Same Song, Umpteenth Verse

  Centennial Carousel, Elk City, OK  ID’d by Senator Stephanie Bice

Tomorrow the Oklahoma Legislature begins a special session to address the budget shortfall for FY 2018 and to consider funding for a teacher pay increase.  Having checked the website of the Oklahoma Council of Public Affairs some days earlier and seeing nothing particularly related to the special session other than their regurgitation of non-specific “government bad, private good” drivel that they are paid to produce, I anticipated I would need to reprise my “The Glib, The Bad and The Ugly” post from just before the 2017 regular session when there was also talk of a teacher pay increase (which didn’t happen).  It’s pretty interesting how even our legislature, which is somewhat fiscally accountable, can tell there is no funding for teacher pay raises, but the Limited Thinkers at the OCPA continue to assure us that there is–by just distorting facts and making stuff up, though sometimes I wonder if the poor fellows there even know that’s what they are doing. 

The latest example, and I assume their attempt to “inform” the legislature before the special session convenes, is a September 19, 2017 post by fellows Curtis Shelton and Dave Bond.  I don’t think I’ve commented on Mr. Shelton’s work before but I’ve documented Mr. Bond as a Limited Thinker more than once (Something Special, Waiting for Dave Bond and Done Waiting for Mr. Bond) so it was no surprise that their attempt at providing “research” falls short of any standard of credibility.   To understand why, we must first examine their numbers.  Below I’ve copied their data from the row labeled “State Sources” to the row labeled “Per Pupil Revenue” for three fiscal years, 2006, 2009 and 2016.  Then below the horizontal line, taken from the same Oklahoma State Department of Education source, pdfs, I show “New Revenue”, a re-calculated “Per Pupil New Revenue”, “Bond Sales” and a calculated “Net Ad Valorem” for each of those three years.  

Here’s why I selected those three years.  I picked 2006 and 2016 because that’s the years they use as the start and the end; they are also the earliest and most recent now showing on the SDE website.  Then I picked 2009 because, having managed an Oklahoma school district’s finances during that roller coaster decade, I know that was the last year that school districts saw any appreciable increase in state appropriated funding over the prior year.  It also marked the beginning of the Great Recession (caused in no small part by the kind of anti-regulatory policies urged by the OCPA) which unfortunately coincided in the following years with the full fiscal impact of the silly “cutting taxes increases revenue” state fiscal policies urged by the OCPA.  Here is the actual data:  Revenue 2006, Revenue 2009 and Revenue 2016

By choosing 2006 as the start they are able to say revenues have grown 41% over that 10-year period; however, over half, 23% of that “growth”, took place in just the first three years and only 18% in the most recent 7 years.  Using their data, the per pupil growth rates for the same two segments are 21% and 8%, respectively, making up their touted number of 29%.  It’s easy to cherry pick start and stop dates to prove a point if you don’t care about presenting real facts and context.  Even using their numbers, it is clear revenue growth has not been robust for Oklahoma schools since 2009.

Now let’s look below the line, where we find the real numbers.  Here is the bottom half of the last page of the 2016 SDE Revenue Report.  Notice nowhere do you find their “Total Revenue” amount of $8,812,222,076.52.  That’s simply because only a limited thinker would see that as a useful number.  The useful number that you do see is “New Revenue Received From School Year 2016” which is the $6,012,945,268 that I have entered in that row below the line, along with the New Revenue numbers for 2006 and 2009.

Bond and Shelton, showing that they can actually add together numbers they don’t understand, add on to the New Revenue amounts for each year the entries for “Balance Sheet Accounts”, being $2,048,140,826.61 for 2016, and for “Non-Revenue Receipts”, being $751,135,986.24 for 2016.  Because these two line totals have increased more rapidly over the years included than the ones that make up “New Revenue” then their inclusion simply distorts the facts in a way that fits the OCPA’s preconceived conclusion—that Oklahoma school districts have plenty of money for teacher pay raises or whatever.

I have written extensively in previous posts about each of these fallacious efforts to overstate school district revenues.  The easier to dispose of ( Double, Double, Toil and Trouble ) are the “Non-Revenue Receipts”—duh, aren’t Bond and Shelton at least curious why OSDE labels them as “non” revenue?  This is revenue that is recorded for tracking, but adding it to total revenues would overstate, or “double count”, the financial resources that are available.  The largest category is “Bond Sales” at $652 million that year most of which was probably raised to build and repair buildings; but you simply do not count that revenue AND the property tax revenue used to pay off the bonds—that is double counting.  Stated so perhaps Bond and Shelton can understand, if you borrow $10,000 to buy a car and then pay back the loan using $10,000 from your wages over the next year, your “income” was not $20,000, it was just $10,000 and you used it all to pay for the car.  The “New Revenue” used to pay back the “Bond Sales” non-revenue is included local ad valorem revenue, specifically property taxes collected into school districts’ sinking funds.  If you look below the line at “Bond Sales” and “Net Ad Valorem” (their “Total Ad Valorem” less my “Bond Sales”), it crudely shows bond sales grew 89% over that 10-year period while other ad valorem grew just over 60%.  Real research would probably reveal that more school districts turned to bond sales as a way to balance their general operating budgets for such things as text books, technology and student uniforms.  That’s not a very efficient way to pay for those items, but when other sources have dried up that’s how they are coping.

As I’ve written before there are also reasons why it is fallacious to view “Balance Sheet Accounts”, called “Cash Forward” by Bond and Shelton, in the same way as “New Revenue” ( Where to Begin? and Paradox of Thrift ).  First, and most obvious, is that it is one-time money.  So using it for something like recurring teacher salary increases would create an immediate revenue shortfall the following year.  Second, most of the “Balance Sheet Accounts” funding is already earmarked for such uses as retiring bond debt, child nutrition services, early fiscal year payroll obligations in advance of ad valorem calendar year collections, etc.  And the almost yearly state revenue failures since 2010 have caused prudent school boards to increase their local “savings accounts” to assure their ability to make payroll and pay district operational expenses when state revenue promises are not kept.

What’s the bottom line?  Look at the calculation of “Per Pupil New Revenue” for 2009 and 2016, it went from $8,644.40 to $8,680.82, essentially no actual dollar increase over seven years, while at the same time utilities, employee health insurance, fuel for buses, etc. all were steadily rising in price.  That is the reality of what Oklahoma school districts have faced, not the preconceived fantasy of abundance concocted by limited thinkers Bond and Shelton.  And what about their parting shot “…this increased funding hasn’t made it to the classroom…”?  I don’t even have to click on the link to know they’re echoing the same song, umpteenth verse about the “Surge” in hiring non-teachers.  Just read my posts A Dirge for a Surge , Purging the Surge and Return of the Surge to see more of their limited thinking, and laziness, on display.

As always, lunch on me for the first to ID its location; and good luck with that.