The Ohio House and Senate voted to pass the Conference Committee version of House Bill 95, Ohio’s 2004-2005 Biennial Budget, on June 19, 2003. Governor Taft signed the budget bill into law on June 26, 2003. The budget will cover state fiscal years 2004-2005, spanning the time period from July 1, 2003 to June 30, 2005.

Two announcements made by the Office of Budget and Management influenced the General Assembly’s final budget deliberations: one, revenues for FY 2003, ending June 30, 2003, were $200 million short of projections; and two, OMB is projecting a deficit of $1 billion over the 2004-2005 biennium.

Countering the bleak news from OBM, word came from the federal government that Ohio would receive about $770 million in fiscal relief. Half of the money is earmarked for Medicaid and half is for essential services and unfunded mandates. The General Assembly voted to use a portion of that money, $33 million, to preserve health care coverage for 50,000 low-income working parents under the Healthy Start/Healthy Families program.

The General Assembly did not fully implement Governor Taft’s tax reform proposals. Instead, HB 95 puts in place a temporary one-cent sales tax increase for both years of the biennium and an expansion of the sales tax to a variety of previously untaxed services. The House’s video slot machine (VLT) proposal was pulled from the budget.

Other highlights of HB 95 include:

Child care: The final bill partially restored eligibility for child care assistance. House Bill 40, the budget corrections bill passed in February, cut eligibility for child care assistance from 185% of the federal poverty level (FPL) to 150% of the FPL. Ohio now will allow parents currently enrolled in the program to remain eligible until they reach 165% FPL. New families entering the program may not earn more than 150% FPL. Those families earning between 165% and 185% -- estimated to be 12,000 children – are no longer eligible for the program and will lose their benefits by September 2003.

Primary and Secondary Education: The House plan to calculate Base Cost Funding using Average Daily Attendance did not make it into the final version of the budget. However, the basic per-pupil funding that school districts receive will be lower than expected in each fiscal year.

Medicaid: The General Assembly rejected the Governor’s proposal to cut a parental expansion that was implemented in 2000. Over fifty-thousand parents with incomes at or below 100% of the federal poverty level would have lost Medicaid coverage as a result of this cut. Ohio will use a portion of its federal fiscal relief funds to continue this coverage.

The Administration proposed elimination of five optional Medicaid services for adults: dental, podiatry, vision, chiropractic and independent psychological services. The General Assembly restored three of these services—dental, vision and podiatry. Governor Taft vetoed the language requiring these services be maintained at current levels in temporary law, but instructed ODJFS to continue to offer these services since the General Assembly authorized adequate funding for this purpose.

Independent psychology and chiropractic services for adults on Medicaid were not funded and will be eliminated as of January 2004.

Below is a brief summary of key line items included in HB 95 which CDF-Ohio most closely follows. The chart compares the actual FY 2002 amounts and estimated FY 2003 amounts with the budget as it was introduced, as it passed in the House, as it passed in the Senate, and the final version. See explanatory notes for details of the line items.

Note: GRF refers to General Revenue Fund dollars which are state funds. Federal refers to federal funds.

EARLY CARE AND EDUCATION

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200-406 Head Start: In the 2002-2003 biennium Ohio shifted state funding of Head Start from GRF to TANF. The line item provided funding to enroll three- and four-year-old children from poor families in a comprehensive preschool program that was aligned with the federal Head Start program. In the 2004-2005 biennium, this line item has been phased out and replaced with 200-663 Head Start Plus/Head Start.

200-663 Head Start Plus/Head Start: Provides funding for 11,600 poor 3- and 4-year-old children to receive part-day, part-year Head Start programming in fiscal year 2004, down from the fiscal year 2003 level of 18,000 state-funded slots. Delays implementation of Head Start Plus until FY 2005. Head Start Plus will provide funding for up to 10,000 poor 3- and 4-year-old children to receive full-day, full-year programming, including child care, early education, and comprehensive services and provides funding for an additional 4,000 children to receive traditional part-day, part-year services.

The General Assembly directed the Legislative Office of Education Oversight (LOEO) to conduct a study of Head Start/Child Care partnership agreements and submit the results of this study to the General Assembly by December 31, 2004.

The LOEO study will examine:

• The impact on literacy-readiness for children receiving services as a result of such agreements;
• The costs and benefits, both financial and intangible, of such agreements to both participant children and providers;
• The operation of the agreements: how the agreements work; how well the agreements work; what components are included in the agreements; and whether the agreements are unique to the providers who are parties to the agreements or standardized across the state or within a local region; and
• Whether there is an administrative entity, such as a county department of job and family services, that oversees the implementation of a particular agreement and the degree to which oversight is performed and what overhead costs the administrative entity incurs in overseeing such agreements.

GRF 200-449 Head Start Plus Start Up: The Governor’s budget provided $16 million in GRF to initiate the reimbursement process between county departments of job and family services (CDJFS) and Head Start Plus providers. The final budget spreads these funds over the biennium, allowing the Department of Education to provide grants to agencies providing reimbursable services to eligible children. Governor Taft vetoed language that would have required CDJFS’ to monitor funds paid to Head Start providers. The Ohio Department of Education will continue to perform this function.

200-408 Public Preschool: Provides funding for preschool services for children age three- and four-years old from low-income families. Approximately 5,600 children are enrolled with family incomes not exceeding 185%FPL. Another 2,900 children are enrolled for a fee established by the school district.

200-411 Ohio Family and Children First: The executive budget does not include specific earmarks.

200-442 Child Care Licensing: Provides funding for licensing preschool and after-school programs operated by public schools, Head Start agencies and chartered non-public schools.

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600-413 Day Care Match/Maintenance of Effort and 600-617 Day Care Federal: Provides funding for the child care assistance program for low- and moderate-income working families. In addition, funds are used for administrative costs, licensing services, county operations for child care related activities, quality initiatives and child care resource and referral services. Funding is $126 million lower in FY2004 than in FY 2003. In the previous biennium, Ohio had transferred some of its unspent TANF dollars into this program. Those funds are not available in the 2004-2005 biennium.

Over 100,000 children are currently enrolled. In the previous biennium, the ceiling for eligibility for child care assistance was 185% FPL. House Bill 40, the budget corrections bill signed by Governor Taft in March of 2003, reduced eligibility to 150% FPL. The General Assembly partially restored eligibility for child care assistance. Ohio now will allow those parents currently enrolled in the program to remain eligible until they reach 165% FPL. New families entering the program may not earn more than 150% FPL. Those earning between 165% and 185%--estimated to be 12,000 children--are no longer eligible for the program and will lose their benefits by September 2003.

PRIMARY AND SECONDARY PUBLIC EDUCATION

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200-405 Primary and Secondary Education Funding: Represents a lump-sum of $6.7 billion in GRF funds to be allocated for fiscal year 2005 by the Governor’s Blue-Ribbon Panel on Financing Student Success. The General Assembly did not make a provision for this line item, instead appropriating funds for each year of the biennium.

200-501 Base Cost Funding: These funds represent the basic per-pupil funding that school districts receive and also cover some special education and vocational education spending by districts. The basic per-pupil amount that districts will receive will be $5,058 in FY 2004 and $5,169 in FY 2005. The funding schedule established in the previous budget bill had put the amount for FY 2004 at $5,088 and FY 2005 at $5,230.

200-520 DPIA: Disadvantaged Pupil Impact Aid (DPIA) is the money that districts with high numbers of low-income children receive to fund programming that meets the needs of these children. In fiscal year 2004 each school district will receive a 2% increase in DPIA over what they received in fiscal year 2003.

• ODE will fund all-day, every-day kindergarten in all school districts that qualified for and provided this service in FY 2003.
• Up to $3.8 million of DPIA will fund school breakfast programs in FY 2004 and FY 2005, of which $1 million may be spent each year on outreach efforts with the Children’s Hunger Alliance to increase participation in child nutrition programs.

200-525 Parity Aid: This line item is designed to reduce the funding differences between low-income/low-wealth districts and high-income/high-wealth districts. Like Base Cost Funding, parity aid for fiscal years 2004 and 2005 will be lower than what had been laid out in the previous budget bill – 58% rather than 60% in FY 2004, and 76% rather than 80% in FY 2005. Parity aid will now follow students who enroll in community (charter) schools.

GRF 200-431 School Improvement Initiatives: Provides technical assistance to school districts that rate either “academic watch” or “academic emergency” under the state’s accountability system and also provides technical assistance to school buildings that do not meet the requirements of the new federal No Child Left Behind act.

• Provides up to $350,000 in both FY 2004 and FY 2005 for Project GRAD, an initiative designed to reduce the dropout rate in urban school districts. The House version provided $250,000 in each year.
GRF 200-513 Student Intervention Services: Funds intervention services outlined in Senate Bill 1, the Student Success Bill.
• Earmarks $3.7 million in FY 2004 and $5.9 million in FY 2005 to provide targeted intervention to 9th and 10th grade students enrolled in “academic emergency” districts.
• Appropriates $150,000 in each year of the biennium for the Read Baby Read program.

GRF 200-427 Academic Standards: These funds will provide for the development and dissemination of academic content standards.

GRF 200-437 Student Assessment: Funds the development, field testing, printing, distribution, and scoring of Ohio’s statewide diagnostic, achievement and graduation tests.

• Earmarks $500,000 in FY 2004 and $100,000 in FY 2005 to train school district personnel in Academic Watch and Academic Emergency districts to score the practice versions of the Ohio Graduation Test.

GRF 200-439 Accountability/Report Cards: Provides for the development and distribution of school building and school district report cards. These report cards measure a building’s or district’s performance based on indicators determined by the State Board of Education, and rates the building or district as excellent, effective, in need of continuous improvement, under academic watch, or in academic emergency.

GRF 200-446 Education Management Information System: Provides funding to improve the Education Management Information System (EMIS). The EMIS system was originally designed as an accounting system. In the years since its inception the demands for data have greatly increased, outstripping the capacity of the current system. Both Senate Bill 1 and the federal No Child Left Behind act place large demands on ODE to collect, analyze and report data at the district, building and student level.

MEDICAID

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600-525 Health Care/Medicaid: provides Medicaid coverage to qualified individuals, including children eligible for the federal Children’s Health Insurance Program (CHIP). Medicaid served one in every eight Ohioans at some point during FY 2002 and pays for one out of three Ohio births.

The Administration has implemented successful efforts to contain certain costs for Medicaid services. However, Medicaid’s annual average growth rate exceeds a level that can be supported by projected state revenues. Therefore, the budget as introduced included a range of cost containment measures throughout the Medicaid program.

The General Assembly maintained some and discarded other of these cost containment measures, including:

• Restoration of parental expansion. As of July 2000, Medicaid coverage was expanded to include parents of Medicaid-eligible children who earn up to 100% of the federal poverty level. The Administration proposed and the House maintained plans to eliminate this expansion. The Senate voted to maintain coverage for over 50,000 low-income working parents who would have lost coverage under the Executive and House plans by using $33 million of the federal fiscal relief funds. The budget, as signed by the Governor, maintains this coverage.

• Elimination of some optional services for adults: The Administration proposed elimination of dental, podiatry, vision, chiropractic and independent psychology services for adults. The General Assembly restored three of these services: dental, vision and podiatry. Governor Taft vetoed the language requiring these services, instead instructing ODJFS to continue to offer these services since the General Assembly authorized adequate funding for this purpose. Independent psychology and chiropractic services for adults on Medicaid were not funded and will be eliminated as of January, 2004.

• Provider reimbursement: The General Assembly restored reimbursement rate increases to cover inflation for Children’s Hospitals inpatient care and gave a partial increase to general hospitals for outpatient care. Physicians and other community providers will receive no increase.

HEALTH

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440-416 Child and Family Health Services: provides funding for community-based health services. Earmarks include:

• $900,000 in each fiscal year for federally qualified health centers and federally designated look-alikes to provide services to uninsured low-income persons.
• $270,000 in each fiscal year for the OPTIONS dental care access program.
• $1,700,000 in each fiscal year for women’s health services, with restrictions that none of these funds shall be used to provide abortion services, nor can these funds be used for counseling for or referrals for abortion except in the case of a medical emergency.
• $500,000 in each fiscal year for abstinence-only education.
• $262,500 in each fiscal year for various local programs.

440-418 Immunizations: provides funding for programs focusing on raising immunization rates.

440-459 Help Me Grow: provides funding to support a coordinated statewide early childhood program of voluntary home visits for newborns and information and service coordination for parents and young children.

GRF dollars in this line item may be used in conjunction with Temporary Assistance for Needy Families (TANF) funds from the Department of Job and Family Services, Early Intervention funding from the Department of Mental Retardation and Developmental Disabilities, and in conjunction with other early childhood funds and services to promote the optimal development of young children.

The total proposed investment for Help Me Grow when GRF funds are combined with these other funds is $63,233,906 in FY 2004 and $63,649,562 in FY 2005.

The General Assembly added language requiring that, “The department shall not provide home-visiting services under the Help Me Grow program unless requested in writing by a parent of the infant or toddler.”

440-504 Poison Control Network: grants to the consolidated Ohio Poison Control Center to provide poison control services to Ohio citizens.

440-505 Medically Handicapped Children: provides funding for the diagnosis, treatment, and case management coordination for eligible children with medical handicaps.

440-461 Center for Vital and Health Stats: The House and Senate cut the funding for the Center for Vital and Health Statistics. The Center provides an essential function for Ohio by summarizing and reporting basic information on births, deaths, and vital statistics. Many private and public organizations rely on this data to produce reports, analyze trends, and offer policy recommendations regarding the health and well being of Ohio children and adults.