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Schools Lose State Funds: Burden Shifts to Property Taxes As Charters Grow, Beacon Journal Analysis Finds

Posted on: Saturday, 21 January 2006, 12:00 CST

By Dennis J. Willard and Doug Oplinger, The Akron Beacon Journal, Ohio

Jan. 21--COLUMBUS -- The growth of charter schools is shifting the burden of funding public education increasingly onto local property taxes, according to an analysis of Ohio Department of Education data by the Akron Beacon Journal.

The shift is occurring statewide -- from urban centers like Cincinnati, Akron and Columbus, to rapidly growing suburbs such as Green and Medina.

There are constitutional implications.

The Beacon Journal did its analysis after Ohio Supreme Court Justice Paul Pfeifer raised the issue in oral arguments two months ago in a new case before the court addressing the constitutionality of charter schools.

Public-school advocates have gone to the high court, arguing that charter schools -- many run by for-profit companies -- are unconstitutional, partly because of the way money is removed from public schools.

Pfeifer said that if that contention is correct, then charter-school funding may violate a 1997 court decision that said the state's reliance on property taxes to fund education creates unconstitutional disparities between districts.

"The net result is a greater reliance, instead of a lower reliance, on the real-estate taxes in direct conflict with the admonitions of this court," Pfeifer said.

He held up Cincinnati as an example.

"The end result, the bottom line, they (lawmakers) are taking away state funds at a rate that exceeds the dollars that follow the particular student, thereby placing a greater reliance on the property tax in school districts that have humongous fundamental problems. That's the constitutional issue," Pfeifer said.

The Beacon Journal analysis showed that Cincinnati residents are paying a larger portion of the "formula" cost of running their schools, up from 53.3 percent in the 2002-03 school year to 58.5 percent this year.

The formula amount is the total funding the state believes is necessary for an adequate education. It includes classroom aid, teacher training, special education, transportation and other services.

The formula takes into account a community's tax base. The more property wealth per pupil, the more money the district is expected to raise locally.

In high-wealth districts, such as Cincinnati, the shift is most evident.

Cincinnati loses about 30 percent of its state aid to charters, although those schools enroll only 17 percent of the city's children.

To determine whether other factors may be at work, the Beacon Journal removed from the analysis formula changes that the legislature and Gov. Bob Taft made in the last four years. There was negligible change; charter schools continued to be the force driving increased dependence on property taxes.

Chad Readler, a Columbus attorney who represented charter schools in the Supreme Court case, agreed that there is an increased reliance on property taxes, but said there are practical and legal defenses.

Practically, he said, districts lose money whenever a student leaves for any reason, whether it be for a charter or private school or for another district.

"So anytime a student leaves a district, it is probably true that district is going to be -- in terms of percentage -- more reliant on property taxes," Readler said.

But, he said, although state dollars are lost, per-pupil funding from local property taxes actually increases when a district has fewer students enrolled.

"I'm sure districts would say they would have to close schools, consolidate classrooms, and things like that, but that is a reality that urban districts have faced for a number of years and is not charter-school specific," Readler said.

Legally, he said, the 1997 DeRolph v. State Board of Education decision pointed to an over-reliance on property taxes statewide, not in individual districts.

The Legislative Office of Education Oversight, an independent research arm of the state legislature, issued a report last May that cited Cincinnati as an example of a district struggling with a loss of funding to charter schools.

"The loss of state dollars to community (charter) schools may affect a district's ability to provide for the education of students who remain in district-operated schools," the report said.

Because children at all grade levels leave buildings throughout the district, public school systems cannot easily "close a school or eliminate a classroom or teacher to compensate for less state funding," the agency said.

The oversight board also pointed out that Ohio is one of only three states that runs charter-school funding through the public school district's "formula," then subtracts the funds from the local district.

State Rep. Mary Taylor, R-Green, questioned whether charter schools are to blame.

The Beacon Journal's analysis showed that her home district of Green, a rapidly growing community unable to pass a school levy fortwo years, now relies on real-estate taxes for 58.4 percent of its "formula" revenues, up from 53.6 percent four years ago.

"The way the formula works, it's not allowing school districts like Green to collect more money as the enrollment is growing," she said.

The state assumes that Green is collecting 23 mills to offer an adequate education. As the tax base grows, the state share declines, forcing the district to go to voters to raise the money necessary to keep pace with enrollment, she said.

"The need for levies comes from a flaw in the formula and has nothing to do with charter schools," she said.

State Sen. Kimberly Zurz, D-Green, disagreed.

She said that students are leaving Green -- recognized by the state as among the top academic districts in Ohio -- to attend schools that are of lower quality. When they do, "it's obvious that the amount deducted for the charter school is twice the amount the school district gets" from the state for individual students, she said.

And as Green fails to pass a levy, more people leave, "because parents are getting frustrated," she said.

Stanley Lucas, treasurer of Dayton schools -- the district that has lost the most students to charters -- said: "The judge is right. His basic premise is right. The numbers prove it.

"The bottom line is, I know there is disparate treatment for our kids."

Dennis J. Willard can be reached at 614-224-1613 or dwillard@thebeaconjournal.com. Doug Oplinger can be reached at 330-996-3750, or doplinger@thebeaconjournal.com

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Copyright (c) 2006, The Akron Beacon Journal, Ohio

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Source: Akron Beacon Journal (Akron, Ohio)

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