State Board of Education of Ohio continues to search for options amid dismal funding outlook

BY: SUSAN TEBBEN – Ohio Capital Journal

Another cloudy financial outlook has the State Board of Education of Ohio looking at further ways to make cuts, though the options are dwindling, according to leadership.

At the board’s July meeting, Superintendent of Public Instruction Paul Craft led the state agency’s budget committee through current balances and future projections for their $17 million operating budget.

With the changes made to carve out the board from the rest of the Ohio Department of Education and Workforce — changes tacked on to the previous state operating budget by the General Assembly last year and allowed despite a lawsuit against it — the board is left to use only the funds collected from teacher licensure fees as spending money for the entire agency, according to Craft.

In a separate bill passed by the Senate just last month, $4.7 million would be transferred from the state’s general revenue fund to the board’s licensure fund, also called Fund 4L20. That bill was passed by the House as well, but because they made changes before approving the bill, the Senate will need to concur on the changes, which won’t happen until at least November, when the legislature is scheduled to come back from summer break.

“This fund, supported by license fees paid by teachers and other school staff, is used by the State Board of Education to pay its operating expenses,” an analysis of Senate Bill 117 by the Legislative Service Commission stated, adding that the expenses are associated with educator credentials, investigations and disciplinary actions for education misconduct and background checks for school teachers and staff.

But Craft told the committee the fund wasn’t previously used for all the board’s expenses, causing a tenuous situation that Craft warned of at the beginning of the year, as the funding they were receiving from the general revenue fund every year dried up.

In fiscal year 2022 and 2023, the licensure fund was “running some deficits,” Craft told the board committee, but with the general revenue funds, the agency was able to pay the bills.

“Things changed rapidly,” he said, once fiscal years 2024 and 2025 approached.

The expenditure line has “jumped up quite a bit” since the board became its own agency with only the licensure fund from which to draw money.

The board is now using Fund 4L20 to pay the rent for its office building, support costs and IT expenses, things that were folded into the state’s Department of Education (as it was previously called) general expenses when the board was a part of it.

“Those are now things that are being charged against the teacher licensure fund that had never been drawn against the teacher licensure fund,” Craft said.

Revenue projections for the 2025 fiscal year are coming in about $2 million less than hoped, Craft told the board committee, adding that the projections are also lower than “historical average.”

Some of the hits to the board’s wallet stem from a familiar place of financial hardship: the COVID-19 pandemic.

When lockdowns and school closures hit the state in March 2019, the fiscal year 2020 was impacted, including the process of renewing and approving teacher licenses.

“It was a very, very slow hiring year, as you can imagine,” according to Craft.

Because college courses were hard to access and renewals were harder to arrange, the state allowed teachers to take a one-year extension on their five-year licenses. But that gap in licensure fees hadn’t come to bear in the board of education’s revenue stream until now, since the licenses are now set to be renewed in fiscal year 2026 with the one-year extension.

The board also just received a $1.3 million bill for the Resident Educator Summative Assessment (RESA) contract, a program that is required of teachers by state law before they are eligible for a professional teaching license.

The board is also expecting new expenses from expanded background check processes through what’s called the RAPBACK system, also required by the legislature. That is compounded with paying the 11 state board employee salaries under the umbrella of a licensure fund that sees ebbs and flows throughout the year based on number of teachers, coaches and administrators who apply for them. Typically, the demand ends by fall, when education staff who need them have received them.

“Right now, you can see that we need to end the year with some balances in order to make it through the lean months that come in the fall, until we get to the better months in the spring,” Craft said.

The board has instituted a hiring freeze within its employee ranks, and already has a freeze on travel expenses for the Craft and his staff. In its July meeting, the board approved a further travel expenses freeze, this time on members of the board, and talked about reducing the number and time of meetings to accommodate those who come from farther distances.

But Craft said the options for cuts are thinning out, with almost 1/3 of the operating budget required either by contract or by Ohio Revised Code mandate.

“There’s $6.3 million of those things that we can’t just cut because we want to,” Craft said.

Several members of the board pushed for discussions with legislators about getting more funding, especially for things required by lawmakers.

“I have never seen a budget so bare-bones; asking (Craft) not to travel, not having administrative assistants, pretty soon we’re going to have to pay for our paper to have the copies on,” said board member Amy Fugate.

Diana Fessler didn’t deny the usefulness of the background checks through RAPBACK, but said if expansions are required by the legislature, they should help out.

“I agree with you that it’s a good thing, but it does seem like an area that there could be discussion about the General Assembly picking up the tab since the source of this effort is expensive, but necessary … but we could use some help,” she said.

For Walter Davis, the problem behind it all is a lack of awareness that members of the financially-troubled board were elected to do the job.

“I think we can’t lose sight of the fact that the majority of this body is constitutionally elected by the people of Ohio who have a right … to have a certain amount of independence from the legislature, their whims and wiles,” Davis said.

This story has been changed to correct the status of Senate Bill 117.