How Do I Leap The (60% that is)? Let Me Count The Ways

Palo Duro Canyon, near Canyon, Texas, ID’d by Linda Ford Murphy

Compile a list of every public school district “that spends less than sixty percent (60%) of their budget on instructional expenditures.”

That is the seemingly simple Executive Order  given to the State Board of Education and the State Superintendent by Governor Fallin.  A percentage is the quotient two numbers, in this case “instructional expenditures” divided by “their budget”.  The directive contains no definition of either.  Let the games begin.  If I want to compile a long list of school districts that spend less than 60% of their budget on instructional expenditures, then I want the definition of “budget” that gives the largest number AND the definition of “instructional expenditures” that gives the smallest number.

Districts do produce an official budget that reports projected expenditures and revenues for all funds.  The largest number in a budget will be the total revenue for all funds.  For all districts statewide in FY 2016 actual revenues available were $8,061.086,091 (the Oklahoma Council of Public Affairs has published analyses adding clearly marked “non-revenue receipts” of over $751 million and would use that to pad the total—but they are Limited Thinkers).  Function 1000, “Instruction”, expenditures for all funds totaled $2,931,460,665, giving all school districts statewide a percentage of actual revenues spent on instructional expenditures of 36.4%.  The main reason the revenue number is so large is because it includes carryover or fund balances in the total.  While arguably school districts could have expended their balances of $2,931 million in 2016, they could not have expected to repeat that amount because the fund balances are one-time revenues; new revenues collected for 2016 totaled $6,012,945,264.  Using that number instead yields 48.8%, a huge improvement, but still far short of the target 60%.

Keeping those “all funds” revenue numbers in mind let’s turn to “all funds” expenditures.  The total for 2016 was $6,712,315,660, which if used in the calculation would yield 43.7%.  Looks like we’ve moved backwards.  What it illustrates is a common error (or intentional exaggeration as Limited Thinkers at Oklahoma’s Stink Tanks regularly have done, see Double, Double, Toil and Trouble ) in totaling school district expenditures, namely including both the sinking and bond fund expenditures.  Doing so means including both the expenditure of the borrowed funds and the payments made to repay the debt, thus double counting the expenditures for building buildings, buying buses, acquiring textbooks, etc.    If we eliminate the bond funds, keeping the sinking fund, then total instructional expenditures (function 1000) drop to $2,892,389,217 and total expenditures to $6,065,186,175 giving all school districts a calculation of 47.7% expended on “Instruction”.

Expenditures, like revenues, also have a category that limited thinkers include to exaggerate totals by double counting, namely functions 5200 to 5900.  These functions are accounting entries to track expenditures, really transfers, between funds and, if included, overstate total expenditures in the same way that reimbursing your spouse for a purchase made does not increase family expenditures.  Making this adjustment raises the calculation a little to 48.5%.   I expect there will be other adjustments, most importantly not including all funds.  Here they are in reverse order.

81-88 Trust and Agency Funds and 50 Endowment Fund

These funds come from various sources usually with specific restrictions on their use, and in some instances are strictly pass-through accounts.  They vary greatly among districts and any rational implementation of the executive order will exclude them.  The calculation is now 48.7%.

60 School Activity Fund

How does a District use money raised for a band trip to pay for classroom instruction?  Even though some of these funds are used for instruction, it’s pretty unlikely activity funds will remain in the calculation, so the calculation would then be 49.7%.

41 Sinking Fund and 31-39 Bond Funds

As explained above at least one of these has to be eliminated due to double counting.   A major problem with keeping either in the calculation is that careful examination would likely reveal that the largest use is the construction/repair of school buildings which expenditures are separated from function 1000 and reported in the 4000 function category.  But how does a function 1000 teacher have class without a classroom?   By some illogic one of these might make the cut, though the current “administrative cost” calculation (Title 70, Okla. Statutes, Sect. 18-124) includes only the General Fund.  If both Sinking and Bond funds are eliminated the calculation becomes 55.2%

24 OKC Maps Trust and 25 Municipal Tax Levy

These funds are unique to only a few districts.  For the purpose of establishing statewide norms/comparisons these are best eliminated.  The calculation is now 55.3%.

22 Child Nutrition Fund (and Fund 11 Function 3000)

The Child Nutrition Fund cannot have function 1000 expenditures for instruction.  Instead these expenditures must be coded within the 3000 function category, unless they are of the accounting/double counting kind in 5000.  Some districts operate their Child Nutrition program in their general fund 11 and track it by the 3000 function category.   Unless school districts are expected to divert school lunch money to teacher salaries child nutrition expenditures should be eliminated.  The calculation then becomes 59.4%.

21 Building Fund

The statutory purposes of the Building Fund do not include paying teacher salaries and these expenditures are used primarily for the operation and maintenance of school buildings (less than one percent was coded to Instruction in 2016).  It is doubtful the executive order calculation will include the Building Fund (though I could make a counter argument).  If eliminated as expected the statewide calculation becomes 61.8%.

12 CO-OP Fund

The only co-ops I’ve had experience with were entirely function 1000 instruction, but statewide they exist for non-instructional purposes as well.  I haven’t reviewed their coding enough to discern if all double counting is excluded.  Regardless, excluding this Fund statewide slightly raises the percentage but, rounded, it is still 61.8%.

As you can see what funds are included matter.  That final statewide percentage is the result of dividing Function 1000 instructional expenditures of $2,828,815,608 in school districts’ General Fund 11 by their total expenditures, adjusted by removing Function 3000 (child nutrition) and Functions 5200-5900 (transfers), of $4,574,266,337.56.  Using this most likely calculation I expect a preponderance of school districts will meet the 60% standard.

For those districts that fall short here are a couple of fairness considerations.  First, as I’ve alluded to earlier, not all expenditures that are essential to have classroom instruction are included in Function 1000, such as heating, cooling and maintaining the classrooms where instruction occurs.  The disparity among school districts in their Building and Bond Funds capacities are wide and long (see Cockamamie? You Don’t Know Cockamamie!) because they are based solely on a local district’s property valuation per student.  This wide disparity permits wealthier districts to easily provide and maintain their classroom facilities without use of scarce General Fund revenues, which in turn permits a greater percentage to be devoted to “Instruction”.  By contrast poorer school districts must resort to using the General Fund to maintain their classrooms, necessarily limiting the amount available for “Instruction”.

Second, a very strong argument can be made that many expenditures in the 2000 function category, especially 2100 and 2200, and even 2400 should be included (see Selected OCAS Functions ).  Most notable, I think, are functions 2135 through 2180, which are services in support of the instructional programs for students with Individualized Education Programs under the IDEA federal law.   Translated, why do we rely on accounting definitions to determine what is “Instruction”?  Just including expenditures within Function 2100 raises the statewide calculation to 68.6%.

One final thought that has been made by many others:  Give teachers a $5,000 pay raise, estimated for FY 2016 to cost $150,000,000, and the percentage increases to 70%–Duh!  See:

As always lunch is on me for the first to ID the photo location.


Leave a Reply