Ohio Budget Bill Includes Sweeping Reforms for School Districts

July 19, 2021 

Ohio’s operating budget for fiscal years 2022-2023 is now law after Governor Mike DeWine signed House Bill 110 (HB 110) on July 1, 2021. Included in the bill are a number of policy changes affecting the state’s K-12 schools, with some of the key changes explained below. Please reach out to us here if you have questions.

Online Learning Schools

HB 110 allows local, city, exempted village and joint vocational school districts an “online learning model” through the creation of an “online learning school.”

• Online learning is defined as a scenario where students work primarily from home on assignments delivered via an internet or computer-based instructional model.
• An online learning school will be a separate school with its own IRN number.
• Students must be assigned to the online learning school for EMIS reporting and school funding purposes.
• Additionally, to operate an online learning school, a school district must:
  • Provide students enrolled in the online learning school with a computer that is equipped with a filtering device (or software) that protects against internet access to materials that are obscene or harmful to juveniles at no cost;
  • Provide internet access to all students enrolled in the online learning school at no cost;
  • Provide a comprehensive orientation to students and their parents/guardians prior to enrollment in the online learning school;
  • Implement a learning management system that tracks the time students participate in online learning activities; and
  • Document all student learning activities that are completed offline with participation record checks and approved by the teacher of record.
• Districts wishing to open an online learning school must submit an application to the Ohio Department of Education by August 1, 2021.
• More information on this topic is available here.

New School Transportation Provisions

HB 110 makes several notable changes to school transportation:

• Payment in lieu of transportation (ORC Section 3327.02)
  • New deadline for districts to determine payment in lieu of transportation: 30 calendar days prior to first day of student instruction in the district.
    • The deadline for district determination for students enrolling after the first day of student instruction in the district is 14 calendar days after student enrolls.

• District superintendent has the authority to issue determinations regarding payment in lieu of transportation pending board of education approval at the next subsequent board of education meeting.
  • Payment amounts must be at least fifty percent (50%) of the amount established by the Ohio Department of Education as average cost of pupil transportation for previous school year.
• New requirement for board of education to issue letter to parents, community/non-public school, and state board of education stating reasons for determining payment in lieu of transportation is appropriate.
• New provision allowing parents to designate community/non-public school to act on parents’ behalf in regards to payment in lieu of transportation process, including mediation.
• If Ohio Department of Education determines district failed to provide required transportation to student, then district will pay parent of student fifty percent (50%) of the cost of providing the transportation to the student as determined by the district, but no more than two thousand five hundred dollars ($2,500).

• Ohio Department of Education monitoring of compliance with district responsibility to provide student transportation (ORC Section 3327.021):
  • The Ohio Department of Education will now monitor district compliance with responsibilities to provide pupil transportation.
  • Through its monitoring efforts, if the Ohio Department of Education determines that a district is non-complaint with its responsibilities for a consistent or prolonged period of time, then the Ohio Department of Education will deduct from district payment for pupil transportation the total daily amount as determined by the Department for each day of non-compliance.

• (New – Codified Provision of HB 164 – Online classroom portions of required bus driver training):
  • The Ohio Department of Education will develop online bus driver training program, which will substitute for the classroom portion of both the pre-service and the annual in-service training required for bus driver certification.
    • Note: on bus training requirements are not changing.

Health Curriculum

• School districts must include instruction on the harmful effects of – and legal restrictions against – vaping devices in their health curriculum. This is in addition to current educational requirements relating to tobacco, drug and alcohol abuse.
• School districts must notify parents and guardians of their intent to provide instruction in sex education or venereal diseases over and above the current education codified in ORC 3313.60 and ORC 3313.6011. Such notice must include identifying the names of instructors, vendors, as well as the curriculum being used. Districts must obtain written parental consent before providing such instruction and must also provide instructional materials to parents upon request. The Ohio Department of Education will be required to conduct annual audits to ensure compliance.

Disciplinary Actions for Educator Licenses

• HB 110 adds trafficking in persons as addressed in ORC 2905.32 to the list of offenses for which the State Board must revoke or deny teacher licensure pursuant to ORC section 3319.31.
• Additionally, HB 110 adds ORC 3319.319 to the Ohio Revised Code. This section permits a district in Ohio or in another state to request any report of misconduct received by the Ohio Department of Education regarding an individual under consideration for employment.
  • The language provides that if the Ohio Department of Education receives any such report, the Ohio Department of Education is required, upon request, to provide the contents of the report to the requesting officer and notify the officer that the provided information is confidential and may not be disseminated to any other person or entity.
  • The new language further requires the Ohio Department of Education to document the information provided in the record of any investigation undertaken pursuant to ORC Section 3319.311 based on the report. More specifically, the Ohio Department of Education documentation must include: a list of the information provided, the date the information was provided, and the name and contact information of the appointing or hiring officer to whom information was provided.

Pre-Employment Applications and Screening

• HB 110 creates a new provision requiring certain pre-employment actions and screening by public and chartered nonpublic schools.
• In particular, the new provisions require schools to include the following written notice on all employment applications in boldface type:
  • “ANY PERSON WHO KNOWINGLY MAKES A FALSE STATEMENT IS GUILTY OF FALSIFICATION UNDER SECTION 2921.13 OF THE REVISED CODE, WHICH IS A MISDEMEANER OF THE FIRST DEGREE.”
• Additionally, the new provision requires each district and nonpublic school to consult the “educator profile” database maintained on the Department of Education’s website prior to making any hiring decision.
• Further, once the “educator profile” database has been consulted, the statute grants the district further discretion to determine employment, disciplinary, or criminal record of an applicant for employment in either or both of the following ways:
  • By consulting with the Ohio Department of Education’s Office of Professional Conduct to determine whether an applicant has been subject to disciplinary action by the department; or
  • By consulting with any prior education-related employers of the individual.
• The statute also provides that a district may require additional background checks beyond the criminal records checks already required by statute for any application for employment or potential volunteer.
• Finally, the new statute provides for conditional employment of an individual pending receipt of information sought after consulting the “educator profile” database. The statute further provides that a district may release an individual from employment if information is received during the individual’s conditional employment due to the district’s consultation with the Office of Professional Conduct, or with a prior education-related employer indicating that the individual has engaged in conduct unbecoming of the teaching profession, or if information indicates that the individual has committed an offense that prevents, limits, or otherwise affects the applicant’s employment with the district.

School Funding

Ohio House Bill (HB) 110 makes significant changes to school funding. It changes how students are counted  toward a district’s enrollment, which, in turn, impacts school funding. It also creates a base cost model that largely relies on statewide employee compensation data and staff-to-student ratios to calculate base cost per pupil amounts for each district that are then used to establish state funding. The current average base cost amount of $6,020 per pupil will increase to approximately $7,200 per pupil. This increase translates to a 4% increase for FY 2022 compared to FY 2021 and a 6% increase for FY 2023, or about $2 billion in additional state spending. Due to the high price tag, funding will be phased in and could change for FY 2024 and beyond.

The new model also contains an equalizing mechanism to ensure higher poverty districts receive more state aid than those that can raise more revenue through local taxes.

For school district funding wonks, please read on.

Enrolled ADM

HB 110 fundamentally changes how students are counted and how a district’s ADM is calculated. Currently, districts use “formula ADM,” which counts students in the district in which they reside even if they attend a non-public school under a state scholarship program (e.g., Educational Choice Scholarship Program, Autism Scholarship Program, etc.), another public school district via open enrollment, a community or STEM school or a joint vocational school.  HB 100 replaces “formula ADM” with “enrolled ADM,” which counts students in the district in which they are educated. “Enrolled ADM” excludes students participating in a community school, STEM school or in a state scholarship program from the school district’s calculation.

HB 110 amends ORC § 3317.022, for fiscal years 2022 and 2023, to provide different funding formulas for various “funding units” which are (1) city, local and exempted village school districts; (2) community and STEM schools; (3) educational choice scholarship providers; (4) autism scholarship providers; and (5) Jon Peterson Special Needs scholarship providers.  Different formulas are provided for these “funding units” for fiscal year 2024 and beyond.

Additionally, for “funding units” that are city, local and exempted village school districts, a formula is provided to calculate additional funding for special education students, the amount of which is dependent on the student’s category. Similarly, a new formula is provided for economically disadvantaged students, English language learners and gifted students. For all of these categories of students, formulas are provided for fiscal years 2022 and 2023, and a different formula is provided for fiscal year 2024 and beyond.  The specific formulas can be found in the updated statutory language.

Base Cost Model

HB 110 replaces the “uniform per pupil formula amount” with a “variable per pupil base cost” to be computed for each school district. Each district’s “variable per pupil base cost” is made up of the following components: (1) teacher base cost; (2) student support base cost; (3) district leadership and accountability base cost; (4) building leadership and operations base cost; and (5) athletic/co-curricular activities base cost. These components are calculated using various inputs, such as statewide average staff and teacher salary data, district-paid insurance costs, district spending data, and certain pupil-to-staff ratios.  The average salaries and costs for the base cost computations are calculated using data from FY 2018.

A district’s base cost enrolled ADM is used for those factors of the base cost computation that are paid on a per pupil basis.  A unique “base cost per pupil amount” is established that is equal to the district’s base cost divided by the district’s base cost enrolled ADM. The “statewide average base cost per pupil” for FY 2022 and FY 2023 is the sum of the aggregate base cost calculated for all school districts for FY 2022, divided by the sum of the base cost enrolled ADMs of all school districts in the state for FY 2022.

The base cost, including state and local shares, amounts to an estimated $10.9 billion in each fiscal year, with the estimated statewide average base cost per pupil being $7,202 and $8,334 for career-technical students.

State Share Index Replaced by Per Pupil Local Capacity Amount

The current “state share index” formula used to equalize payments based upon a district’s capacity to raise local revenues is replaced with a district-specific “per pupil local capacity amount.” A “per pupil local capacity amount” is based on three factors: 1) a district’s base cost enrolled ADM; 2) property valuation; and 3) income.

But before calculating the “per-pupil local capacity amount,” a district’s “per-pupil local capacity percentage” must be determined. A district’s “per-pupil local capacity percentage” is calculated by a two-step process. First, all districts are ranked using each district’s ratio of the district’s median federally adjusted gross income (FAGI) and the statewide median FAGI, from the highest ratio to the lowest ratio. Using those ratios, a district’s “per-pupil local capacity percentage” is established as follows: 1) if the district’s ratio is less than the ratio of the district with the 40th highest quotient but greater than 1.0, then the district’s “per-pupil local capacity percentage” is equal to a percentage between 2.25% and 2.5% and to be calculated based on a sliding scale; 2) if the district’s ratio is less than or equal to 1.0, then the district’s “per pupil local capacity percentage” is equal to the district’s ratio times 2.25%; and 3) if the district’s ratio is greater than or equal to the ratio of the district with the 40th highest quotient, then the district’s “per-pupil local capacity percentage” is equal to 2.5%.

After a district’s “per-pupil local capacity percentage” is determined, it can be plugged into the following formula to calculate the district’s “per-pupil local capacity amount.” The district’s “per-pupil local capacity amount” is equal to the sum of the following three factors, which are calculated using the district’s base cost enrolled ADM: 1) the “valuation per pupil,” which is calculated by multiplying the per-pupil local capacity percentage by 60% of the minimum of (a) the average valuation for the three most recent tax years and (b) the district’s taxable value; 2) the “FAGI per pupil,” which is calculated by multiplying the per pupil local capacity percentage by 20% of the minimum of (a) the average of the total FAGI of the district’s residents for the three most recent tax years and (b) the total FAGI of the district’s residents for the most recent tax year; and 3) the “adjusted FAGI per pupil,” which is calculated by multiplying the per pupil local capacity percentage by 20% of the per pupil amount of the product of (a) the median FAGI of the district’s residents for the most recent tax year and (b) the number of state tax returns filed by taxpayers residing in the district for the most recent tax year.

The statewide average per pupil local capacity amount is estimated to be $4,121 in FY 2022 and $4,457 in FY 2023.

Funding for Community Schools, STEM Schools and State Scholarship Programs

HB 110 fundamentally alters how community schools, STEM schools and state scholarship programs (i.e., Autism Scholarship Program and Jon Peterson Special Needs Scholarship Program) are funded.  Important changes include:

• Students attending community schools, STEM schools or other schools through state scholarship programs will no longer be included as enrolled in their school district for Average Daily Membership (ADM) calculations.
• Community school, STEM school and state scholarship program payments will no longer be deducted from school districts’ core foundation aid. However, school districts will no longer receive state funding for students enrolled in community schools, STEM schools or enrolled with scholarship providers.
• Payments for these students will be made directly to private schools by way of a “funding unit” to be implemented by the Ohio Department of Education.

Autism Scholarship Amount and Services Providers

HB 110 increases the amount for the Autism Scholarship. However, based on the change to “enrolled ADM” from “formula ADM,” the scholarship amount is not being deducted from the funding provided to public school districts. Rather, school districts simply will not receive any funding for students who are utilizing a scholarship program because these students are not enrolled in the district.

• Autism Scholarship
  • $31,500.00 for the 2022 fiscal year
  • $32,445,00 for the 20223 fiscal year and beyond
• Autism Scholarship Services Providers
  • The bill subjects any registered and approved Autism Scholarship Program private provider and its employees to criminal records check requirements and requires submission of the results to the Ohio Department of Education. The Ohio Department of Education must use the submitted records checks to enroll those individuals employed by registered private providers in the Retained Applicant Fingerprint Database (“rapback”) in the same manner as licensed educators.
  • The bill adds a “registered behavior technician” and “certified Ohio behavior analyst” to the list of qualified, credentialed providers that may offer intervention services under the Autism Scholarship Program.

Jon Peterson Special Needs Scholarship Amount

HB 110 increases the amount for the Jon Peterson Special Needs Scholarship.  However, as with the Autism Scholarship, based on the change to “enrolled ADM” from “formula ADM,” the scholarship amount is not being deducted from the funding provided to public school districts. Rather, school districts simply will not receive any funding for students who are utilizing a scholarship program because these students are not enrolled in the district.

• Jon Peterson Special Needs Scholarship
  • Going forward, the Peterson Scholarship amounts are calculated as the least of the following options:
    • The amount of fees charged by the student’s provider; or
    • The base amount of $6,217 for fiscal year 2022 and $6,414 for fiscal year 2023 plus
      • Category 1 $1,514 for fiscal year 2022 and $1,562, for fiscal year 2023;
      • Category 2 $3,841 for fiscal year 2022 and $3,963, for fiscal year 2023;
      • Category 3$9,465 for fiscal year 2022 and $9,522, for fiscal year 2023;
      • Category 4 $12,644 for fiscal year 2022 and $12,707, for fiscal year 2023;
      • Category 5 $17,193 for fiscal year 2022 and $17,209, for fiscal year 2023;
      • Category 6 $24,591 for fiscal year 2022 and $25,370, for fiscal year 2023; or
      • $27,000.00.
• HB 110 also requires the base amount for the Peterson Scholarship to increase (after FY 23) by the same percentage that the statewide average base cost per pupil increases in future fiscal years. Additionally, the dollar amounts for the special education categories must increase (after FY 23) by the same percentage calculated by the General Assembly for each special education category.

EdChoice Scholarship

HB 110 overhauls the existing system of funding for EdChoice vouchers and implements a number of important changes:

• EdChoice scholarship payments will no longer be deducted from school districts’ core foundation aid. These payments will be made directly to private schools by way of a “funding unit” to be implemented by the Ohio Department of Education.
• Students attending private schools through the EdChoice vouchers will no longer be included as enrolled in their school district for Average Daily Membership (ADM) calculations.
• EdChoice vouchers will increase from $4,650 to $5,500 for grades K-8 and from $6,000 to $7,500 for grades 9-12.
• The number of EdChoice scholarships will no longer be capped at 60,000.
• EdChoice scholarships will be available to more students. Specifically, this legislation phases in eligibility for students who are currently homeschooled or attend private schools.
• Criteria for performance-based vouchers are slightly changed to include district buildings ranked in the lower 20% for 18-19 and 21-22 year for scholarships sought for the 2023-2024 year.
• School districts will not be permitted to contest the Ohio Department of Education’s determination of student eligibility.
• School districts will be required to provide attendance zones for buildings that meet performance-based voucher criteria to the Ohio Department of Education by January 1 of each year.

Auxiliary Service Funds

HB 110 makes a number of fundamental changes to the allocation of auxiliary service funds. Specifically, it:

• Permits all chartered nonpublic schools, instead of only nonreligious schools, to receive auxiliary service funds directly from the Ohio Department of Education instead of through the local public school district.
• Requires religiously affiliated chartered nonpublic schools that elect to receive auxiliary service funds directly from the Ohio Department of Education to submit an affidavit certifying the funds will be used for a permissible purpose.
• Requires a chartered nonpublic school choosing direct auxiliary service fund payments to notify the Ohio Department of Education and the public school by July 31, 2021.
• Clarifies that materials purchased with auxiliary service funds paid directly to a school may be acquired under a contract with a school district, ESC, the Department of Health, city or general health districts or private entities.

Career-Technical Educator License Requirements

• HB 110 extends the standards and requirements for obtaining a two-year initial career-technical workforce development educator license and a five-year advanced career-technical workforce development educator license.
• These licenses are valid for teaching career-technical education or workforce development programs in grades four through twelve.
• Former statutory language required applicants for such licenses to have a high school diploma, but HB 110 expands issuance of such licenses to include individuals who have a certificate of high school equivalence awarded under ORC Section 3301.80 or the equivalent of such certificate as recognized under ORC Section 3301.80(C).

School Counselor Standards

• HB 110 expands knowledge required to be incorporated into the school counselor standards by the Educator Standards Board.
• More specifically, the revised language now requires the Educator Standards Board, in consultation with the Chancellor of Higher Education, to include knowledge of the credit transfer program (Career-Technical Assurance Guide (“CTAG”)) in the Board’s standards for school counselors.
• CTAG is the result of the career-technical education credit transfer criteria, policies, and procedures established under ORC Section 3333.162 and has the purpose of ensuring transfer of career-technical course credit to any state institution of higher education and having coursework apply to majors and degrees at any other state institution of higher education without unnecessary duplication or institutional barriers.

Cheating on Assessments

• HB 110 expands and clarifies prohibitions against assisting students in cheating on assessments and State Board action against school employees who do so.
• In addition to the existing prohibition against revealing specific questions to students known to be a part of an assessment, or in any other way assisting students in cheating on an assessment, ORC 3319.151 now specifically prohibits an individual from doing the following:
  • Obtaining prior knowledge of the contents of an assessment;
  • Using prior knowledge of the contents of an assessment to assist students in preparing for an assessment; and
  • Failing to comply with any rule adopted by the Department of Education regarding security protocols for an assessment.
• In addressing State Board action, HB 110 removes the formerly required one-year suspension of a teacher’s license after an investigation, and replaces it with language providing that the State Board shall take any action against the employee under ORC Section 3319.31 that it considers appropriate, based on the nature and extent of the violation.
• Adjustments to State Board action after investigation provide the State Board flexibility in applying licensure suspension, revocation, or limitation at its discretion based upon fact-specific circumstances.
• Additionally, the revised language requires the State Board to notify the employee of an allegation upon commencing an investigation and provide the employee an opportunity to respond prior to taking any disciplinary action.
• Notably, although the State Board now has flexibility in applying disciplinary action less severe than the previously required one-year suspension, the statute still includes language providing that violation of the listed prohibitions serve as grounds for termination of employment of non-teaching employees under ORC Section 3319.081(C) or ORC Section 124.34 and termination of a teaching contract under ORC Section 3311.82 or ORC Section 3319.16.

Changes to Nationally Standardized College Admission Assessments

• HB 110 permits the parent or guardian of a high school student to opt the student out of the requirement to take a nationally standardized college admission assessment (currently, the ACT or the SAT) beginning with the class of 2026.
• A district or school is prohibited from administering these tests to students who opt out.

Kindergarten Assessment Administration Windows

• HB 110 adjusts the period of time in which a school must administer the kindergarten readiness assessment and the kindergarten reading skills assessment (for the Third Grade Reading Guarantee) to July 1st through the twentieth (20th) day of instruction per the school calendar.

Academic Distress Commissions and Phase-Out of Control

• HB 110 establishes a process by which a school district for which an academic distress commission (ADC) was established may be relieved from the oversight of its ADC before meeting the conditions prescribed by continuing law.
• The process includes the following:
  • Requires the district to develop and implement a three-year academic improvement plan and submit annual reports on its improvement progress (the district is permitted to apply for up to two, one-year extensions of the improvement plan).
  • Requires the State Superintendent to review the plan and approve or suggest modifications to it.
  • Specifies that the ADC will continue to exist – with the removal of the chief executive officer (CEO) – and provide assistance, but the ADC will relinquish operational and managerial control of the district.
  • Specifies that if the district meets the majority of the plan’s improvement benchmarks at the end of the initial or extended evaluation period, the ADC is dissolved; in contrast, if the district does not meet the majority of the plan’s improvement benchmarks, the district once again becomes subject to an ADC, including oversight by a CEO.
  • Permits the district’s board of education to employ as superintendent the individual who previously held the CEO position.
  • Requires the district’s ADC to appoint a new CEO if the district again becomes subject to the ADC.

• Requires the Auditor of State, once during the three-year implementation period for the improvement plan, to complete a performance audit of a school district to which the bill applies (at the Auditor’s expense) and submit the audit results to the district board and its ADC.
• These provisions are exempt from the referendum and take effect immediately when HB 110 becomes law.

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