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.