Budget & Tax , Education

Curtis Shelton | April 13, 2021

A flood of federal dollars for education

Curtis Shelton

The federal bailout is estimated to provide more than $1.7 billion to Oklahoma’s K-12 and higher education systems. The stated reason for the bailout, like all the federal stimulus money, is to keep states from cutting services due to a decline in tax revenue from economic closures. However, Oklahoma has remained relatively open throughout the pandemic and, after modest cuts in 2020, is seeing an increase in state revenue in 2021.

Through March, Oklahoma has collected an additional $137 million compared to last year and that surplus is almost certain to grow over the last three months of the fiscal year. Widespread economic impacts from the Covid-19 shutdowns did not take effect until April of 2020. That month saw a $500 million decline in tax revenue, with the total revenue decline for the fourth quarter of the fiscal year totaling $710 million. This sets up the possibility for massive revenue growth to end the fiscal year.

With the legislature preparing to craft the state’s budget in the coming months the possibility of this additional $1.7 billion for education must be accounted for.

Let us put in context how much money K-12 and higher education would receive from this bailout.

The K-12 portion of the bailout is estimated at just under $1.5 billion. Total revenue for public education surpassed $7 billion in fiscal year 2020, not including the $2.7 billion that schools carried over. This means, even with a projected surplus in tax revenue, the federal government would inflate the K-12 budget by 17% compared to fiscal year 2020. This $1.5 billion would be greater than the entire increase in funding to public education since 2009, when adjusted for inflation.

The same story exists for higher education. With a total budget of $2.7 billion, higher education would receive an estimated $234 million. This would be a 9 percent increase in revenue. In recent years enrollment in Oklahoma’s higher education institutions has fallen. According to the state regents’ 10-year comparison, enrollment has declined each year since 2012, falling from 221,083 students to 184,694 students in 2019. As enrollment has fallen and the state’s flagship universities continue to prioritize diversity initiatives, the state legislature has steadily reduced funding since 2012.

With all the strings attached and complications that come with it, Oklahoma should think long and hard before accepting the federal bailout money. Oklahoma lawmakers should be aware of the ramifications of accepting the bailout money and how those borrowed funds could affect certain agencies as they begin to make decisions on how to craft this year's appropriated budget.

Curtis Shelton Policy Research Fellow

Curtis Shelton

Policy Research Fellow

Curtis Shelton currently serves as a policy research fellow for OCPA with a focus on fiscal policy. Curtis graduated Oklahoma State University in 2016 with a Bachelors of Arts in Finance. Previously, he served as a summer intern at OCPA and spent time as a staff accountant for Sutherland Global Services.

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