Educational Service Centers Funding

Since Educational Service Centers (ESCs) have no legal taxing or bonding authority, they must depend on revenues from member districts, from the state as prescribed in law, through contracted services to districts, and from competition for grants and state funding.

State funding to ESCs is provided to support basic operations and statutorily mandated services. State funding of about $64 million per year makes up roughly one-fourth of the total funding received by ESCs. It consists of three major categories – gifted unit funding, preschool handicapped units, and a per-pupil allocation.

Each of the ESC provides educational and other services to its members districts and receives state funding directly from the state. The house bill 110 ceases deductions and transfers approach starting with first July payment in FY2022. A number of calculations comprise this deduction and will be described below.


State Support

the letters below match the letters on the School Finance Payment Report (SFPR))

A          State Operating Subsidy

This funding materializes in the form of a base amount applied to the same student count extracted from the latest Report Card as was utilized in the calculation of the local per-pupil funding under Section 3313.843 referenced above.
Ohio law appropriates $42.5M and $45M in fiscal years 2022 and 2023 for the ESC state operating subsidy. Please note: It is often necessary to prorate this fund distribution to stay within budget appropriations.
The state funding formula and factors are below:
 
A Total Student Count 0.00
B Funding Base [FY 20 SFPR Line A] $0.00
C Formula Amount
[If A <= 5000 then D]
[If A> 5,000 but A <= 35,000 then (D + ((A – 5,000) * $24.72))]
[If A> 35,000 then (D + (30,000 * $24.72) + ((A – 35,000) * $30.90))]
$.00
D Base Amount $356,250.00
E General Phase-in Percentage 16.67%
F Proration Factor 0.00000000
G State Operating Subsidy [(B + ((C - B) * E)) * F]       $0.00


B         State Gifted Funding

Another component of state funding of Educational Service Centers involves gifted education. The Department is authorized to set aside $3,800,000 of the statewide appropriation for foundation funding for ESC gifted education. The Department distributes these dollars through the unit-based funding methodology in place under Ohio Revised Code 3317.024(L), 3317.05(E) and 3317.053(A), (B) and (C) as it existed before FY 2010. These sections of the law direct that the cost of each gifted unit be based on the salary and fringe benefit of the FTE of the personnel involved at 15% of the salary figure as well as any additional unit allowances the law allows. The law also provides for the proration of state funding if the appropriation is not sufficient. The following table summarizes state gifted education funding for a hypothetical Educational Service Center:
 
 
Personnel
 
FTE
 
Position
Minimum
Salary
Fringe
Benefit
Unit
Allowance
Total
Unit Cost
Prorated
Unit Cost
Personnel 1 1.00 Coordinator $27,591 $4,139 $7,929 $39,659 $22,965
Personnel 2 0.60 Coordinator $16,555 $2,483 $4,757 $23,795 $13,778
Personnel 3 1.00 Teacher $18,615 $2,792 $7,929 $29,336 $16,987
Total 2.60   $62,761 $9,414 $20,615 $92,790 $53,730
 
 
 
 
 
 

In the table above, Personnel 1 is a gifted coordinator employed full time, so the corresponding FTE is 1.00. The minimum salary for this employee is $ 27,591. Based on that salary, the fringe benefit of
$4,139 is calculated ($27,591 * 0.15). The law also provides a unit allowance of $7,929 for each FTE coordinator. Added to the salary and fringe benefit, that results in a total unit cost of $39,659 [(1.00 * $27,591) + ($27,591 * 0.15) + (1.00 * $7,929)].
 

C         Special Education Transportation

In addition to the above-mentioned funding from the state, Educational Service Centers also receive money to cover transportation of special needs students and for special equipment needed for such transportation. This aid is calculated as the lesser of the actual cost reported, or the sum of $6 per pupil per day plus half of the amount by which the actual cost exceeds $6 per pupil per day. The state covers 25% of this amount.


Transfers

E          District Per-Pupil

City, exempted village and local school districts with an average daily enrollment of 16,000 or less must enter into an agreement with an Educational Service Center under Ohio Revised Code 3313.843.
ORC Section 3313.843(H) provides that pursuant to provisions of ORC Section 3317.023 the Ohio Department of Education (ODE) annually shall deduct from each school district that enters into an agreement with an ESC under this section, a per-pupil amount of $6.50 or above from state foundation payments to the school district and paid to ESC on semi-monthly basis throughout the fiscal year. The per-pupil amount is multiplied by the school age students count of the client district as reported on the latest Report Card.
Individual district information can be viewed on the Ohio Department of Education website by visiting the ‘Client District Report’ at this link. The following table shows a sample calculation of local per-pupil funding of a hypothetical Educational Service Center.
 
 
 
Client School Districts
Total Student
Count
Per- Pupil
Amount
District Per-Pupil
Deduction
School District 1 3,571.43 $6.50 $23,214.30
School District 2 1,101.07 $6.50 $7,156.96
School District 3 1,773.84 $6.50 $11,529.96
School District 4 2,548.40 $6.50 $16,564.60
School District 5 1,092.98 $6.50 $7,104.37
School District 6 869.21 $6.50 $5,649.87
School District 7 2,549.11 $6.50 $16,569.22
School District 8 990.40 $6.50 $6,437.60
School District 9 1,106.18 $6.50 $7,190.17
Total Transferred to ESC 15,602.62   $381,935.55
 
Sample calculation of Educational Service Center per-pupil funding deducted from client district foundation funding.
   

F          Preschool Special Education

In addition to services provided to school-age children, Educational Service Centers also offer preschool services to children with disabilities under the age of 6 not enrolled in kindergarten. Under Ohio Revised Code 3317.0213, the Department pays additional state aid to school districts for preschool children with disabilities. This state funding goes directly to the school district, which can choose to provide the services itself or contract with an ESC. Preschool funding is calculated according to Ohio Revised Code 3317.0213(A). If the district provides preschool services itself, the funding remains with the district. If the district contracts with an Educational Service Center, the calculated funding is deducted from the foundation payment of the district and sent to the ESC.
This funding will be based on a constant per-pupil amount of $4,000 applied to the total count of all preschool children with disabilities plus special education weights as specified in the law, applied to each of the six categories of special education preschool children. The law provides for a unique weight for each category that is applied at 50% strength to the number of children in the respective category. To wealth equalize this funding the law also calls for the application of the state share percentage which is the measure of the state contribution to the foundation formula of the district to this part of the funding calculation.

Category Description FY22 Weight 
1 Speech and Language Impairments 0.2435
2 Intellectual Disabilities 0.6179
Specific Learning Disabilities
Other Health Impaired (minor)
Developmental Delay (preschool only)
3 Deafness (Hearing Impairment) 1.4845
Emotional Disturbance (SBH)
4 Visual Impairments 1.9812
Other Health Impaired (major)
5 Multiple Disabilities (other than deaf-blind) 2.6830
Orthopedic Impairments
6 Deaf-Blindness 3.9554
Autism
Traumatic Brain Injury (TBI)
 
 Funding formula:
[(($4000 * FTE) + (FTE by Category * Applicable Category Weight * Statewide Average Base Cost Per-Pupil * District State Share Percentage * 0.5)) * Proration Factor]
 

G         Contracts Paid by Districts

City, exempted village, local and joint vocational school districts also may set up contracts with Educational Service Centers for services covered by Ohio Revised Code 3313.845. Funds can be deducted from the school district foundation calculation and sent to the Educational Service Center. To receive payment, both district and an ESC must use ESC Contract system where they enter the information, upload the copy of the contract and provide electronic approvals. The directions on how to use the system as available here. ESCs also have the option of billing a school district directly instead of having the state deduct the contract amount from its foundation funding.
 Community schools may enter into agreements with Educational Service under ORC 3313.844.. Services provided and the amount and manner of payment to the ESC shall be mutually agreed on and reflected in their respective agreements. The agreements may call for payment to the ESC by the community school directly, or may advise the Department to make deductions from the foundation funding of the community school for the Educational Service Center.  To receive payment, both district and an ESC must use ESC Contract system where they enter the information, upload the copy of the contract and provide electronic approvals. The directions on how to use the system as available here.
 

Conclusion

Educational Service Centers provide a wide variety of services to the state’s school districts, community schools, chartered nonpublic schools and state-run juvenile detention facilities including curriculum development and in-service training; special education services; speech, language and hearing services; cooperative purchasing consortia; and sponsorship of community schools.
 Please direct any questions about Educational Service Center funding to Elena Sanders, Daria Shams or Prabir Sarkar of the Ohio Department of Education at:
Elena.Sanders@education.ohio.govDaria.Shams@ode.state.oh.us
Prabir.Sarkar@ode.state.oh.us

Last Modified: 11/20/2022 2:51:11 PM