY21, so the FY11-FY21 comparison of net state funding to inflation is only very slightly impacted by the recent high inflation rates. Another way to look at this is that state funding has increased by 8.3% since FY11; however, this increase is only sufficient to offset the impact of inflation partway through FY17.  
  • While not shown on the table, over the same FY11-FY22 time period where total state funding for traditional districts and JVSDs was increasing by $588 million, state funding for community schools increased by $324 million (44.8%) and state funding for Ohio’s 5 voucher programs increased by $465 million (to 5.7 times its FY11 level). 

Explanation of Table and Graph

The top five rows of the table show foundation formula funding from FY11-FY22 for Ohio’s 609 K-12 school districts as well as for Ohio’s 49 JVSDs. FY22 figures are from the ODE April #2 SFPR payment. As mentioned above, the foundation formula funding figures shown are after the community school and voucher deductions. In Figure 1 below traditional district foundation aid is shown in blue and foundation aid for JVSDs is shown in orange.

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. In Figure 1 below TPP replacement funding is shown in gray.

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 as measured by the Consumer Price Index (CPI) since FY11. 

Figure 1: FY11-FY22 State Foundation Aid & TPP Tax Replacement Funding

Both Figure 1 above and the table show that foundation formula funding decreased in both FY12 and FY13. This drop in state aid was further compounded because TPP replacement payments decreased by an even larger amount, and as a result, total state funding decreased from FY11 to FY12 and again from FY12 to FY13. From FY14 and onward both state foundation formula funding and total state foundation formula funding + TPP funding have increased each year (although the increases in FY18 and FY19 were rather modest at 1.3% and 1.1%, respectively) until the Covid-related decreases in state funding in FY20 and FY21.

Both Figure 1 above and the table also show that total foundation formula funding + TPP replacement funding in FY12, FY13, FY14, FY15 and FY16 are below the FY11 total state funding level. State Formula Aid + TPP funding has been higher than in FY11 for each since FY17. However, the bottom two rows of the table show that 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 the Ohio Department of Education (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).  FY22 inflation data is through March 2022. 

Figure 1: FY11-FY22 State Foundation Aid & TPP Tax Replacement Funding

* FY20 Foundation Aid amounts also include $15.5 million in enrollment growth aid, $248.0 million in Student Wellness & Success (SWS) funding for districts and $7.1 million for JVSDs, while FY21 funding includes $23.0 million in enrollment growth funds, $359.9 million in SWS funding for districts and $11.0 million for JVSDs.  FY11 Foundation Aid figure includes Federal Stimulus funds of $515.5 million.

Sources: All funding data from ODE.  Inflation rate data is based on the CPI-U and is computed on a fiscal year basis (July 1 – June 30). FY22 Inflation rate is through March 2022.