By David Postic
Oklahoma does not value education. Our spending shows it. Our outcomes show it. The number of teachers flocking to other states for better pay and better schools (or, in Oklahoma, leaving the profession entirely) show it. Each year, it seems like the Legislature keeps cutting and cutting and cutting the education budget as our classroom size keeps growing and growing and growing. Each year, we complain that the Legislature needs to get their act together, that it needs to better fund our schools. And each year, we are absolutely right. But it’s also easy to complain; it’s tougher to conceptualize. What would better education look like in Oklahoma? What would it cost?
First things first: let’s go ahead and admit that we are not funding our schools like we should. Because we aren’t. Over the past 10 years, Common Education funding in Oklahoma has increased a mere $78,680,179, not adjusted for inflation ($2,348,041,255 in FY 2007 compared with $2,426,721,434 in FY 2017). That might sound like a lot of money, but just wait. Adjusting for inflation (because we can), annual spending on Common Ed has actually decreased to the tune of $389,722,187 (or ~14%). To put that in comparison, the amount of money the Legislature has cut from Common Ed (let’s not even get into the amount it’s cut from Higher Ed) could pay the entire Thunder payroll (pre-salary cap increase) for 5 years. It could pay the Red Sox payroll for 2 years. Or it could buy 121,550 of these super nice toilets to symbolize where the Legislature is throwing our education funding. It’s that much money.
But to be fair, a decrease in funding, by itself, is not necessarily bad. If we have fewer students, then per-pupil funding stays the same, right? Theoretically, yes, dear reader, you would be right. Only that’s not the case. Because we don’t have fewer students. We have more students. We have many more students. To be precise, as of April 2016, Oklahoma is home to 692,670 students, which is a 50,999 student (or ~8%) increase from 2007. (We don’t have enrollment totals for FY 2017, so the comparison of enrollment to funding is a bit off, but it’s close enough.) Funding has gone down; enrollment has gone up. Uh oh.
What this means is that our per-pupil, inflation-adjusted state funding for Common Ed has decreased by $1,761 over the last 10 years ($5,264 in 2007 to $3,503 in 2017), or about 33%. Keep in mind that state funding is only about 45% of total funding for public education; another 45% is local funding from property taxes, bonds, etc.; and 10% comes from the federal government (these numbers are slightly different in Oklahoma, but you get the idea). So at first blush, a decrease in spending may seem like it has a silver lining, what with all the tax money we don’t have to pay and whatnot (more on this later). But because a decrease in state funding means that local funding has to pick up the slack, you will end up paying about the same amount in taxes—and some people will even have to pay more—if we are to maintain constant levels of funding.
Of course, that’s the problem: we aren’t maintaining constant levels of funding to Common Ed. We are siphoning it off to pay for tax breaks to corporations and the wealthy. That’s a judgment call our state Legislature has made. And it’s wrong. Their judgment is wrong. They have decided that it is more politically expedient to sacrifice the potential of us students than to make the difficult call to halt tax breaks or—God forbid—raise taxes. They have decided that our students don’t deserve better. That our teachers don’t deserve better. That our state doesn’t deserve better. And they are absolutely 100% wrong.
But I digress. I’m not just here to complain (although I’m definitely here to do that); I’m here to offer some solutions. Mostly, though, I want to quantify (in very brief and simple terms) what it will take to better our public schools. As a result, my focus is on revenue and does not cover qualitative improvements to Oklahoma education.
Let’s start with the obvious: Oklahoma hates taxes. Like, a lot. Like OU hates Texas. Like Donald Trump hates facts. Like everyone hates Ramsay Bolton. That much. As a result, we cut taxes a lot. How much do these tax breaks cost, you ask? Great question.
Exceedingly low tax rates for horizontal drilling will cost us in the neighborhood of $379 million in 2016 (and that’s just horizontal drilling tax breaks, not to mention other tax breaks for the oil and gas industry), while wind power credits are expected to cost another $133 million. I point out these two tax breaks for special treatment because—as every Oklahoma knows—oil and wind are two things that this state does not have in short supply. So it begs the question why we need such high tax breaks at all? Of course, a little incentive is fine. But our tax rate on horizontal drilling, for instance, is well below other states, and it’s not like oil companies are going to stop coming to Oklahoma—we have all the oils. As State Secretary of Finance Preston Doerflinger has said, a fiscally responsible policymaker “needs to seriously consider at what level government should incentivize something that is now standard practice.” Even walking back these two tax breaks a tiny bit could bring in tens of millions of dollars in new revenue. Phasing them out entirely (which, for horizontal drilling, would merely return to the ordinary 7% gross-production rate) would be half a billion dollars in the bank.
But these corporate tax breaks (and many more) pale in comparison to the lost revenue from cuts to the state income tax rate. Since the top rate (which applies to income above $7,200; the first $7,200 is taxed at rates between 1/2% to 4%) has been cut from 6.65% in 2004 to 5% in 2016, Oklahoma’s annual revenue loss is $1.022 billion. Annual. Billion. Is. What was that really big thing we had this year? A budget deficit? And how much was it? $1.3 billion? An extra billion dollars really would have helped with that. Too bad.
Now, tax cuts are nice. I like money. Money is good. Money buys me things like Netflix subscriptions and raisins and trips to Harry Potter World. But how much money did these tax cuts actually give us? And are they really even worth the cost? As of 2016, about 72% of the benefit from these cuts (about $735 million in 2016) goes to the wealthiest 20% of households (those making $246,000 a year). The wealthiest 5% of households ($568,000 a year) get 43% of the benefits. And the wealthiest 1% receive about the same benefit as the bottom 80%. The Oklahoma Policy Institute put this disparity in dollar terms:
The median Oklahoma household with annual income of $49,800 has seen its taxes reduced by $228, compared to a $15,519 cut for the average household in the top 1 percent (income of $476,600 and above). Households making less than $21,700 — the bottom 20 percent of households — have received an average of just $4 per year from cutting the top rate, since little or none of their income is taxed at the top tax brackets.
But wait, the inequity gets even bigger. When looking at the share of income paid in taxes, the Institute on Tax and Economic Policy has calculated that, in 2015, the poorest 20% of Oklahomans paid 10.5% of their income in state and local taxes compared to just 4.3% paid by the wealthiest 1%, or about 2.4 times as much. The middle 60% paid, on average, 9.3% of their income in taxes, 2.2 times as much as the top 1 percent. In policy terms, this is called a regressive tax system, as it places a larger burden on low-income households than on high-income households.
A billion dollars of lost revenue. Very little money in my pocket. And I pay more of my income than do wealthy people (who, coincidentally, benefit much more than I do from these tax breaks). Remind me why these tax cuts are good again? Oh yeah, because they foster growth and improve the economy. Only there is no evidence to support this. The nonpartisan Center on Budget and Policy Priorities looked at 40 years of data and studies on state taxes and economic performance:
The large majority of these studies find that interstate differences in tax levels, including differences in personal income taxes, have little if any effect on relative rates of state economic growth. Of the 15 major studies published in academic journals since 2000 that examined the broad economic effect of state personal income tax levels, 11 found no significant effects and one of the others produced internally inconsistent results.
In fact, four of the five states that have enacted the largest personal income tax cuts in the last five years — Maine, Kansas, Ohio and Wisconsin — have experienced total job growth and personal income growth below the national average since the tax cuts took effect. A recent study by the Urban Institute and Brookings Institution found “neither tax revenues nor top marginal income tax rates bear any stable relation to economic growth rates across states and over time.” Yet Oklahoma continues to cut its tax rates despite the fact that we cannot afford to do so. And education has suffered because of it.
So how are we to proceed? What could we do with the money even if we had it? This is where qualitative analysis comes in, and to a certain extent a mere increase in funding won’t necessarily improve outcomes. And outcomes are, to a large degree, what are most important. But money helps. And it’s easy to imagine what would be possible with an extra billion or two in funds available for education.
With an extra billion dollars, we could give our 46,571 (FTE) teachers a $21,000 raise (or at least give them the $3,338 raise they need to meet the regional average). We could roll back the 30% cut to school lunch matching programs. We could replace the $38 million cut from support for public school activities. Or we could actually buy textbooks for students. We could do so much to address the problems we have and to make Oklahoma a better place for both students and teachers. With an extra billion dollars, we could spend $1,443 more per student than we currently do, which would move us from 47th in the nation for per-pupil spending all the way up to 33rd. Those are good things. Those are things we could do. If only we had the money…
And we do have the money, at least in theory. There was a time when we weren’t losing a billion dollars a year in income tax cuts; there was a time we weren’t giving half a billion dollars away to energy companies. And guess what? We survived. Not cutting taxes did not kill us. Don’t get me wrong: I don’t like paying taxes. And if the Legislature eliminated all of the tax cuts mentioned above, my taxes would go up. Yours would to. But the Legislature can craft policies that minimize the impact on Oklahoma citizens while still providing the revenue we as a state need to function properly. It’s possible.
The politics of crafting those solutions is what seems impossible. Oklahoma is not a place that believes in things raising taxes or making tough political decisions. Politicians need votes to stay in office, and it will be much more difficult to get those votes if they tell their constituents that taxes are going to go up. You might feel less inclined to vote for someone who tells you that. Hell, that would give me pause. But consider this: is there anything we do as a state that is more valuable than education? Is there anything that gives our state’s future more promise? Is there anything that you would say to a child to justify taking away their free or reduced lunch, their textbooks, their teachers, their classrooms, or the educational opportunities?
It will cost us all to make education better in Oklahoma. It will cost us a lot. But our schools will be better for it; our students will be better for it; our future will be better for it. How much am I willing to pay for better schools? As much as it takes.
See this original post on Medium.