Oklahoma’s fiscal situation presents an apparent paradox. We have now seen state tax collections rise for five consecutive quarters and exceed prior year collections by 10.5 percent. At the same time, the state budget is still being cut. This year’s budget of $6.511 billion is $255 million, or 3.8 percent, smaller than last year’s and $614 million, or 8.6 percent, less than FY ’09.  Budget cuts are continuing to affect all areas of state government, with agencies and school districts forced to reduce and eliminate programs, lay off staff, and curtail services to the public. Unfortunately, looking ahead to FY ’13, we should anticipate minimal restoration of the funding cuts that have been absorbed these past three years, even if the state’s economic recovery continues.

The explanation for the paradox of deeper cuts coinciding with growing revenue is two-fold. First, revenue growth associated with the economic recovery has been insufficient to return to pre-recession levels. General Revenue collections in FY ’11 remained 16.5 percent below FY ’08 and substantially below levels of five years ago. Just as significantly, the rebound in state tax collections has been unable to compensate fully for the loss of substantial non-recurring revenues that were used to limit cuts. In particular, the legislature used large amounts of federal stimulus funds and state rainy day funds to balance the budget in the first two years of the crisis. It also adopted various other ‘revenue enhancement measures’ to address the shortfall, including suspending or deferring payment of tax credits, issuing bonds, transferring cash and revolving fund balances, and raising fees. Read the rest of this entry »

If Oklahoma is to have any chance of improving our students’ educational performance, we need to support excellence in our teachers and administrators. In recent years, Oklahoma has made such a commitment by investing in research-based professional development programs for teachers and school leaders. Unfortunately, three such successful programs – Literacy First, Great Expectations, and A+ Schools – have fallen victim to the  budget axe and are set to lose all state funding in the upcoming budget year.

The decision to eliminate funding for these programs must be viewed within the state Department of Education’s budget context. This year the Legislature cut appropriations to the Department of Education by $108 million, or 4.5 percent, compared to FY ’11. Within the total Common Education budget, the Legislature allocates a set amount for “the support of public school activities”, which encompasses the costs of the flexible benefit allowance for teachers and support staff, the teachers retirement credit, and all the educational programs that are funded outside the state aid formula. The FY ’12 allocation of $401.2 million is $18.7 million less than that of FY ’11 and $57.4 million, or 12.5 percent, less than FY ’10.  For the second straight year, the Legislature chose not to provide line-item allocations within the Activities Budget, leaving it in the hands of Superintendent Janet Barresi and the Board of Education to manage the shortfall. Read the rest of this entry »

State Finance Director Preston Doerflinger yesterday announced that June General Revenue (GR) collections came in $78.1 million, or 15.7 percent, above last year and $66.2 million, or 13.0 percent, above the official certified estimate. The June collections brought to an end the 2011 fiscal year and confirmed the increasingly solid recovery of Oklahoma’s tax collections that has been apparent over the course of the year. As can be seen from the first chart, the final quarter of FY ’11 marked the second quarter in a row where revenues exceeded the prior year by over 12 percent and the fifth straight quarter of year-over-year quarterly revenue growth.

For the full year, General Revenue increased by $487.1 million, or 10.5 percent, from the depths of FY ’10. However, as we can see, revenue collections remain substantially below pre-downturn levels. This year’s GR came in 14.2 percent below FY ’08 and remains considerably below collections of five years ago, FY ’06. Read the rest of this entry »

Every year during state budget discussions, state leaders speak about prioritizing spending to protect core services. That’s especially true when times are bad and the overall budget pie is shrinking. However, the distribution of that pie among agencies over the past decade has remained relatively unchanged (with a couple notable exceptions).

A series of visualizations created with the online tool Many Eyes illustrates this fact well. The graphs are derived from data compiled by OK Policy on the percentage of total state appropriations received by the ten largest agencies, plus another category for all other agencies, from FY ’00 to FY’12.

Click on any of the images below to see a larger, interactive version.

Read the rest of this entry »

The Oklahoma Department of Human Services this week approved changes to the state’s child care subsidy program that  will increase hardships for struggling low-income working families, threaten access to quality child care, and harm child care providers who serve low-income children. [UPDATE: In late July, the Commission decided to defer a vote on these changes until November]

DHS’ actions were precipitated by budget shortfalls for the upcoming year exceeding $30 million. The Legislature reduced state appropriations to DHS  for FY ’12 by a modest $6.0 million, or 1.1 percent, compared to FY ’11. However, the agency also faces the loss of one-time funding in this year’s budget, expected increases in program utilization, and higher employee benefit costs. To balance its budget, DHS proposed a series of  measures, which included voluntary buyouts of 231 positions, mostly within its field operations division for children and family services, and cuts in contracts for various social services. Read the rest of this entry »

This week, State Finance Director Preston Doerflinger announced General Revenue (GR) collections for May.  For the month, GR was $36 million, or 9.5 percent, above May 2010 and $25.4 million, or 6.5 percent, above the certified estimate. May collections would have been even higher but for the Legislature’s decision to allocate $21.4 million in oil revenues as supplemental funds for common and higher education. For the eleven months of FY ’11, revenues are $409.1 million, or 9.9 percent, above last year and $153.2 million, or 3.5 percent, above the certified estimate. In this blog post, we go a little deeper into the numbers with a series of brief observations and charts.

• May marks the 13th straight month that revenues showed improvement compared to the same month for the prior year. In each of the last seven months, revenues have come in at least 9 percent higher than the prior year.

• Read the rest of this entry »

With the 2011 legislative session now wrapped up, we are pleased to release our FY ’12 Budget Highlights, a one-page summary analysis of the budget for the upcoming year, along with eight detailed charts and tables on revenues and appropriations.

A couple of the notable charts are excerpted below.

The state’s annual appropriated budget for FY ’12 is $6.511 billion. This is the third straight year of decreased funding for state agencies; total appropriations for next year will be $250 million less than in FY ’07. Read the rest of this entry »

The budget deal is done, and nearly every state agency is receiving another round of funding reductions. That leaves an important question: what programs will be cut to make up the loss? How cuts are distributed will have a huge effect on state services, but the Legislature seems to be abandoning its responsibility to make these hard decisions.

In previous years, the Legislature would approve budget limit bills directing agencies on how to spend state dollars. Although each agency’s budget bills looked a little different, sections typically included:

That changed last year, when leadership chose not to run budget limit bills for most agencies. This year there are less than a handful. Read the rest of this entry »

In The Know is a daily synopsis of Oklahoma policy-related news and blogs.  Inclusion of a story does not necessarily mean endorsement by the Oklahoma Policy Institute. E-mail your suggestions for In The Know items to gperry@okpolicy.org. You can sign up here to receive In The Know by e-mail.

State Treasurer Ken Miller criticized Gov. Fallin and legislative leadership for crafting a disappointing business-as-usual budget agreement.  Public colleges and universities facing higher enrollment will have to raise tuition rates and shrink staff after $44 million in budget cuts during the past two years.  Citizens and lawmakers rallied against the scheduled closure of seven parks across the state.  The Oklahoma House passed a bill requiring DHS to make a plan to close two facilities that care for 250 severely disable residents.

On Wednesday the Senate reconsidered and approved a $70M transportation bond issue that was central to the state’s FY ’12 budget agreement.  Legislative leaders announced the creation of a special joint committee that will hold public meetings on federal health-care reform during the interim.  The Oklahoman has an editorial criticizing policymakers for including schools in an ongoing political battle over gun rights.

A bill to abolish the Indian Affairs Commission passed the House Wednesday and a $40 million bond issue to finish the American Indian Cultural Center and Museum is dead for the year.  The Norman City Council discussed how to spend the surplus revenue raised by a half-cent sales tax increase.  The governor signed a bill putting the Oklahoma Human Rights Commission under the auspices of the attorney general’s office.

In today’s Policy Note, the Institute for Women’s Policy Research examines the changes to employment policies and practices mandated as part of sex and race employment discrimination litigation.

Read on for more. Read the rest of this entry »

What’s up this week at Oklahoma Policy Institute? The Weekly Wonk is dedicated to this week’s events, publications, and blog posts.

This week at OK Policy we reviewed the state’s FY ’12 budget agreement on our blog.  We applaud leadership for protecting our most vulnerable populations by targeting available funds for Medicaid, human services, and mental health, but ask if state agencies facing a third consecutive year of budget cuts are being provided enough resources to continue to perform their core missions.

OK Policy has long called for a balanced approach to the state budget and we urged leaders to avoid further cuts to key public services by choosing among an array of fiscal tools for closing the budget shortfall.  Click here for our spreadsheet tracking state agency appropriations from FY’09 to FY ’12.  Click below to watch OK Policy Director David Blatt discuss the state budget on ONR (Oklahoma News Report) this week on OETA: Read the rest of this entry »

On Tuesday, Governor Fallin and the Republican leadership of the House and Senate announced an agreement on the FY ’12 budget. Total state appropriations for next year will be $6.511 billion, which is $254 million, or 3.8 percent less than this year’s final budget.

To make the budget balance and limit the magnitude of cuts, the agreement includes some $370 million more revenue than what was certified as available for appropriation by the Board of Equalization in February. Although full details have not been spelled out, the main revenue enhancements appear to be: $120 million in cash balances that have accumulated this year; some $100 million from the final round of federal stimulus money approved by Congress last summer; and a $100 million transfer from the State Transportation Fund that will be partly made up for by a $70 million bond issue for the Department of Transportation. Additional revenues include transfers from the Unclaimed Property Fund and agency reserve funds, increased tax compliance efforts, and diversion of tax revenues slated for the ROADS program to the General Revenue fund. Read the rest of this entry »

After two straight years of cuts, the state’s budget situation remains dire. Despite the economic recovery and improving revenue collections, the state faces a huge shortfall for next year. The substantial non-recurring revenues that were used to balance the budget over the past two years, including federal stimulus dollars, state reserve funds, and assorted one-time revenue enhancements,  have mostly dried up.  The Board of Equalization has certified some $500 million less in available revenue for FY ’12 than what was appropriated for the current year budget. As we stated in our recent issue brief on protecting core services:

The impact (of budget cuts) is being felt by Oklahoma families, businesses and communities in far-ranging ways… Deeper cuts will further impinge the ability of state agencies to fulfill their core missions and may seriously affect the well-being of schoolchildren, seniors, persons with disabilities, correctional and public safety officers, and other members of our communities.

In this context, the Governor and legislative leaders are actively considering additional ongoing or one-time revenue sources that could avert truly catastrophic cuts to core services. One option being discussed is appropriating this year’s “5 percent money” for next year’s budget.  This post explains the “5 percent option” and suggests why, on balance, we think a portion of this money should be used, along with other revenue solutions. Read the rest of this entry »