Monday, March 10, 2008

Attacks on School Funding

This editorial appeared in yesterday's Tulsa World.

School funding under attack
By DAVID AVERILL Editor, Editorial Pages 3/9/2008

Education funding in Oklahoma is under attack on several fronts. This is not good news in a state that already spends less per student than most others and whose teachers are among the nation's lowest paid. The fronts on the undeclared war against education funding are these:

· Declining state revenues. Tax collections, especially corporate income tax revenues, for the current fiscal year are lower than was anticipated when the budget was written last year. As a result the House Bill 1017 Revolving Fund, named for the historic 1990 education reform and revenue law, is short by $37 million. In addition, state lottery proceeds, which are dedicated to schools, are $4.6 million less than anticipated.

Unless the Legislature passes a $41.6 million supplemental appropriation in the next few days, school districts across the state will face budget cuts of about 2 percent. The cuts will affect the current school year. Local districts will have to do what they can to effect the cuts, possibly including staff reductions.

· Income tax cuts. In the past few years the Legislature has reduced income tax rates by an amount that will soon total an estimated $700 million a year. It is an item of faith among the tax-cut advocates that the reductions will spur economic growth that will more than offset the cuts. That hasn't happened yet and there is no evidence that it will anytime soon. Meanwhile, it is estimated that state revenues in the coming budget year will be about $110 million less than the current year -- a worse than no-growth situation.

Education is the big-ticket item in the state budget. Common schools -- grades K-12 -- receive about 36 percent of the annual budget. Throw in higher education and career tech education and the figure is closer to 60 percent. When state revenues are decreased by a dollar, funds available to common schools are reduced by about 36 cents. Knock $700 million out of the budget and you've cut the amount available to public schools by about $252 million.

· Ad valorem tax cap. A resolution is sailing through the Legislature which would, if approved by voters, cap growth of property tax valuations at 3 percent or the rate of inflation, whichever is smaller. The cap currently is 5 percent, one of the most restrictive in the nation.

Property taxes are the primary local funding mechanism for public schools. Seventy percent of the taxes collected go to schools in the county where they are collected. Applying the lowered cap in Tulsa County would reduce property values by an estimated $18.2 million and reduce taxes by $2.5 million, $1.5 million of which would go to Tulsa Public Schools. Statewide the yearly ad valorem tax reduction would amount to about $25 million.

· Pressure for increased highway spending. Everyone knows that Oklahoma needs to spend more money to build and maintain highways and bridges. The problem in a state with shrinking revenues and compromised tax base is how to do it. A highway advocacy group called Restore TRUST is pushing lawmakers to stop "diverting" motor vehicle taxes into the general revenue fund and "put them back on roads."

Their pitch is misleading. Motor vehicle taxes -- license tag fees -- are collected in lieu of personal property taxes on cars and trucks. They were never intended as highway user fees and were never dedicated to highway construction. So they are not being "diverted" and they can't be "put back" where they never were.

In effect, what the group is advocating is recutting the budget pie to give a larger slice to highways. Of course, recutting a pie to make one slice larger means that the other slices must be smaller.

By law, 36.2 percent of motor vehicle taxes go directly to local schools. Most of the rest goes to the general fund, about 36 percent of which is spent on common education.

The highway advocates are well-intentioned, and increased highway spending is a legitimate need. But it is a shame that they would boost highway spending at the expense of public schools.

These various revenue reductions, proposed or fait accompli, paint a gloomy picture for a public education system that already is underfunded.

Think about this: Rising natural gas and oil prices historically have meant Fat City for state revenue collections. But despite the fact that gas prices are rising and oil is at an all-time high, we're getting ready to cut local school funds that already have been committed. Where will we be when gas and oil prices cool? In the soup, that's where.
David Averill, 581-8333

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