School Funding

Ohio has relied on property tax revenue contributed by school districts, and state resources allocated in the state budget to fund a “thorough and efficient system of common schools.” Lawmakers have frequently modified the source of funds, the level of state spending, and the distribution of state funds. During the Great Depression, local communities struggled to fund their schools, making state funding even more critical. In 1934 the Legislature approved a 3% sales tax and substantially increased the state’s contribution to education. This change was called “Foundation Funding.” Its purpose was to provide every school district a basic foundation for operating its schools. To this day the line item in the state budget for basic operations of public education is known as Foundation Funding. The biennial budget approved in 2021 added into the Foundation Funding line item, spending for charter schools and vouchers, education options that are not operated by public school districts.

In 1992 a coalition of more than 500 Ohio school districts joined the Coalition for Equity and Adequacy in School Funding in a lawsuit to challenge the failure of the legislature to meet its public school funding obligations as stated in the “thorough and efficient” clause of the Ohio Constitution. The named plaintiff in the case was Nathan DeRolph, a middle school student in Green Local school district. In 1997 the Ohio Supreme Court made the first four decisions in the DeRolph case that found the funding system to be unconstitutional. It failed to account for the true cost of education, and it promoted unequal opportunity because of over-reliance on property taxes. Despite multiple short-lived efforts to improve the funding system, the General Assembly has typically relied on “residual” funding (defining per pupil spending by funds they want to spend) and has not reduced reliance on local property taxes to solve funding gaps.

The Legislature’s resistance to the Supreme Court decision was immediate. Instead of adopting a funding remedy, in 1997 the Legislature authorized and funded its first voucher program, and permitted unaccountable organizations to operate charter schools. Part of the cost of these new educational options was assigned to local school districts that had no say in the decision. Regulations guaranteeing quality, transparency, access, student rights, or accountability did not apply to the operation of these publicly funded entities. In a serious departure from the constitutional requirement of separation of church and state, both options allow religious education at public expense.

Ohio now operates two systems of education that compete for public funds. One system is public and accountable, and one is private and unaccountable. Since 1997, voucher programs and charter schools have grown, payment levels have increased, and restrictions on access have been removed. Spending has exploded. In 2021 the foundation funding line item included more than $1 billion for 115,000 students in charter schools, and $560 million for 75,000 students using vouchers. Ohio’s 1.6 million public school students received $7.4 billion.

In June of 2021 the Ohio Legislature approved its operating budget for FY 23 and FY 24. This was a breakthrough budget for public education. The Legislature approved most of the components of the Fair School Funding Plan, the school funding reform model developed by an independent group of education practitioners to achieve the long-awaited school funding plan that was both equitable and adequate. The bipartisan effort to design a true remedy to the DeRolph case began in 2016 and was championed by Rep. John Patterson (D-Ashtabula) and Rep. Bob Cupp (R-Lima). The spending levels were established based on an input model that assessed the actual costs of educating a typical student and the costs of educating children whose needs require greater investment.

​The distribution plan reduced reliance on local property taxes, which drive inequality, and more accurately assessed the capacity of local communities to fund their schools. The plan also ended the “deduction” method for funding private school alternatives, thus providing significant relief to affected school districts.

A critical role of the state investment in public schools is to neutralize the negative effect of local property taxes on education opportunities. The fair school funding plan makes it possible for every child in the state, no matter the capacity of their community to pay for education, to have access to adequate resources for a high-quality education. The plan accomplishes this by increasing the level of basic aid—the base cost; increasing categorical aid; funding more transportation costs; and providing targeted boosts in funding to the lowest wealth districts. For the plan to be fair to all and fair to taxpayers, all components are needed, as is full funding.

While much was accomplished in the last budget, the plan was not made permanent nor was it fully funded. Most elements of the formula and recommendations for additional research were adopted in the budget document, and funds were approved for the first two years of an anticipated six-year phase-in. The same budget also increased funding and access to vouchers and charter schools.

In a related development, in January of 2021, a coalition of 120 school districts and the Ohio Coalition for Equity and Adequacy of School Funding filed suit in Franklin County Common Pleas Court challenging the constitutionality of Ohio’s EdChoice and EdChoice Expansion voucher programs, claiming they are a violation of the “thorough and efficient” clause of the Ohio Constitution. The persistent growth in vouchers and pending legislation to make vouchers available without restriction makes them a threat to the state’s capacity to fund public education and to public education itself. Plaintiffs claim the constitution requires the state to operate one education system, not two. Vouchers advance individual interests, while public education serves the common good.

After tremendous advocacy efforts from various organizations, the legislature continued the phase-in of its FSFP. It also used this budget cycle to dismantle the State Board of Education by removing nearly all of its longstanding responsibilities, including making suggestions and priorities in the state’s education budget.

The “Vouchers Hurt Ohio” lawsuit also continued during this time with delays caused by then-Senate President Matt Huffman’s unwillingness to be deposed in the lawsuit.

During its first implementation of Ohio’s near-universal voucher system, Ohio saw over a billion dollars in two years go to the EdChoice Expansion. Data show most of these funds went to wealthy, white families in suburban areas whose children were already attending private schools before the vouchers were available. ProPublica exposed Ohio’s model as a method for funneling money to religious schools.

Speaker of the House, Matt Huffman, made his intentions clear in January of 2025 that he did not support continuing the FSFP. Despite increased advocacy efforts, the state ultimately abandoned the FSFP, shortchanging Ohio’s public school system by $2.75 billion. Further complicating Ohio’s school funding situation is the federal government’s proposed cuts to public schools. Although the federal government failed to pass a budget by the end of September 2025, leaving public schools across the nation in limbo for future funding stability, Ohio has already seen increased federal funding for charter schools to the tune of $105 million. 

At the same time, Ohio is facing a property tax crisis. According to the Ohio Education Policy Institute, Ohio has created an artificial shortfall for itself by increasing tax loopholes for corporations and flattening the income tax to benefit wealthy Ohioans. These efforts, combined with the legislature’s seeming disinterest in supporting its public school students, have decreased the state’s portion of education funding from 47% in FY19 to only 32% in FY27. Over 20 bills have been introduced in the 136th General Assembly to address property taxes, but none of the bills appear to address the state’s underfunding of public education.