Education follows the ROADS to guaranteed funding growth

A decade ago, following the overwhelming defeat of a referendum to boost state taxes on motor fuels, supporters of increased transportation funding hit on a new approach.  In 2005, the legislature approved HB 1078,  creating the Rebuilding Oklahoma Access and Driver Safety (ROADS) fund dedicated for maintenance and repair of state highways and bridges. State dollars would be allocated directly to the ROADS fund “off the top” from  income tax collections without going through the appropriations process, and the fund would be guaranteed an automatic annual increase until it reached an overall cap.

The idea worked. The ROADS fund reached $357 million this year and is slated to grow an additional $59.7 million annually until it hits $575 million. The increased funding has allowed the Department of Transportation to bring about significant infrastructure improvements and adopt a succession of 8-year construction work plans.

This year, education groups, frustrated by years of failed efforts to boost education funding through the regular appropriations process and ballot measures, are following the road laid by transportation advocates. HB 2642  creates the Securing Education Excellence (SEE) Fund.  In its introduced version, HB 2642 provided that beginning in FY 2016, in any year that revenues are projected to grow by at least 1 percent, the fund will receive an automatic increase of $57.5 million until it reaches a cap of $575 million. The bill passed the House 94-1 with its title stricken, which ensures that the bill will go to  conference committee if it  passes the Senate.

At the recent massive education rally, support for HB 2642 was the main request of legislators made by advocates, and House author Lee Denny (R-Cushing) was one of two legislators to address the crowd. Two days after the rally, the bill was heard by the Senate Appropriations committee, but as a committee substitute that involved two significant changes:

1. The money currently allocated for annual increases to the ROADS fund – $59.7 million – would henceforth be split between the ROADS fund and the Securing Education Excellence Fund. ROADS would be assured annual growth of $29.85 million until it reached a cap of $597 million. Education would receive $29.85 million in FY 2015 and each following year until such time as the ROADS fund met its cap, which would likely be FY 2022. After that, SEE would receive a $60 million increase in years of projected revenue growth of at least 1 percent until it reached a cap of $600 million.
2. Once the SEE fund hits $60 million, one additional instructional day would be added to the next school year, and each additional $60 million thereafter would be coupled with an additional school day.

By dividing up funds already earmarked for transportation, the Senate’s budget-neutral version addresses the concern that the state’s chronic budget shortfalls are partly due to the growing tendency to skim revenues off the top for dedicated purposes. Without new revenue, this practice leaves agencies that don’t enjoy dedicated revenue streams, such as Corrections, Human Services and Mental Health, competing for scarcer resources. 

Not surprisingly, however, transportation advocates are strongly opposed to the Senate proposal, which would extend the time to reach the ROADS funding cap by four years. The transportation advocacy coalition, TRUST, declared, “Any retreat from the eight-year plan will adversely impact economic expansion and public safety in Oklahoma.” Senate President Brian Bingman and House Democratic leader Scott Inman have also expressed opposition to diverting ROADS money to education. Meanwhile, education advocates are concerned that the $29.85 million annual increase in the Senate version until the ROADS cap is reached is fairly minimal in light of the $213 million cut to state aid funding for public schools since 2008.. There is also concern about whether funding will be enough to cover the added salary and overhead expenses of increasing the school year every time the fund grows an additional $60 million.

Although the Senate version of HB 2642 would provide considerably less funding than education advocates are looking for, another aspect of the ROADS example may offer encouragement. When the ROADS fund was created in 2005, it was initially slated to grow by $35 million annually, and only by $17.5 million in years where revenue growth was less than 3 percent. Its initial cap was set at $170 million. In subsequent years the program was amended to remove the growth trigger, increase annual growth to $59.7 million, and more than triple the total cap. Other adjustments have also been made along the way. As a result, Oklahoma’s transportation spending has grown considerably at at time when almost every other area of public services has seen cuts or flat funding. But it also means that whatever is decided in 2014 on the Securing Education Excellence fund is equally unlikely to be the last word.

The Senate committee substitute passed the Appropriations Committee on a 21-3 vote. It heads now to the full Senate and then to a conference committee, where House and Senate leaders will attempt to find some way to satisfy two very important public services competing for increasingly scarce revenues.