Education Funding in OklahomaAre our children a priority?

Updated December 12, 2012

Megan BennOklahoma Policy Institute

mwbenn@okpolicy.org - (405) 826-7591

• State – approx. 60%

• Federal – approx. 10%

• Local – approx. 30%

The Three Legged Stool of Common Education Funding

Education funding and enrollment

Common Education % of Total State Appropriations

FY ’13 Education Funding• State aid funding has declined by $214 million

since FY 2008 while public school enrollment has increased by over 24,000 students. The result has been larger class sizes, fewer course offerings, and the loss of school programs and services.

• Since 2008, the cost of health benefits alone has increased by $57 million, while the total programs and activities budget has increased by just $34 million

• Since 2008, schools in Oklahoma have also had major reforms passed and been expected to fund these reforms with less money. – A-F grading system, 3rd Grade Reading, Teacher effectiveness

Budget Trends: FY ‘10 – FY ‘12 Budgeting Through the Crisis

FY ‘12 appropriations of $6.603 billion: Three consecutive years of declining appropriations; $163 million, 2.4 percent, below FY ‘11; $522 million, 7.3 percent, below FY ’09; $157 million, 2.3 percent below FY ’07.

See FY ‘12 Budget Highlights at:http://okpolicy.org/fy-2012-budget-highlights

FY'06 FY'07 FY'08 FY'09 FY'10 - Initial FY '10 - Final FY '11 FY '12$4,000 $4,500 $5,000 $5,500 $6,000 $6,500 $7,000 $7,500

$6,217 $6,760

$7,043 $7,095 $6,590

$5,897 $5,938 $6,404

30641.047879

837.9 554.1 98.8

223.7273 100

State Appropriations, FY '06- FY '12(in $ Millions, includes supplementals, excludes Rainy Day "spillover"

funds)

State Revenues Federal Relief Rainy Day Fund

Total = $7,125

Total =7,231 Total =

$6,959Total = $6,766

Total=$6,603

Federal Dollars - Stimulus is over now Looming Disaster with Federal cuts

If Sequestration were to occur (no deal on the fiscal cliff):

• Oklahoma schools would lose an estimated $51.1 million for Title 1, IDEA, Head Start and others

• It would affect more than 100,000 students

• Eliminate almost 1,200 jobs

Oklahoma’s Property Tax Funds:

• More than 25% of school district budgets. That’s money that provides students with textbooks, supplies, smaller classrooms and more teaching time;

• More than 1/5 of funding  for county governments that is spent on public safety and criminal justice, keeping our communities safe;

• 70% of funding for Oklahoma’s career technology centers that help Oklahomans develop the skills and training needed for today’s workforce.

Oklahoma’s Property Taxes are among the lowest in the nation

• Oklahoma ranks 48th in the nation in Property tax collections per capita

• Oklahoman’s pay only 43% of what the avg. person pays in property taxes across the nation - $597 per capita while the national average is $1,388.

Property Tax Ballot Measures

• State Question 758 – Lowers Cap on Property tax increases from 5 to 3% annually.

• Impact to schools – approx. 4.2 million less in growth revenue annually

Property Tax State Questions

• State Question 766 - would exempt all intangible property owned by businesses from taxation

• Impact to schools approx. $32 million less in current revenue

Total Effect of State Questions• SQ 758: Estimated impact at

$3,200,000.00– Loss of growth revenue for Common

Ed

• SQ 766: Estimated impact at $32,000,000.00

– Loss of current revenue for Common Ed

• Total Impact : $35,200,000.00

Based on OK Tax Commission Estimates Released During 2012 Legislative Session

Education Funding Summary• State

– Decrease of $220 million over past 4 years, about $200 less per pupil

• Federal– If Sequestration were to occur,

decrease of $51 million• Local

– If both state questions pass, over $35 million less to common Education

Oklahoma’s Path to ProsperityWe Already Lag Behind

Oklahoma invests less than most states in our public structures.

Education

Health and Social Services

Transportation

Public Safety

Environment and Housing

Utilities

Insurance trusts

OtherTotal

-$1,000

$1,000

$3,000

$5,000

$7,000

$9,000

State and Local Spending per Person by Function, 2007-08

OklahomaUS Average

Spen

ding

per

Per

son

Source: U.S. Bureau of the Census

The Challenges We FaceA Fiscally Responsible Course

Preserve the Income Tax Largest funding source for state services; Based on the share of agency appropriations funded with

income tax revenues, elimination of the personal income tax would leave us unable to pay for:

Salary and benefits for 17,000 classroom teachers; AND

Health insurance coverage for 430,000 low-income children; AND

Incarceration of 9,300 inmates; AND Tuition for 19,000 Oklahoma’s Promise students; AND The ROADS transportation improvement plan; AND A wide range of services and programs across state

government.See: ‘What the Income Tax Pays For’at http://okpolicy.org/tax-reform-information

The Challenges We FaceA Fiscally Responsible Course

Preserve the Income Tax Taxes are rarely decisive in business investment decisions.

For 24 years, I’ve been conducting interviews with executives of companies that we tried to recruit to Ardmore that ended up locating elsewhere. Not once in all those years did a company that rejected Ardmore base its decisions on taxes.Ardmore Chamber of Commerce President Wes Stucky, Oct. 2011

"I will tell you that state income tax had absolutely no impact in terms of the decision of merging the company and where the corporate headquarters is located.” Phillips Petroleum CEO Jim Mulva, discussing the company’s merger with Houston-based Conoco Inc. and decision to locate its new headquarters in Houston, November 2001

What Can You Do?• Stay Informed and Get Involved

• Talk to your legislator – ask them to make Education Funding a priority this session

• Spread the word – take this message to your ptas, friends, families and work colleagues

Stay Connected• E-mail mwbenn@okpolicy.org• Visit our website www.okpolicy.org and blog

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