One of my father’s favorite expressions was “Do I have to draw you a picture?” Or something to that effect, and since it’s been well more than fifty years since I heard him say that I’m not sure if it was always a sarcastic final warning to correct my misbehavior or failure to complete some chore, or if there was sometimes an element of true instruction involved. Regardless using graphic representation of data and calculations can be an effective way to demonstrate numerical and computational relationships, so here is a demonstration of why the state aid formula has not made underpaid districts whole, to date, in the motor vehicle collections fiasco.
Here’s what happens when the wrongful apportionment occurs. There are two districts and each have the same target foundation program revenue of 15,000; you see that at the top of each district’s “Calculation” column. For detail on the formula for determining state foundation aid you can look at my earlier posts Okie Masterminds and Paradise Lost ; for these examples state foundation aid is shown in blue, the motor vehicle collections shown in yellow and the remaining revenues that are chargeable are in red. So in the “calculate” columns the calculation for state aid is blue = 15,000 – yellow – red. So for each district that’s 15,000 – 4,000 – 6,000 = 5,000. Translated, each district is targeted to receive 15,000 total with 4,000 to come from motor vehicle collections (estimated based on prior year collections) and 6,000 from the other revenue sources, so the remaining 5,000 comes from state aid to fill in what the district needs to reach the 15,000 target.
Now look at what actually happens that year. State aid, blue, always comes in at least as finally projected; the other revenue sources, red, we assume do as well because they have no impact on motor vehicle collections which is what we’re trying to understand. Then the Tax Commission does its thing and wrongly apportions 1,000 to the overpaid district that should have gone to the underpaid district. As a result, underpaid district receives only 3,000 which causes it to fall short of the target total by 1,000 also. The overpaid district benefits from the wrongful apportionment collecting 16,000 total instead of the 15,000 target. There’s never been disagreement about this first year effect. The disagreement comes with what happens next.
As I’ve said before, incredibly the litigious overpaid districts represented to the Oklahoma Supreme Court that the adjustment in state aid the following year fully compensates the underpaid district for its loss. Here’s what that looks like. We keep the target 15,000 the same for both districts and the red other revenues is kept the same as well; this keeps out the noise. What does change for each is exactly what the litigious overpaid districts acknowledge changes. Because the calculation of state aid uses prior year actual motor vehicle collections, underpaid district’s state aid will go up and overpaid district’s will go down. This is what it looks like. Underpaid gets to 15,000 with 6,000 in red, 3,000 in yellow (same as prior year actual) and 6,000 in state aid. Overpaid gets to 15,000 with 6,000 in red, 5,000 in yellow (same as prior year actual) and 4,000 in state aid.
The litigious overpaid districts complained that my examples don’t use “real numbers”, but this example demonstrates exactly the subsequent year increase in state aid they rely upon to assure the court that the underpaid districts have been made whole. As their attorney said at the hearing, in a different and erroneous context, they are so focused on the shiny object that is the state aid adjustment to offset the expected change in motor vehicle collections they miss the real story, namely that the greater state aid (blue) in the second year merely offsets the lower motor vehicle collections (yellow) expected that year and gets the underpaid district to 15,000 which is the target. The increased state aid does nothing to offset the prior year loss. As I’ve shown in earlier posts using Tulsa’s and Sand Springs’ actual numbers, there has been no year since this fiasco began in FY2016 that the underpaid districts have been overpaid in foundation program revenue; by contrast each of the litigious overpaid districts were greatly overpaid in FY2016 and FY2017 and since they have not been underpaid (except for the court-ordered correction in February). If you underpay me I can’t be made whole till you overpay me.
As always, lunch is on me for the first to ID the photo location.