More State Budget Cuts For Our Schools

[Rick Rowlands]

Does everything that government does have to be so complicated?!?

[irishbobcat]

the state budget is of concern due to the Ohio Supreme Court ruling from Sept. 21, 2009 that stated that the installation of Video Lottery Terminals (VLTs) at Ohio's horse-race tracks is subject to referendum. The referendum cannot appear on the ballot until November 2010.



House Bill 1, the state budget bill, included VLTs as an extension of the Ohio Lottery; as such, the proceeds from VLTs would only be able to be used for education. The biennial budget for K-12 education in H.B. 1 included $851 million in revenues from VLTs.



Since the ruling, we have received many questions about the impact the loss of those funds might potentially have on the budget for education in Ohio.



Yesterday, Governor Ted Strickland's Office asked ODE to provide information about how potential additional reductions would affect K-12 funding. The Governor's Office is releasing the information ODE provided to the media shortly, and I want to be certain you have access to it, should you receive any inquiries. I do want to stress that, very similar to prior scenario building during the budget development process, these figures and examples are being used to DEMONSTRATE how devastating any additional reductions would be to education. NO decisions have been made about altering the education budget.



ODE has developed information for two scenarios. One scenario is based on ODE receiving a waiver from meeting maintenance of effort (MOE) and use of funds criteria from the U.S. Department of Education (USDOE). This would allow ODE to shift State Fiscal Stabilization Funds (SFSF) from FY11 to FY10. Shifting funds would minimize the impact of the revenue loss in FY10, but would require the entire loss of revenue to be made up in FY11.



The other scenario assumes that USDOE does not grant a waiver to ODE. This would result in not only the loss of VLT revenue, but could also cause the loss of SFSF appropriated for both ODE and the Board of Regents as the state would not be able to meet its obligations for MOE and use of funds. The reductions would then have to be split over both years of the biennium.



Without a waiver from the USDOE



Losing both the VLT and SFSF funding results in a shortfall of $2.3 billion. Based on the simulations released earlier this month, a 10.31% reduction in districts' FY 2010 payments and 15.74% in FY 2011 payments would be necessary. In the scenario, reductions have been applied at these percentages across the board. We have only provided estimates for traditional districts, but reductions at the same levels for community schools are assumed.



We do not know if the USDOE would grant a waiver of these particular requirements and allow us to remain eligible to receive SFSF funds.



Click here to visit Education Reform on the ODE Web and view the funding adjustment under this scenario.



With a waiver from the USDOE



If ODE were granted a waiver for meeting MOE and use of funds criteria by the USDOE, reductions would be shifted to affect FY11 only. Under this scenario, $285.2 million which has already been included in the FY11 K-12 education budget would have to be shifted to fill the shortfall in FY10. The shift in funds would be necessary because USDOE guidance for the use of SFSF funds requires any shortfalls in FY10 to be addressed before applying funds to shortfalls in FY11.

This avoids a deficit in FY10, but means that the full impact of the cuts would need to be absorbed in FY11 and shared by both K-12 education and the Board of Regents. Reductions to districts would be in the amount of $654.2 million, or an across-the-board reduction of 10.06% per district in FY11. This also results in a budget shortfall for the Board of Regents of $197.3million.



Click here to visit Education Reform on the ODE Web and view the funding adjustment under this scenario.



For the purposes of this exercise, Joint Vocational Schools are not included in either reduction scenario. Any further reduction to the JVS budget would put an additional $44 million in federal Perkins grant funds at risk.



Additionally, neither of these scenarios can fully account for the implications these reductions might have at the local level. For example, in order to preserve Title I or IDEA funds (both regular and stimulus) a district may need to divert resources to those programs.



We understand that the uncertainty of the last year has been difficult for you as planning budgets and making important decisions about your finances have been thrown into flux by issues with the state budget. The current situation definitely adds to the angst we all feel. Let me reiterate that NO decisions have been made about education funding. Please understand that we are doing everything we can at ODE to assist you through these tough financial times. I will keep you informed as soon as ODE receives any information.