Budget & Tax, Education

Legislative leader shocked by schools’ cash stockpile

January 27, 2021

Ray Carter

When the most recent state budget year ended on June 30, Oklahoma’s 500-plus public-school districts reported an apparently record amount of $982 million in combined carryover savings.

That sum is grabbing the attention of lawmakers at the state Capitol.

During a recent budget hearing for the Oklahoma State Department of Education (OSDE), Rep. Mark McBride noted combined school-district carryover almost reached $1 billion, which represents nearly one-seventh of the $7 billion public schools received last year from all sources.

“That’s a heck of a business model,” said McBride, R-Moore and chair of the House Appropriations and Budget Subcommittee on Education.

At the end of the 2020 state budget year, Oklahoma school districts reported carrying over $982 million, an increase of nearly 8 percent compared to 2019. While that one-year jump was tied in part to the COVID-19 closure of all schools in the spring, which reduced many normal school expenses and contributed to increased savings, it also continued a trend that predated the pandemic.

In the last three years, combined carryover in Oklahoma public-school districts has surged by $320.6 million, or 48 percent. From the conclusion of the 2017 state budget year to the end of the 2020 budget year, carryover funds in Oklahoma schools rose from $661.4 million to $982 million.

That $320.6 million increase in carryover across three years means schools have boosted savings by an amount that almost equals the cost of the historic teacher pay raise approved in 2018.

When lawmakers voted to boost teacher paychecks by an average of $6,100 apiece during the 2018 session, a legislative summary pegged the cost of that pay raise at $353.5 million.

Lawmakers raised numerous taxes to fund the 2018 pay raise, arguing there was no other way to cover the cost.

The $982 million in carryover reported by schools at the end of the 2020 budget year exceeds all reported carryover since at least 2006, even after adjusting for inflation. (Carryover figures prior to 2006 are not readily available.)

The record carryover comes even as schools are also experiencing a substantial infusion of federal funding tied to COVID-19 needs.

OSDE officials have previously reported that, at the halfway mark of the ongoing school year, Oklahoma districts had spent just $46 million of the $144 million provided to them through the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act last spring, leaving nearly $100 million still unspent.

Schools are now expected to receive as much as $660.7 million in additional federal bailout funding approved by Congress in December, although the Oklahoma State Department of Education could retain 10 percent of that amount.

Despite the substantial increase in savings and a flood of federal bailout funds, several major school districts in Oklahoma have yet to fully reopen for full-time, in-person instruction five days a week.

State Superintendent of Public Instruction Joy Hofmeister told lawmakers that schools have been reluctant to spend carryover funds due to uncertainty about “what the next year or two will bring” due to the COVID-19 pandemic.

“It would be like emptying a savings account,” she said.

However, Hofmeister stressed that neither she nor her agency had any role in building up school districts’ carryover reserves.

“Those are decisions of locally elected school board members,” Hofmeister said. “The State Department of Education does not have any oversight on how they encumber their funds like that.”