Month: August 2018

 

In my last post I took Joel Griffith with the American Legislative Exchange Council (ALEC) to task because I convinced myself he was doctoring his “research” by including spending with federal funds to show how Oklahoma “taxpayers” would have saved billions if only TABOR had been in place.  His totals were like Oklahoma government expenditures, including federal funds, that I’m used to seeing (which I showed using a table from the Comprehensive Annual Financial Report for 2017) for recent years, about $16 billion, with the two largest parts being state tax revenue and federal transfers/grants to Oklahoma.  I am so used to the fellows at the OCPA doing sloppy work that I just stopped there thinking I got them again and didn’t even look at his source to double check my conclusion.   Confidently I included Mr. Griffith’s email address on my distribution list and suggested he make a correction to his article.

As he pointed out in his reply, which was respectful of his elder (haven’t verified that but very safe assumption) his numbers did NOT include spending with federal dollars.  I was wrong.  He uses data from the National Association of State Budget Officers (NASBO) which is reasonable to do.  Comparisons among states, like comparisons among school districts I’ve submitted data for, can never really be apples to apples but using a consistent methodology over time is about as good as you can do—though you should try to get the right numbers.   Here’s what one of the pages he used looks like:

Oklahoma is down toward the bottom in the Southwest, just above Texas.  The most recent report does not have actual data for 2017, only “estimated”.  So when he whined about the growth in state expenditures from $11.5 billion in 2011 to $16.5 billion in 2017 he was comparing actual to estimated, presumably.  Of course I have now checked his source and transcribed the data from all the NASBO reports going back to 2000.  I put the estimated numbers for 2017 and 2011 in italics so there are two entries for 2011, actual and estimated.  Here’s my table:

The first five data columns mirror the NASBO reports; the last two are my calculations, first removing the federal amount from the total and then also removing bond amounts.  Notice that the $16.1 billion for 2017 (estimated) shows up as $16,134 million.  That’s the number he used.  But notice that nowhere for either 2011 actual or 2011 estimated does $11.5 billion show up, the closest being $11,596 million by also subtracting the bond amount, but that wouldn’t be apples to apples.  So on this alone I think Mr. Griffith owes a correction.

What else, besides just using the wrong amount, about his numbers fits with my experience reviewing the work by Stink Tanks like OCPA and ALEC is how they are oh so clever in selecting a base year from which to describe a change.   He says “total state funds expenditures are expected to smash records in fiscal year (FY) 2018 for the seventh consecutive year, after rising from $11.5 billion in FY 2011 to $16.1 billion in FY 2017.”  Not only, as I’ve shown, is the $11.5 billion $600 million less than the number from the NASBO data and we don’t know if the $16.1 billion estimated actually happened, but you could also describe the data this way:

Total state funds expenditures, after taking five years to catch back up to the 2007 pre-recession total of $13.6 billion, was at $15.1 billion for 2016, being a paltry 10.5% increase over that decade and well below the combined increases in population and inflation.

His other big revelation from his look at the data was telling us that total state funds expenditures, since 2000, blew right through the cap of 56% (42% inflation plus 14% population growth) that having TABOR in place would have imposed.  He could have saved us over $3 billion.  But look at the data table.  Here are the percentage increases from 2000 to 2017 (estimated) for three columns:  “less fed” (which is total state spending) is 107.6% which clearly does blow the top off the 56% TABOR cap (his calculation, not mine); “general” is 35.7% which is way less than his cap; and “other” is 213.1%.  Even a limited thinker can see that his heartburn can’t be for our general fund state spending, but rather should be focused on our “other state funds”.  Figuring out what those are led me to Oklahoma’s deep state.

Here’s the NASBO definitions and a great national chart:

Remember I got off on the wrong track because I was used to data sets where federal funding was close to half of our state spending.  But now I’m seeing a data set where the total is much larger, $23.3 billion for 2017 estimated, and has this “other state funds” category being a big hunk as well.  So what is it?

Read the definitions above.  Right off the bat, if I’m concerned about taxes, it seems I should be more focused on the “general fund” totals that are paid for mostly with taxes—and TABOR wouldn’t have limited Oklahoma’s growth (except it can ratchet you down in a pretty stupid way) as Griffith calculates it, because 36% is well under 56%.  On the other hand, “other state funds” include tuition, fees, donations, assessments, provider taxes, etc.–provider taxes appear to be a way states can game the Medicaid system to have the federal government and patients pay some of the state’s match and Oklahoma plays in that game so they are not what most think of as taxes.  I’m very skeptical that Colorado’s TABOR includes most of these revenue streams.

Still I went looking for Oklahoma’s “other state funds” and here’s what I think is the best representation from Page 48 (cafr16 p48) of the 2016 (so can be compared to the most recent actual NASBO data) Oklahoma Comprehensive Annual Financial Report:

I think it’s obvious that the general fund and federal funds shown in the NASBO data are within the $17 billion for “Primary Government” above, though removing the $900 million for higher education makes sense because it is used to cover the $867 million Higher Ed deficiency below and we shouldn’t double count (though stink tanks like to).  So that brings us to $16 billion or so with, see at the bottom, $8 billion from taxes and, second and third columns at the top, the rest from charges ($1.7 billion) and grants, $7.8 billion, virtually all federal I bet.

What I conclude from this exercise is our “other state funds” (Oklahoma’s Deep State) will be found almost entirely in the “Component Units” described in the middle of the Table, of which Higher Education is the largest, but notice it (tuition and fees) and the others are very dependent, not on tax revenues, but on user charges.  Perhaps some also comes from the list of “Business Type Activities”.  The largest of these is the state’s health insurance program for state and education workers.  And that’s another story—one that also doesn’t involve taxes unless you want to double count.

For my money, and thinking, if we want to use the broad NASBO data and if we’re interested in arbitrarily constraining state spending to keep taxes low, which is Mr. Griffith’s mission, then I don’t think you use “other state funds” in your argument.  But if you don’t, then your argument goes away for Oklahoma and you don’t get to publish your drivel on the OCPA’s site.  However at least you wouldn’t be adding to everyone’s confusion about how state services are financed and what they cost.  Still I enjoyed learning more about our state’s deep state.

As always lunch is on me for the first to ID the location of this photo (selected in recognition of the recent passing of a true American hero and statesman).     

Bison sculpture at Tallgrass Prairie Preserve, Osage County, ID’d by Peg Gotthold.

(Note:  Have had correspondence with Mr. Griffith and likely I will be following up with a significant correction; appears he did NOT include federal funds.  So now I need to find another $8 billion our state expends according to NASBO, and will comment on other aspects.  Enjoy.)

The Latin phrase Labor Omnia Vincit is Oklahoma’s state motto—“Work conquers all”.  TABOR is an acronym for Taxpayer Bill of Rights, a legislative proposal pushed by Stink Tanks that would limit increases in state and local government spending to no more than the rate of inflation plus the rate of population growth.  Colorado enacted this as an amendment to its state constitution in 1992.  So when I read “Spending restraint would save Oklahoma taxpayers billions” now posted on the website of the Oklahoma Council of Public Affairs I had to learn more, very little more, about Colorado’s TABOR to check this claim by author Joel Griffith, supposedly a TABOR expert for the American Legislative Exchange Council, a national stink tank, and a lawyer.  I also exhausted my Latin vocabulary from two years’ high school study so had to finish the title by exhausting my French vocabulary (sadly had to use Google).

Mr. Griffith leads off with this claim about Oklahoma:

According to the National Association of State Budget Officers (NASBO), total state funds expenditures are expected to smash records in fiscal year (FY) 2018 for the seventh consecutive year, after rising from $11.5 billion in FY 2011 to $16.1 billion in FY 2017.

Right off the bat I knew this would be an easy one.  I lived through FY 2011 to FY 2017 budget preparations with an Oklahoma school district and immediately suspected two problems with his numbers.  First, to get to $16.1 billion that would include federal funds flowing through the state and I doubted that TABOR would restrict federal spending since it is a state measure.  Also I was pretty sure that Colorado, unlike Oklahoma, had accepted Medicaid expansion under Obamacare demonstrating their common sense that you don’t deny your citizens a federal benefit they are paying for.  And second, the increase from $11.5 to $16.1 billion simply didn’t jive with the state aid cutbacks school districts had experienced during that time.

I easily confirmed my suspicions by viewing the Comprehensive Annual Financial Report issued by the State of Oklahoma for both FY 2011 and FY 2017.  This is from page 54 from CAFR FY 2017:

I’ve been around our state numbers and other financial reports enough to know that, with some effort, we could probably tie into his $16.1 billion with the numbers on this page.  Regardless of how close we could get I’m very confident that his $16.1 billion must include federal funds passing through the state because that $6.7 billion in federal grants is over 40% of the total—the very thing that had an OCPA fellow in a tizzy about which I commented in my last post.

Now that I have a credible source for FY 2017 let’s look at the same report from page 52 of CAFR FY 2011:

These numbers don’t even begin to support his assertion that Oklahoma’s state expenditures were $11.5 billion in FY 2011.  He is simply wrong, wrong, wrong—and shame on the fellows at the OCPA for publishing this slop.  Later I will reveal what I think this new Limited Thinker has done, though I’m not going to prove it in this post.

For FY 2011 you see that federal grants made up an even larger share of the state’s revenues, probably the result of the ARRA stimulus that helped move our economy out of the Great Recession of 2008 and set us on the path to a steady expansion that continues today.  This brings us to the second reason Mr. Griffith is a Limited Thinker—he’s including federal funds in his calculations. Here’s his “billions” conclusion:

What would TABOR have meant for Oklahoma? Since 2000, total state funds spending would have increased just 56 percent rather than 108 percent if limited to just the combined growth in inflation (42 percent) and population growth (14 percent.) Failure to adhere to such basic constraints created a budget blowout of $16.1 billion in FY 2017, a whopping $3.6 billion higher than the $12.7 billion in spending the state would have had with TABOR-constrained growth.

Even though Mr. Griffith purports to being an attorney, apparently he has not read TABOR in the Colorado Constitution.  If he had he would find this language at Article X, Section 20, subsection (2):

(e)  “Fiscal year spending” means all district expenditures and reserve increases except, as to both, those for refunds made in the current or next fiscal year or those from gifts, federal funds, collections for another government, pension contributions by employees and pension fund earnings, reserve transfers or expenditures, damage awards, or property sales.

This language defines the spending limitations imposed at subsection (7) of Colorado’s TABOR.  It clearly does not limit Colorado in any way from expending whatever amount of federal grants or funds come its way.  A proper analysis, performed by a true researcher who is able to think clearly and has the necessary reading, writing and arithmetic skills, of TABOR’s impact on Oklahoma state expenditures would begin by subtracting from its total spending all “gifts, federal funds, etc.” as defined above.  No way would the resulting numbers for FY 2011 or FY 2017 be the silliness used by Mr. Griffith.  Based on the numbers above FY 2011 will be less than $9 billion and FY 2017 less than $10 billion.   So between the two he is only off a whopping $8.5 billion or so.

I won’t take up my space with his silly chart that displays his foolishness, except to quote the legend:

Source:  Author’s calculations based on data from NASBO, Federal Reserve, Census Bureau.

To apply TABOR you need to make calculations using three data sets:  population growth for which the Census Bureau is the best source; the Consumer Price Index for the state for which the Commerce Department is the source, but possibly the Federal Reserve republishes the numbers; and accurate amounts, as defined in TABOR, for expenditures and revenues in actual dollars, i.e. no adjustment for inflation, for which I would go to that state’s official records for the data.   But note that he uses NASBO, a source I’ve not explored, but my hunch is that the data he pulled for Oklahoma, in addition to making no effort to adjust for federal funding, probably is adjusted for inflation, which would explain some of the huge difference for FY 2011.  Just a hunch, but I have already demonstrated that my hunches are better informed than his “research.”

Finally, what about his calculations.  Maybe he knows how to, maybe he doesn’t.  I can’t tell because “garbage in, garbage out” defines his work.  Until Mr. Griffith takes the time to understand what TABOR provides and to understand a state’s financial reporting he has no business alleging “billions” would have been saved.  Again shame on the fellows at the OCPA for publishing such rank garbage.

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

Central High School in Topeka, KS, which the Thinker wrongly thought was the school involved in Brown v. Board of Education; ID’d by Clark Frailey.

I’ve been commenting on gubernatorial candidate platforms and other matters of interest to me which has taken me away from my usual foils, the good fellows at the Oklahoma Council of Public Affairs, for over two months.  So it’s past time to see what silliness they have been up to.  Three articles caught my attention.

The first by Mike Brake, Official Says Some Assessors Shortchange Schools, Counties, reports on a study done by the Oklahoma County Assessor’s office that looked at valuation practices in 12 of Oklahoma’s 77 counties.    The study finds wide variations in assessment practices that are consistent with the 2013 Equalization Performance Audit commissioned by the State Board of Equalization which found 35 counties out of compliance.  Since the OCPA seems otherwise to be on a tear to greatly increase property tax revenues in Oklahoma as a way to fund public education, a state responsibility, it is a good thing that they take an interest in making sure assessment practices are consistent across all 77 counties.  Simply stated, if assessment practices are allowed to vary widely then the whim of individual assessors will thwart efforts to achieve fairness among taxpayers and adequate funding for schools statewide.  I’ve requested a copy of the Oklahoma County Assessor’s study and may have more to say later.

The second, Distorting Facts To Fit A Narrative, by Jonathan Small could be funny if it weren’t so disingenuous.  Mr. Small is annoyed by a politician half a continent away who probably did distort facts and misuse terminology, but Small, who lives in a house made of glass, should not talk like a kettle because he need only look down the hall, or in a mirror, to find examples of authors “distorting fact to fit a narrative”.  As I’ve repeatedly documented in this blog, he and his colleagues so consistently distort facts and misuse terminology that it is notable only when they don’t.  In the recent two-year run up to the teacher pay raise this spring the fellows at the OCPA, and sister Stink Tank the 1889 Institute, consistently pushed the narrative that there was plenty of funding available for raises by distorting the facts in a variety of ways, including counting the same revenue twice, referring to teacher aides and cafeteria workers as “administrators”, implying that fund balances are recurring revenue, inflating numbers without disclosure and, my favorite, just making stuff up.

The third, Flood Of Federal Dollars Damages Accountability, by Trent England is arguably another example Mr. Small could use of distorting facts (“Nobody is ever on the hook”) to fit a narrative (Government wastes the money it spends), but it’s hard to argue he is distorting facts when he presents little of them.  He includes the State Department of Education as one of those agencies receiving the corrupting hundreds of millions of dollars so let’s look at some facts about those programs.

Here’s the total federal revenue, $693 million (out of the total $6.091 billion from all sources–local, county, state and private) flowing through SDE to Oklahoma school districts for the 2016-2017 fiscal year.

Three programs clearly dominate and fit the “hundreds of millions of dollars” that concern Mr. England.  The largest is $239 million for breakfast and lunch programs in school cafeterias statewide; the mandatory state match for this program was $3.1 million that year.  Our poor legislators were bullied by the U. S. Department of Agriculture into spending almost a penny and a half for every dollar of food Oklahoma’s neediest children consumed.  To quote a most compassionate commentator, “womp, womp”.  Mr. England, the accountability here is pretty simple, if you don’t like how the school lunch programs is run at your school, take it up with your school district, or if you don’t think there should be a school lunch program, take it up with your elected representatives in Congress.

The next largest is $191.7 million for “disadvantaged students”, a program which began as the Elementary and Secondary Education Act of 1965 as part of Lyndon Johnson’s War on Poverty.  The funding is allocated to school districts nationwide primarily based on the incidence of poverty as measured by U. S. Census Bureau, specifically their Small Area Income and Poverty Estimates.  To my knowledge there is no significant financial match, or distortion of priorities, caused by this funding at either the state or local level.

I taught remedial mathematics for two years during the early 70s in a Tulsa junior high school program that was funded with these dollars.  With my faithful assistant Alice (who humiliated me on the tennis court) and a class size of twelve we were able to teach students, often one on one, who otherwise would have been buried in a classroom with over thirty other students.  It seemed to work well with many returning to the “regular” classes the next semester.  Mr. England, the accountability here is pretty simple, if you don’t like how these programs are run at your school, take it up with your school district, or if you don’t think this federal program should exist, take it up with your elected representatives in Congress.

The third largest is $136.1 million to support compliance with the federal “Individuals with Disabilities Education Act” first enacted in 1975.  This is the law that requires school districts throughout the nation to serve students with disabilities according to federal standards.  Working at a public high school as I did in 2005 was in marked contrast with my experience as a student at Nathan Hale High School in 1965, my senior year.  I don’t recall interacting with any students with disabilities and don’t even know if they were allowed to attend.

I suspect that the educational services provided to students with disabilities across the country varied widely, with some states and districts working hard to educate all children while other states and districts were doing as little as they could get away with.  Regardless, for whatever reasons, Congress determined in 1975 that there should be a national standard for the educational services to be provided to students with disabilities at all public schools.  That is what Congress does, whether Mr. England likes it or not, it passes laws that it believes are necessary and proper for the good of the nation.

According to public school world which I’ve inhabited as a teacher, an administrator, a school board member and a lawyer for almost 50 years, part of the bargain in 1975 was that the federal government would help fund the costs of providing the additional services for students with disabilities mandated by the new law, and that it would do so at the approximate level of 40%.  According to the National School Board Association the actual level is now about 16%.

Let me translate that for Mr. England, who might go to the OCPA’s silly data tool and calculate the total of program 239 expenditures statewide in FY17 and subtract from that the $136.1 million in federal funding for education of Oklahoma students with disabilities to see how much Oklahoma school districts, with state and local funding, expended to meet this federal law mandate.  He might then search for a school board member, administrator, parent of a student with a disability, who thinks Oklahoma school districts receive too much from the federal government to help meet the mandate.

Mr. England, just like the other two programs that spend hundreds of millions of dollars, the accountability here is pretty simple, if you don’t like how educational services for students with disabilities are provided at your school, take it up with your school district, or if you don’t think educational services for students with disabilities should be a federal mandate, take it up with your elected representatives in Congress.

I hope I’ve provided some transparency about the education programs guilty of using federal funds.  I suspect it would be fairly easy to do the same for the other programs he mentions, those administered by the Department of Health and Health Care Authority, using hundreds of millions of dollars.  So I spent less than ten minutes perusing the Governor’s FY17 budget proposal and quickly found that the Health Care Authority is dominated by Medicaid programs, namely health insurance for low income families and the disabled, and long term (nursing home) care for the elderly.  It’s pretty damn transparent that Mr. England would rather whine about accountability than just simply state that he doesn’t think taxpayers should help finance health insurance for children or provide long term care for the elderly who can’t pay for it.  Let them beg in the streets.

The Department of Health operates a myriad of programs that readily appear to be efforts at prevention, like nutrition for infants, immunizations to prevent contagious diseases, medical services for pregnant women, and many more that doubtless help avoid much greater costs to us all in the future.  What is Mr. England’s vision–a return to a time not so long ago when infectious diseases killed more people than cancer, when a high percentage of children died before reaching adulthood (check your family history), when childbirth was a major cause of death for women?  These advances in public health we’ve accomplished, some of it even during my life time, are not without expense, without laws that restrict our “freedoms” or even without bureaucrats administering public health programs.

If your narrative is that federal funds corrupt state level decision-making, then be transparent (give us the facts) about the programs those federal funds pay for and tell us which ones you’d be willing to eliminate and how the state would pay for the ones you’d keep.  Now that would be accountability and transparency by example.  Otherwise you are just “distorting facts to fit a narrative.”

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