Ohio committee hears warnings that proposed cash‑balance cap and budget changes would destabilize school finances
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Summary
Superintendents, treasurers and analysts told the Senate Education Committee that the House budget’s rollback of school funding and a proposed 30% cash‑balance cap could force deep program cuts, lower bond ratings and increase levy pressure across hundreds of districts.
Several Ohio education officials and an independent analyst told the Senate Education Committee that two items in the current budget proposal — changes to how the Fair School Funding Plan is implemented and a 30% cap on district cash balances — risk destabilizing district finances across the state.
Howard Fleeter, consultant to the Ohio Education Policy Institute, told the committee his review found 478 districts currently hold cash balances above the proposed 30% threshold and that "$3,730,000,000 is at risk of being rolled back by county budget commissions." He called the 30% cap “the single most problematic policy proposal that I’ve ever seen” in his 30 years of school‑finance work.
Why it matters: Witnesses said the two proposals would cut the state share of school funding, reduce predictability, and could force districts to put more levies on the ballot. District treasurers described practical timing problems — tax collections and payroll liabilities span fiscal years, producing legitimate reasons to hold higher cash balances — and analysts said sudden rollbacks could harm bond ratings and raise borrowing costs.
What committee heard: Several district finance officers said local circumstances vary widely and a single statewide cap is a blunt instrument. Nicole Marshall, treasurer for Westerville City Schools, and Brian Haynes, treasurer for Streetsboro City Schools, stressed that rising enrollment, special education needs and levy timing make rigid targets risky. Fleeter’s data showed statewide average cash balances of roughly 46 percent and warned that many districts would fall into fiscal watch or emergency categories within a few years under the proposed approach.
Discussion vs. decisions: Committee members asked whether a different numerical cap — for example 50% — might work. Fleeter said no single number fits all districts; he recommended requiring each district to adopt minimum and maximum reserve policies with action plans when a threshold is crossed rather than imposing a uniform rollback. Several treasurers and superintendents favored a locally tailored approach that retains transparency and accountability without abrupt state intervention.
Budget context: Witnesses also urged the committee to update the cost inputs in the Fair School Funding Plan before any recalculation of the state/local share, saying the governor’s budget updated property and income data without updating base‑cost inputs and that mismatch is what drove the state share lower in analyses presented to the committee.
Ending: Multiple witnesses asked the Senate to preserve phase‑in of the Fair School Funding Plan and to adopt a more nuanced remedy for unusually high reserves, rather than the across‑the‑board 30% cap urged in House language. The committee took testimony but did not take a vote during the hearing.
