Summary of Policy Changes in HB49

Summary of Policy Changes in HB49 (R. Smith) Operating Budget As Introduced

Joan Platz, OAAE Research & Information Director

February 19, 2017


Governor Kasich introduced his final biennial budget in the Ohio House on January 30, 2017 as HB49 (R. Smith) Operating Budget. 

The total proposed budget for All Funds is $67.16 billion in FY18 (4.73 percent increase) and $68.59 billion in FY19 (2.13 percent increase).

Appropriations for the Ohio Department of Education are organized into five fund groups that include the General Revenue Fund, the Dedicated Purpose Fund, the Internal Service Activity Fund, the State Lottery Fund, and Federal Funds.


The General Revenue Fund (GRF) is the largest fund group and supports most of the major education initiatives in the state, including the following major line items:

Fund Code  Program FY18 FY19 Increase/decrease
200408 Early Childhood Education     $70.28 million $70.28 million $10 million increase 
200427 Assessment  $60.0 million        $60.1 million            $215,173 increase
200471 NEW Office of Innovation       $750,000 $750,000  
200502 Pupil Transportation               $549.2 million       $529.6 million          $74 million decrease
200550 Foundation Funding               $6.8 billion            $6.98 billion             $323.7 million increase
200573 EdChoice Expansion              $38.4 million        $ 47.7 million          $16.2 million increase

The executive budget includes FY18 appropriations of $8.05 billion (1.82 percent increase) and FY19 appropriations of $8.19 billion (1.70 percent increase) for the Department of Education, General Revenue Fund.


The Dedicated Purpose Fund includes appropriations for programs that bring in revenue, such as Commodity Foods program and the Child Nutrition Refunds.  The FY18 appropriation is $50.4 million and the FY19 appropriation is $50.2 million.


The Internal Service Activity Fund Group includes support for programs such as Information Technology Development and Support, Indirect Operational Support, and Interagency Program Support. The appropriation is $15.4 million in both fiscal years.


The State Lottery Fund Group includes revenue from the State Lottery “ support elementary, secondary, vocational, and special education programs as determined in appropriations made by the General Assembly.” The appropriation is $1.071 billion in both fiscal years, which would support four programs:  Foundation Funding, the Community Connectors Program, the Straight A Fund, and Community School Facilities.


The Federal Fund Group includes federal grants and payments, including School Food Service, Education of Exceptional Children, School Improvement grants, IDEA, Career Technical Education Basic Grant, ESEA, and more. The FY18 appropriation is $2.02 billion and the FY19 appropriation is $2.043 billion.



Governor Kasich’s executive budget also makes changes in education policies, especially in the areas of career-technical education and teacher licensing requirements, and permits the creation of STEAM schools – STEM schools that also include the arts.

The following is a summary of some of the significant policy changes related to K-12 education included in HB49 (R. Smith) Operating Budget as introduced:




Section 3317 ORC and related sections:  The executive budget generally maintains the current structure of the school funding formula with a few policy changes, which are listed below:

  • Maintains the current per pupil amount of $6,000 in each year.  Usually the per pupil amount is increased each biennium to address inflation and to help pay for state mandates.  But the governor has been saying that the state’s budget will be tight this year due to lower than expected tax revenue.  The governor added $280 million in new money, but that is offset in part by proposed decreases in transportation by $73 million; tangible personal property tax reimbursements by $81 million; special education enhancements by $5 million; career technical enhancements by $2 million; and the tangible personal property tax supplement by $44 million.
  • The Gain Cap is decreased from 7.5 percent in FY17 to 5 percent each year.  This provision limits the amount of state aid that a school district can receive .  The cap also includes state funding for capacity aid and pupil transportation.
  • Capacity Aid provides additional state funds based on the ability of districts to raise revenue from one mill of local property tax.
  • Transitional Aid (guarantee) will be based on average daily membership (ADM) between FY11-16.  Districts with a decline ADM greater than 5 percent will lose state aid up to a maximum of 5 percent, depending on the percent decline in total ADM.  School districts with a five-year total ADM decline between zero and up to 5 percent will have no reduction in their guarantee base.
  • The third grade reading proficiency bonus is maintained.  An additional payment is made to STEM schools for third grade students who score proficient or higher on the English language arts assessment. 
  • The graduation bonus is also funded
  • The career technical education component of the formula will be funded outside of the guarantee formula.
  • The minimum state share for pupil transportation<span"> will be reduced from 50 percent to 37.5 percent in FY18 and 25 percent in FY19. A school district’s transportation funding will be the greater of 37.5 percent or the district’s state share index (for FY 2018) or the greater of 25 percent or the district’s state share index (for FY 2019).
  • State Share Index measures a district’s capacity to raise local revenue, and is based on a district’s three-year average valuation per-pupil relative to the statewide average. In certain circumstances the relative valuation is adjusted by the district’s median income relative to the statewide median.
  • State aid also includes funding for special education, career-tech education, gifted education, disadvantaged students, K-3 Literacy Funds, and students who are learning English.
  • Tangible Personal Property Tax Reimbursements will decline from $224.4 million in FY17, to $142.3 million in FY18, and to 111.2 million in FY19.  The TTP Supplement ($43.9 million) ends this fiscal year.


According to Jim Siegel, The Columbus Dispatch, the proposed changes in the school funding formula in the executive budget would result in the following: 

  • Out of 610 school districts 388 (63 percent) would lose state funding over two years.
  • The number of school districts on the guarantee (gain cap) would increase from 133 in FY17 to 321 by FY19, costing the state $181 million.
  •  “When grouped by size and demographics, the state’s 55 large and mid-size urban districts would get the largest average per-pupil increases. Rural and suburban districts, on average, would get less per pupil.”  See “20 questions answered on Kasich budget,” by Jim Siegel, The Columbus Dispatch, February 17, 2017.




Section 265.340 Straight A Program:  The executive budget includes $15 million from the Lottery Profits Fund in both fiscal years to support the Straight A Program.

The program was created in 2013 by the 130th General Assembly to provide grants to eligible entities to increase student achievement, reduce spending in the five-year fiscal forecast, direct a greater share of resources to the classroom, and implement a shared services delivery model. Those eligible to receive a grant include school districts, educational service centers (ESCs), community schools, STEM schools, college-preparatory boarding schools, individual school buildings, education consortia, institutions of higher education, and private or governmental partnerships with one or more educational entity.

The bill retains the major provisions of the Straight A Program with these changes:

  • Eliminates the goal that requires grant applicants to show that they will utilize a greater share of resources in the classroom.
  • Specifies that businesses, nonprofit organizations, and innovation incubators may be part of an education consortia that receives a grant
  • Authorizes two types of grants: 
    • Innovation grants must be used to implement a new idea or modify an existing process
    • Replication grants must be used to replicate a project implemented by an existing or previous grantee, that the Straight A board has determined to be successful and suitable.




New Section 3313.011; repeals 3313.82:  The bill would require, beginning January 1, 2018, that district superintendents and superintendents of joint vocational school districts appoint three nonvoting advisory members to their boards of education to represent local business interests.  These members would advise the board regarding employment skills and development of curriculum; changes in the economy and job market; and make recommendations for developing a working relationship among business, labor, and educational personnel.

The bill also repeals Section 3313.82, which currently requires each school district and educational service center (ESC) board of education to appoint a business advisory council.

The bill does not establish a requirement that superintendents of ESCs appoint members to their boards of education to represent local business interests.




Section 3313.603 (I) - Course Credit for Integrated Course Curriculum:  The bill would change the language allowing students to earn credits through integrated courses, including career technical education, and would expand the types of content areas in which credits could be earned in integrated courses. 

Currently students can earn credits in integrated courses in English language arts, math, science, and social studies.  The bill expands the number of eligible subject areas to include those that the state board has adopted standards for under section 3301.079 of the Revised Code.

If a student completes an integrated course in the manner authorized under the bill, the student may receive credit for both subject areas, and could take a related end-of-course exam.

Students who take integrated courses would still be required to take required end of course exams to earn graduation credits.

The ODE would be required by July 1, 2018, in consultation with the Department of Higher Education and the Governor’s Office of Workforce Transformation, to develop a plan that encourages districts and chartered nonpublic schools to integrate academic content in subject areas, and provides guidance to assist districts and schools, including guidance about appropriate licensure for teachers.


Section 3313.603 (J) and 3314.03 Competency Based Education:  The ODE would be required to develop a framework for school districts and community schools to use in granting high school credit to students who demonstrate subject area competency through work-based learning experiences, internships, or cooperative education by December 31, 2017.  Currently the state board is required to adopt and update a statewide plan for competency based education.

School districts and community schools would be required to comply with the framework beginning with the 2018-2019 school year, and would be required to review any policy adopted regarding the demonstration of subject area competency, and identify ways to incorporate work-based learning experiences, internships, and cooperative education into the policy.


New Section 3313.6113 Industry Recognized Credential: The bill eliminates the requirement that the state board approve the industry-recognized credentials and licenses. Instead, the superintendent of public instruction, in collaboration with the governor’s office of workforce transformation and representatives of business organizations, would be required to establish a committee to develop a list of industry-recognized credentials and licenses that may be used to qualify for a high school diploma under division (A)(3) of section 3313.618 of the Revised Code.  The industry recognized credentials and licenses would also be used for “state report card purposes” under section 3302.03 of the Revised Code.  The committee must be appointed by January 1, 2018.

The committee would establish criteria for acceptable industry-recognized credentials and licenses aligned with the in-demand jobs list published by the Department of Job and Family Services; review the list of industry-recognized credentials and licenses that were in existence on January 1, 2018 and update the list; and review and update the list of industry-recognized credentials and licenses biannually.




New Section 3319.229; Repeal former Section 3319.229 Professional Career-Technical Teaching Licenses: The bill would replace the professional career-technical teaching license with two new educator licenses, Career-Technical Educator Level I (two years) and Career-Technical Educator Level II (five years), for individuals teaching in career-technical and workforce development subject areas in any of grades 7-12, beginning July 1, 2018.

An individual who, on July 1, 2018, holds a professional career-technical teaching license issued under the rules described in former Section 3319.229 of the Revised Code, may continue to renew that license in accordance with those rules, for the remainder of the individual’s teaching career.

However, the bill states that “nothing in this division shall be construed to prohibit the individual from applying to the state board for a career-technical educator license under this section.”

The state board, in collaboration with the chancellor of higher education, would adopt rules establishing standards and requirements for obtaining a two-year career-technical educator level I license and a five-year career-technical educator level II license. The rules would require applicants for either license to have a high school diploma, five years of work experience in the subject area, and an industry recognized credential.


New Section 3319.236 Educator License:  The executive budget would require beginning on September 1, 2018, that each applicant for renewal of a teaching license complete an on-site work experience with a local business or chamber of commerce as a condition of renewal.

Under current law unchanged in the bill (Section 3319.22), each teacher who applies for renewal of a five-year professional or associate educator license must design an individual professional development plan, subject to the approval of the local professional development committee.  In accordance with the plan, the teacher must also complete six semester hours of coursework related to classroom teaching and/or the area of licensure, or 18 continuing education units, or other equivalent activities related to classroom teaching or the area of licensure.

The work experience would count toward the required continuing education. Each local professional development committee established under Section 3319.22 of the Revised Code would work with its teachers to identify local work experience opportunities that meet the requirements of this section.


Section 3333.0414 Opioid Instruction:  The executive budget would require the chancellor of higher education to adopt rules that require teacher preparation programs to include instruction in opioid and other substance abuse prevention. All educator and other school personnel preparation programs for all content areas and grade levels would be required to include information on the magnitude of opioid and substance abuse; the role of educators and other school personnel can play in educating students on the adverse effects of such abuse; and the resources available to teach students about consequences of such abuse and to help fight and treat it.




Section 3326.01 STEAM Schools: The bill defines a STEAM schools as one that teaches science, technology, engineering, the arts, and mathematics. The bill also refers to STEM school equivalents and STEM programs of excellence, and states that ALL provisions of the Revised Code applicable to a STEM school would apply to a STEAM school, STEAM equivalent school, or STEAM program of excellence, except as otherwise noted.


Section 3326.03 (C)(3)(c) and Section 3326.032 (B) STEAM Proposals:  A STEM school is a partnership of public and private entities. A STEM school equivalent is a partnership of public and private entities with a community school or chartered nonpublic school.  Currently to establish a STEM school or STEM equivalent school a partnership must submit a proposal to the STEM Committee.

The bill would require STEAM proposals and STEAM equivalent proposals to include evidence that the curriculum will integrate arts and design into the study of science, technology, engineering, and mathematics; include evidence that a partnership includes arts organizations, institutions of higher education and businesses; and assure commitments of sustained and verifiable fiscal and in-kind support from regional education and business entities, and arts organizations.

To become a STEAM school or STEAM school equivalent, a STEM school or STEM school equivalent would need to change its existing proposal to include the provisions for STEAM, and submit the proposal to the STEM Committee for approval.

The bill would also require that the curriculum team for each STEAM school and STEAM equivalent school include an expert in the integration of arts and design into the STEM fields.  The team consists of the school’s chief administrative officer, a teacher, a representative of the higher education institution that is a collaborating partner in the school or equivalent school, and a member of the public with expertise in the application of science, technology, engineering, and mathematics.


Section 3326.04 STEM Programs of Excellence Grants:  Current law allows a school district, community school, or chartered nonpublic school to submit a proposal to the STEM Committee for a grant to support the operation of a STEM program of excellence. Funds to support this grant have not been appropriated for several years. 

The bill would require that STEAM programs of excellence show evidence that the curriculum will integrate arts and design into the study of science, technology, engineering, and mathematics and show evidence that the partnership includes arts organizations, institutions of higher education, and businesses.  To become a STEAM program of excellence, a STEM program of excellence would need to change its existing proposal to include the provisions for STEAM, and submit the proposal to the STEM Committee for approval.

The bill also expands the grade levels for STEM and STEAM programs of excellence grants to serve students in grades K-12, rather than K-8.


Section 3326.11 STEM Schools:  The bill would permit STEM and STEAM schools and equivalents to comply with section 3321.05 of the Ohio Revised Code, All Day Kindergarten.




New Section 3333.98 College-Ready Program:  The bill would require the chancellor of higher education, in consultation with the Superintendent of Public Instruction, to establish the College-Ready Program beginning February 1, 2018.

The program would approve public and private chartered schools to provide courses for students who do not meet the remediation-free standard, and who need additional coursework to either qualify to take courses for college credit while still enrolled in high school, or to be prepared for college upon graduation, or both.

The chancellor, in consultation with the state Superintendent, is required to convene a workgroup of faculty and administrators from both secondary schools and institutions of higher education to develop one or more models for a College-Ready Program in math. This must be done by December 31, 2017. 

The workgroup is also required to develop and make recommendations for other aspects of the program, including criteria for approving schools and institutions to provide instruction; a timeline to develop models for additional subject areas by the February 1, 2018; recommend upper and lower score thresholds for student eligibility based on national standardized test scores and state-required assessments for high school students; use the remediation-free standards established by the presidents of state institutions of higher education under current law as a guide; recommend data collection and evaluation requirements for the programs; develop an application and approval process for schools and institutions to offer College-Ready courses using the models developed by the workgroup.

Approved programs may offer college-ready courses beginning with the 2018-2019 school year.




New Section 3345.062 Remediation Reports:  The bill would require the president, or equivalent, of each state university to issue a report each year regarding the remediation of students.  The report must be published not later than December 31, 2017, and each thirty-first day of December thereafter.  The report must include the number of enrolled students that require remedial education; the cost of remedial coursework the state university provides; the specific areas of remediation provided by the state university; and causes for remediation.

Each president, or equivalent, would be required to present the findings of the report to the state university’s board of trustees, and to submit a copy of the report to the chancellor of higher education and the superintendent of public instruction.




Section 3365 College Credit Plus:  Officials representing school districts and institutions of higher education have been debating the components of College Credit Plus program (CCP) over the past two years. The CCP allows high school students who are enrolled in public or nonpublic high schools, or who are home-instructed, to enroll in college courses to receive high school and college credit. The executive budget includes the following changes in the program:


Section 3365.03 Eligibility:  Section 3365.03 would change requirements to participate in the CCP program for students entering the program in the 2018-2019 school year. The bill would require students to pass a remediation-free assessment, but would also provide an alternate route.  It would allow a student, who scores within one standard error of measurement below the remediation-free score for one of those assessments, to be considered to have met this requirement, if the student also has a cumulative high school grade point average of at least 3.0; or receives a recommendation from a school counselor, principal, or career-technical program advisor; and meets the standards that the college and the relevant academic program have established.


New Section 3365.091 Underperforming Participant:  The chancellor of higher education in consultation with the superintendent of public instruction would be required to adopt rules specifying the conditions under which an underperforming participant may continue in the program, based on meeting certain requirements, and in consultation with interested parties.


Section 3365.06 Eligible Courses:  The bill would require that courses at institutions of higher education selected by CCP participants meet some criteria for funding purposes to address the complaint that some CCP participants are taking less rigorous coursework in college than available in their high schools. 

The chancellor of higher education and the superintendent of public instruction would be required to adopt rules specifying which courses are eligible for funding, and are required to include stakeholders in the rule-making process.


Section 3365.07 Payment System:  According to the bill, the payment system for CCP under Option B specifies that, if the college’s “standard rate” is less than the applicable default amount, the ODE must pay the standard rate. The “standard rate” is defined in the bill as “the amount per credit hour assessed by the college for an in-state student who is enrolled in an undergraduate course at that college, but who is not participating in the CCP Program, as prescribed by the college’s established tuition policy.”

The bill also removes a current provision that permits an alternative payment structure below the default floor amount with the approval of the Chancellor.  Instead, the bill prohibits payments made by the ODE for a CCP course below the default floor amount.


New Section 3365.072 Textbooks:  Governing authorities of public, nonpublic, and nonchartered nonpublic schools under certain conditions would be able to enter into agreements with colleges for the provision of textbooks for the 2018-2019 school year, either by paying the college an amount equal to ten dollars per credit hour of enrollment for each participant, or paying the college an amount agreed upon by both the secondary school and the college. The bill also prohibits any public or nonpublic participant from being charged for textbooks, and codifies the definition for “textbook” as “any paper, electronic, or other purchased coursework material.”

Beginning with the 2018-2019 school year, the bill prescribes that each home-instructed participant must either pay the college $10 per credit hour to rent the textbooks, or purchase the textbooks.


Section 3365.03 and Section 3365.12 Appeals:  The bill changes in the appeals processes for the CCP program.

If a student misses a deadline for applying to the CCP program and a principal withholds their written consent, the bill would require the superintendent of the district or the governing authority of the school to review an appeal by the student, rather than the State Board of Education. The decision of the district superintendent or governing authority would be final.

The ODE, rather than the state board of education, would hear appeals of decisions about granting high school credit for courses taken through CCP.


Section 3365.04; and 05 (B)(C); Other requirements:  Public and nonpublic schools would be required to provide all students enrolled in grades 6-11 with information about the CCP program prior to the first day of February, rather than March.

And participating colleges would be required to notify participants, parents of participants, and a participant’s secondary school when a participant was admitted to the college, the specified courses to be taken, when the course would be offered, and option selected by the participant.  The bill eliminates the requirement that the superintendent of public instruction be notified of these details.




HB49 (R. Smith) Operating Budget As Introduced, starting at page 757


Legislative Service Commission, Analysis of HB49 (R. Smith) Operating Budget As Introduced, Department of Education


Office of Budget and Management, Primary and Secondary Education, FY18-19 Ohio School Foundation Funding Formula Simulation


Executive Budget for FY18 and 19


Siegel, Jim,  “Answers to 20 Ohio School Funding Questions You Didn't Know You Had,"The Columbus Dispatch, February 17, 2017