All The State’s Money

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.

A Letter to Stitt

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 1/20th 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.

“WOLF!” The Oklahoma Tax Commission shorted Tulsa Public Schools $3.4 million of our taxes.

I truly am not crying “wolf”, but many “believers” think I am. Three years ago eight school districts sued the Oklahoma Tax Commission and have conclusively proved that almost $23 million in motor vehicle taxes was wrongly paid to 146 school districts by shorting 271 school districts the same amount. Many overpaid and underpaid districts (“Believers”) wrongly believe the subsequent year adjustment in state aid corrected for this egregious error in payments. This post and others referenced will demonstrate to anyone interested that no correction occurred and that the court ordered correction being implemented will be short lived unless this obvious misunderstanding about the purpose and effect of the state aid formula is understood by the affected school districts and the State Department of Education. Please enjoy reading these simple lessons in thinking about the formula.

Understanding how this works is essential for the Tulsa Public Schools that lost $3.4 million due to the wrongful apportionment of motor vehicle collections (our tax dollars) by the Oklahoma Tax Commission and 270 other underpaid districts to fully recover their loss.   That the Commission caused this loss is now a matter of settled law; you can read the Court of Civil Appeals decision here. 

From March, 2016 through November, 2018, as a result of the legal proceedings initiated by eight school districts, including Mid-Del that lost over $2 million and Sand Springs, Muskogee and Ponca City that each lost over $460,000, ended with a successful conclusion, they and all other underpaid districts, including Bartlesville at $555,000, Okmulgee $333,000, Sapulpa $133,000, Pawhuska $216,000, Hominy $141,000, Catoosa $122,000 and Putnam City, Oklahoma City and Lawton that each lost over $1 million, will be paid back over the next year.

The $22.8 million lost by the 271 underpaid districts was wrongfully paid to 146 districts statewide including Jenks $813,000, Bixby $899,000, Union $1,450,000, Moore $1,695,000, Norman $1,155,000, and Mustang $1,540,000, each of whom asked the Oklahoma Supreme Court to stop the payments arguing, incredibly, that the 271 districts had already been made whole through the state aid formula.  However, that districts not wanting to lose back money wrongfully paid to them might convince themselves no harm has occurred is not as incredible as many of the underpaid districts, believing that their losses were fully gained back through the formula. Using facts about the $3.4 million lost by Tulsa Public Schools, you tell me when they were made whole.

The court-ordered correction for TPS is $3,466,251; they received the first payment of $266,635 in February.   The remaining twelve payments to be made will be made entirely in fiscal year 2020 from July, 2019 through June, 2020. Here is the Order for resuming payments.

The belief that the subsequent year adjustment in state aid offsets the prior year loss in a state dedicated revenue is simply wrong and is a misunderstanding that will prevent TPS and other districts from keeping the over $22 million in correcting payments being made to offset the wrongful apportionments by the Oklahoma Tax Commission.  More importantly it is a misunderstanding that, as it has already, can lead to legislation that will wrongly harm school districts in the future.  While some of the actual calculations involved are complicated, the underlying principles are not and involve no more than multiplying, adding, subtracting and basic first year Algebra, as you will see if you read to the end of this post. 

The Full Story:

Here are TPS motor vehicle collections each year since FY 2014, and beginning with the OTC’s wrongful apportionments in FY2016 each is less than the year before meaning loss after loss after loss.  It is true that those lower payments resulted in state aid adjustments the following year, but those are to give TPS the right revenue the following year for that year’s expenses at the same per weighted student rate as every other district.  The state aid adjustments are not overpayments to compensate for the $3.5 million loss caused by the OTC.

FY2014                      $20,260,574

FY2015                      $20,256,034

FY2016          $17,258,996

FY2017          $15,382,504

FY2018                      $15,245,255

Here are statements of relevant facts and questions about the TPS loss.

Motor vehicle collections are a “chargeable” in the Foundation part of the school aid formula.

The first calculation in the Foundation part of the formula is to multiply a district’s weighted student population times the foundation dollar amount (factor) that is the same for all districts.  This is the way the formula equalizes funding among districts, by providing that all districts receive the same amount per weighted student.

For TPS in FY 2016 that amount was $107,172,708. 

State foundation aid for TPS that year was determined by subtracting $69,500,543 in total estimated “chargeables” from the $107,172,708 Foundation amount, yielding the Foundation Aid amount TPS received of $37,672,165. 

The $69,500,543 in estimated chargeables that year included $20,256,034 in motor vehicle collections which was the actual amount received by TPS in FY 2015 and, under the state aid formula law, is the amount to be used in calculating state aid for the following year.

Motor vehicle collections, therefore, affect the amount of Foundation Program income school districts receive in two ways.  As one of the “state dedicated” revenues included as a chargeable in the equalization formula it is one of the revenue sources the legislature expects will help school districts receive the same amount overall per weighted student as other districts receive in each current year.  Also, in calculating the amount of state aid, actual motor vehicle collections from the previous year are used to estimate how much a district will receive from that source.  An estimate is needed simply because the state aid amount is calculated early in the fiscal year and before all chargeable revenues have been received.

Very simply stated, for TPS in FY 2016 to receive the $107,172,708 Foundation amount it likely budgeted to expend that year, $37,672,165 was to come from state aid, $20,256,034 from motor vehicle collections and $49,244,509 from its other chargeables.  The state aid was received and the other chargeables performed a little better than expected, but motor vehicle collections were $17,258,996—almost $3 million less than expected.  That loss had to be made up somewhere and essentially was a hit to the TPS general fund balance at the end of the year, meaning its ending balance was $3 million lower than it would have been if the $20,256,034 estimate had been realized.

Believers may argue at this point that the chargeables are not guaranteed and sometimes you just have to live with what is received.  That is true and, based on the OTC’s recalculations ordered by the district court, $742,035 of the $3 million loss was due to the decline overall of motor vehicle collections and a change in state law, but $2,255,003 of it was fully the result of the OTC wrongly sending TPS money to other districts.

Now is when Believers ought to explain and show when that $2.255 million was restored to the general fund balance.  Likely this will be their response.  The next year, FY2017, TPS now has a new and lower chargeable amount for motor vehicle collections that results, dollar for dollar, in increased state aid which in turn offsets that FY2016 loss.  That is just wrong and faulty reasoning and here’s why.

We’ll repeat the steps above only now for FY 2017, so the recalculated Foundation amount is $105,489,719.  State foundation aid for TPS that year is determined by subtracting $68,408,583 in total estimated “chargeables” from the $105,489,719 Foundation amount, yielding the Foundation Aid amount TPS received of $ 37,081,136. 

The $68,408,583 in estimated chargeables that year included the $17,258,996 in motor vehicle collections which was the actual amount received by TPS in FY2016 as you learned above and again, under the state aid formula law, is the amount to be used in calculating state aid for the following year.  So absolutely more state aid is calculated if only $17 million is subtracted rather than $20 million, but this formula calculation is still only designed to give TPS the same amount per weighted student (the $105,489,719 which is TPS weighted student count multiplied by the Foundation factor) as is to be given to all districts in FY2017, including those that were overpaid motor vehicle collections in FY2016 by the OTC. 

Very simply stated again, TPS in FY2017 likely budgeted to expend the $105,489,719 that year of which $37, 081,136 was to come from state aid, $17,258,996 from motor vehicle collections and $51,149,587 from its other chargeables.  The state aid was received and the other chargeables performed slightly better than expected, but motor vehicle collections were $15,382,504—almost $1.9 million less than expected.  Again TPS did not collect, through state aid and chargeables, the Foundation program amount predicted by the state aid formula.  Not only was there no extra funding through state aid or any other formula source to correct the $3 million hit its general fund balance took in FY2016, it has lost almost $2 million more.  It is a silly distortion of both the purpose and the mathematical effect of using the prior year actual amount to calculate state aid to believe that the subsequent year’s adjustment corrects for the prior year’s loss.  I would love to rent a building from a Believer because if I underpaid my rent in March, paying only $400 when the rent is $500, my Believer landlord would believe I’ve made up for that $100 underpayment by just paying him the correct monthly amount $500 for April.  If you underpay me, I’m not made whole until you overpay me—it’s just that simple. 

FY 2016 and 2017 were the only full fiscal years impacted by the OTC’s wrongful apportionments.  Using the recalculations ordered by the court it is a fact that TPS motor vehicle collections fell short of the amounts charged in the formula by $4,873,530 meaning its Foundation program income was much lower than that intended by the state aid formula.  $3,212,189 of that was due to the OTC’s wrongful apportionments and was redirected to the 146 overpaid districts statewide.  The difference was a result of statewide under collections and the amended law.  The court-ordered correction for TPS is $3,466,251 because the wrongful apportionments continued into FY2018 for two months before the law was changed again.  TPS received no overpayment recovery in FY2018 either; its revenue from motor vehicle collections was down again and therefore likely received less in Foundation Program revenues per weighted student than did the several Tulsa County districts that had been overpaid by the Tax Commission. 

Nearly $3.5 million in a little over two years; those who deny this happened have succumbed to the silly and prevalent belief that the subsequent year adjustment in state aid mathematically offsets the prior year shortfall in a dedicated revenue source. They confuse a simple and obvious estimation or prediction process in the state aid formula that tries to get the current year’s total revenues equalized among districts with it being a remedial or corrective process. It is mathematically true that the next year’s adjustment in state aid will balance out the expected lower dedicated revenue and prevent further losses, but it does nothing retroactively to correct or offset the prior year loss. The only way that happens is for the district in the next year to over collect or be overpaid more than is estimated. And for TPS the facts show that has not happened (except for the February, 2019 court ordered payment).

I’ve been around educators enough and taught enough myself to recognize that people have different learning styles.  So over the course of these three years I’ve penned other ways to understand what is happening.  I’ve set up each of them as a separate post on this blog and will now provide the links.  Here’s a version of how I first worked through the state aid dynamics to assure myself that the funds wrongfully withheld from Sand Springs where I was CFO were not coming back unless we took action—which our board and seven others had the courage to do. Tables Rock

Here is an actual mathematical proof of what I’ve been trying to describe.  Eventually I’ll strive for more elegance, but the algebra teachers who may read this—and who should be consulted by Believers—will appreciate. Okie Masterminds

Here is my attempt at a parable, probably will come off pretty lame, but a colleague with a strong accounting background really likes it so enjoy.  My Obsession

Paradise Lost shows the arguments made by several litigious overpaid districts (LODs) that believe the “formula makes you whole” fairy tale, with my critique of course.

Lastly I offer the Nuclear Option which ponders whether Believers would also have TPS ignore a loss of almost $30 million.

Each of these examples tell the same story as the actual numbers for TPS and the other 270 underpaid districts:  that the subsequent year’s increase in state aid only works to get it right the second year and does nothing to correct the earlier year’s shortfall.  Whether “real numbers” or hypothetical, the mechanics are the same.  And they are the reverse for the 146 over paid districts—their windfalls, through no fault of their own, have funded increases in their fund balances and/or greater expenditures the last three years.

If you reach out to someone in leadership at an underpaid district and they assure you that their district has been made whole through the formula process, have them show why any of the examples are wrong, or better yet, have them show you in what year since FY 2016 their district has collected more motor vehicle or state aid revenue than was its fair share under the formula for that year. Using prior year actual collections in the formula calculation is simply the way the legislature has chosen to estimate what will be received that year. If actual collections deviate from the prior year, up or down, then those are one-time gains or losses that are not corrected by the formula the following year. Mathematically the only correction for a gain comes if there is a subsequent loss to the same revenue source, and the only correction for a loss is if there is a subsequent gain to the same revenue source. If you under pay me, I cannot be made whole until you over pay me.  

TPS has not been made whole for the $3.466 million lost and neither have the other 270 underpaid districts. But it’s not too late for the “believers” to learn, to do better and to make a difference.

The misinformed failure of other underpaid districts to support in any way the efforts of the eight school districts that have won this almost $23 million recovery for the other 263 districts made their work even more difficult. It also contributed to the 2017 legislation that now stands in the way of complete recovery. But it is not too late. There is both an administrative and a legislative opportunity for underpaid districts to retain their $22.8 million recovery.

All districts that care about fairness can advocate that the State Department of Education not include the court-ordered correcting payments in the chargeable amount for the calculation of the next year’s state aid. Likewise they can aggressively support passage of House Bill 1991 in the 2020 legislative session. These actions do not involve litigation. They simply require that school leaders understand how the state aid formula works and how these actions will complete the correction of the almost $22.8 million in wrongful motor vehicle collections apportionments made by the Tax Commission.

As a taxpayer and citizen I cannot passively watch as school leaders wittingly or unwittingly ignore a financial distortion of this magnitude. Reach out to your board representative and tell them to care about the $22.8 million.

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

A Picture Is Worth…(you decide)

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.

Tables Rock

Upon beginning this quest three years ago the way I first understood the dynamics of how the wrongful apportionments of motor vehicle revenues affected school district revenues through the state aid formula was with tables.  Here’s one dated March 7, 2016 in my computer that is the earliest version I have of how I proved to myself that the following year’s state aid adjustment does NOT compensate a school district when shorted motor vehicle collections revenue by the Tax Commission.   Winners and Losers were the categories I used then for the overpaid and underpaid districts as I now prefer to call them.  In later versions I dropped reference to the MVC factor to keep examples simpler.

Here’s another version I used in early 2018.

Here’s the most recent version we used in our response to the litigious overpaid districts that tried to mislead the Oklahoma Supreme Court with their fairy tale belief that “the formula has made underpaid districts whole”:

“Incredibly Overpaid Districts argue that the use of the lowered MVR amount in the calculation of state aid for the subsequent year, yielding an increase, offsets the prior year loss. It does not. This example demonstrates why. 

Actual MVR affects school district revenue in only two ways, as the amount received in the current year and as a chargeable in the subsequent year Foundation Aid calculation.  The state aid formula first calculates the Foundation Program amount for each district, which, if actually received, meets the statutory goal to “provide for as large a measure of equalization as possible among districts” (70 18-101).  The Underpaid District falls $2,000 short of the Program amount because actual MVR is that much less than its MVR the previous year, the amount used to calculate the 50,000 received in Foundation Aid.  The Overpaid District exceeds its Foundation Program amount by $2,000, benefiting from the OPM it has wrongly been paid.  The Second Year calculations of Foundation Aid for each district use the First Year’s actual MVR amounts.  Since the wrongful apportionments of MVR persist, the resulting changes in Foundation Aid, more for the Underpaid District and less for the Overpaid District, do not correct, pay back or remedy the loss suffered by the Underpaid District in the First Year.  The Second Year Foundation Aid amounts simply are adjusted to the amounts of MVR each district is expected to receive in the Second Year.  The result when that expectation is realized, unlike the First Year, is that each district in fact receives the Foundation Program income the legislature intends for it to receive.  It is as simple as this:  if a district is underpaid one year, that loss from the Foundation Program income set by the formula is not offset until it is overpaid in a later year.  The subsequent year increase in Foundation Aid is not an overpayment; it is the correct payment.  In the same way Overpaid Districts’ gains from the OTC’s wrongful distortion of Motor Vehicle Revenues in the months at issue were not offset by lowered Foundation Aid in later years.” 

Lastly, here are a series of tables I use to demonstrate different outcomes, first how the losses and gains are permanent with no court ordered remedy:

Next, here’s how it was supposed to work if the legislature hadn’t converted to the ADA method (without changing the chargeable calculation) in 2017.  The court orders districts’ MVR to go back to the old method and then losses are wiped out by gains and gains by losses.

But the 2017 amendment converted to ADA without changing the chargeable amount so here’s where we are now.  We get the court ordered adjustment/correcting payments in the third year of our example, but if those adjustments are treated as chargeables in the fourth year the corrections are undone.

What follows is what needs to happen.  The correcting payments ordered by the court, shown in the third year are NOT included in the fourth year’s chargeables.  Then the correction holds and all districts are made whole. As the state’s largest “loser”, TPS should be all over this.

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

Nuclear Option

Over the last three posts I’ve shared three different ways of understanding why the state aid formula does not correct in the subsequent year for the underpayment of a state dedicated revenue source in the prior year.  Simply stated the subsequent year adjustment in state aid is the formula’s attempt to prevent another loss or underpayment that year because it predicts or estimates that the dedicated revenue will be down again.  If that comes to pass at least the district doesn’t lose again, but it is not made whole for the prior year loss.  If you underpay me the only way I can be made whole is for you to overpay me.  The formula works in the opposite way when a state dedicated revenue source is over paid or more is received than predicted or charged in the formula.  The subsequent year’s aid is reduced to offset the anticipated greater revenue from the dedicated source.

This fairly straight forward result, that a subsequent year adjustment does not correct a prior year loss or gain, has apparently baffled school administrators I call “Believers”, some even with districts that were grossly underpaid by the Tax Commission. Several apparently can’t tell they were hurt and have bought in to the “formula will make you whole” delusion.  Using Tulsa Public Schools’ numbers as an example–they lost $3.2 million–I’ll show a way to perhaps wake up the Believers that can be done with any underpaid district’s data. So here’s food for thought, a nuclear option.

Take a look at the TPS foundation aid calculation for this year.

The target foundation revenue for the district is $112,792,793.  Local TPS property taxes are expected to generate $40,882,097 and the five state dedicated chargeables, including motor vehicle collections, another $28,138,886 for a total of $69,020,983.  That amount is subtracted from the foundation aid target leaving the difference of $43,771,810 to be received in foundation aid.  If all works out then the district will have the $112,792,793 it has budgeted for teachers, utilities, etc. to have school this year.  What if instead of just a $3.2 million revenue failure over two fiscal years, for some reason TPS collects nothing from those five state dedicated revenue sources, a shocking loss of $28,138,886.  That would hurt, right?

According to the “formula will make you whole” true believers the loss will be a huge disruption in the current year, but not to worry because all that money will come back the next year in greater state aid.  So think about that, planned expenditures of $112 million but only about $84.6 million in new revenue—somehow that $28 million gap has to be filled.  It looks like TPS carries about a $30 million fund balance so they can just use it and count on it being replenished the following year with that nice $28 million bump in state aid.  Let’s think through how that’s going to work out.

We’ll assume the next year is not too different from the current year so the foundation aid calculation will look like this:

Foundation Program Target                                                        $112,792,793

Less Chargeables:

Ad Valorem Chargeable                                       $40,882,097

County 4 mill                                                           $0

School Land                                                 $0

Gross Production                                       $0

Motor Vehicle                                                         $0

REA                                                                 $0

Total Chargeables:                                                             $40,882,097

Net Foundation Aid                                                                       $71,910,696

See the magic.  State aid is up the full $28 million needed to replenish the general fund balance.  So the true believers are right, and I am wrong—not.  It’s great that aid has increased to offset the loss, but it’s not offsetting last year’s loss; that hole still remains.  What it does is offset the ongoing absence of any revenue from the state dedicated sources and, together with the $40 million from local property taxes, provides the $112 million needed to have school the current year.  And after having school there is nothing left over to put back into the fund balance.  I’m sure the TPS administration would notice losing $28 million, as they surely noticed the actual $3.2 million loss.  Either sum is a lot of money and worth speaking up for. The mathematics, which the true believers apparently don’t understand, is the same whether it is one dollar, $3 million, or $28 million. The first year is a loss till the state dedicated revenue returns to the prior level.

The true believers are simply wrong.  The only way TPS would get back the $28 million is if the state dedicated sources start flowing to it again and are $28 million more than the chargeable amount used for that year’s foundation aid calculation.  If you under pay me, I can’t be made whole until you over pay me.

As always lunch is on me if you are the first to ID the location of the photo. 

Paradise Lost

When I first became aware in February, 2016 that the Tax Commission was wrongfully apportioning motor vehicle collections to some districts at the expense of others, many in school world made the argument that we shouldn’t be too concerned because whatever harm was done that year would be corrected the following year by the formula.  I was skeptical, but not sure, of that until I worked through examples like I show in my post Tables Rock and like this one we used in our recent argument to the Supreme Court referee. 

In the First Year the Formula column is each district’s foundation aid calculation which shows the districts each received $10,000 motor vehicle collections the year before because that is the amount used for the First Year formula/aid calculation.  Also each district is targeted to receive $100,000 which is based on multiplying the same foundation factor dollar amount times the number of weighted students. Foundation aid is calculated by subtracting Motor Vehicle and Other Chargeables from the Foundation Program amount, $100,000, so each district is to be given $50,000 in foundation aid.  The First Year Actual column for each shows what actually happens, namely the other chargeables and foundation aid are received but the OTC underpays the Underpaid district by $2,000 which instead is paid to the Overpaid district.  The result is simply that the Underpaid district falls the $2,000 short of the $100,000 target ($98,000) while the Overpaid district exceeds its target by the same $2,000 ($102,000).  How does this get fixed or corrected?  Seems very clear that now the Underpaid district needs to be overpaid by $2,000 and the Overpaid district needs to be underpaid by $2,000, i.e. what went wrongly from one pocket to the other, now needs to go back.  Look what happens in the Second year.  Because Underpaid district received $8,000 MVC the prior year that amount is used for the Second Year aid calculation, and the $12,000 is used for the Overpaid district.  As the real life overpaid districts correctly told the Supreme Court that in fact means Underpaid’s aid will increase by $2,000 and Overpaid’s will decrease by $2,000 for the second year.  But the result is that each simply gets what they are supposed to receive, $100,000.  Neither is wrongly paid, overpaid or underpaid in the second year.  The fact that Underpaid gets $2,000 more in aid is offset by getting $2,000 less in MVC, and vice versa for Overpaid.  This simple dynamic is exactly what happened over the three fiscal years impacted by the OTC’s wrongful apportionments. 

Here is what the litigious overpaid districts told the Supreme Court (my client underpaid school districts are referred to as “RPI”, real parties in interest):

Notice in these two state aid calculation sheets for FY 2018, one for Sand Springs an underpaid district and the other for Norman an overpaid district, that each uses the same Foundation Aid Factor of $1,573 in the multiplication times their respective number of weighted students to determine their target foundation revenue.  That’s how the equalization process works and when it works well districts receive that amount, or close to it.  We know that each received the Net Foundation Aid amount that is shown because this is their final allocation for the year done in the final month.  In earlier posts I’ve pointed out that the other chargeables are irrelevant because they are not affected by, nor do they affect motor vehicle collections.  So all that remains to learn if Sand Springs collected the $1,966,827 (the actual FY 2017 amount that is used to calculate FY 2018 foundation aid) in motor vehicle collections in FY 2018; it did not, rather it fell short by $31,680 upon collecting $1,935,147.  Norman on the other hand exceeded its formula amount from FY 2017 of $5,671,979 by $312,059 upon collecting $5,984,038. 

So on what planet or in what universe, my litigious overpaid friends, does that result make Sand Springs whole?  Sand Springs’ net foundation aid and motor vehicle collections cause it to fall short of the target $1,573 per weighted student, while Norman enjoys a hefty $312,000 cushion.  FY 2016 and FY 2017, being the years the OTC reeked most of its havoc, resulted in Sand Springs’ shortfalls of $395,850 and $248,832, respectively, while Norman gained $570,896 and $51,935, respectively, despite statewide collections being well below the prior years.

As you can see, and as we showed the Referee, whether you use our example numbers or use actual numbers, the result is the same.  The subsequent year adjustment in state aid does not make up for the prior year shortfall in motor vehicle collections when those collections remain down.  It is only if they increase above the prior year amount that the losses can be replaced—if you underpay me I can’t be made whole till you overpay me.

The litigious overpaid districts couldn’t handle the truth, though I fear they still don’t understand the truth, so they conjured up an example spanning four fiscal years they claimed refutes what we had shown.  Remember they had told the Supreme Court that the very next year the underpaid districts were made whole by the magic of the formula; they didn’t explain why now it would take four years.

This is where Paradise Lost comes in, well Paradise, California anyhow.  I don’t mean to make light of that awful disaster, but it inspired the analogy that follows to show the silliness of the overpaid districts’ argument.  Assume your neighbor carelessly ignores an outdoor burn ban and sets fire to his house and yours, both being destroyed.  Fortunately, the local fire department contains the blaze to only your two houses.  Then one week later a nighttime lightning strike starts a wildfire that rapidly engulfs your entire neighborhood, destroying every house.  It is evident that yours and your neighbor’s houses would not have escaped this second fire either.

When the smoke clears you sue your neighbor for the loss of your house.  Your neighbor responds by arguing the damage he caused is not compensable because your house would have been destroyed anyhow by the large fire; so you are no worse off now than you would have been had he not burned your house down a week earlier.  Under our jurisprudence your neighbor would still be fully liable for the damage done; his argument would carry no weight.  Your other neighbors though would be deemed victims of an “act of god” and thereby excluded from any legal remedy to compensate for their damages.

In 2015 the Oklahoma Legislature changed the motor vehicle apportionment law to cap the overall amount going to school districts.  For the next 25 apportionment months the OTC wrongly applied the law in a way that de facto paid school districts according to their prior year average daily attendance (ADA).  That is the period of time that is at issue in the litigation initiated by the eight underpaid school districts, not before and not since.  The period of harm caused by the OTC ended with August, 2017 because that month the Legislature again amended the law to apportion motor vehicle collections by ADA, making de jure what the OTC had mostly made de facto.  The OTC is like the careless neighbor in my Paradise story—they aren’t entitled to cause losses and gains among school districts by wrongly applying a statute.  The legislature on the other hand, wittingly or unwittingly, is empowered to do so, which it did, primarily by cutting off the easiest remedy for the underpaid districts.

The 2017 amendment didn’t have to cause this harm; had the legislature been properly advised and changed the way the motor vehicle collections state aid formula chargeable amount is calculated to conform to the apportionment by ADA, i.e. to make the prediction more accurate, the resulting gains and losses would be relatively minor.  More about that in a later post.  Here’s the exhibit produced by the litigious overpaid districts:

They didn’t use the OTC’s accurate recalculations of how much Sand Springs would have received had the OTC correctly applied the law in FY16, FY17 and early FY18, but their estimates are close.  They think the significance of this data is to show Sand Springs was made whole by the formula because its actual motor vehicle collections plus state aid (total, not just foundation) over the four fiscal years equals what it would have received had the law been correctly applied over those four years.  That is actually a true result that proves nothing because it combines the careless harm caused by the OTC together with the unwitting harm caused by the legislature. 

Here’s what their data actually shows for the three complete years shown (FY19 is not finished so the actual collections shown for that year is an assumption).  Subtract the Motor Vehicle Chargeable amount each year from the Motor Vehicle Collections recorded for the same year.   The losses resulting for Sand Springs are the FY16 ($395,850), FY17 ($248,832) and FY18 ($31,680) I showed earlier; the careless neighbor burns your house in FY16 and FY17.  Do the same subtractions on the right or “what if” side of their data and the losses are FY16 ($107,842), FY17 ($77,328) and FY18 ($491,190); the first two years’ losses are primarily due to statewide collections being down, and the third is god (legislature) burning down your house.  The three year totals are the same loss of ($676,362) either way.  Doing the same math for Norman, one of the litigious overpaid districts, will yield their three year gain of $934,890 over their formula projections.  As an aside the Sand Springs loss ($676,362) exceeds its court ordered correcting payment of $465,832 since over $200,000 of its losses were because statewide collections fell by about $10 million the first two years before rising by about $5 million.  Norman’s court ordered correcting payment reduction ($1,155,863) is greater than its gross overpayments of $934,890 for the same reason with the opposite effect, because it collected more each year than the year before when, due to statewide under collections, it should have collected less. 

Sand Springs’ and the other 270 underpaid districts’ losses are real and have not been corrected.  Norman’s and the other 145 overpaid districts’ gains are real and should be sitting in their fund balances.  If what I was supposed to receive was given to you instead, I’m not made whole till I get it back.  And you don’t get to keep it just because my house would have burned anyway.

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

Okie Masterminds

Okie is what I am, born in Pawhuska to two native Okies; my grandmother Watts was also born in Oklahoma before the 1889 land rush.  I’m a K-12 product of the Tulsa Public Schools and learned all the math and English necessary to understand Oklahoma’s state aid formula by the eighth grade.  I’ve lived all but four years of my adult life as a resident and active citizen in this state.

Masterminds is the silly movie Linda and I watched last night—you know, over a 1000 choices and still nothing to watch, but it had its moments.  A few hapless bunglers successfully get off with $17 million cash and then are fairly easily busted, though supposedly over $2 million is still not accounted for in the real life story that inspired this showcase for old and current SNL talent.

The movie could inspire a plot line for a new movie titled Okie Masterminds.  It’s about how over $22 million in public funds intended for 271 school districts, including almost $3.5 million for the Tulsa Public Schools, was instead wrongfully paid to 146 other school districts over the course of 25 months, in plain sight and the gross error later being proved through the Oklahoma legal system.  Yet, apparently because most Oklahoma school finance officials don’t understand how the state aid formula works with the state dedicated revenues that are included, both overpaid and underpaid districts have convinced themselves that no real harm was done after all.  As a result, we have a statewide spectacle of scores of school district and state agency officials who have stood by doing and saying nothing for three years while effectively a heist of over $22 million occurred because they don’t understand math that is required of high school graduates in our state.

Maybe I’m being too harsh; perhaps it’s my background as both a teacher of mathematics and a lawyer that gives me the perspective to see what is readily apparent, but so obscure to so many.  Here’s the math, not stated in the most elegant fashion, but should be sufficient.   As background, in our legal proceedings, we’ve stated, and not been challenged, that current year motor vehicle collections affect school district revenue in only two ways:  first as the amount of revenue from motor vehicle collections in the current year, and second as one determinant of the foundation state aid revenue a district will receive in the following year.  Therefore, in math lingo, motor vehicle collections is an independent variable and foundation state aid and total foundation current income are dependent variables, i.e. they are affected by prior year motor vehicle collections.  All the other variables/elements of the demonstration that follows are independent variables with respect to motor vehicle collections, i.e. it does not affect them and they don’t affect it, so in the demonstration they will be treated as constants to remove the noise.*

The math

T = target foundation program income (each district’s weighted student count, or WADM, times the state foundation program factor, a dollar amount set by the legislature each year)

M = motor vehicle collections or MVC in year 1, or M1 = M

C = other chargeables

Again, to keep out noise, assume that T remains the same each year, that M is the amount in year 1, and that C remains the same each year; T, M and C are independent variables with T and C remaining constant for this example.

K = change in motor vehicle revenue from the year 1 chargeable amount M.  K is also an independent variable.

A1 = state aid in year 1, A2 = state aid in year 2, etc.

R1 = actual revenue in year 1, etc.

Therefore, the series of A’s and R’s are dependent variables.  By holding T and C constant we can isolate the impact when M changes by the amount K from the initial estimate.

Year 1

R1 = A1 + M + C = T

In words the formula worked perfectly in year 1

Year 2

Let’s calculate state aid.

A2 = T – M – C        target revenue less actual MVC from the year before and less other chargeables

Assume again that Year 2, like year 1, is a perfect year and all chargeables are fully collected, then

R2 = A2 + M + C       now substitute our A2 calculation

R2 = (T – M – C) + M + C     simplify and you get

R2 = T        again; just showing that when chargeables M and C current year collections match the prior year amounts then actual revenue will equal the target revenue.

Year 3

Now the OTC does its thing and arbitrarily moves K from one district to another; first the underpaid district.

A3 = T – M – C

R3 = A3 + M – K + C     This is because M3 = M-K due to the OTC’s wrongful apportionment.

R3 = T – M – C + M – K + C

R3 = T – K         the underpaid district loses in year 3 by exactly K, the amount the OTC shorted the underpaid district.  Will the formula make the underpaid district whole in year 4?  Drum roll please…

Year 4

A4 = T – (M-K) – C      this is the calculation of state aid that most think will make underpaid districts whole the following year.   Compare to the calculation of A3 above and you get this, A4 = A3 + K, so A4 is made greater by the amount K of the year 3 loss of MVC; but look what happens.

R4 = A4 + (M-K) + C     we’re assuming that MVC stays down by K (which it did for Tulsa and all the plaintiff districts)

R4 = T – (M- K) – C + (M-K) + C     substituting the calculation above for A4 and simplify

R4 = T     is the underpaid district made whole?   yes, for year 4, but not for the loss of K in year 3; in other words, the formula adjustment to A4 prevents a further loss due to the lower MVC amount now being apportioned to the district.  But paying the district the amount T does not make up for the prior year loss; it just stops further losses.

Year 5

Judge Parrish orders the one-time payment of K to correct for the loss

A5 = T – (M-K) – C

R5 = A5 + (M – K) + K + C     the extra K is due to the court order.

R5 = T – (M – K) – C + (M – K) + K + C

R5 = T + K        the underpaid district is made whole for year 3, translated to common sense which the algebra confirms: “If you underpay me, I am not made whole till you overpay me.”  This overpayment could also happen as a result of the chargeable revenue source, like gross production revenues, fluctuating down and then up.  But the loss remains, whether due to OTC wrongful apportionment or due to price fluctuations of oil and gas, until the revenue increases again by K.  If it doesn’t increase, there is no offset.

What if the Parrish K is included in year 6 MVC chargeable…

Year 6

A6 = T – (M – K + K) – C

R6 = A6 + (M – K) + C     the court ordered payment doesn’t happen again, so back down by K.

R6 = T – (M – K + K) – C + (M – K) + C

R6 = T – K                      underpaid district loses again. 

Had MVC been restored permanently to M then underpaid district is made whole permanently which was our plan A till the legislature made the ADA calculation permanent in 2017,  OR if the Parrish K was not included in the year 6 chargeable for MVC then the underpaid district is also restored permanently, which is what should happen if the SDE and/or the legislature understand how this works and want to do the right thing, i.e. restore the $22 million overpaid to the 146 back to the 271 that lost it due to the OTC’s wrongful apportionments.

*When we used a simplified numerical example that shows the same thing as this demonstration, understanding that briefs filed with the Supreme Court are limited in the number of pages, the ten overpaid districts amusingly said in their reply (to which we could not reply in writing) that our example was wrong and that “real numbers tell the real story” and proceeded to simply show that prior year MVC is used to calculate the next year’s foundation aid, duh, exactly what our example showed.  So in no way as I’ll elaborate upon in a future post did this refute what our math clearly demonstrates, i.e. that until the MVC comes back up, the loss is permanent.  At the March 7 hearing with the Supreme Court referee I was tempted to point out the ten overpaid school districts clearly did not know what “real numbers” are.  Real numbers as I recall from mathematics include rational numbers, which include integers, and irrational numbers, both positive and negative which are assumed to be fully dense along either side of a line beginning with zero.  So our numbers which were integers are every bit as real as their numbers which were rational and both our example and their state aid calculation sheets are subject to the same mathematical relationships and properties illustrated in my example above.  Numbers that are not “real” are “imaginary” and by definition, as I recall, are expressed as a product of the square root of negative one.  Their numbers like mine clearly show that the subsequent year adjustment in state aid resulting from a deviation in motor vehicle collections the year before, does not offset that deviation.  What it does do is to provide the correct amount of foundation program income if the deviation continues.  Only a subsequent year deviation in motor vehicle collections, in the opposite direction, will provide an offset.  Their assertion that it did was not accompanied by any proof or showing of why our example was not a true depiction of the effect.  What they did eventually show was equally ineffective, but I will save that for a later post.

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

My Obsession

I’ve previously posted about the motor vehicle collections litigation this Thinker has been involved in for over three years now so if you want to share my obsession you can enjoy background information here:  HB 2244, Turkish de Fright, Twas Night Before Sine Die, and Motor Vehicle Litigation Update.   Here are links to the four cases the matter has spun off:

Four underpaid districts seek original jurisdiction with the Oklahoma Supreme Court; they decline but what we predicted comes to pass.  April, 2016.

Eight underpaid districts seek injunctive and declaratory relief in Oklahoma County District Court, June 2016 with decisions in their favor in December, 2016 and November, 2018.

The Tax Commission appeals the December 2016 order, but the Court of Civil Appeals sides with the underpaid districts and expands the order, February, 2018.

Ten overpaid districts ask the Oklahoma Supreme Court to stop the November, 2018 order of the district court; they decline and order that the correcting payments continue.

The eight hundred pound gorilla throughout this litigation has been the belief by most of the school finance community, meaning many finance professionals with school districts, and possibly with the State Department of Education and the school boards and administrators associations, that the state aid formula has already made the underpaid school districts whole.  This demonstrably silly belief surfaced in the unsuccessful effort by the ten overpaid districts and fortunately failed with the Supreme Court. 

There is still work to be done to restore the more than $22 million wrongfully overpaid to 146 districts at the expense of 271 that were underpaid.  For that to happen the silly belief that the formula corrects all harm done has to be replaced with a correct understanding of what the formula does and does not accomplish.  In preparation for a public education effort by this Thinker I am posting a series of alternative demonstrations showing how the formula works.  First is a reprise of the parable included with my last Motor Vehicle Litigation Update:

Somewhere East of Tulsa

First Year

Adam’s two sons, Cal and Aron, are about to enter university in faraway towns, Norman and Tulsa, respectively.  Adam has carefully calculated their yearly expenses, tuition, books, room and board, to be $1000 each.  His brother Ishmael, a very successful goatherd without children of his own, has offered to provide the income from selling the milk of twelve goats, six to winter in Norman and six in Tulsa, estimated at $100 per goat, toward the expenses of Cal and Aron.  He also provides servant goatherds, Jolley and Tony, in each town to feed and milk the goats.  Adam does the math and sends his sons off to university with $400 each.

After their first year they return home to work in their father’s fields and each reports good grades and that, in fact, the goats produced the $600 income each expected so they met their expenses without any debt.  The goats were taken by Jolley and Tony to spend the summer with Ishmael’s larger herd before returning to Norman and Tulsa for Cal and Aron’s second year of university.

Second Year

At the end of the summer Adam again gives each of his sons $400 expecting each will receive $600 this second year from the sale of milk from Ishmael’s goats, to meet their $1000 yearly expenses.  When Cal arrives in Norman he finds Ishmael’s servant Jolley with seven, instead of six, goats.  Aron arrives at Tulsa to find Tony with only five, instead of six, goats.  They learn that Jolley and Tony began their return together with all twelve goats, but separated at the confluence of the Arkansas and Canadian Rivers in a late summer thunderstorm mistakenly dividing the herd into seven and five, instead of six and six.  As a result, Cal enjoys an unexpected income of $700 from the goat milk giving him more than needed for his expenses.  Aron, on the other hand, receives only $500 from the sale of goat milk leaving him $100 short which he covers with a loan from the university. 

After this second year they again return home to work in their father’s fields and each reports good grades and that their income from the goat milk had been $700 and $500, instead of $600 each.  During the summer Adam receives a letter from Ishmael stating that due to the poor condition of the grazing fields in his area he has instructed Jolley and Tony to remain with the goats they have in Norman and Tulsa for the summer and the following years. 

Third Year

Adam calls his two sons from the fields to share this news and that, since he expects Cal will receive again $700 in milk income and Aron again only $500, he plans to give Cal $300 and Aron $500 so each will have $1000 for expenses their third year.  Cal understands, though is still miffed that his father is giving Aron more than he will receive.  Aron respectfully thanks his father for making the adjustment to assure he has the $1000 he needs for the third year, but also asks how he is to pay the $100 back to the university for his unexpected deficiency the second year.  He goes on to suggest that perhaps Cal could make do with only $200 from their father since he must have saved his unexpected $100 gain.  Cal, upset with this suggestion, especially since he spent his windfall already, pushes back telling his father that his generosity to Aron, by increasing his income $100, fully makes him whole for his loss, and that to reduce his (Cal’s) income any more is just not right.

Adam, now somewhat confused by his sons’ arguments, advises that he will consult Ishmael and rely on his sage advice, but they are to return to university with the $300 and $500 as he told them.

Aron and Cal return to university and during the first semester Jolley receives a letter from Ishmael’s wife Parrish instructing him to send the next $100 from the goat milk sales in Norman on to Aron in Tulsa before the end of the second semester.  Knowing Parrish’s influence with Ishmael he does as instructed, of course over Cal’s objection.  Aron is able to repay his loan from the university; Cal has to tighten his belt the second semester regretting his excess spending the year before.  Cal and Aron return home for the third summer to work in Adam’s fields. 

Fourth Year

Toward the end of the summer Adam again calls them together to receive their expense money from him for the next year.  Since Ishmael’s goats are still grazing seven in Norman and five in Tulsa he announces that he again plans to give Cal $300 and Aron $500 for the next year at university.  Cal objects and reminds his father that since $100 of his goat milk income the previous year had been diverted to Aron, he (Cal) had received only $600 in milk income and therefore should receive $400 in aid from his father, as should Aron also since he had actually collected $600 in milk sales the year before.  Aron objects to his father saying that the extra $100 only made up for his loss their second year at university and should not be charged against his income for the coming year.  He further points out that there still are only five of Ishmael’s goats in Samaria so his expected milk income remains $500, making his additional need still $500.

Confused again by their arguments, Adam asks his sons to return to the fields while he decides what to do.

To be continued.    

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

Reconnaissance, Osage County

75 years ago this month my parents were married and within forty months gave birth to both my brother and me in Pawhuska, the county seat of Osage County which has been made famous in recent years by the Letts play “August, Osage County”, the best seller “Killers of the Flower Moon” and the success of Ree Drummond as the Pioneer Woman.  For most of my life visits to Pawhuska (we left when I was about two) were rare and brief, with few stories.  That changed throughout the 1990’s with the establishment of the Nature Conservancy’s Tallgrass Prairie Preserve north of Pawhuska and an occasional Osage County probate.   So when our nephew, who was abducted from Tulsa County to Texas as a child by my brother, and his better half advised they were planning a Pioneer Woman pilgrimage soon, I couldn’t resist making our own day trip and sharing some favorites.   Here’s my nephew doing his Texas thing:

We headed north out of Tulsa on US 75, then west on OK 20, then north on OK 11 into Osage County where we saw pastures like this:

And an oil well on Main Street Barnsdall:


We arrived at the Mercantile, consumed food, and made it out the back door without leaving too much behind:

In years past, before following Dean Ornish, we would always enjoy barbeque at Bad Brad’s:


Instead we sought to nourish our souls at the Immaculate Conception Catholic Church, renowned for its stained glass windows, especially this one depicting actual Osage who came in contact with the early missionaries:

From here, for a longer day trip, one can head north to the Tallgrass Prairie Preserve which we last did after Thanksgiving, 2017:

Don’t miss the city park on the way with mouse-like treadmill for human children:

We skipped the Preserve and headed south on OK 99 to Hominy, look for the Osage scouting party on the ridge line west of town:

Then check out the Cha’ Tullis Gallery on Main Street; always worth what’s left behind.

As always lunch is on me for the first to ID the location of the lady Thinker at the beginning or below—both the same municipality in Texas.