An investment budget for a better Ohio

January 24, 2017
   

The state is missing opportunities to invest in foundational programs for thriving communities

Contact Wendy Patton
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We can create a stronger Ohio by investing in our children, our infrastructure and our workforce. Instead, Governor Kasich is warning Ohioans that our best days are behind us and we can’t afford to do what is needed to create a more vibrant state with an economy that works for everyone. What we really can’t afford is that austere view of our future; we need to do more, not less. This brief lays out some of the public investments essential to position Ohio for a brighter future and ensure that all of our neighbors have the basics. Billions of dollars have been squandered on tax cuts that have overwhelmingly benefited Ohio’s most affluent, while doing little for the economy. Resources to pay for the investments we need could be provided by modernizing Ohio’s tax system, rebalancing it so the wealthiest pay their share, and eliminating wasteful tax breaks.[1]

investment key findings copy

 

BUILD THE BASIS FOR TOMORROW’S SKILLED WORKFORCE


A fully fund kindgarten copyFull-day kindergarten
: Research shows that full day kindergarten helps kids do better in reading and math. [2] Ohio was going to provide full day kindergarten, but eliminated the mandate in 2012, largely because it was unfunded.[3] Today, some school districts offer full day kindergarten, and others charge tuition. All Ohio children need fully funded, full-day kindergarten – especially to pass the third-grade reading guarantee test.

 

93 million pre-k copy Pre-Kindergarten: Ohio’s current investments in early childhood programs fall short of providing Ohio’s most vulnerable children with the support necessary for success in kindergarten, third-grade literacy, and beyond.[4] Only about a quarter of eligible youngsters are served across Ohio’s several programs for young children.[5] Within the Ohio Department of Education’s (DOE) publicly funded preschool program, just 18,440 kids are served at $4,000 each for a half-day program[6] – a per-child number that is $521 per child below the national average.[7]

 

150 mil childcare A copyPublic childcare: State funding for childcare across federal and state sources remains lower in 2016 than in 2009, adjusted for inflation.[8] As a result, quality is low – just 1 in 7 kids served is in a program rated as ‘highly qualified.’[9] Far too few families and children are eligible for this critical work support. In 2010, families earning up to 200 percent of the federal poverty level (about $40,000 a year for a parent with two kids) could get help, but the eligibility has dropped to 130 percent of poverty (about $26,000 for that family). Eligibility should be restored, serving more families and kids. Underfunding that has eroded wages and quality among Ohio’s public childcare providers must be reversed.[10]

 

90 million state share copyHigher Education: Adjusted for inflation, state support to higher education is $500 million lower this fiscal year than it was a decade ago.[11] Public higher education is still recouping losses from the recession. Consistency in funding is necessary to maintain quality. The Inter-University Council[12] estimates a 4.5 percent increase in state support, which would maintain current services.[13] Failure to provide an adequate state share of instruction, combined with tuition freeze, may limit colleges’ ability to provided courses and other essentials. This amount falls short of what would be needed to actually reduce Ohio’s high tuition.[14]

ENSURE JOBS FOR WORKERS AND A WORKFORCE FOR EMPLOYERS

75 million a year transpo copyPublic transit: The Governor’s Workgroup to Reduce Reliance on Public Assistance identified lack of transportation as a leading barrier to self-sufficiency.[15] The Ohio Department of Transportation (ODOT) indicated that the state provided just 1 percent of the cost of operating Ohio’s public transit systems in 2012, although 10 percent is the suggested level.[16] About $40 million a year was provided through the General Revenue Fund (GRF) in 2000; that has dwindled to $15.3 million annually.[17]

ODOT estimates that in 2015, Ohio had unmet market demand for 37.5 million rides. [18] The ODOT Director’s budget letter identified a proposed 33 percent increase in funding for public transit [19]  and requested an additional $10 million in this budget for public transit, but this is too small a step.[20] A new coalition – Ohioans for Transportation Equity – has called for a $75 million dollar “Innovation Fund” – a competitive fund that would support local proposals for public transit appropriate to their needs. The source could be a combination of state and federal funds.

MCO $35-40 mil copyHold counties and public transit agencies harmless from changes to the MCO tax: In 2014, the federal government warned Ohio that the Medicaid Managed Care Organization (MCO) tax, part of the sales tax base, did not comply with federal law.[21] As Ohio moves to fix this, legislators could hurt local governments and public transit agencies that “piggyback” the state sales tax with a local tax. Local governments have seen deep cuts since 2011. Legislators should make sure changes to the MCO tax do not cause further harm by ensuring any new design provides equivalent revenues to counties and transit agencies, or by providing funding from another state revenue source.

 

$15 mil investment workforce copyScale-up workforce development best practices: Sector partnerships, known in Ohio as Industry Workforce Alliances, are state-of-the art workforce development strategies. These partnerships of worker representatives, community based organizations, trainers, and public agencies, are employer-led and focus on regional barriers to skills and employment in key sectors. Ohio began supporting these partnerships through a $1.4 million pilot initiative. These strategies benefit employers and workers. The Ohio Workforce Coalition has called for a $10 million investment, a portion of which could come from the Governor’s WIOA discretionary fund and could leverage an additional $5 million from industry and nonpublic sources.

 

$150 mil need based financial aid copySmart investments in need-based financial aid: Ohio has one state source for need-based financial aid – the Ohio College Opportunity Grant (OCOG). In the last budget, Ohio made the smart decision to increase funding to OCOG. Even with renewed investment, Ohio remains about $150 million below the intended target of $250 million a year. OCOG was established during Governor Taft’s era to replace two state need-based student aid programs, the Ohio Instructional Grant (OIG) and the Part-time Student Instructional Grant.[22] The target of $250 million a year was set at that time.

Ohio underinvests in financial aid and poorly targets its spending. Students at two-year public institutions, like community colleges and branch campuses lack full-eligibility. This means the vast majority of students at those institutions receive no need-based aid from the state. Community colleges offer training programs connected to careers and are often the most accessible institutions for low-income and non-traditional learners.

OCOG copyOhio’s decision to end need-based aid for these students has consequences. A shrinking share of adult learners are enrolling in training.[23] As Ohio emerged from the recession in 2010, 130,000 Ohio adults upgraded their skills at community colleges and branch campuses. That dropped by 35 percent to 85,000 in 2015. This is a setback for Ohioans looking to gain a leg up in the job market and for employers looking for skilled workers.

 

$16.7 million OCOG copyRedirect financial aid to public institutions: Public institutions are good investments.[24] New earnings data show that graduates of public certificate programs, on average, earn $9,000 more than those who graduate from their for-profit counterparts. Nearly one-third of students who graduate from for-profit programs go on to earn less than what a full-time minimum wage worker would earn in a year. That’s nearly double the share of public graduates (14 percent) that make less than a full-time minimum wage worker.[25]

Although these schools typically cost more and return less to students, Ohio designated $16.7 million in OCOG for proprietary institutions last budget cycle,[26] yet OCOG largely excludes students at public two-year institutions. For-profit schools cost more and yield less for students. The state should reevaluate its policy of funding proprietary schools at the expense of public two-year programs that promise, on average better returns.

EITC copyMake Ohio’s earned income tax credit work for working families: Ohio’s tax cuts have overwhelmingly favored the wealthiest. Low-to-moderate income workers end up paying a higher share of their income out in state and local taxes.[27] The richest 1 percent of Ohioans, on average, pay only about 6 percent of their income, while the bottom 20 percent of earners pay nearly double that amount.[28] This makes our tax system both inadequate to meet our needs and unfair. The Earned Income Tax Credit (EITC) is one way the state can restore some equity to our tax code, while encouraging work and injecting money into local economies that need a boost. Ohio’s existing credit is too weak to help the workers most in need of a tax cut. Data from the Ohio Department of Taxation shows that no one earning under $10,000 benefitted from the credit in 2014.[29] Ohio’s current EITC is only 10 percent of the federal credit, is capped for some earners and, unlike nearly all other state EITC’s Ohio’s credit is not refundable, meaning it can’t help those who earn too little to pay income taxes (despite paying other taxes).

A more substantial, refundable, non-capped EITC would extend the credit’s reach among the poorest workers and increase the amount available to all eligible claimants. It would support labor market participation, local spending and a fairer tax code. A new report on the EITC will be coming from Policy Matters Ohio soon.

KEEP PROMISES TO THE MOST VULNERABLE

ACA repeal copySupport healthy people and a productive workforce:

Medicaid expansion allowed low-paid workers in Ohio’s largest job categories to see a doctor for common but debilitating ailments such as diabetes, hypertension, depression and addiction. Ensuring access to a doctor’s care helps families stay intact and keeps workforces stable. The state must protect the access to health care that was provided by the Affordable Care Act (ACA). Repeal of the ACA and Medicaid expansion will hurt Ohio families and our budget: it would cause an estimated loss of $3.5 billion in federal funding to the Ohio budget in 2019 while cutting nearly 1 million of our neighbors off of health care.[30]

$30 million mental health copyAddressing the drug epidemic and mental health crisis: Due to a critical bed shortage, too few of Ohio’s severely mentally ill and addicted can access in-patient treatment.[31] The drug epidemic is creating new pressures for intervention for the addicted and subsequent residential care. A coalition of behavioral health providers and advocates developed a plan to create 15 crisis centers with 240 more beds with supportive community services. Additionally, Ohio needs 100 psychiatric beds for children.[32]

 


30 mil foodbanks A copyPrevent hunger
: Ohio’s poverty rate remains near recession levels.[33] The Ohio Association of Foodbanks meets a crucial need. It provides dry goods, surplus fresh produce, meats and dairy to Ohio’s hungry. It also conducts outreach to those with difficulty getting to food pantries and provides nutrition programs to keep kids from being hungry on weekends, holidays, snow days and in months that school lunches are not served.

 

State funding is vital to providing these critical services to the neediest of Ohioans – too many of whom are children. Foodbanks are asking for a larger annual budget allocation than in the last budget[34] because hunger is up in Ohio’s metropolitan areas.[35]

20 million foster care copyRestore funding to Children’s Services: Ohio gives less state support as a share of total costs to children’s services than any other state. Local levies provide the greatest share of funds to draw down federal dollars for children’s services.[36] Yet the phase-out of tax reimbursements, promised when the state eliminated a local business property tax 12 years ago, will leave local children’s service levies about $12 million poorer in 2018 than in 2014 (adjusted for inflation).[37] Making the situation more desperate, the number of kids in the system in state fiscal year 2008 (14,282) is just slightly higher than the number in 2016 (13,895), yet the primary state funding line (600523 – Family and Children’s Services) has fallen by about $28 million (adjusted for inflation) between 2008 and 2016.[38] A modest one-time bump in funding in 2015 was helpful, but not sustained, and need is growing with the drug epidemic.

$15 million counties case workers copyAdult Protective Services: The state has not adequately financed new requirements to protect frail elderly Ohioans living in their homes. As more people age at home instead of nursing homes, more caseworkers are needed to make sure they are safe, well cared for and not living in fear or abuse. The Ohio Family Violence Prevention Project estimates that each year, 105,000 older adults (over 60) in Ohio are abused or neglected.[39] Based on this number, at a recommended case load of 25 cases per worker per month, it would take up to $15 million a year to adequately staff adult protective services to reach all endangered seniors.[40]

REBUILD LAGGING COMMUNITIES AND SQUEEZED SCHOOLS

$186 million copyRestore school staffing. Ohio’s schools were ranked fifth in the nation by Education Week in 2010. Since then, we’ve slid to 23rd,[41] with the loss of many teachers, including 40 percent of our librarians, 12 percent of our art, music and gym teachers and 4 percent of our school counselors and social workers.[42] We could prepare our children better, for a brighter future, by restoring staffing to our public schools.

$270 million local levy copyGet charter school funding out of local coffers: When a public school student moves to a charter school, the local school district must send the charter school a full state per pupil amount – plus categorical funds – rather than the actual per-pupil share of that district’s formula aid. This has been frustrating school districts for nearly 20 years, particularly because not all schools get the same per-pupil amounts as they have to provide to the charter school. Many get less. Under the current formula, in those districts with less funding than the state per-pupil amount, local resources make up the difference – an estimated $270 million in fiscal year 2016. This is local levy funds – and voters did not approve this diversion of funds.[43]

 

Local Government Fund copyLocal government aid: The state eliminated the estate tax, phased out reimbursements to localities and cut the Local Government Fund (GRF) in half. Local governments are working with $1 billion less every year, adjusted for inflation, than in 2010, yet they still deliver the public services that we depend on – from snowplowing and road repair to many health and human services.[44] Restoring local government funding could allow communities to better stem the drug epidemic with community mental health and addiction treatment services, put police back on the beat, reopen closed pools and rec centers, repave streets and fix blight in neighborhoods.

 

ohio housing trust fund copyBoost the supply of affordable housing. Ohio has a pressing need for housing assistance. More than 400,000 Ohio households spend more than half their income on rent. An estimated 33,546 Ohioans used homeless assistance services in 2014.[45] Established in 1991, when Ohio voters approved a constitutional amendment designating housing as a public purpose, the Ohio Housing Trust Fund supports a host of programs for affordable housing and homeless assistance. But in recent years it has been funded at well below previous levels.

 

ENDNOTES

[1]See Policy Matters Ohio testimonies at  http://www.policymattersohio.org/2020testimony-sept2016 and http://www.policymattersohio.org/taxbreak-testimony-march2016

[2] See Kathleen A. Roskos, James F. Christie, and Donald J. Richgels. “The Essentials of Early Literacy Instruction,” National Association for the Education of the Young Child, http://www.naeyc.org/files/yc/file/200303/Essentials.pdf; also see Alex M. Moore, Kristy vanMarle, David C. Geary. Kindergartners’ fluent processing of symbolic numerical magnitude is predicted by their cardinal knowledge and implicit understanding of arithmetic 2years earlier. Journal of Experimental Child Psychology, 2016; 150: 31 DOI: 10.1016/j.jecp.2016.05.003 (Described in Science Daily at https://www.sciencedaily.com/releases/2016/08/160804171649.htm

[3] Chandra Neeley, “Why more schools are moving to full-day kindergarten: Who charges, and how much?” Cleveland.com at http://www.cleveland.com/rocky-river/index.ssf/2015/12/why_more_schools_are_moving_to.html

[4] Groundwork Ohio, Leaving Young Children Behind: A Lost Opportunity for School and Workforce Success at http://media.wix.com/ugd/d2fbfd_7e0b46601bb24334a04ef988ed82f7d5.pdf

[5] Id.

[6] Cost based on average cost per child ($4000) in public early education program by Dr. Wendy Grove of the Ohio Department of Education in e-mails of 12/16/2016

[7] National Institute for Early Education Research, State of Preschool 2015 (state profile for Ohio) at http://nieer.org/state-preschool-yearbooks/the-state-of-preschool-2015

[8] These numbers are based on the Groundwork report cited above. Inflation adjustment was done by Policy Matters Ohio.

[9] Groundwork Ohio Policy Agenda 2016 at http://media.wix.com/ugd/d2fbfd_c4bb4dd579054e418d4a7639d5de299d.pdf

[10] The $150 estimate is based on 2 components: quality and quantity. Starting with quality:

The federal standard for market rates for publicly funded childcare is to reimburse providers at the 75th percentile of the latest market study. Ohio’s funding lags. The 2009 base rate funding levels were set at the 26th percentile. There have been modest changes in base rates since then, and those changes have provided significant improvement in some places in the state. However, other places still lag. Premiums for Quality have been instituted, but less than a quarter of providers are in the quality program.

Boosting quality – About $80 million

  • $65 million: According to preliminary discussions at the Early Education Advisory Council meeting on January 18, 2017, $65 million is needed to adapt payment rates to the new 2016 market study.
  • $15 million: Funding of another $15 million is needed to ensure a boost in rates to the nationally recommended level of the 75th market percentile for providers rated in the top tiers of the ‘Step Up to Quality’ program.

Boosting eligibility by funding additional slots – About $70 million:

  • $57.5 million would be needed for 10,000 new slots, based on ODJFS’s cost per child in publicly funded childcare ($5,748, provided in a December 18, 2016 e-mail from  Communications Director Angela Terez). Funding 10,000 additional children would allow an increase in eligibility – not to the desired level of 200%, but a move in the right direction.
  • Our calculations include a 20% premium, assuming those slots are provided at a higher level of quality.

[11] Wendy Patton, “Ohio Budget Basics,” Policy Matters Ohio, December 2016 at http://www.policymattersohio.org/wp-content/uploads/2016/12/Budget-Primer-2016-2.pdf

[12] Vanessa McCray, “Public Universities Seek Additional Aid from State,” The Toledo Blade, December 19, 2016, http://www.toledoblade.com/Education/2016/12/19/Ohio-Universities-seek-tuition-boost.html.

[13] Note that the Inter-University Council’s ask is simply to keep up with inflation, not more: The Congressional Budget Office projection for increase in the Consumer Price Index for FY 2018 and FY 2019 will be 4.588 percent. See CBO, 10-year economic projections, August 2016 at https://www.cbo.gov/about/products/budget-economic-data#4.

[14] Ohio’s tuition at a 4-year public university is, on average, higher than in 36 other states and the District of Columbia. Tuition at 2-year campuses is pricier, on average, than in 38 other states and Washington, D.C., according to: The College Board, ‘Tuition and fees by sector and state over time’ (Table 5) at https://trends.collegeboard.org/college-pricing/figures-tables/tuition-fees-sector-state-over-time

[15] Workgroup to Reduce Reliance on Public Assistance Report to Governor John R. Kasich and the Ohio General Assembly April 15, 2015 at http://humanservices.ohio.gov/WorkArea/DownloadAsset.aspx?id=2147636202

[16] Ohio Department of Transportation, Ohio Statewide Transit Needs Study, 2015 at http://www.dot.state.oh.us/Divisions/Planning/Transit/TransitNeedsStudy/Documents/FindingsSnapshotLetterSize.pdf

[17] Ohio Legislative Services Commission Budget in Detail.

[18] Ohio Department of Transportation, Op.Cit.

[19] E-mailed agency budget letters from Katelyn Kaman of the Ohio Office of Budget and Management, December 21, 2016.

[20] Ginger Christ, “ODOT looking to send 33 percent more money to public transit,” The Plain Dealer, January 13, 2017 at http://www.cleveland.com/metro/index.ssf/2017/01/odot_looking_to_send_33_percen.html

[21] Wendy Patton, “Medicaid provider tax fix must not hurt counties, transit agencies,” July 2016 at http://www.policymattersohio.org/medicaid-mco-july2016
[22] Student Financial Aid, Association of Independent Colleges and Universities of Ohio at

http://www.aicuo.edu/n/docs/Ohio%20College%20Opportunity%20Grant%20Position%20Statement.pdf

[23]Ohio Department of Education, Enrollment Data, available at http://education.ohio.gov/Topics/Data/Frequently-Requested-Data/Enrollment-Data.

[24] U.S. Department of Education, Gainful Employment Data, November 2016, available at http://www.ed.gov/news/press-releases/education-department-releases-new-graduate-earnings-data-career-college-programs.

[25] Ohio Department of Higher Education, Catalogue of Budget Line Items, 2016, available at http://www.lsc.ohio.gov/fiscal/cobli/2016/bor.pdf.

[26] Ohio Department of Higher Education, Catalogue of Budget Line Items, 2016, available at http://www.lsc.ohio.gov/fiscal/cobli/2016/bor.pdf.

[27] Zach Schiller, ”The Great Ohio Tax Shift,” August, 2014 at http://www.policymattersohio.org/tax-shift-aug2014. Note that this study doesn’t include additional 2015 changes that further widened the gap.

[28] See, Policy Matters Ohio, “Wealthy not paying fair share of state an local taxes,” April 2016, available at http://www.policymattersohio.org/blogpost-taxes-april2016.

[29] Ohio Department of Taxation, Individual Income Tax Tables, Tax Year 2014, available at http://www.tax.ohio.gov/tax_analysis/tax_data_series/individual_income/publications_tds_individual.aspx

[30] The Urban Institute estimates the loss of federal funds in Ohio due to repeal of the Affordable Care Act, modeled on the federal repeal vetoed by President Obama in January 2016, would cost the state $3.5 billion in federal dollars in 2019, when such a repeal is expected to be implemented. See Linda J. Blumberg, Matthew Buettgens, and John Holahan, “Implications of Partial Repeal of the ACA through Reconciliation,” Urban Institute, December 2016 at http://www.urban.org/research/publication/implications-partial-repeal-aca-through-reconciliation
[31] Student Financial Aid, Association of Independent Colleges and Universities of Ohio at

http://www.aicuo.edu/n/docs/Ohio%20College%20Opportunity%20Grant%20Position%20Statement.pdf

[32] Based on interview with the Ohio Association of Community Behavioral Health Authorities, e-mail form Elizabeth Heinrich, December 21, 2016.

[33] Ohio Association of Foodbanks, “Seven Years After the End of the Great Recession, Household Incomes in Ohio Have Not Recovered,” December 8, 2016 at http://ohiofoodbanks.org/files/2016-17/Press-Release-Fewer-Ohio-Households-Self-Sufficient-Seven-Years-After-Recession.pdf

[34] Ohio Association of Foodbanks – Budget request for FY 2018-19 budget at http://ohiofoodbanks.org/advocacy/2018-19/Foodbanks_One_Pager.pdf; see also WOSU radio story at http://radio.wosu.org/post/hunger-relief-group-asking-increased-funding-programs

[35]“How Hungry is America? Food Action Research Center ( http://frac.org/pdf/food-hardship-2016.pdf) Cited in Ohio Association of Foodbanks news release at http://ohiofoodbanks.org/files/2016-17/Press-Release-Ohio-Has-Highest-Rate-of-Food-Hardship-in-Midwest.pdf

[36] Public Children’s Services Association of Ohio, The Child Protection Mission: Safety, Permanency & Well-being (PCSAO Factbook 12th Edition 2015-2016) at https://www.office.com/1/?auth=2

[37] Spreadsheet provided by the Public Children’s Services Association of Ohio, based on Ohio Department of Taxation data on TPP reimbursements, 2014 – 2018.

[38] Number of children provided by Public Children’s Services Association of Ohio. Expenditures and appropriations (2017) data is taken from the Legislative Services Commission’s Budget in Detail for line item 600523.

[39] Healthpath Foundation of Ohio, “Preventing elder abuse in Ohio, August 2015 at http://www.healthpathohio.org/Portals/0/Uploads/Documents/Preventing_Elder_Abuse_in_Ohio.pdf

[40] Wendy Patton, “Protecting elderly Ohioans from Abuse and Neglect,” Policy Matters Ohio, May 2014 at http://www.policymattersohio.org/adult-may2014

[41] Catherine Candisky, “Ohio’s Schools Slide in National Rankings, Columbus Dispatch, January 7, 2016 at http://www.dispatch.com/content/stories/local/2016/01/07/rankings-slide-in-national-report.html

[42] Victoria Jackson, Number of Ohio’s vital school professionals dwindling, Policy Matters Ohio, December 2016 at http://www.policymattersohio.org/k-12-report-dec16. Figures calculated based on Ohio LMI average wages (Occupational Employment Survey):

  • 637 librarians at average salary of @ $51,231
  • 2383 art, music and physical education teachers at average salary of @$60,000
  • 188 school counselors at @$52,964

[43] OEPI Research Update: GRF Tax Revenues, Funding Formula Issues, CAUV, & 2015 School Levy Analysis Dr. Howard Fleeter Ohio Education Policy Institute OSBA Capital Conference November 16, 2016

http://www.oepiohio.org/wp-content/uploads/2015/10/OSBA-2016-Cap-Conf-OEPI-Presentation-11-16-16-Final-copy.pdf

[44] Wendy Patton, “Cuts sting Ohio localities,” Policy Matters Ohio, January 2017 at http://www.policymattersohio.org/

[45] The Ohio Housing Finance Agency, “2017 Housing Needs Assessment” at http://ohiohome.org/news/documents/2017-HousingNeedsAssessment.pdf

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