State Budget Issues

The State Budget

Ohio's biennial budget bill for Fiscal Years 2016-2017 is Amended Substitute House Bill 64. The bill was passed by the House and is now being considered in the Senate. 

Here are the highlights:


More Income Tax Cuts Proposed by Gov. Kasich
  
As expected, the major focus of the governor's executive budget was further erosion of the state income tax. The proposal asks for a 23% across-the-board personal income tax (PIT) reduction over the biennium, and elimination of the PIT for small businesses who have less than $2 million in annual gross receipts.  

The governor proposes to make up much of the lost income tax revenue by increasing sales and use taxes 22.8% and increasing the commercial activity tax (CAT tax) by 88% over the biennium.

Generally speaking, the Ohio Conference AAUP has been leery of income tax cuts because they have done little to help the average Ohioan, and they eliminate revenue that could be invested in things like public higher education.

Additionally, increasing the sales tax tends to put a greater burden on lower income earners. 

The House of Representatives made significant changes to Kasich's tax plan, but the Senate may restore some of these measures. Any differences will be worked out in conference committee.

Higher Education Appropriations
  
Higher education funding under Kasich's proposed budget accounts for 6.8% of total general revenue spending.

Kasich's plan would appropriate a total of about $2.4 billion to higher education in FY 2016, representing a 2% increase over appropriations during FY 2015.

For FY 2017, the governor would appropriate about $2.5 billion, which would be a 2.5% increase from the previous year.

While we applaud the funding increases, it must be noted that these allocations don't restore higher education funding to where it was before Kasich took office. In FY 2011, under Gov. Strickland's last budget, higher ed spending was $20.5 million higher than it will be in FY 2017. 

Addressing Costs & Student Debt

As far as tuition caps, Kasich would allow a 2% tuition increase at public colleges and universities in FY 2016 but no increase in FY 2017.

Additionally, the governor has proposed a $120 million "debt relief fund." The details of how this money would be awarded are unclear, but the goal is to prioritize low-income, in-demand jobs and those who work in Ohio for five years.

Moreover, Kasich has called for the creation of a nine-member Task Force on Affordability and Efficiency that will be charged with finding efficiencies and ways to reduce costs at colleges and universities.

Community College Bachelor's Degrees

Outside of the funding pieces, Kasich introduced language that would allow community colleges to offer four-year degrees when local job creators express a need for workers with advanced training and only if there is not a public university or its regional campus within 30 miles that has such a program.
 
Expansion of OCOG Eligibility, College Credit Plus Funding

Additionally, the Kasich administration, as well as leaders of the Ohio Association of Community Colleges and Inter-University Council, are touting that the best way to reduce college costs is to reduce time to degree completion.

In that vein, the governor has proposed offering the need-based Ohio College Opportunity Grant (OCOG) to community college students during the summer.

OCOG has not been available to community college students because of a "Pell first" rule that requires those students to use federal Pell Grant funds before accessing OCOG. The Pell money tends to cover the full educational costs for those students but currently is not available for summer session.

Moreover, the governor is making a push to get more high school students enrolled in College Credit Plus and Advanced Placement courses by asking for $6.5 million in new funding for those programs in FY 2017.

Funds for "College-Level Teachers"

Kasich also wants $18.5 million over the biennium to hire and train more "college-level teachers" to teach in economically-disadvantaged high schools. 

While we appreciate the intent, we have concerns about qualification standards and quality assurances and will need to see more details.
  

Awarding Competency-Based Credit

The governor is asking Ohio's public colleges and universities to develop a plan to give competency-based credit for certain courses. He also has set aside $500,000 to develop a competency-based training program to train Ohioans in skills for "in-demand jobs."