COLUMBUS, Ohio (AP) — The two-year state operating budget that Ohio Gov. John Kasich unveils Monday will contain a host of big policy changes, including his recently released school-funding plan, a decision on whether to expand Medicaid and a package of tax policy changes likely to include a hike for oil and gas drillers.

Since Kasich introduced his first budget, the state's fiscal picture has improved significantly. Fellow Republicans control both the Ohio House and Ohio Senate. But none of that will prevent a vigorous debate.

A major element of the proposal is the school funding overhaul that Kasich announced last week, which boosts K-12 education dollars by $1.2 billion compared with the previous two-year budget. The plan includes a host of contentious policy changes, including expansion of vouchers for students in low-performing districts.

Kasich said the spending increase was made possible through revenue growth, including from expanded gambling.

If Kasich opts to accept federal aid and expand Medicaid, as many expect he will, he'll need to persuade fellow Republicans who opposed the federal health care overhaul to support the move. Kasich has already begun making the case that accepting Medicaid dollars available under the overhaul is not the same as endorsing what he referred to as "Obamacare."

"Obamacare, you know, involving an individual mandate, I don't support," he said during a Thursday legislative preview session for journalists organized by The Associated Press. "... But this is a different issue. This is about people who are at the lower economic end."

The federal government will pay the cost of the Medicaid expansion for the first three years, which Kasich has hinted could allow Ohio to spend in other areas without raising taxes.

A town hall on tax cuts that Kasich has scheduled to follow Monday's budget unveiling suggests that his budget package will reflect an overall reduction in taxes, which could go a long way to bringing reticent Republicans on board.

Kasich campaigned in 2010 on a pledge to reduce Ohio's income tax and, with re-election just a year away, this budget is where that will need to happen. Kasich has said he'll bring back a proposed severance tax increase on high-volume oil and natural gas drillers in this budget, which he's linked in the past to a modest statewide income-tax cut.

That proposal has been divisive, as areas of the state benefiting from the oil and gas boom complain that money from it should stay in their communities.

Advocates for Ohio's Future, a coalition of groups representing the poor, disabled, and elderly, anticipated in a Friday teleconference that Kasich's budget would also expand the state's safety net — though perhaps not to the extent they would prefer.