OKPOLICY.ORG
Every year Oklahoma compiles a Comprehensive Annual Financial Report (CAFR), which details where the state’s money came from and how it was spent. The CAFR provides a big picture view of everything our state government is doing. Here are three trends that stand out from the most recent report:
Oklahoma’s reliance on federal funds has dropped significantly
State Treasurer Ken Miller created a stir last month when he reported that Oklahoma had the 7th highest reliance on federal funds in the nation, with 43 cents out of every dollar spent by Oklahoma coming from the federal government. However, an important fact to note is that Treasurer Miller was citing numbers from 2011. In that year and in 2010, states saw a big boost in federal funding due to stimulus relief efforts.
At the same time, tax collections were way down due to the Great Recession. Stimulus aid prevented even more devastating cutbacks in state services and helped avert a second Great Depression. Together these factors meant that the percentage of state dollars coming from the federal government hit a historic high in 2010, and it was only slightly smaller in 2011.
Today looks much different. Since 2011, the amount of federal grants coming to Oklahoma has dropped by $1.12 billion dollars after inflation. In 2013, federal money accounted for 38 percent of all dollars spent by Oklahoma, while state tax revenues accounted for 48 percent.
We can’t say from this data whether our state’s ranking for reliance on federal funds has changed. It’s likely that all states have become less reliant on the federal government in recent years. As long as we have relatively high poverty and low taxes, our proportion of federal funds will continue to be higher than most states. That remains true even as we are leaving billions on the table by not accepting federal funds to expand health coverage.
The size of state government continues to shrink
The biggest supporters of more tax cuts have made a big deal out of the fact that the total amount in nominal dollars spent by Oklahoma is increasing. However, that number doesn’t tell us anything about the size of government if we don’t account for increasing costs and population growth.
We don’t say Texas has more government than Oklahoma because its budget is bigger, when they also have about seven times more people. Likewise, we shouldn’t compare total spending levels to 2008 without taking into account that 2013 Oklahoma has 182,000 more people. It’s also important to account for the changing buying power of a dollar over the years by adjusting for inflation.
Making those adjustments reveals that Oklahoma spent about $4,425 per resident in FY 2013. That’s less than every year going back to 2008.
Education spending has plummeted
In 2013, the total size of the pie was slightly down from the previous year, but Oklahoma did spend more in some areas. Spending on social services, general government, and other areas grew from the previous year. Spending on social services is down from recession-era highs, but it is up by $74 million from 2012. The biggest increase was for general government, which grew by $124 million.
Over the past six years, education spending (which includes both common and higher education) has seen the largest drop. After inflation, Oklahoma education spending is down about $50 million from 2012 and down $610 million from 2009.
Total spending on health services decreased by about $69 million in 2013, after a big jump in 2012. The 2012 increase was covered by the new hospital provider fee (which brought in $342 million in 2012) and increased federal support ($206 million). The drop in health spending in the most recent year matches the national trend of health spending shrinking as a share of the overall economy.
Data and reality
Tax cut boosters and interest groups seeking to slash state government have cited numbers showing that Oklahoma’s spending is at an all-time high. Yet those numbers don’t fit very well with the realities we can see on the ground — realities like Oklahoma schools that are losing teachers and eliminating advanced classes; prisons and jails that are desperately overcrowded and understaffed; crumbling, out-of-date facilities for Oklahoma’s public health lab and medical examiner’s office; and the decade-long waiting list for Oklahomans with severe developmental disabilities and their families.
Those numbers don’t match reality because they are pulled out of context. When making decisions about our state’s future, lawmakers should stick with reality.
