Archive for 2013

A lose-lose situation: Oklahoma still wears health law blinders

by | March 28th, 2013 | Posted in Blog, Healthcare | Comments (2)

625_nfidLast summer, the United States Supreme Court in National Federation of Independent Business vs. Sebelius (NFIB) found the Patient Protection and Affordable Care Act (ACA) to be constitutional. The re-election of President Obama confirmed that the law would continue to move forward. Yet while most other states are working hard to implement the new law so as to best serve their state’s residents, Oklahoma has instead decided to devote its energy and resources to waging a stubborn, counter-productive, and hopeless last stand.

continue reading A lose-lose situation: Oklahoma still wears health law blinders

What’s unaffordable?

by | February 26th, 2013 | Posted in Blog, Education, Healthcare | Comments (2)

In her 2013 State of the State address, Governor Mary Fallin reiterated her opposition to accepting federal dollars to provide coverage to uninsured Oklahomans through Medicaid, as provided under the Affordable Care Act. In states that extend Medicaid, the federal government will pay 100 percent of the cost for the newly-eligible population for three years (2014-16) and 90 percent from 2020 onwards. Yet the Governor claims that extending Medicaid would impose large and unaffordable costs on the state:

According to a report from the Kaiser Commission on Medicaid and the Uninsured, the proposed expansion of Medicaid would result in a $689 million increase in state Medicaid costs between 2013 and 2022. Expanding Medicaid as proposed by the president would mean that a huge sum of money would be diverted from other priorities, like education and public safety, as well as existing health care programs.

The Governor’s assertion that extending Medicaid is unaffordable to Oklahoma is unconvincing in at least two respects. First, the study on which she bases her cost estimates makes clear that extending Medicaid would have a very modest fiscal cost to the state and would bring in over twelve new federal dollars for every additional dollar of state spending. Secondly, the state cost of extending Medicaid would be less than half the cost of the Governor’s proposed 0.25 percentage point cut to the top income tax rate over the same period.

In November, the Kaiser Commission on Medicaid and the Uninsured released the report which estimated that Oklahoma would spend $689 million more from 2013-2022 by extending Medicaid under the ACA (1). This estimate is significantly higher than the one developed by the Oklahoma Health Care Authority (OHCA), which had previously formed the basis of discussions of the cost of Medicaid expansion. In part, this is because the Kaiser Commission’s projections run through 2022, adding two years when the state share would be 10 percent. In addition, unlike OHCA, the Kaiser Commission assumes that extending Medicaid eligibility to 138 percent of the federal poverty level for working age adults will lead some people who  currently have employer-sponsored coverage or individual coverage to drop that coverage and enroll in Medicaid instead. The Kaiser Commission projects 204,000 more Oklahomans will enroll in Medicaid, of whom 126,000 are currently uninsured.

A careful look at the full Kaiser Commission report shows, however, that the actual cost to Oklahoma of extending Medicaid are modest and would yield tremendous benefits:

  • Kaiser_federal&stateFrom 2013-2022, the federal government would spend an additional $8.561 billion on the newly-eligible Medicaid population, or more than $12 for every dollar in state spending. The federal government would assume 92.5 percent of the total cost from 2013-2022.
  • The $689 million state cost of Medicaid expansion would be offset by $205 million in savings in reduced uncompensated care costs, reducing the net cost to $485 million (Table ES-4). This does not take into account savings from shifting services currently paid for with state-only dollars to Medicaid; Oklahoma currently spends an estimated $48 million annually on health services for low-income adults who could become Medicaid-eligible. Nor does it include revenue gains from the boost to state economic activity resulting from increased federal dollars.
  • The state costs would be especially modest in the early years. The state cost is projected to be just $11 million in 2016, which is less than the $23 million the state would save that year in uncompensated care costs (Table 15).
  • Extending Medicaid eligibility would increase state spending on Medicaid by just 2.7 percent from 2014 – 2022 (Table 6).
  • Medicaid payments to Oklahoma hospitals alone would increase by $3.6 billion from 2013-2022, an 18.5 percent increase  (Table 13).
  • Medicaid expansion would reduce the number of uninsured Oklahomans by 126,000 (Table 12). Currently nearly one in two working age Oklahomans with income below 133 percent of the federal poverty level are without insurance.

cost-tax-cut-MedicaidAccepting the Kaiser Commission’s cost estimates, Oklahoma can expect to spend an additional $485  million between now and 2022, net of reduced uncompensated care costs. The Governor contends that this spending would detract significantly from Oklahoma’s ability to make necessary investments in education, public safety, and other health care programs. Yet the Governor proposes cutting Oklahoma’s top income tax rate from 5.25 to 5.0 percent. This tax cut would cost about $125 million in 2014 and $1.48 billion from 2013-2022 (see Table), which is double or triple the state cost of extending Medicaid over the same period. More than two in five Oklahoma households would get no benefit at all from the tax cut, and the median benefit would be just $39 per household in 2014, as we discussed in this blog post. By contrast, extending Medicaid would provide health coverage for 125,000 uninsured Oklahomans. The economic benefits of an infusion of $8.56 billion in federal funds for health care over nine years would dwarf those of a $1.48 billion tax cut.

If we want to make the best decision for our state’s health and prosperity, turning down federal dollars to extend Medicaid to low-income Oklahomans is the truly unaffordable choice.

For a fact sheet version of this blog post, click here. For more analysis and information on expanding Medicaid, click here

(1) This number does not include  the “woodwork” population of those currently eligible but not enrolled in Medicaid. This population is expected to enroll in Medicaid whether or note the state extends Medicaid eligibility.

Where the Affordable Care Act fits into the gun control debate

by | February 20th, 2013 | Posted in Blog, Healthcare | Comments (1)

329644_1507Since the tragic shooting at Sandy Hook Elementary School, the debate surrounding gun violence, gun control, and mental health has gained renewed prominence. Last month, President Obama laid out proposals to reduce gun violence which include increasing access to mental health services.  The affordable access to these services has been a constant barrier to some Americans in need of treatment. There have been multiple pieces of bipartisan legislation introduced since the Connecticut shooting, addressing the need for increased access and training in mental health services. Starting January of 2014, the Affordable Care Act (ACA) will help to reduce barriers to mental health services by increasing access to mental health benefits.  Embracing the implementation of the ACA will be one solution to preventing another tragic mass shooting. 

The ACA allows states to expand Medicaid coverage to working individuals with income levels up to 133 percent of the Federal Poverty Line (FPL). The expansion of Medicaid will potentially cover 13.4 million uninsured people with mental and behavioral health conditions. In addition to Medicaid expansion, employers with more than fifty full time employees will now be required to offer affordable health insurance.The act also establishes insurance marketplaces for individuals who are not Medicaid eligible and don’t have access to affordable health insurance through their employer.  Individuals with income levels up to four times the FPL will be eligible for premium tax credits to purchase insurance through the marketplace.

Insurance companies will be required to offer “qualified health plans” through the insurance marketplaces. While qualified health plans have not been specifically defined as of yet, they must all provide “minimum essential benefits” as defined by the ACA. Mental health services are included under the minimum essential benefits. With access to health insurance through Medicaid, an employer, or the insurance marketplace, individuals will be guaranteed the same level of mental health benefits as medical and surgical benefits.

In addition to the ACA, the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) exist to ensure parity in mental health benefits. The MHPAEA aimed to create “parity” by eliminating historical differences in group health insurance coverage for mental health and substance abuse benefits and medical/surgical benefits. Getting mental health parity legislation passed and implemented has been a long and difficult journey. Efforts in achieving mental health parity date back 50 years, starting when President John Kennedy called for parity in mental health benefits for federal employee health insurance plans.

In 1997, Senators Pete Domenici from New Mexico and Paul Wellstone from Minnesota succeeded in getting the Mental Health Parity Act passed. The legislation required group health plans with fifty or more employees that offered mental health benefits to apply the same lifetime and annual dollar limits to mental health coverage as those applied to coverage for medical and surgical benefits. Efforts to improve the legislation continued for more than a decade. It wasn’t until the passage of the MHPAEA did true parity between mental health and medical/surgical benefits begin to occur.

However, there are several limitations to the MHPAEA and ACA. The MHPAEA doesn’t require employers to offer mental health benefits. The ACA requires insurance plans sold through the insurance marketplaces to offer mental health benefits, but exempts employers who already provide affordable health insurance to their employees from offering mental health benefits if they are not currently offering the benefits. Also, when the Supreme Court ruled on the constitutionality of the ACA, the Court gave the states the option of expanding Medicaid. As of mid-February, only 21 states and the District of Columbia have decided to expand Medicaid in compliance with the ACA. As a result, those individuals who are unable to receive coverage under Medicaid will be unable to access affordable health insurance which will include mental health benefits.

Now that the gun control debate is back in the national spotlight and President Obama has committed his administration to working on solutions to curb gun violence, the MHPAEA and the ACA are two mechanisms that will ensure individuals will have access to mental health services. Both Congressional Senators from Oklahoma, Tom Coburn and Jim Inhofe agreed with President Obama’s efforts to increase mental health services as one solution to preventing gun violence. In her State of the State address, Governor Mary Fallin, emphasized the need for more resources to be put towards the Department of Mental Health and Substance Abuse Services to assist children and their families who suffer from emotional disturbances.

Unfortunately, Governor Fallin has failed to take the extra vital step in getting uninsured working Oklahomans access to needed health insurance including mental health benefits by refusing to accept federal funds to expand the Medicaid program in Oklahoma. The full implementation and acceptance of the ACA will demonstrate the country’s willingness to ensure individuals are getting the mental health services they need and hopefully avert the next tragic mass shooting.

 

 

Guest Blog (Sarah Morice-Brubaker): Enter the tenthers

by | February 12th, 2013 | Posted in Blog | Comments (0)

Sarah Morice-Brubaker is Assistant Professor of Theology at Phillips Theological Seminary in Tulsa, and a regular blogger for the online religion magazine Religion Dispatches.

sarah-morice-brubakerThe Oklahoma Firearms Freedom Act has been reintroduced this legislative session as HB 2021, after twice being vetoed by Governor Henry. The bill would make firearms, firearm accessories, and firearm ammunitions exempt from federal regulation, provided they are made and sold only within Oklahoma.

The legislation, though, was not made exclusively in Oklahoma. To the contrary, a number of states have passed such legislation or will be considering it this year. All this is good news to the Tenth Amendment Center, which tracks Firearm Freedom-type bills and has sample legislation on its website.

The rationale comes from particular interpretations of the Tenth Amendment and the Commerce Clause. The Tenth Amendment states: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Meanwhile, the Commerce Clause states positively that Congress has the power to regulate commerce between states, or with other countries or tribal nations.

In other words, if a firearm is made and sold within the same state — or so the thinking goes — then it shouldn’t be subject to federal regulation. After all, if powers not specifically granted to the federal government belong to the states, and the constitution gives Congress the power to regulate interstate and international commerce, then intra-state commerce should be fair game, right?

Well, not necessarily. The Necessary and Proper Clause actually gives Congress a lot of leeway, and the Supremacy Clause means federal law takes precedence over state law. That is exactly what the ATF pointed out in its open letters to federal firearms licensees in Montana and Tennessee, where Firearms Freedom Acts were passed.

Nevertheless, it’s important to pay attention to the burgeoning tenther movement, which has been gaining traction for the last several years. The term “tenther” was originally meant as a pejorative. Critics wanted to liken the movement’s supporters to conspiracy-minded groups like birthers and truthers. Inevitably, though, some members of the movement ended up embracing the term, and now you can purchase a coozie bearing the words “110% Certified Tenther.”

The tenther position is not just about guns. If the 110% coozie doesn’t do it for you, you could also buy this one with a marijuana leaf.  Nor is the tenther position strictly associated with the libertarian position. A tenther could conceivably support a state’s right to pass a law that a libertarian might deem an instance of government overreach.

Nor do the movement’s legislative inroads correlate with Christian religiosity. (This is what particularly interested me, as a religion nerd.)  Compare these two maps: This one, showing state Firearms Freedom measures; and this one, showing state percentages of Christian adherents. Some states, like Oklahoma, have a high proportion of Christian adherents and are also arenas for Firearms Freedom legislation. But some, like Arizona, do not.

No, the tenther movement is about using the US Constitution to get leverage against the federal government specifically. And they show no sign of halting their efforts even in the fact of federal pushback. In Montana, supporters of the Firearms Freedom filed a lawsuit insisting that they were within their legal rights in refusing federal regulation of state-manufactured firearms. When the lawsuit was dismissed, plaintiffs have filed an appeal with the Ninth Circuit, and oral arguments are scheduled to begin next month.

Meanwhile, back in Oklahoma, Brad Henry is no longer governor, and Gov. Mary Fallin has been generally supportive of pro-gun legislation. If the Oklahoma legislature passes HB 2021, the practical impact would likely be minimal, unless the Ninth Circuit were to decide in favor of the Montana plaintiffs. The significance here lies in the national trend of which the HB 2021 is a part.  

The opinions stated above are not necessarily those of OK Policy, its staff, or its board. This blog is a venue to help promote the discussion of ideas from various points of view and we invite your comments and contributions. To see our guidelines for blog submissions, click here.

Wither Insure Oklahoma?

by | January 16th, 2013 | Posted in Blog, Healthcare | Comments (6)

Insure Oklahoma2In announcing that Oklahoma would not take advantage of the opportunities provided by the Affordable Care Act (ACA) to expand Medicaid to cover low-income adults, Governor Mary Fallin stated she was committed to developing an “Oklahoma Plan to reduce the number of uninsured and the costs of healthcare”. According to several news reports, the options under consideration include expansion of Insure Oklahoma.

Insure Oklahoma involves a mix of public and private funding, and includes a modified benefit package compared to traditional Medicaid, along with greater cost-sharing responsibilities for participants. These features of the program have made Insure Oklahoma popular with some elected officials who are typically less than fully supportive of traditional Medicaid, and have led some to hold out Insure Oklahoma as an alternative to expanding Medicaid under the ACA.

However, with the full implementation of the Affordable Care Act in 2014, the future of programs like Insure Oklahoma becomes highly uncertain. The federal government is unlikely to extend Insure Oklahoma in its present form and may not extend it at all. Even if the program could be continued in some form, its financial terms are far less favorable to the state than the Medicaid expansion proposed by the Affordable Care Act. Rather than trying to preserve Insure Oklahoma, the state would be much better off by expanding Medicaid in a way that takes advantage of federal willingness to provide flexibility regarding benefit packages and cost-sharing for the newly-eligible Medicaid population, and by pursuing premium assistance options within the Medicaid program.

Insure Oklahoma is a health insurance program created in 2005 under a Medicaid 1115 waiver to provide coverage for low-income adults. The state’s share of funding for Insure Oklahoma comes from a portion of the tobacco tax revenues approved by Oklahoma voters in 2004 that generates over $40 million annually for the program. There are two components of Insure Oklahoma:

  • Employer-Sponsored Insurance (ESI) provides premium assistance to employees and their spouses with income up to 200 percent of the poverty level to purchase employer coverage. Businesses with fewer than 100 employees are eligible to participate in Insure Oklahoma. Employers and employees pay a portion of the cost of coverage, and Medicaid covers the rest;
  • The Individual Plan (IO) allows qualified adults and their dependents with incomes below 200 percent of the poverty level to buy into Medicaid coverage. It is available to employees of small businesses with fewer than 100 employees who are not eligible for employer-based coverage, self-employed adults, the temporarily unemployed, and some adults with disabilities. Members pay up to 5 percent of their income towards the cost of coverage, with the remainder paid for by Medicaid.

Insure Oklahoma currently covers 30,693 members, of whom 54 percent (16,620) are insured through Employer-Sponsored Insurance and 46 percent (14,073) through the Individual Plan. Currently, 96 percent of IO members are adults, with the remainder being dependent children and students.

The Affordable Care Act has, in some ways, made a program like Insure Oklahoma redundant. IO members with income above 100 percent of the federal poverty level – some 22,000 individuals – will qualify for tax credits, paid for entirely with federal funds, to purchase insurance on the new health insurance exchanges, which, in Oklahoma, will be operated by the federal government. IO members with incomes below the poverty level, some 8,600 current members, were expected to become eligible for Medicaid, with the federal government assuming 100 percent of the cost for the first three years (2014-16) and 90 percent from 2020 onwards. With Governor Fallin’s rejection of Medicaid expansion, IO members with incomes below the poverty level are likely to join the ranks of the roughly 130,000 uninsured working-age Oklahomans who will be stuck in a coverage crater, earning too little to qualify for tax credits.

What will happen to Insure Oklahoma beyond 2013? The Tulsa World reported in December that federal officials informed the Oklahoma Health Care Authority they are not interested in continuing partnerships like the Insure Oklahoma program once the ACA’s new coverage options kick in. More recently, sources have indicated that states have been told they can request extensions of premium assistance waiver programs, although waivers are unlikely to be approved in their present forms. Yet even if Oklahoma were to gain approval for an extension of Insure Oklahoma, it would be fiscally irresponsible to follow that route since the state would be required to pay the traditional Medicaid state match of roughly 35 percent, rather than having the federal government foot 90 to 100 percent of the bill.

At the same time, the federal government is signaling a clear willingness to allow states that expand Medicaid increased flexibility in shaping coverage for those newly eligible for Medicaid.  In a recent set of Questions and Answers to Governors, Health and Human Services Kathleen Sebelius wrote:

For the newly eligible adults, states will have flexibility under the statute to provide benefits benchmarked to commercial plans and they can design different benefit packages for different populations. We also intend to propose further changes related to cost sharing.

In addition, Oklahoma could retain a premium assistance component as part of its Medicaid expansion through what are known as  Section 1906 premium assistance programs, which many other states already do as part of their regular Medicaid program.

The Governor has said publicly that she plans to reduce the number of uninsured and the costs of healthcare.  Yet by rejecting Medicaid expansion, Oklahoma gives up the chance to have federal funds cover the lion’s share of the costs of insuring a large share of the state’s uninsured population, while leaving itself in a worse position to continue the Insure Oklahoma model in some future form. That sounds like no plan at all.

 

What Governor Fallin’s healthcare decisions mean for Oklahomans

by | December 18th, 2012 | Posted in Blog, Healthcare | Comments (0)

Just before Thanksgiving, Governor Mary Fallin announced a pair of important decisions related to the Affordable Care Act. She said that Oklahoma would not participate in the expansion of Medicaid for low-income adults and would not create its own state-based health insurance exchange. Where do these decisions leave Oklahomans?

The Affordable Care Act provides two primary mechanisms to extend health insurance coverage to most of the 48 million Americans, and 694,000 Oklahomans, who are currently uninsured. The first is to extend Medicaid coverage to working-age adults with incomes below 133 percent of the federal poverty level, roughly $30,000 per year for a family of four. Medicaid is a joint federal-state program; to encourage state participation in the expansion of coverage, the federal government committed to paying 100 percent of the cost of newly eligible Medicaid participants for three years (2014-16) and ultimately to pay 90 percent of the cost from 2020 forward.

Unfortunately, refusing to expand Medicaid slams the door on roughly 130,000 uninsured Oklahomans with incomes below the poverty level. This population will be stuck in a huge ‘coverage crater‘, without access to private coverage or public support. This decision is also a major blow to Oklahoma’s health care providers,  who will remain stuck with absorbing and trying to pass along the crippling costs of uncompensated care, which total $600 million annually for hospitals alone, according to the Oklahoma Hospital Association.

continue reading What Governor Fallin’s healthcare decisions mean for Oklahomans

Leadership urged to reconsider Medicaid expansion decision

by | December 12th, 2012 | Posted in Blog, Healthcare, OK Policy | Comments (1)

In a letter from its Board of Directors, Oklahoma Policy Institute has urged Governor Fallin and legislative leaders to reconsider the Governor’s decision not to participate in the expansion of Medicaid for uninsured low-income adults.

“The practical benefits of accepting these benefits would be positive for Oklahoma families, healthcare providers, businesses, and the state’s economy as a whole”, the letter states.

The bipartisan seven-member Board of Directors is chaired by Vincent LoVoi and includes Don Millican, Nancy Robertson, Albert “Kell” Kelly, Steve Burrage, Susan Neal and Linda Edmondson.

continue reading Leadership urged to reconsider Medicaid expansion decision

Jeff Alderman: Missouri analysis shows economic benefits of Medicaid expansion

by | December 10th, 2012 | Posted in Blog, Healthcare | Comments (3)

Jeff Alderman, MD is an associate professor at OU-Tulsa, and a regular contributor to OK Policy’s blog

Governor Mary Fallin recently decided to forego Medicaid expansion for low-income adults in Oklahoma under the Affordable Care Act.  The Governor asserted that Oklahoma’s cost for Medicaid expansion would approach $475 million between 2014 and 2020, which would significantly jeopardize critical parts of the state’s budget like education and public safety.

As OK Policy has shown, the Governor overstates the true cost of Medicaid expansion by making unrealistic assumptions, while ignoring potential savings and new revenues. A newly released study commissioned by the Missouri Hospital Administration further calls Governor Fallin’s projections into doubt. Using sophisticated research tools, including highly regarded economic software called IMPLAN (Impact Analysis for Planning), researchers from the University of Missouri School of Medicine and a Vienna, Va.-based health consulting firm concluded that expanding Medicaid in Missouri (which has nearly double the population of Oklahoma) would cost the federal government $8.2 billion and the state $333 million between 2014 and 2020. Yet, the report strongly suggests that Missouri would actually generate additional revenue from Medicaid expansion, resulting from increased jobs and stronger economic growth in the health care sector that would produce a windfall of taxes to state coffers over seven years. Specifically, the study found Medicaid expansion in Missouri over seven years would: 

continue reading Jeff Alderman: Missouri analysis shows economic benefits of Medicaid expansion

Opponents of SQ 762 are making false claims

by | November 2nd, 2012 | Posted in Blog, Criminal Justice, State Questions | Comments (2)

To find more about all of the state questions on the ballot in November, see our 2012 State Questions page.

Oklahoma is the only state that requires the governor to approve every parole. Removing the governor from the parole process for less serious, non-violent offenses has been a recommendation of multiple major studies of Oklahoma’s criminal justice system, including a 2007 audit by MGT of America, the 2008 final report from the Oklahoma Academy Town Hall, and this year’s Justice Reinvestment initiative.

Last year, Governor Fallin signed a bill into law that would have made this change.  However, an attorney general’s opinion determined that it would require a constitutional change. This change was sent to a vote of the people in State Question 762.

Governor Fallin supported SQ 762 until just recently. On October 16, Fallin announced she was reversing her position in a statement which argued: “It appears State Question 762 would define non-violent offenders only by their current offense and would not mandate the consideration of past violent behavior.  Since taking office, I have denied parole for 437 offenders, who would be considered ‘non-violent’ under the terms of State Question 762, keeping them off our streets and out of our communities.”

The governor’s rationale for changing her position has major flaws. First, the implication that the parole board does not consider past violent behavior of offenders is false. When offenders come up for parole, the board is provided a “jacket” that details their entire criminal history. They read letters or hear testimony from crime victims, as well as from those who wish to speak on behalf of the offender. The governor does not have access to any information that is denied to the parole board. She relies on the same documents and testimony to approve or reject their decision.

Second, rejecting parole for these offenders is not going to keep them “off our streets.” The vast majority of these offenders will be released at some point, with or without parole. As seen below, a big effect of denying paroles is that more offenders are being released without any supervision.

On the other hand, increasing paroles for lesser offenses will both save taxpayer dollars and improve public safety. Well-managed parole systems have been shown to reduce crime recidivism, since offenders are given supervision and assistance reintegrating into society.

Oklahoma’s district attorneys have been another vocal opponent of SQ 762. For example, district attorneys Greg Mashburn and Tim Harris were quoted claiming it would take the governor out of the process for child pornographers and those who abuse a vulnerable adult in a nursing home. This is not true. The offenses covered by SQ 762 do not include any of the “85-percent crimes” that require an offender to serve at least 85-percent of his or her sentence before being eligible for parole. Paroles for those convicted of child pornography, abuse of a vulnerable adult, and aggravated drug trafficking (defined as possession of large amounts of illegal drugs) will all continue to require approval by the governor if SQ 762 passes. Click here for a full list of the offenses that would not be affected by SQ 762.

District attorneys, who should know better, are spreading falsehoods about what SQ 762 would do. The governor has presented a rationale for changing her position that makes little sense. Both are examples of a tragic pattern in Oklahoma, where sounding “tough on crime” is deemed more important than doing what’s shown to be more cost-effective and better for public safety.

School consolidation is not a new idea in Oklahoma

by | September 19th, 2012 | Posted in Blog, Education | Comments (3)

Photo by Larry Darling used under a Creative Commons License.

With education funding certain to be a major issue this next legislative session, you can be certain that “consolidation” will be suggested as a way to reduce administrative costs and put more money into children’s classrooms.  Governor Mary Fallin has already shown her hand on the subject, saying that consolidation will definitely be on the table this year.

The mere mention of the word “consolidation” stirs passions on both sides of the debate. Some think it is the answer to our education funding problems, while others are convinced it will kill communities and keep kids on buses for two to three hours a day. What’s less understood and not often reported is that Oklahoma policymakers and school leaders have been working on reducing school administrative costs in a variety of ways, including consolidation, for years.

Two approaches are typically employed to reduce administrative costs in public schools – school consolidation and administrative consolidation.  School consolidation is the merger of two or more existing districts to create a new district, which is empowered to close down and merge individual schools.  Administrative consolidation involves combining multiple districts under one superintendent or combining other administrative functions, with no individual school sites being shut down in the process.

There are currently 521 school districts in Oklahoma.  While this is far fewer than the 5,656 districts at the time of statehood, it still ranks Oklahoma eighth nationally for school districts per capita.  Since 1977, there have been more than 100 school consolidations or annexations. The School Consolidation Assistance Fund, established as part of the landmark HB 1017 legislation in 1990, serves as an incentive for school districts to consolidate voluntarily. Consolidating districts can receive up to $500,000, in addition to the per pupil funds of the consolidated students. This payment is intended to deal with the administrative and transportation costs associated with the consolidation.  The assistance fund currently has more than $6 million available.

In 2011, the Legislature passed a bill to incentivize administrative consolidation. Under HB 2115, districts that share a superintendent can receive half of the superintendent’s salary for the first three years with money from the School Consolidation Assistance Fund.  Six schools have utilized this incentive and are now sharing a superintendent.

Many people are unaware of how extensively small schools across the state already share administrative services. From alternative education programs to special education services, grant writing, and guidance counselors, small schools find many ways to reduce costs and utilize economies of scale to lower administrative costs.  Purchasing is another important area of shared services.  Many schools across the state have formed purchasing cooperatives to buy in bulk at cheaper rates.

The progress we’ve already made with consolidation limits how much administrative savings are left to be found. Some costs may actually increase following consolidation. The Oklahoman reported that Cordell District saw its transportation costs increase by $16,500 after taking in students from Washita Heights. The story concluded:

School district consolidation can mean longer bus routes — leading to long, tiring days for schoolchildren and thousands of dollars in added fuel and insurance costs for districts.

With Oklahomans growing increasingly concerned about cuts to the classroom, it is understandable that legislators are looking for ways to  eliminate inefficiencies through consolidation. While there is certainly  potential for savings, policymakers should not overstate the impact.  As we discussed previously, even if Oklahoma reduced district administration costs to that of the state with the least spending in that area, we would still rank 48th in per pupil spending going to the classroom, and we would have restored less than one-third of the overall funding that has been lost since 2008. A serious discussion of how we value and invest in education in this state won’t be able to count on any silver bullet for a solution.