Education

At $12,206 Per Student, Oklahoma’s Total Education Revenues at an All-Time High

June 3, 2014

Jonathan Small

By Jonathan Small, CPA

In an OCPA blog post in March I noted that, according to the Oklahoma State Department of Education, per-pupil available revenues have reached an all-time high of $12,206. (To calculate per-pupil available revenue, one simply divides the total available revenue by the total enrollment.) As I said at the time:

It’s important to understand that the current system of public education in Oklahoma is a partnership between the state of Oklahoma and local school districts. Both are authorized by the Oklahoma constitution to provide revenue for the various expenses of common education. Our system of financing common education is somewhat unique, and differs from other government programs where state dominance and state funds comprise the majority of the program. Programs such as Medicaid, transportation, welfare assistance, and others operate primarily on state and federal funds, without the arrangement or expectation of local revenue involvement. Given this relationship, analyzing total available revenue per-pupil is vital if one wants a clear revenue picture.

This $12,206 figure is actually low, because it doesn’t count the significant investment by the state in the Oklahoma Teachers Retirement System (TRS). For decades, lawmakers overpromised benefits and underfunded the TRS. This neglect resulted in the TRS being one of the worst-funded state pension systems in the United States. Over the last several years, while making significant increases to common education, lawmakers also significantly increased contributions to the TRS. The state dedicated $128.9 million to TRS in fiscal year (FY) 2003 and $300.5 million to TRS in FY-2013, an increase of $171.6 million or 133.17 percent. Only in government can you argue that money going to teacher retirement benefits doesn’t count as revenue available for education. (Try making that argument to anyone running a private school.)

Even so, our analysis struck a nerve with many liberals, tax consumers, and various Oklahomans who simply refuse to believe that, overall, public education’s available revenue actually exceeds that of the former record-high amounts prior to the recession.

Some have tried dismissing our analysis by pointing to all of the various uses of the available revenues, some of which aren’t related to the schools’ operating budgets. But of course we’re not talking about school operating budgets, and never said we were. We’re talking about total available revenues. In a policy environment that too often favors the interests of tax consumers, OCPA is looking at things from the perspective of the tax payers. How much money has been extracted from them and is now available to the government’s monopoly education system?

What matters most is not whether available revenues are directed towards this particular program or that particular expenditure item. What matters is: How much revenue is available for public education in Oklahoma?

This is hardly a novel analysis. State agencies, for example, are required annually to submit budgets to the state’s Office of Management and Enterprise Services and must budget all available funds, regardless of the source.

Private-sector companies are evaluated based on all available revenues as a whole. In fact, the Enron scandal had its basis in efforts by the company and its accountants to conceal portions of its companies’ operations and transactions from the public.

Looking at the whole picture is the only way to make a wise decision about what is actually needed in public education in Oklahoma. Looking only at cherry-picked line items will lead to erroneous analysis and a continuing evaluation of the activity in public education in silos, which leads to so many of the problems we face today. Policymakers, public school teachers, public school administrators, parents, and taxpayers should not be afraid to analyze completely where all $8.2 billion in available revenues is going in common education.

OCPA believes that if we conduct such an analysis, we can refocus common education on the core areas of education, significantly improve student performance and parental satisfaction, and pay higher salaries to those teachers who have earned it.

We believe that Oklahoma taxpayers cannot be faulted for asking the question: How is it that $12,206 in total available revenue is not enough to provide an education?

Jonathan Small, C.P.A., is the vice president for policy at OCPA. He previously served as a budget analyst for the Oklahoma Office of State Finance, a fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and as director of government affairs for the Oklahoma Insurance Department.