Demographic Changes Coming to Oklahoma

April 22, 2015

Matthew Ladner

Oklahoma has enacted some substantial K-12 reforms in recent years, including parental choice programs and A-F school letter grading. District interests, however, have pushed back fiercely in a variety of ways. How hard should Oklahoma hold on to the K-12 status quo, and where is it taking the state?

Before looking forward to the next 15 years, let’s look back over the last 15 years of K-12 outputs. Consider the percentage of Oklahoma students scoring “Below Basic” and “Proficient or Better” on the NAEP fourth grade reading exam between 1998 and 2013.

In 1998, students scoring Below Basic outnumbered Proficient or Better readers 34 percent to 30 percent. In 2013, Below Basic readers outnumbered Proficient or Better readers 35 percent to 30 percent. That’s a lost decade plus halfway through a second.

Things don’t look to get any easier over the next decade and a half. Oklahoma’s student population looks to become increasingly diverse during this period. More worrying still, the state’s total population will age profoundly.

Economists have established that age demography has broad societal impacts. They have developed a measure of age-demographic strain called the “total age dependency ratio.” The basic idea is that young people are too young to have entered the workforce, and elderly people exit the workforce in large numbers when retiring.

Young people utilize state services (most notably K-12 education but also a variety of others) and elderly people utilize public health spending. At the state level, this happens primarily through the Medicaid program. Elderly recipients of Medicaid utilize six times more resources than a child and more than three times that of non-elderly adults on average. Medicaid takes up 23 percent of the average state budget, with education spending taking up approximately half.

In broad terms, the total age dependency ratio involves adding together the number of young and elderly people and dividing the sum by the number of working-age people.

Working-age people (ages 18-64 in the U.S. Census calculation) are the primary payers of taxpayer services, while children and the elderly are primary consumers of major state services. Economists have documented that high age dependency ratios (in other words, small working-age populations) serve as a drag on economic growth, which impacts state revenue growth.

The figure on page 9 depicts the U.S. Census Bureau’s projected total age dependency ratio for Oklahoma between 2010 and 2030. In 2010, Oklahoma had 62 young and elderly people for every 100 working-age people. Every day, 10,000 additional Baby Boomers reach retirement age, and Oklahoma has more than its fair share of them.

The Census Bureau projects the total number of Oklahomans aged 65 and older to increase from under 450,000 in 2010 to more than 750,000 in 2030. By 2030, all Baby Boomers will be 65 years or older, and Oklahoma’s total age dependency ratio will have moved to 80 young and elderly people for every 100 working-age people.

The age dependency ratio contains the implicit assumption that the working-age population will be, well, working. Note however that many of the working-age Oklahomans of 2030 sit in Oklahoma classrooms right now. These are the same people who will struggle to pay the taxes needed for health and education spending in the near future. The 2013 fourth-graders mentioned above, for instance, will be in their mid-20s in 2030. The fourth-graders from 1998 will be in their early 40s. Both cohorts had only 30 percent of proficient readers in fourth grade.

Oklahomans should feel the gravest possible level of concern. It is an unambiguous blessing to have multiple generations of Americans alive at the same time, but the American social welfare state is not prepared for it at either the state or federal level.

The most immediate need—and the one thing that policymakers could do now—is to improve the quality of the K-12 system. Another 15 years like 1998-2013 will prove incredibly costly for Oklahoma’s future. Oklahoma’s growing health care spending threatens to strain all other types of spending as the population ages.

Spending on K-12 education is guaranteed by the Oklahoma Constitution and is supported by the public. It faces a terrific strain in what looks to be an era where health needs increase and revenue growth slows, but it is here to stay. The organization of the delivery system, however, badly needs to change to meet the needs of the 21st century. Changing age demography will require a rethinking of the entire social welfare state, but the most urgent need will be to improve K-12 outcomes.

The challenge for Oklahoma policymakers lies in driving an increase in both the academic outcomes and the cost-effectiveness of K-12 delivery.

Matthew Ladner (Ph.D., University of Houston) is the senior advisor of policy and research for the Foundation for Excellence in Education. Dr. Ladner has testified before Congress, the United States Commission on Civil Rights, and numerous state legislative committees, and has authored many studies on school choice, charter schools, and special-education reform. He is the author of the 2010 report “Reforms with Results: What Oklahoma Can Learn from Florida’s K-12 Revolution,” which was published by the Foundation for Educational Choice, the Oklahoma Business and Education Coalition, and OCPA.