Month: September 2019

Not my words, rather an expression our Governor uses I guess to say he’s willing to try some radical stuff to make our state government more efficient.  This post is a follow up to the previous two so won’t make much sense unless you read them first.  I wondered what would happen if the Foundation and Incentive programs were combined, if that would free up much money.  It doesn’t seem to.  I converted Column F of the SDE’s spreadsheet (that I love) to the total $3,592.37 of the two formula factors thus combining the target Foundation and Incentive program revenues together.  Then, keeping the state dedicated revenues at zero, the only chargeable amounts will be the local property taxes.  I moved that total into Column G by combining the amount already there with 20 x the amounts in Column U, I think calculating for each district what the formula says the total of 35 mills will generate. 

For many districts the original amount in Column G equals 15 times the amount in Column U which makes sense at a 15 mill rate, but for most it does not, actually going as high as a bit over 19.  I think, but am not sure, that it has to do with how personal property is assessed in the 77 counties.  Possibly it has to do with assessment ratios, but I don’t think so.  Perhaps someone will enlighten me.

Back to the real story, the end result is a savings of $1.175 million which would shore up the state match for an additional two mills of local option as shown in my last two posts.   Before this exercise there were 24 districts still on the Foundation side of the formula and all those plus 15 more were receiving Incentive aid as well.  This last move, combining the two programs, while not freeing up much additional money reduces the total number of districts “off the formula” from that 39 to 34—the most notable still off being Cushing, Pryor and Stroud, each having their own happy stories of robust local property valuations.  And here’s a real “blow it up” strategy—just put the kids from Moffett on a bus each day to be educated in Pryor.

A Word About Equalizing

Say you have five kids, Ted, Alice, Ben, Sue and Martha from youngest to oldest.  You promise to take them to the amusement park at the end of the month if they do all you ask and save their chore money.  They do so and Ted has $10, Alice $20, Ben $30, Sue $40 and Martha $60.  Since admission and food is the same for all ages you do the math to see if you can supplement their earnings so each has $60 to match Martha by giving $50 to Ted, $40 to Alice, etc., but the total of $140 busts your $100 budget.  You give it more thought and decide Martha is an outlier so perhaps $40 each will do.  You do the math again and find the $60 cost leaves you with $40 to spare.  Being a generous parent you settle on assuring each child has at least $50 to spend which uses up your $100 budget and Martha can just enjoy her extra $10. 

With the SDE spreadsheet working different options for allowing local districts to increase their millage rates, yet maintaining some reasonable equity among all of Oklahoma’s children is easy to do.  What is not easy is to explain why we should turn the clock back on a decades long effort to assure children throughout our state have similar opportunities for a good education.

A Real Blow Up

None of this discussion about fairness is fully accurate unless and until the assessment practices by all 77 elected county assessors are uniform—or maybe ask the question why we even need locally elected county assessors for what is a function essential to assuring statewide delivery of public education.  Here’s an excerpt from my Post One Step Forward, Two Back:

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.

I never got the copy, don’t know why they wouldn’t respond, but I bet Governor Stitt could get a copy if he really wants to make a difference, i.e. “blow things up.”

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

In my post A Letter to Stitt, I tried to explain why any effort to allow more local millage in support of Oklahoma’s schools runs counter to Governor Stitt’s duty to provide a free public education for all of Oklahoma’s children UNLESS he is willing to pony up a new state dollar for every new local property tax dollar raised.  If all affected districts opted in, each additional mill would cost about $30 million or so in new state money.  In this post I show him where some of that state money can be found without raising taxes. 

The SDE spreadsheet that I am enamored with shows us that 77 districts (column AN) are off the Foundation Aid formula including all but one of the 39 that are also off the Incentive Aid formula (column AO), meaning a total of 78 are receiving more from the seven revenue sources included in the calculation of state aid than is needed to meet the legislative target of $3,592.37 (1,837.57 + 20 x 87.74) per weighted student.  Since all of those 78 districts are receiving revenue from some or all of the five state dedicated revenues, County 4-Mill through REA Tax below, then undoubtedly some of that revenue could be diverted to help match new local millage.

Here’s a table that shows the sources and totals of funds flowing through and around the state aid formula as shown in the SDE’s spreadsheet:

Local Property Taxes	1,260,524,569
County 4-Mill	111,258,350
School Land	100,031,979
Gross Production	103,560,732
Motor Vehicle	250,188,448
REA Tax	44,107,211
State Aid	2,368,584,982
Total Revenues	4,238,256,271

Local Property Taxes are the 35 mills I described in my previous post flowing to school districts as provided in the Oklahoma Constitution.  The next five are referred to as the State Dedicated Revenues. Two of the five, the County 4-mill levy and State Land, are also embedded in our state constitution at Article 10, Section 9 and Article 11, respectively, while the others, i.e. gross production, motor vehicle and rural electric apportionments to schools are set forth in statutes.  Interestingly Title 70, Section 18-109.7 provides that those three revenue sources shall be paid into the Common School Fund when voters amend Article 10, Section 12a of the state constitution, which apparently never happened.  If those three revenue sources were allocated as part of state aid instead of directly to school districts we can get an idea of what happens by simply replacing the data in columns K, L and M with zeros for all districts and letting the SDE spreadsheet (that I love) recalculate the amounts of state aid now required. 

What pops out, as expected, leaves the Transportation and Salary Incentive aid calculations (Columns R and W) unchanged.  That’s because those calculations are independent of the state dedicated revenues.  But the net Foundation Aid total changes to $1,347,958,545 (Column O) from the original $1,004,095,242—an increase of $343,863,303.  Not to worry though because $397,856,391 has been added to funding for net state aid from the three dedicated sources leaving a dividend of $54 million that is available to match the increase in local millage Stitt wants to allow and still keep school districts with reasonably equalized operational funding.  The $54 million comes from the 77 school districts that were off the Foundation Aid formula before we made the change; that count is now 35 meaning 42 have been brought back into the Foundation side of the equalization formula.

Since additional local millage will require amending our state constitution any way, we can consider what happens if the other two, County 4-Mill and School Land (Columns I and J), are also be placed in the Common School Fund (I think it exists, if not the annual state aid appropriation) and apportioned through the formula.  The resulting amount needed for net Foundation Aid (Column O) increases by $204,990,568 to $1,552,949,113, but we have $211,290,329 to offset that, leaving Stitt with $6.3 million more to match additional local millage (maybe not worth the constitutional change).  Our beginning chart would now look like this:

Local Property Taxes	1,260,524,569
County 4-Mill	0
School Land	0
Gross Production	0
Motor Vehicle	0
REA Tax	0
State Aid	2,917,438,853
Total Revenues	4,177,963,422

Which is right at $60 million less than the Total Revenues above—about enough to match two new local mills.  Also another 11 school districts are brought back on the Foundation Aid part of the formula. Next time I’ll help our Governor “blow it up”.

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

Governor Stitt was in Tulsa the last week of August for a State of the State address to the Tulsa Regional Chamber of Commerce.  His remarks, as reported by the Tulsa World, included that “his administration is looking into letting communities vote for higher property taxes to better fund schools without having the increase offset by the state’s funding formula.”  That motivated me to send this letter to the World, published yesterday:

Henry Bellmon, arguably Oklahoma’s greatest education governor, as part of his legacy left us a state aid formula that gives every child in this state access to an education from a local school district that is funded at about the same operational level throughout the state.  If Governor Stitt moves forward with allowing school districts to increase local property tax millage as a way to provide new funding for our schools he will need to decide early on if he values all of Oklahoma’s children, or just those who reside in in districts with greater property wealth.  Excluding the 2% of students whose school districts are “off the formula” because of local wealth and the 5% attending charter schools that do not receive property taxes, school districts serving the remaining 93% raise $630 million through a 20 mill local levy which must be leveraged in the foundation program part of the formula with $1.24 billion in state revenues to achieve the target equalization.  I applaud Governor Stitt for wanting to give local districts more resources, but unless he is willing to add about two state dollars for every local dollar raised he will be telling us that he values a Bixby student twice as much as a Sand Springs student, a student at Wynnewood in Garvin County fifteen times as much as a Bethany student in Oklahoma County, and a student at Peckham in Kay County 150 times as much as a Moffet student in Sequoyah County.  That’s no legacy.

The data source of my analysis is the most recent, dated 8/11/2019, from the “Foundation & Salary Calculation Worksheets” on the State Department of Education’s site that, to my shame, I don’t recall finding before and that will likely save me a lot of time in the future when succumbing to My Obsession.   The worksheets for each fiscal year, updated as changes are made to state aid, contain all the information from the individual districts’ calculation worksheets.  This most current one will be updated at least one more time to capture the new total valuations for levy of property taxes in 2020, so its valuations are for the previous year.  Also districts will submit first quarter student membership data that can increase the Weighted Average Daily Membership counts that are used for each district and the statewide total.

I love spreadsheets.  They are such a powerful and accessible tool for analysis and an ongoing wonder for those of us who studied mathematics through college using hand calculations and tables (though we could write our own computer programs to analyze data with a 24 hour turn around).  So I went to work on the spreadsheet, first creating a new column that is the ratio of column U (Adj. Val. / 1000) to column S (Salary Incent WADM x factor $87.74).  School districts have authority under Article 10, Section 9, to levy 35 mills, which used to be differentiated between 15 mills that was fairly automatic and up to an additional 20 mills by annual approval of voters.  When the Salary Incentive part of the formula was developed it was intended to encourage districts to levy the full 20 additional mills by increasing state aid for each mill levied.  I think now all districts levy the full 20 because that’s how Column W is set up.  Column S (times 20) is the amount of funding the legislature wants districts to have through this part of the formula being the total each generates from the 20 mill levy with the difference (Column W) being made up in state aid.  Column U is the amount each district can raise with one mill (scaled to 1/20^th like Column S). 

The result in this new calculation column shows what part of the Salary Incentive target revenue each district can raise from its 20 mill levy.  At the bottom is poor Moffett Public Schools in Sequoyah County where its 20 mills will generate only 2.556% of the revenue needed.  Actually at the bottom are all of the state’s public charter schools, serving about 5% of weighted students, at 0.0% because they have no authority to levy property taxes.  At the top is the Peckham Public School in Kay County where its 20 mills generate 377% of the revenue needed.  At 100% or more a district is “off the formula” and our list shows 29 of those that generate all they need and then some for this part of the formula.  Those are the 2% I refer to in my letter—based on weighted student counts which are greater than actual numbers, but are in similar proportions among most districts.

Here is how I came up with my $2 of state money for every new $1 from additional millage.  If we want perfect equalization we would start with Peckham, but I opted for the Legislature’s standard, meaning the districts that currently receive some Salary Incentive aid and are serving 93% of the students.  At the top of that list is the Wynnewood district in Garvin County which generates 96.1% of its Salary Incentive target.  Totaling its small amount of aid along with the 470 school districts in between down to Moffett, it takes the $1.24 billion in state aid, together with the $630 million generated by the same districts’ 20 mill levies to keep the formula’s equalization in place.  Without reasonable equalization then this offer of allowing local districts to enhance their programs with greater property taxes is a great opportunity for communities high on the ratio scale to step up, but a mostly hollow option for those down the ratio scale.  It’s simple math to show that without equalization by the state the good folks in Moffett will need a 37 mills increase in their tax rate to match the per student amount generated in Peckham by only a one mill increase.  I hope that’s a hard sell to anyone who cares, as a governor should, about all the children in our state.

Perhaps there are other options not so clearly wrong.  What if we only provided equalizing state aid for additional millage up to a ratio of 70% of the Salary Incentive target.  Then the cut-off is at Western Heights in Oklahoma County still going down the scale to Moffett and capturing 91.5% of weighted students—not too shabby.  An additional mill for each of those 448 districts adds about $30 million and can be “equalized” within that group for about $33 million in state aid, being pretty close to a dollar for dollar return on the state’s new investment.  Moving down the scale further to 60% makes Edmond the starting point and the math gets interesting because while 89.3% of weighted students are covered by the equalization it still requires more than a dollar of state aid, even more than at 70% (a 1.15 ratio instead of 1.10), for each local dollar of property tax raised.  Pushing down further begins to greatly increase the number a students served by “have not” districts.  Regardless of where you land it’s going to take at least a dollar of state aid incentive for each additional dollar likely to be raised with the optional milllage to maintain a semblance of fairness.

To Be Continued.

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