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Substitute HB 59 (as passed by the Ohio Senate) Highlights And The Lowlights OACTS Presentation by BASA June 25, 2013.

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Presentation on theme: "Substitute HB 59 (as passed by the Ohio Senate) Highlights And The Lowlights OACTS Presentation by BASA June 25, 2013."— Presentation transcript:

1 Substitute HB 59 (as passed by the Ohio Senate) Highlights And The Lowlights OACTS Presentation by BASA June 25, 2013

2 GRF Revenues – Actual $ Received Comparing 05/13 with YTD Estimates Category Actual FY13 per 05/31/2013 Estimated FY13 per 05/31/2013Difference Non-Auto Sales$ 6,705,630 $ 6,706,700 $ (1,070) Auto Sales & Use $1,007,424 $ 980,600 $ 26,824 Subtotal - Sales$ 7,713,054 $ 7,687,300 $ 25,754 Personal Income$ 8,630,559$ 8,110,797 $ 519,763 Corporate Franchise $ 273,977 $ 145,000 $ 128,977 Commercial Activity Tax $ 786,949 $ 847,300 $ (60,351) Public Utility, KWH, MCF Tax $ 442,451 $ 457,400 $ (14,949) Foreign/Domestic Insurance $ 471,589 $ 412,700 $ 58,889 Other Business $ 34,463 $ 14,100 $ 20,363 Sin Taxes $ 856,476 $ 835,800 $ 20,676 Estate $ 100,527 $ 64,100 $ 36,427 Total Tax Receipts$19,310,046$18,574,497 $ 735,549 $ in thousands

3 GRF Revenues – Actual $ Received Comparing YTD 05/13 with 05/12 Category Actual FY13 per 05/31/13 Actual FY12 per 05/31/13Difference Non-Auto Sales $ 6,705,630$ 6,411,493 $ 294,137 Auto Sales & Use $1,007,424 $ 965,715 $ 41,710 Subtotal - Sales $ 7,713,054$ 7,377,208 $ 335,847 Personal Income $ 8,630,559$ 7,593,799 $1,036,760 Corporate Franchise $ 273,977 $122,360 $ 151,617 Commercial Activity Tax $ 786,949 $ 409,595 $ 377,354 Public Utility, KWH, MCF Tax $ 442,451 $ 445,329 $ (2,877) Foreign/Domestic Insurance $ 471,589 $ 445,318 $ 26,270 Other Business $ 34,463 $ 11,381 $ 23,082 Sin Tax $ 856,476 $ 858,908 $ (2,433) Estate $ 100,527 $ 63,701 $ 36,826 Total Tax Receipts $19,310,046$17,327,598 $ 1,982,447 $ in thousands

4 Tax Reform in HB 59 Increasing the state sales tax from 5.5 to 5.75% Expanding sales tax to include electronically delivered products and collection of the tax on items purchased through a catalog or over the Internet Indexing the Homestead Tax Exemption to income (rather than providing it for all senior citizens) Eliminating all state subsidies for local property taxes enacted, beginning with local issues effective in or after TY 2014 (but not renewals and substitute levies)

5 Tax Reform in HB 59 (continued) Indexing the $20 personal exemption credit on the state income tax Lowering the Commercial Activity Tax threshold from $1 million to $500,000 Initiating a small business 50% tax cut on the first $250,000 in net business income Reducing the personal income tax rate by 8.5% in FY 2014, 9% in FY 2015, and 10% in FY 2016

6 Tax Reform in HB 59 (continued) Total cost of tax reforms estimated to be a little over $2.5 billion over next three fiscal years To be paid with: – Current excess revenue (after reserving maximum in Budget Stabilization Fund) – Expansion of sales tax – Reduction in exemption from Commercial Activity Tax

7 Overview of Funding Formula Increases per pupil from $5,732 to $5,745 in FY14 and to $5,900 in FY15 $717MM increase in FY14 and FY15 from FY13 Caps: 6.25% in FY14 and 10.5% in FY15 – 242 districts on caps by end of FY15 Guarantee districts: 176 by end of FY15 $207MM for Third Grade Reading Guarantee Transportation subsidy inside formula

8 House LSC Updated vs. Senate Proposed FY14-15 Funding Comparison by 2013 Typology Typology Group FY13 Base Total $ Change FY14 Total $ Change FY14 $/Pupil Change FY15 Total $ Change FY15 $/Pupil Change 1. Poor Rural Low ADM -$5,856,366 -$368,899-$2$11,043,403$68 2. Rural Very Low ADM -$5,984,859 $24,049$0$5,683,588$55 3. Small Town, Low ADM -$3,154,498 $195,994$1$8,642,627$50 4. Small Town High Poverty $58,732 $407,690$2$24,080,652$122 5. Suburban Districts $2,631,221 $1,119,906$3$22,327,344$70 6. Wealthy Suburban, Larger $635,565 $1,036,894$4$14,903,641$62 7. Urban Districts -$3,626,007 $2,793,175$11$53,152,640$212 8. Major Urban $8,630,492 -$4,696,991-$19$15,553,247$62 0. Islands, College Corner $1,264 $59$0$1,187$7 Total -$6,781,919 $511,878$0$155,388,328$92

9 Payment in Lieu of Transportation Parent can request subsidy regardless of whether student is impractical to transport. Amount of payment in lieu of transportation would be the state average cost of transportation (and not amount limited by appropriation). Retains current law for eligibility and reduces minimum payment from $233 to $225 – Districts begin paying half in FY 15

10 EdChoice Scholarships Beginning in 2016-2017 school year, qualifies students in kindergarten through third grade if enrolled (or will enroll) in a district-operated school that has received a grade of "D" or "F" in "making progress in improving K-3 literacy" in two of the three most recent state report cards and has not received an "A" in "making progress in improving K-3 literacy" in the most recent report card issued prior to the first day of July of the school year for which the scholarship is sought

11 New EdChoice Scholarships Beginning with 2013-2014, expands the EdChoice scholarship program to qualify students with family incomes at or below 200% of the federal poverty guidelines, regardless of the academic rating of the school Scholarships for students from low-income families to be funded through an appropriation by General Assembly, rather than through deductions from resident school districts' state education aid Must use regular EdChoice if school is eligible

12 New EdChoice Scholarships Limits number of low-income scholarships to amount appropriated for that purpose Phases in EdChoice expansion by qualifying only kindergartners for the scholarship in 2013-2014 school year, with the grade higher added in each subsequent year Prioritizes awarding of scholarships if applications exceed number of scholarships that can be funded by the appropriation, as follows:

13 New EdChoice Scholarships First, to students who received scholarships in the previous year; Second, students with family incomes at or below 100% of federal poverty guidelines; Third, students with family incomes between 100% and 200% of federal poverty guidelines

14 New EdChoice Scholarships If student's family income is above 200% but at or below 300% of the federal poverty guidelines (FPG), student may receive scholarship in the amount of 75% of the full scholarship amount If student's family income is above 300% but at or below 400% FPG, student may receive a scholarship in the amount of 50% of the full scholarship amount If student's family income is above 400% FPG, student is no longer eligible to receive an EdChoice scholarship.

15 All EdChoice Scholarships Requires each chartered nonpublic school to administer the state achievement assessments to all of its students if at least 35% of its total enrollment is made up of students who are participating in the EdChoice Scholarship Program, Autism Scholarship Program, Jon Peterson Special Needs Scholarship Program, or the Cleveland Scholarship Program.

16 Special Needs Scholarships For fall 2013 application period for the Special Needs Scholarship Program, ODE may not accept applications from students who have not received scholarship from the program in previous or current school year In FY 2014 Ohio to reimburse districts for Special Needs Scholarship deductions for students that did not attend a public school in their resident district in the previous year

17 Preschool Special Education Funding Currently, preschool education for students with disabilities funded on a unit (per class) basis based on previous teacher salary schedule without local share. – New formula is: ($4,000 X number of preschool students with disabilities) plus (number of students in each category X weighted amount for that category X state share index X 0.5) Currently, there is no state share index multiplier, but approximately one-third of all units currently in operation have no state funding. (Serving these students is required by federal law.)

18 All Day Kindergarten Tuition Only school districts that may charge fees or tuition for all-day kindergarten are those districts offering all-day kindergarten for the first time or that charged fees or tuition for all-day kindergarten in the 2012-2013 school year Requires ODE to adjust a district's ADM certification by one-half of full-time equivalency for each student charged fees or tuition for all- day kindergarten.

19 Special Education Exceptional Cost Fund Ohio House made positive change when it removed 15% transfer of additional school district special education dollars to the Special Education Exceptional Cost Fund – Budget had estimated needed amount to be $111.6 million in FY 2014 and $119.5 million in FY 2015 – Appropriation in Sub. HB 59 is $40 million and state payments limited to appropriation

20 Certification of Average Daily Membership (ADM) Counts kindergarten students as true full-time equivalent (FTE) student in ADM instead of counting each kindergarten student as 1.0 FTE, regardless of time spent in school Requires two counts of students, one during the first full week of October and the other during the first full week of February Specifies that annualized periodic payments for each school district must be based on the district's final student counts, calculated as follows: 0.5 x October count + [0.5 x (0.5 x October count + 0.5 x February count)]

21 Educational Service Center Funding Requirement for deductions from local districts to educational service centers for $6.50 per pupil is reinstated If majority of a service center's districts approve higher amount, ODE must deduct the approved excess from all of the service center's client school districts

22 Extra-curricular Participation Permits students enrolled in chartered or non-chartered nonpublic schools and students receiving home instruction to participate in extracurricular activity at school of student's resident school district to which the student would otherwise be assigned Permits the superintendent of a school district to allow any student enrolled in a nonpublic school and not entitled to attend school in that district to participate in school's extracurricular activities if: – (1) nonpublic school in which student is enrolled does not offer the extracurricular activity, and – (2) extracurricular activity is not interscholastic athletics or interscholastic contests or competition in music, drama, or forensics

23 Extra-curricular Participation Authorizes, but does not require, the superintendent of a school district to allow student receiving home instruction who is not entitled to attend school in that district to participate in a school's extracurricular activities, if the activity is not offered by the student's resident district

24 Extra-curricular Participation Board of education may require students enrolled in chartered or non-chartered nonpublic schools & homeschooled students participating in an extracurricular activity in that district to enroll and participate in not more than one academic course (if there is room) at the school offering the extracurricular activity as a condition to participating in the activity Prohibits school district, conference, or association from imposing additional eligibility requirements that conflict with these new ones

25 Accountability for Subgroups School districts required to account for the expenditure of state education funds provided for services to subgroups of students Districts would be required to submit an improvement plan if ODE determines that a district or school has not reached satisfactory achievement and progress for a subgroup ODE would then be permitted to require that the plan includes partnering with another entity for services to that subgroup, apparently at the district’s cost

26 Teacher Evaluation Changes Prescribes that the student academic growth factor must account for 35% (rather than 50% as under current law) of each evaluation under the standards-based state framework – Permits a school district to attribute an additional percentage to the student academic growth factor, not to exceed 15% of each evaluation

27 Teacher Evaluation Changes Specifies that, when calculating student academic growth for a teacher evaluation, students who have had 30 or more excused or unexcused absences for the school year must be excluded – rather than excluding students with 60 or more unexcused absences as under current law

28 Guarantee and Caps Guarantee will be final FY 2013 foundation funding (including transportation and career- tech money) – Using May 2013 levels now but could change – FY 2013 guarantee based on FY 2011 PASS Report which used TY 2009 property values (which in turn could have been influenced by 2007 update)

29 Career Tech Category “Weights” FY 2014FY 2015 1$4,366$4,408 2$3,907$3,944 3$2,470$2,494 4$1,781$1,798 5$1,379$1,392 Associated services funding at $225 in FY 2014 and $227 in FY 2015 All amounts subject to state share

30 Career-Tech Opportunity Grant (Formula amount X Formula ADM) – (0.0005 X three year average property valuation – Formula amount is $5,745 in FY 2014 and $5,800 in Fiscal Year 2015 – If calculation results in negative number, then the formula amount is 0 Spending requirement of 75% on costs directly associated with career-tech programs and not more than 25% on personnel expenditures

31 Career-Tech Extended Programs Must involve direct contact with students or are directly related to student programs Instructional staff employed on hourly basis rather than for additional days – Rate = regular per diem rate or as negotiated – Not more than 8 hours in any day

32 Upcoming Events on Budget OASBO/BASA/OSBA Regional Meetings in July 7/10 – Athens7/11 in Columbus 7/12 – Clayton7/15 in Findlay 7/17 – Wooster7/18 in Brecksville – OASBO is handling registration Budget Analysis and Discussion (B.A.D.) Seminar in Columbus on Monday, August 12 at the Hyatt Regency (Columbus) – OSBA is handling registration

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