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.