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State of Ohio | Governor's Blue Ribbon Task Force on Financing Student Success

Meeting Schedule, Agendas and Minutes

September 11, 2003 Minutes

The third meeting of the Governor's Blue Ribbon Task Force on Financing Student Success convened at 10:00 am on September 11, 2003.

Presentations:

In attendance were Chairman Bill Wilkins, Vice Chair Jim Hyre, Ted Adams, Barbara Byrd-Bennett, John Brandt, Eric Burkland, Charles Calvert, Walt Davis, Paolo DeMaria, Matt Filipic, Robert Gardner, Chuck Gossett, Christine Hansen, William Hartnett, Jim Hoops, Jeff Jacobson, Tom Johnson, Dick Maxwell, Jim Mahoney, Dan Navin, C.J. Prentiss, Barbara Shaner, Jennifer Sheets, Richard Stoff, David Varda, Scott Williams, Dennis Woods, Tom Zaino, and Susan Zelman.

Chairman Wilkins began the meeting by asking for a moment of silence for those who died two years ago. Mr. Wilkins introduced Jackie Seevers, the Task Force's Administrative Assistant and Julia Bauer, a legal intern. Chairman Wilkins then introduced Tax Commissioner Tom Zaino, who provided an overview of how Ohio's property tax system supports funding for schools. Commissioner Zaino's presentation (as well as other presentations made to the Task Force) is available on the Task Force's website at http://www.ohio.gov/blueribbontaskforce.

In Part I of his presentation, Commissioner Zaino provided an overview of Ohio's property tax system as it relates to our public school system. Mr. Zaino discussed the constitutional restrictions on property taxes and the different types of real and tangible personal property.

Commissioner Zaino observed that about 75% of property tax revenue comes from real property, the balance from tangible personal property. Mr. Zaino described the difference between voted and effective mills, which is caused by the rate reduction provisions known commonly as the H.B. 920 reduction provisions (after the law that instituted the current rate reduction provisions in 1976). He noted that the H.B. 920 reduction factors are designed to prevent taxing jurisdictions from realizing additional revenue from increases in property values due to inflation. Commissioner Zaino also noted that Ohio has had restrictions on growth in property tax revenues since the 1920s. While H.B. 920 changed these restrictions, it was not the first time Ohio limited growth in property tax revenues.

Commissioner Zaino went into some detail regarding the 20-mill floor for school districts. He noted that the H.B. 920 reduction factors only apply to current expense and permanent improvement operating millage when the total is more than 20 effective mills. Districts at the 20-mill floor realize growth on both voted and unvoted millage in their property tax revenues as real property increases in value, since the reduction factors stop once a district hits 20 mills. Commissioner Zaino noted that 331 districts are currently at the 20-mill floor for at least one class of real property. He estimates that another 115 districts will be at the floor within six years, which means that nearly 75% of Ohio's school districts would be at the 20-mill floor, based on current trends. There was general discussion among Task Force members of H.B. 920 and its effects. Representative Calvert noted that the H.B. 920 rate reduction provisions are now in Ohio's constitution.

In Part II of his presentation, Commissioner Zaino described the interaction between education funding formulas and the tax system. He compared a high-wealth and a low-wealth district, noting that a high-wealth district receives relatively less state aid than a low-wealth district up to 23 mills. However, high-wealth districts that levy more than 23 mills generate more local revenue because of their wealth. Senator Jacobson noted that Parity Aid is designed to help lower-wealth districts compensate for their lesser ability to raise local funds.

Commissioner Zaino described the two types of Phantom Revenue – Reappraisal Phantom Revenue and Gap Phantom Revenue. Reappraisal Phantom Revenue occurs when real property is reappraised or updated every three years. School districts' real property wealth increases, but the H.B. 920 reduction factors prevent them from realizing the additional local revenue that the state's funding formula assumes the districts are receiving.

Commissioner Zaino noted that Gap Phantom Revenue, which was caused by the three-mill difference between the 20-mill floor and the 23-mill charge-off (the state's school funding formula assumes that all school districts levy at least 23 mills). Mr. Zaino noted that Gap Phantom Revenue no longer exists, since state aid fills in the gap for those districts that have millage rates of less than 23 mills. There was considerable discussion among Task Force members relative to public policy issues surrounding Phantom Revenue.

In closing, Commissioner Zaino provided the Task Force the Five Guiding Principles of a Quality Tax System:

  1. Simplicity,
  2. Equity and Fairness,
  3. Stable and Sufficient Revenue,
  4. Neutrality, and
  5. Competitiveness.

During the working lunch, Chairman Wilkins asked Task Force members to look at committee assignments and provide their top two preferences. The Chair observed that he would try to honor the member's preferences, but noted that we need to keep balance on these committees. Chairman Wilkins announced that the next meeting of the Task Force will be held on October 2 from 10 am to 2 pm in the O'Keefe Conference Center at 300 East Broad St. He stated that he would like to discuss at that meeting the process to be followed and the coordination of the work, future meeting schedules and other procedural issues. Vice Chairman Hyre noted that members should come forward with topics that need to be discussed on the various committees. Any member of the Task Force is welcome to attend any committee meetings.

After the working lunch, Chairman Wilkins introduced Katherine Canada, the Executive Director of the Commission on Teaching Success. Dr. Canada noted that five members of the Task Force also served on the Teaching Success Commission. She observed that this allowed for good cross-fertilization of ideas. Dr. Canada focused on the Commission's recommendations that had fiscal impacts, noting the four major areas considered by the Commission:

Senator Jacobson asked if the Commission identified things that the state is currently doing that could be eliminated so that resources could be reallocated. Dr. Canada noted that there was much discussion about spending professional development money differently. Mr. Brandt asked whether the Commission dealt with collective bargaining issues. Dr. Canada responded that it did not.

For the presentation on the recommendations of the Commission on Student Success, Chairman Wilkins introduced Lisa Gray, the Commission's Executive Director. Ms. Gray noted that this Commission was created in part due to recommendations of Achieve Inc, which dealt largely with academic content standards and student achievement. This 34-member commission was similar in composition to this Task Force. One of the most important things that Commission did was to speak to groups throughout the state. As a result, they had good buy-in from stakeholder groups.

Ms. Gray noted that most of the Commission's recommendations were adopted in S.B. 1 a few years ago. These provisions were amended in H.B. 3 to align Ohio's standards with the federal No Child Left Behind legislation. The Commission's key recommendation was for a system of rigorous and reasonable standards, with attainment of these standards measured by a system of assessments.

Chairman Wilkins next introduced Dr. Mitchell Chester from the Ohio Department of Education. Dr. Chester provided a high-level overview of the key components of No Child Left Behind (NCLB). Dr. Chester described in some detail the changes that Ohio made to its testing system in response to the requirements in NCLB. The principal change in Ohio's testing program due to NCLB was the replacement of diagnostic tests in grades 3-8 with achievement tests.

Dr. Chester described federal Adequate Yearly Progress (AYP) requirements, and the resulting student intervention mandated for those schools that did not meet the AYP requirements. He noted that performance designations are now at the building level rather than only at the district levels.

Performance is now measured through four different lenses.

  1. Performance indicators based on tests, attendance and graduation rates,
  2. A performance index, which is sensitive to gradations of achievement (it weights higher performance more than lower performance),
  3. The growth calculation, which is based on individual student gains, and
  4. Adequate Yearly Progress (the federal requirement).

Adequate Yearly Progress (AYP) has been a feature of federal legislation for a long time, but only pertained to Title I-eligible buildings prior to NCLS. Changes in NCLB made AYP apply to all buildings.

Dr. Chester described the AYP performance targets for the 2002-2003 school year and the trajectory for the next 11 years. He also went through report card criteria and described how districts earn designations. Dr. Chester opined that having more indicators of performance is more robust than simply using tests, attendance and graduation. He observed that most schools that did not meet AYP failed because of inability to achieve necessary results on math and/or reading achievement tests.

Finally, Dr. Chester described the consequences of not meeting AYP, for both buildings and districts. He mentioned federal requirements relative to persistently dangerous schools and highly qualified teachers Vice Chairman Hyre asked how many days a year a student is tested? Dr. Chester answered that this differs from district to district, if you look at more than just state testing. Mr. Hyre said that he was only referring to state tests.

Commissioner Zaino asked whether parochial schools have to take these tests. Dr. Chester responded that chartered nonpublic school students are only required to take graduation tests.

Chairman Wilkins adjourned the Task Force at approximately 2:15 pm.


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THE FINAL REPORT
Governor Taft reading with a student.