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Published in Print: May 17, 2000, as Ohio High Court Again Overturns Finance System

Ohio High Court Again Overturns Finance System

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Ohio's system for financing its schools is still broken and must be fixed within the next 12 months, the state supreme court ruled last week in its second such decision in three years.

The state has made some progress on the issue since 1997, but has failed to take sufficient steps to ensure its children have adequate access to a "thorough and efficient" education, as guaranteed by the state constitution, the court concluded in a 4-3 decision handed down May 11.

"We acknowledge the effort that has been made, and that a good-faith attempt to comply with the constitutional requirements has been mounted," Justice Alice Robie Resnick wrote in the majority opinion. "But even more is required."

The news was a setback to the Republican-controlled legislature and GOP Gov. Bob Taft, who had hoped that recent increases in state education spending—particularly for facilities improvements—would satisfy the court. But late last week, those representing the plaintiffs in the case, known as DeRolph v. State of Ohio, said the decision upheld their view that the state's efforts have fallen far short of the mark.

"What they've done is put a veneer panel on a decaying structure," said William L. Phillis, the executive director of the Ohio Coalition for Equity and Adequacy in School Funding, which brought the lawsuit on behalf of more than 500 school districts. "They've merely finessed and tweaked the old system, rather than giving it a complete, systematic overhaul."

Not Enough Money

Last week's ruling extends for at least another year a battle that has already occupied Ohio's state policymakers and education leaders for nearly a decade.

The first decision in the case, which was filed in 1991, came in 1994 when a state trial court judge sided with the plaintiffs. The suit worked its way up to the Ohio Supreme Court, which three years ago agreed that the school funding system failed to pass constitutional muster. ("Justices Reject Ohio System of School Finance," April 2, 1997.)

In that ruling, the justices lambasted the condition of many of the state's school buildings. A 1996 U.S. General Accounting Office survey found that Ohio students were more likely to attend unsafe or inadequate schools than those in any other state.

Since the 1997 ruling, state officials have engaged in an often-fierce struggle to craft a politically palatable remedy. In 1998, then-Gov. George V. Voinovich supported a state ballot initiative that would have raised more than $500 million for the state's schools through a 1-cent sales-tax increase. But voters overwhelmingly rejected the measure.

More recently, Gov. Taft proposed legislation that would direct $10.2 billion in state funds toward school repair and construction over the next 12 years. Much of the money for that plan would come from Ohio's share of the multistate settlement with the nation's tobacco companies. The state also hiked its per- pupil aid to local districts.

While acknowledging those strides, the state supreme court said last week that the state had yet to fundamentally change the way it pays for its schools.

"The decision does recognize that the governor and the General Assembly have put considerable resources into our facilities," said John M. Brandt, the executive director of the Ohio School Boards Association. "But it isn't just that we need more money; the mechanism itself needs to be fixed."

In particular, the justices criticized state officials for failing to address the funding system's heavy reliance on local property taxes, which critics argue creates unfair disparities between rich and poor communities.

Further, the court held that the state had yet to abandon completely the allocation of school aid according to the funds available—a practice known as "residual budgeting"—in favor of a system that is based on an estimate of the actual cost of a "thorough and efficient" education. Although the state hired a school finance expert after the 1997 ruling to calculate such a figure, the court in its new ruling said that state lawmakers later ratcheted down the amount.

"Instead of determining how much does it cost and then pulling together a reservoir of funds," Mr. Phillis said, "they begin with the pool of money and determine how much that will pay for. It's putting the proverbial cart before the horse."

Adequacy Push Growing

Some analysts saw last week's decision as a reflection of the growing willingness of state courts to demand not just that schools be subsidized equitably, but that overall funding be sufficient to provide access to a high-quality education. In 1995, for example, the Wyoming Supreme Court declared its state's finance system unconstitutional and directed that lawmakers remedy the problem by first determining what a "complete, proper, and quality education" would cost.

"I'd say that three-fourths of the finance cases in the past five or six years have been adequacy cases," said Allan Odden, a school finance expert at the University of Wisconsin-Madison. "The courts are moving beyond whether or not the money is distributed fairly. They want to know whether there is enough money."

Mr. Odden attributes the trend, in part, to states' recent efforts to set higher standards for student performance. As states become more clear about the achievement they expect from students, he said, courts have become more interested in probing the question of whether legislatures are providing schools with the needed financial resources to meet those standards.

In last week's ruling, the Ohio high court did not go along with the plaintiffs' request to name a special master to oversee the design of a remedy. But the justices did retain jurisdiction in the case, unlike in 1997, when the high court sent it back to a lower court. So a year from now, Ohio officials will have to again appear before the supreme court to make the case that they have followed through with its order.

Gov. Taft remained upbeat about the ruling last week. At a press conference on Friday, he said he was optimistic that lawmakers could craft a satisfactory remedy in time.

"The state has turned the corner in its efforts to meet the court's mandate," he said. "By giving the state an extra year to finish its work and by not appointing a special master, the court is recognizing that we are on the right track."

Leaders of the Ohio Senate and House of Representatives planned to start appointing a joint committee this week to begin studying the decision. The legislature is slated to go into recess at the end of this month, but lawmakers said they haven't ruled out coming back for a special session during the summer to address the ruling.

Last week, Speaker of the House Jo An Davidson predicted that dealing with the property-tax issue will be the toughest challenge.

"The best method I know for addressing property-tax disparities is what we already do in our foundation formula, which is to equalize funding," she said in an interview. Asked just how difficult the problem will be to solve, she said: "On a scale of 1 to 10, I'd say it's a 12."

Vol. 19, Issue 36, Pages 1,25

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