Archive for The Lobby

Ohio Charter Schools Have Aggressive Statehouse Agenda in Wake of ECOT Battle, State Budget Funding & Kasich Vetoes

Ohio K-12 education policy issues generally slow down after the adoption of the state operating budget but that is unlikely to be the case in 2018. Driven by the battle to close the largest on-line charter school in the state and a series of state operating budget veto’s by Governor John Kasich, K-12 education policy issues will remain front and center as the Ohio General Assembly returns to the Statehouse in September following the traditional summer recess.

First, the saga of ECOT. The Electronic Classroom of Tomorrow (ECOT) was formed in 2000 as the infancy of Ohio’s charter school movement was beginning. ECOT is an on-line charter school serving over 15,000 Ohio students. ECOT has run into a buzz saw at the Ohio Department of Education and charter school opponents when it struggled to document when all of their students were actually on-line for instructional purposes. Lawsuits were filed and will continue. ECOT is now facing an edict from the Ohio Department of Education that the funding that will be provided to them will be reduced. Though the school and state are fighting in court over the attendance documentation matter and the case is awaiting a decision by the Ohio Supreme Court, the Ohio Department of Education has decided to act by deducting about $2.5 million a month from its ongoing payments to ECOT based upon questionable attendance reports. In Ohio, charter schools, unlike traditional public schools, are funded a set amount of state funding based upon the students attending the charter schools. The ECOT battle continues and it is likely to end up in the Ohio General Assembly’s lap most likely following a potential Ohio Supreme Court decision on the attendance issues.

Second, charter school funding remains far behind traditional public schools in the state and the issue will not be dropped by charter schools who teach over 100,000 Ohio students. Charter or community schools in Ohio are public school districts that are privately managed that operate under state regulation and funded with a set state allocation that diverts $6000 per student who chooses not to attend their local school district but attends a public charter school. Facilities based charter schools also receive a 25% allocation of the state’s billion dollar line item for Targeted Assistance funding designed to support low wealth communities, and all charter schools receive special education funding for students with those needs. Nearly all fifty states operate charter schools as an alternative to struggling traditional public schools. It is a little known fact that traditional public school boards are the prime authorizers of charter schools across the nation. In Ohio, charter schools can be facilities based which are limited to being located in one of just under 40 struggling, primarily urban school district or Internet based which can serve students from anywhere in the state. All Ohio charter schools must be authorized by a sponsor and the performance of charter school sponsors has come under heavy scrutiny in recent years. As charter schools generally do not have access to state property tax funds and only receive 25% of the state’s Targeted Assistance funding, Ohio’s charter schools are drastically underfunded compared to their urban counterparts. The recently passed state of Ohio operating budget continued the state’s underfunding of Ohio’s charter schools and this contentious issue is unlikely to go away.

Third, Governor Kasich’s recent veto of several charter school provisions will likely stir additional Statehouse Debate. Of the 47 Kasich state operating budget vetoes, several impact charter schools. Kasich vetoed a provision in HB 49 that would exempt from state assessment and graduation requirements all students at chartered nonpublic schools in which at least 75 percent of students are children with disabilities who receive special education and related services. The Governor also vetoed an HB 49 provision requiring the Department of Education to increase from 20 percent to 60 percent the weight given to the “Progress” category score when computing a total score for the “Academic Performance” component of the Department of Education’s community school sponsor evaluation system. Additionally, in certain cases the provision would prohibit the Department of Education from rating a sponsor “Ineffective” if it scores a “zero” in the system’s Compliance or Quality Practices components. Another Kasich veto impacted a provision that permits Educational Service Centers (ESC) rated “Effective” to sponsor a community school anywhere in the state. Currently, most ESCs can only sponsor schools in their own and contiguous counties, unless they obtain permission from the Department of Education and sign a contract to do so. In addition, Kasich vetoed a provision of HB 49 that would allow a community school sponsor that had its sponsorship authority revoked due to the 2015-2016 sponsorship evaluations due to poor performance to renew its sponsorship for the 2017-2018 school year if the sponsor received at least a “3” or “4” out of “4,” in the Academic component and “zeros” for the Quality Practices and Compliance components of the sponsor evaluation. Governor Kasich also vetoed provisions eliminating the four-year program for new teachers that they complete in order to prepare for a professional educator license issued by the State Board of Education, and would allow Ohio’s public and private schools to choose between administering state achievement assessments in either paper or online formats. The Ohio General Assembly will return in September and overriding a number of the Governor’s vetoes on HB 49 is on the agenda. However, even if these vetoes are not overridden, debate in the Statehouse is likely to continue in the coming months.

Kasich Budget Passes Ohio General Assembly But House Overrides 11 Vetoes

Ohio House Bill 49, Governor John Kasich’s last state operating budget and was signed into law just fifteen minutes before the new fiscal year began in July 1, 2017. This was one ugly budget that started with tight revenues, saw a billion dollar revenue collapse in the middle of the legislative process, then had a Kasich record for line item vetoes and is ending with the first override of a Governor’s veto since 1979.

Ohio House Bill 49 started as a typical Kasich budget. Kasich’s budget agenda was aggressive—continue the Medicaid Expansion fueled by federal funding, enact tax reform, align K-12 education funding with student needs, and address the critical issue of workforce development facing the Ohio economy. In fact, the funding of the Medicaid Expansion under the federal government’s Affordable Care Act again gave the majority of state funding to Ohio’s healthcare program for the poor.

House Bill 49 hit early roadblocks in the Ohio House with Kasich’s tax reform plan scrapped and labeled again as shifting not reducing taxes. The House instead opted to keep what was in essence the same tax plan they had adopted in the last budget. Impacting the House’s budget plans was a joint announcement by the Governor, Speaker of the House and President of the Senate with just a couple weeks left in the House budget process that state revenue collections were continuing to decline and the budget now being debated would have to include $800M in less in spending. As tax increases were off the table from the start with the conservative Republican General Assembly, this put substantial spending cuts on the table.

The House enacted spending reductions without project major impacts to the Big Three of state government spending: Medicaid, K-12 education, and higher education. The House even added some tuition flexibility provisions for higher education and addresses at least some of the funding losses for many of the traditional K-12 school districts. The Ohio Senate, with nearly three weeks cut from their typical budget debate timeframe, worked in hyper-drive to address many of the additional funding cuts needed to meet what had now become a $1 B revenue shortfall. They also attempted to support higher ed and K-12 with policy and budget changes, but the Senate took a more aggressive line against the expansion of Medicaid by including a freeze on the expansion in 2018.

As the General Assembly reached a consensus on House Bill 49 through the Conference Committee, Governor Kasich illustrated the ultimate power the Ohio Constitution gives a Governor on a spending bill. Kasich used his line-item veto power over 40 times, double the number from the last budget. In particular, Kasich’s line item veto hit the interests of higher education, charter schools and opponents of the Medicaid expansion hard. In a highly unusually move, the Ohio House voted to override 11 of the Governor’s veto—10 were Medicaid related and one was oil and gas. The Ohio Senate will consider on July 12th to override the Governor’s vetoes next. Kasich’s last operating budget was not pretty, left many unhappy with line item vetoes and may create tension with the General Assembly as Kasich winds up his term as Governor.

Ohio’s Education Policy a Hot Topic with Ohio House Bill 49

Ohio’s workforce development initiative focused on a lofty goal- have 65% of its residents with a university or college degree or a certificate. The demands of Ohio employers require this level of skilled worker. The core of any state’s workforce development program centers on the development of workers starting with a quality K-12 education and moving onto a system of higher education that prepares them for the workplace of tomorrow. The state of Ohio provides $10B to K-12 education and it continues to be a hot political topic in the state of Ohio’s operating budget—House Bill 49. A billion dollar revenue gap create substantial pressure on funding for Ohio’s K-12 education and higher education systems. However, traditional and charter public schools both worked aggressively to secure funding in Houses Bill 49. Higher education fought hard for increased funding and flexibility to set their own tuition rates. The results were mixed.

House Bill 49 on the education front will provide a funding increase to 77% of the traditional public school districts and provide a $10 dollar per student and then a $20 per student increase for charter schools. Ohio’s higher education institutions received no funding increase for their prime state operations subsidy and no changes for the tuition flexibility following a number of line item vetoes by Governor Kasich. 100,000 children attend charter schools in Ohio. With the Ohio Department of Education and Ohio’s largest on-line charter school in a massive legal and political battle and a billion dollar revenue gap arising at halftime in the budget process, it is not a surprise that the state of Ohio operating budget left most in the Ohio charter school community less than fulfilled. The slight increase in funding for Ohio’s charter schools does not address the funding disparity between traditional public schools and brick and mortar charter schools that both serve the same urban students in the 39 struggling school districts in which brick and mortar charters are permitted to locate.

Ohio Charter School Funding Compared to
Traditional Urban Public Schools

The Ohio General Assembly missed a chance to take a major step forward in addressing this funding disparity between brick and mortar charter schools and their traditional urban school counterparts when they failed to shift Targeted Assistance funding for charter schools. In HB 49, the School Foundation Formula includes Targeted Assistance funding for students in low property wealth communities to all public school districts including community schools. In HB 49, brick and mortar community schools are limited to 25% of Targeted Assistance funding for eligible students even though they serve the same low property wealth communities while traditional urban public school districts receive 100% of Targeted Assistance funding. However, with a tight budget year, the General Assembly did not amend HB 49 to allocate 100% of the state’s Targeted Assistance funding to brick and mortar charter schools. Charter schools were also disappointed in Governor Kasich’s veto of a number of policy issues in the state operating budget that included a clarification of the sponsor evaluation system, reinstatement of the teacher residency program, and elimination of an amendment that would have permitted schools to use a paper or on-line achievement test.

Education policy is sure to remain on the Statehouse agenda following a challenging state budget debate in which many policy and funding issues were not resolved through the budget process.

Distracted Driving Debate to Continue in Ohio General Assembly

As usually happens, the Ohio General Assembly passed an avalanche of bills on their way out the door for their summer recess that traditionally follows passage of the state operating budget by the July 1 fiscal year deadline. However, the Ohio General Assembly is not done with its work in 2017 and will likely focus on a number of major topics including distracted driving.

Automobile accidents caused by distracted driving is not only a public safety problem but is also an economic development challenge as it impacts lost time at work, insurance rates and a range of other economic issues. Nationally, according to the Governor’s Highway Safety Association, cell phone use in automobiles is regulated in the following fashion:

  • Hand-held Cell Phone Use: 14 states, D.C., Puerto Rico, Guam and the U.S. Virgin Islands prohibit all drivers from using hand-held cell phones while driving. All are primary enforcement laws—an officer may cite a driver for using a hand-held cell phone without any other traffic offense taking place.
  • All Cell Phone Use: No state bans all cell phone use for all drivers, but 38 states and D.C. ban all cell phone use by novice drivers, and 20 states and D.C. prohibit it for school bus drivers.
  • Text Messaging: Washington was the first state to pass a texting ban in 2007. Currently, 47 states, D.C., Puerto Rico, Guam and the U.S. Virgin Islands ban text messaging for all drivers. All but 4 have primary enforcement. Of the 4 states without an all driver texting ban:
    • 3 prohibit text messaging by novice drivers.
    • 1 restricts school bus drivers from texting.

Ohio is one of the four states in the union in which texting and driving is not a primary offense—the police cannot give you a ticket if your only offense is texting and driving. Instead, Ohio House Bill 95, which passed the House 71-20, attempts to address the texting while driving crisis by:

  • Creating an enhanced penalty, a $100 ticket, that applies to a person who commits a specified vehicular moving violation while “distracted” if the distraction was a contributing factor to the commission of the violation; and
  • Defining “distracted” to include using a handheld electronic communications device except when operating a motor vehicle while wearing an earphone or earplug or conducting any activity while operating a utility service vehicle or a vehicle for or on behalf of a utility, provided that the driver of the vehicle is acting in response to an emergency, power outage, or a circumstance affecting the health or safety of individuals, that is not necessary to the operation of a vehicle and that impairs or reasonably would be expected to impair the ability of the operator to drive the vehicle safely.

House Bill 95 has the support of parents who lost children due to distracted driving, the auto and insurance industry as well as public safety organizations. All these organizations testified in support of House Bill 95. However, House Bill 95’s fatal flaw is that it does not make texting while driving a primary offense. Enacting a full fledge distracted driving law that makes it a primary offense in Ohio will be the work of the Ohio Senate when the General Assembly returns in the Fall.

Three Reasons Planning and Lobbying for Your Next State Capital Bill Community Projects Should Start Now

The hangover from the state of Ohio operating bill has not even really started but it is too soon to begin planning regional community projects as part of next year’s state capital budget? Three reasons indicate the answer to this question is yes.

First, let’s have a primer on what is a community project in the state capital bill. Community projects must be capital in nature and connected to a state agency either in the form ownership, partnership or through a joint use agreement. Most years, community projects include initiatives built around agriculture, arts and museums, economic development, health care, infrastructure, parks, police and fire, social services, sports, telecommunications, veterans and workforce projects. Applicants for funding still range from local governments to university to community colleges and for profit and not for profit organizations.

Now, three clear facts suggest planning and lobbying should begin right away for state capital budget bill community projects.

  1. State Capital Bill Community Project Funding is Accessible all Over Ohio. There is no reason to plan and lobby for a state capital bill community project if your region has no chance for funding. Past state capital bills illustrate, community project funding was accessible all over the state in urban, rural and suburban counties with community projects located in 77 of the 88 Ohio counties in the last state capital bill. As with most capital budget bills, Cuyahoga received the largest amount of community project funding but Hamilton and Franklin Counties were close behind. Don’t feel too bad for rural communities as they did much better in the last capital bill for community projects than in the previous capital budget gaining a full 10% more in funding than in the previous capital bill.
  2. Competition is Fierce for Community Project Funding. The previous state capital bill had over $1.25 B in legislative requests submitted by members of the Ohio General Assembly to their Finance Committees. With only $200M traditionally available for community projects, demand for funding is likely to exceed the supply of funding in the upcoming capital budget bill. The competition gets so fierce many successful community project funding requests hire Statehouse lobbyist to develop project requests and community with the executive agency and legislators about the economic value of the request for the state and community. In fact, over 1000 registered lobbyist were engaged in the last state capital bill (excluding state executive agency lobbyists).
  3. Quality Community Projects Take Time to Plan. Finally and most importantly, work should begin now on developing a regional arts, sports, workforce, health care, parks, infrastructure, social service or other state capital bill community project because quality requests take time to develop. While funding is accessible for projects all over the state, competition is fierce for everyone. Urban community requests far exceed the regional allocation of dollars. Rural communities compete for a smaller pot of funding. While hiring a lobbyist to gain funding helps, developing a quality project with a strong business plan tied to future funding that illustrates a sustainable project is the most appealing attribute for a community project request. Developing a sustainable community project request that address an important community challenge takes time to create.

The state of Ohio capital bill offers a critical opportunity to address regional challenges but work needs to begin now if communities want to succeed in gaining this in-demand funding.

Ohio House Makes Dramatic Changes to Kasich Budget

The first movement in Governor Kasich’s $69B state operating budget came from leaders of the Ohio House of Representatives and the movement was a substantial.  Responding to the agreement to cut spending substantially as well as to address challenges with the Kasich budget, the Ohio House of Representatives passed House Bill 49 without Governor Kasich’s proposed tax plan and his income tax cut, made several changes impacting economic development, rolled back the proposed Medicaid expansion, made major improvements to higher education and added funding to K-12 education.

As expected, Governor Kasich’s tax plan was the first budget item to go.  The House adopted a completely new tax plan.  The House removed the proposed tax reform plan, including proposed changes to the following taxes: income, sales, severance, commercial activity, tobacco and vapor, and alcohol.  They also struck the centralized collection proposal that would have mandated municipal income tax be collected by the state of Ohio but allowed a business to file a single annual or estimated return through the Ohio Business Gateway which a business may report and pay the total tax due to all the municipalities in which the business earned net profits.  Changes to the Ohio Local Government Fund were also scrapped.

Substantial changes impacting economic development were made to House Bill 49.  The House authorized the job creation tax credit to count employees who work from home in the job creation totals, made changes to the motion picture tax credit to require that a project must have 50% of financing secured to be eligible, priority be given to television or miniseries projects, and the Director of the Development Services Agency to charge an application fee equal to 1% of the estimated credit or $10,000 whichever is less.  The House revised the current data call center sales and use tax exemption to allow the capital expenditure to occur over 6 years instead of 5, retained funding for the Incumbent Workforce Training program at $1.25 M per year, and increased spending for the Defense Development Assistance and Ohio Edison Centers.  The House also authorized a county or municipal government to extend a pre-1994 CRA without triggering the laws enacted in 1994, and elevated the threshold for competitive bidding for port authorities to $250,000.  The House changed House Bill 49 to permits local workforce investment boards to conduct meetings by video and teleconference, and continue the ability for a county or municipality to enter into an enterprise zone agreement after October 15, 2017.  The House extended through July 1, 2019 the ability to apply the state historic preservation tax credit to the commercial activities tax, and eliminates the requirement that a new community district be over 1000 acres.  Finally, the House directed the Governor’s Executive Workforce Board to include an analysis of jobs that pay 125% of the federal minimum wage in the methodology for in-demand jobs.

The House also made major changes to the state’s Medicaid program.  They created legislative guardrails around Group VII Medicaid spending by requiring the Kasich Administration to seek Controlling Board approval on a regular basis for the Medicaid expansion, increased nursing home spending, and limited total Medicaid spending on hospitals to $6.9 B per year, and removed the non-contracting language and requires rates in effect on January 1, 2017 to continue over the biennium.

The Ohio House made several substantive changes to the higher education portion of the budget including:

  • Flat funds the State Share of Instruction and Ohio College Opportunity Grant line items;
  • Removed the proposal on textbook costs and replaces it with a textbook study requirement for public universities and community colleges;
  • Continued funding for the Federal Research Network at $3.5 M per year;
  • Provided $5 M in FY’19 for financial assistance to obtain short-term certificates;
  • Permitted a Community College to increase tuition by $10 per credit hour;
  • Clarified that tuition caps do not apply to tuition guarantee programs and removes the restrictions on increases between cohorts;
  • Exempted health insurance, auxiliary goods and services, non-instructional program fees, licensure costs, fines, travel costs and elective service charges from the tuition freeze;
  • Allowed a Community College to offer an applied bachelor’s degree if the degree is not offered by a public or private university within 30 miles and defines “applied bachelors”;
  • Required the Chancellor to investigate fees charged by institutions, prohibits the charging of any fee and permits the Controlling Board may approve the fee;
  • Required that faculty who assign textbooks must file a financial disclosure statement;
  • Reduced all clinical teaching lines by 10% in FY’18 and collapses them into one line in FY’19; and
  • Provided $750,000 for Co-op/Internship programs and provides earmarks for the 9 university programs traditionally funded through this line for their public policy schools.

The House made substantial changes to the Governor’s K-12 education plan.  They actually increased spending by $80 M—making K-12 one of the few financial winners from the House version of the budget.  They also removed Kasich’s controversial proposals to require teachers to have a private sector internships and placing non-voting business leaders on local school boards.  While the House did add K-12 school funding, Governor Kasich’s revisions to the school funding guarantee that attempts to limit paying public school districts for students they do not have survived.

House Bill 49 now moves on to the Ohio Senate who has raised questions about many of the House changes and is likely to enact additional spending cuts and policy changes to the bill with passage expected to meet the July 1, 2017 fiscal year deadline.

Montrose 1st Quarter 2017 Economic Snapshot Illustrates Mixed Results

The 1st Quarter 2017 economic data illustrates mixed results for the nation and targeted states.

Demographic data is a strong indicator of the potential for economic success and regions demographic and economic indicators vary widely.

Personal income increased $57.7 B (0.4 %) in February, 2017, disposable personal income increased $44.6 B (0.3 %) and personal consumption expenditures increased $7.4 B (0.1 %).

Unemployment rates were lower in March, 2017 in 17 states and stable in 33 states and the District of Columbia and the national unemployment rate declined by 0.2 % to 4.5 %.

Foreign Direct Investment (FDI) in the U.S. continues to increase.  FDI in the U.S. grew to $420.7 B in 2015, an increase of 68 percent from 2014.

Total domestic energy production fell for the first time in years driven by low oil and natural gas prices according to the U.S. Department of Energy.  However, the United States remains on the road to energy independent driven by increases in natural gas production.