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Senate witnesses urge full phase‑in of Fair School Funding, warn against 30% cash‑balance cap
Summary
Consultants, treasurers and superintendents told the Senate Education Committee that House Bill 96 proposals to alter the Fair School Funding Plan and impose a 30% cash‑balance cap would destabilize many districts' finances and could trigger levy burdens and credit downgrades.
Ohio's Senate Education Committee heard sustained criticism Tuesday of House Bill 96 proposals that would slow or alter implementation of the state's Fair School Funding Plan and create a 30% cash‑balance cap for school districts.
Howard Fleeter, a consultant to the Ohio Education Policy Institute, told the committee the cap and partial updates in the governor's proposal together risked destabilizing district budgets statewide. "In the more than 30 years I've spent researching and analyzing school finance in Ohio, this is the single most problematic policy proposal that I've ever seen," Fleeter said, citing his analysis that 478 districts are currently above a 30% threshold and that roughly $3.73 billion would be at risk if county budget commissions exercise rollback authority.
District treasurers and superintendents described practical harms tied to timing and levy cycles. Nicole Marshall, treasurer for Westerville City Schools, said the combination of not updating base cost inputs and shifting the state/local share would reduce state support and force local taxpayers to make up the gap. "Our state share is projected to fall sharply under the governor's calculations unless the base cost inputs are updated," Marshall said. Brian Haynes, treasurer of Streetsboro City Schools, told the committee that a rollback tied to a cash‑balance threshold could come months after a levy vote and create confusion because Ohio collects property taxes in arrears.
Witnesses flagged other consequences Fleeter included in his written analysis: hundreds of districts could fall into fiscal caution, fiscal watch or fiscal emergency within a few years; bond ratings could decline; and the proposal could increase the number and frequency of local levies. Several witnesses urged a different route: require districts to adopt local minimum/maximum reserve policies with public action plans when a district falls outside those bounds, rather than a single statewide percentage cap.
Committee members asked whether a higher threshold than 30%—for example 50%—would be less harmful. Fleeter said that no single statewide number fits all districts and recommended a requirement that districts produce locally appropriate reserve policies and action plans to explain large balances or address shortfalls.
The committee made no decision at the hearing. Members asked staff to review data and possible amendments; additional testimony may follow during the budget process.
