Early this budget season, Ohio House Speaker Matt Huffman said school funding cuts were on the horizon. His House budget certainly follows up with that promise.
According to analysis by the Ohio River Valley Institute, the FY2027 school allocation under the House Plan falls $2.7 billion short of what the General Assembly agreed to invest in public education in the 2022 Fair School Funding Plan. That represents a funding cut of about 25% from the previous plan.
These cuts will be felt across the state. According to the same analysis, 91% of school districts will have less funding under the House plan than the Fair School Funding Plan. An unlucky 26 school districts will see their state support reduced by 50% or more.
In February, my firm Scioto Analysis asked 17 Ohio economists for their thoughts about the plan to cut spending on public education. Of those economists, 14 agreed the cuts would hurt Ohio’s economy in the long run. Only one disagreed.
Dr. Kathryn Wilson of Kent State University explained the harms reductions in school spending can have on the economy, saying they can lead to lower human capital development that hurts the productivity of future workers, but also that it can lead to more costs for taxpayers with more government assistance and criminal justice spending needed with a less educated state population.
In 2023, we conducted a cost-benefit analysis of school spending in Ohio. We built off evidence of the relationship between school spending, test scores, and graduation rates to estimate the long-term impacts of school spending on labor force productivity. We found that increased investment in students leads to wage impacts in the long run that will grow the state’s economy. We also found cuts will hurt productivity and reduce output for the state.
According to the Ohio Department of Education and Workforce, Ohio has about 1.7 million children currently enrolled from Kindergarten to Grade 12. This means the proposed $2.7 billion cut would represent about a $1,600 per-student decrease in spending from the baseline of the General Assembly’s Fair School Funding Plan.
In our 2023 study, we estimated what would happen if the state reduced school funding levels to the per-student expenditure in Indiana, which is about $3,600 lower than Ohio. We estimated this would cost the state somewhere between $30 billion and $120 billion in economic value in the long run.
Scaling these losses to match the Ohio House’s $1,600 reduction in per-pupil spending, we can estimate the reduction in statewide school funding will cost the state economy somewhere from $14 billion to $54 billion in the long run in the form of lower earnings from lower test scores, lower graduation rates, and higher social spending.
Yes, $2.7 billion is a lot of money. But educating a state workforce costs money. Cutting corners on education might lead to short-term benefits, but there are long-term costs the state will have to bear for decisions like this. These include lower productivity, lower earnings, and higher spending on social services and criminal justice.
This commentary first appeared in the Ohio Capital Journal.