A Child-Centered Solution to School Finance in Ohio
Executive Summary
Educating children is not the same as directly funding school systems. A child-centered school finance policy that supports the choices of parents can create higher-quality schools and more equality in the educational opportunities available to children. The only way to ensure that all children have the same educational opportunities and equal resources to obtain them and at the same time create powerful incentives to improve school performance, is to adopt a student-centered school funding system.
Public schools are nominally "free," but pricing, which implicitly occurs through housing markets, fundamentally limits access to better schools and consigns less wealthy families to less desirable schools. The subsequent separation of students along class lines also means that the non-financial inputs critical to good schools, such as peer and family influences, can be even more unevenly distributed than financial resources. The unequal distribution of opportunity remains even when state aid is targeted at the "neediest" schools. State money that simply equalizes financial resources will have limited effects on the root causes of education inequities.
This report outlines an alternative approach that seeks to overcome the limits of past attempts to equalize opportunities. It investigates the combined policies of school choice (in public, charter, and private schools) with financial support that follows the child. Such a system will make the differences in local resources for education funding largely irrelevant. We limit our report to the mechanics and implementation issues of such a system, and demonstrate its fiscal impacts. Our purpose is not to argue for particular policies within such a system but to highlight how key policy choices would affect its implementation and costs. The report is an introduction to and not the final word on a fundamental shift in school finance policy in Ohio. As such, it will invite many questions and concerns that will deserve further research.
The report:
- Highlights the need for a reform of Ohio's school finance system;
- Documents Ohio's level of financial support and compares it to other states;
- Discusses the role of property taxes in funding schools;
- Outlines the basic structure of a child-centered school finance system;
- Presents a basic weighted system of per-pupil financial support and creates a matrix of students in Ohio schools to estimate the expenditures required to fund each child under a child-centered finance system;
- Presents a model to calculate the expenditures required to fund a child-centered system at different levels of per-pupil financial support and under various policy choices;
- Analyzes the implications for property taxes
within communities under different policy choices within a
child-centered funding system; and
- Estimates how much money businesses and individuals would contribute towards the education of deserving, students after the introduction of a tax credit for donations to scholarship-granting organizations.
Read the full report here.
Brian Gottlob is a fellow at the Buckeye Institute and president of PolEcon Research, a Dover, N.H.-based economic and public policy consulting firm.