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Budget debate: lawmakers hear warnings that a 30% cash‑balance cap and incomplete FSFP funding would destabilize districts
Summary
Experts and school finance officials warned the Senate Education Committee that a proposed 30% limit on district cash balances and changes to the Fair School Funding Plan could force rollbacks, downgrade bond ratings and push many districts toward fiscal watch.
School finance experts and local officials told the Senate Education Committee that the House budget’s proposed 30% cash‑balance cap (a limit on district carryover) and certain changes to the Fair School Funding Plan (FSFP) would create financial instability across Ohio school districts.
Howard Fleeter, consultant to OEPI, told the committee the cap was “the single most problematic policy proposal” he had seen in three decades of school‑finance work. Fleeter said 478 districts exceed a 30% threshold and that nearly $3.73 billion could be at risk of rollback by county budget commissions. He said the cap could reduce bond ratings, force additional levies and push districts into fiscal caution or emergency categories.
Multiple district treasurers testified that the statutory timing of property‑tax collections and local levy schedules meant a June 30 cash snapshot could misrepresent a district’s financial position. Streetsboro and Warren local districts described how reappraisals and tax timing interact with local planning, and several treasurers asked for a district‑driven minimum/maximum cash policy rather than a single statewide percentage. One recommended approach, supported by witnesses, was requiring districts to adopt and publish local cash‑balance policies with action plans when thresholds are exceeded or missed.
Fleeter and treasurers also urged the committee to continue phasing in the FSFP and to update the plan’s base‑cost inputs to reflect current staffing, class size and services. They said the governor’s update of property and income inputs, without updating base costs, reduced the state share of funding and distorted the formula.
Why it matters: witnesses argued that a blunt 30% cap risks destabilizing finance for districts at different stages of levy cycles and with varying capital schedules. They proposed more tailored, transparency‑oriented fixes — such as locally set cash policies and longer forecasting horizons — instead of a blanket rollback.
What’s next: the committee heard testimony and questions but took no immediate votes; budget negotiators must decide whether to retain the cash‑cap language, adjust FSFP inputs, or adopt alternative accountability mechanisms.
