The Time Is NOW!

Fund Our Schools!

TimeIsNowOK.com

A plan from some folks at

Bartlesville Public Schools

to resolve the state school funding crisis

• Earlier 2/28 board meeting slideshow with additional info

Bartlesville’s Role

Step Up Oklahoma failed on 2/12.

Since then Bartlesville has been a leader in the effort to convince the legislature to finally solve the school funding crisis.

2/13-2/15: Supt. survey by Supt. McCauley on statewide interest in supporting teachers by suspending schools

2/19: Over 300 at board meeting to support action

2/28: Over 500 at board meeting to support action

2/23: 330 high school students protest state cuts

3/7: Local teachers help convince OEA to advance deadline

3/8: Supt. invited to OEA press conference

OEA has called for suspension statewide on 4/2 if legislature does not address crisis

How did it come to this?

• In 1991 voters rejected SQ 639, which would have repealed the HB 1017 education reform law and its taxes.
• But in 1992 voters approved SQ 640, erecting the highest hurdle in the nation to this day to any tax increases:
• 75% supermajority approval in the legislature and signed by Governor
• Referred to a vote of the people at the next general election and received majority approval

• 2004 SQ 713 tobacco tax PASSED
• 2005 SQ 723 motor fuel tax FAILED
• 2016 SQ 779 1¢ sales tax for $5,000 teacher raise FAILED

How did it come to this?

SQ 640 does nothing to stop tax cuts

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Rep. Earl Sears promoted earlier cuts, but his bill in May 2017 led to repeal of another reduction to 4.85%

5%

5.25%

5.5%

5.65%

5.55%

6.25%

6.65%

6.75%

7%

Current legislature highly resistant to permanent restorations of historic rates

How did it come to this?

Income tax cuts provide an outsized benefit to the wealthy

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Source

How did it come to this?

Defenders of income tax cuts point out the 2010-2015 income tax revenue growth, but it fell after 2015.

Over long time spans booms & busts even out, so revenues should increase due to population growth, inflation, etc.

But our collections are barely higher than they were 12 years ago.

Source

How did it come to this?

SQ 640 does nothing to stop tax cuts

In 2015, state cut the Gross Production Tax on horizontally drilled wells from 7% to 2% for the first 3 years of production

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Source

How did it come to this?

Oklahoma has a lower combined severance and ad valorem effective tax rate than most states. FY16 comparison:

Source

The impact on Bartlesville Schools

Normal Adjustments vs. Revenue Shortfalls

The impact on Bartlesville Schools

District Fund Balance (with % of Total Fund Revenues)

14.4%

13.2%

14.6%

15.0%

15.0%

11.1%

8.1%

5.1%

6.1%

2017: Began rebuilding via personnel reductions & August 2016 bond issue to shift capital costs

How did it come to this?

Many representatives have have supported raising GPT on initial three years of horizontal well production from 2% to 4%. Others have wanted a return to the historic 7%, but shown a willingness to settle for 5%. In general, the members of the two parties have divided on this issue.

How did it come to this?

“In overwhelmingly rejecting a permanent 1-cent increase in the state sales tax to fund teacher pay raises and other education concerns, Oklahoma voters sent a clear message to the members of the Republican-controlled Legislature: Do your jobs.”

The Daily Oklahoman

• 2017-2018 Legislative Session
• Legislators filed over 24 teacher raise bills, but passed nothing
• 54% approval of unconstitutional $1.50/pack cigarette “fee” worsened budget crisis
• First Special Session

HB 1054x for $3,000 raise passed Senate with 88% YES

but FAILED in the House with 72% YES (5 votes shy)

• Second Special Session

HB 1033xx for $5,000 raise FAILED in the House with 64% YES

(13 votes shy; 17/27 Democrats and 18/71 Republicans voted NO)

What was the rationale for voting NO yet saying teachers do need a raise?

State just needs more audits and efficiencies

REALITY:

• School per pupil funding cuts highest in nation, by far
• 85% of state agencies have been cut by 45%
• Almost half of state employees eligible for food stamps

Tax increases should be up to a vote of the people

REALITY:

• A general message after SQ 779 failed was that the people elected the legislators to handle tax matters
• The legislature has not referred anything for such a vote
• Waiting until November won’t help the 2018-19 school year

Reallocate existing funds, such as School Land $

REALITY:

• Dubious proposition with unhealthy side effects

Rep. Dunlap

What was the rationale for voting NO yet saying teachers do need a raise?

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An improving economy will provide revenue

REALITY:

• Even with growth we are still $170 million in the hole
• Future growth will be insufficient for meaningful raises

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3/14/2018 UPDATE:

Sen. Daniels voted AYE on SB 133 for a 12.7% teacher raise & also voted AYE on an amended HB 1033 to fund that via a shift to 4% GPT for the first 3 years on horizontally drilled wells, $1/pack increase on cigarettes, and 6 cent/gallon increase on gas and diesel. However, HB 1033 failed by two votes from passing the Senate with the 75% supermajority 34-12.

What does the entire Bartlesville delegation agree on?

Rep. Sears

Rep. Dunlap

Sen. Daniels

A number of tax credits are not paying off economically, but they seem politically immortal; can’t find enough votes to end them.

What were rationales for voting YES on 1054x but NO on 1033xx?

• Tax package was inequitable
• State should restore previous gross production tax rates
• Proposed cigarette & gas taxes hit middle class too hard

REALITY:

• Complaints of regressive taxes, but then criticism of income taxes, which are progressive; you can’t have it both ways
• If minority party helps solve the fiscal crisis, it could lose leverage in the November elections

What were reasons for voting YES when that reversed past policies?

Some championed income tax cuts and gross production tax cuts as boosts for the state economy.

HOWEVER, that was risky in a state with the highest barrier to restoring taxes, and the risk did not pay off sufficiently.

Recent years of recurring revenue failures have convinced Rep. Sears and many others that the tax base has eroded too much.

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Rep. Sears

How big might a suspension be?

At least 350,656 students, over 50% of the state, are in districts who have/are discussing the walkout:

Positional vs. Interest-Based Bargaining

What are some of the interests?

Schools

• Qualified teachers
• Funding for operations, textbooks, support services

State

• Balanced budgets
• Efficiently maintain or improve core services
• Quality state employees for improved services & efficiency

Industry

• Maximize profits for investors, fund business growth, etc.
• Better employees via education, quality of life, etc.

What are the “options” from OEA?

Failed Step Up Oklahoma plan cost $717 M

Over $1.4 billion

over three years

Reasoning for their “options”

Failed Step Up Oklahoma plan cost $717 M

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Wichita pays $6,720 more

NW Arkansas pays $12,600 more

DFW metro pays $15,640 more

Reasoning for their “options”

Failed Step Up Oklahoma plan cost $717 M

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It would take:

• $33 million to restore textbook funding eliminated in 2016
• $26 million to provide a minimal $1,000 support raise
• $22 million to restore the FY18 cut in school funding

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That’s $80 million already.

What are some “options” from legislators?

SB 133

On 3/14 the Senate passed this bill for a 12.7% increase to minimum salaries.

That would range from $4,029 at BS Step 0 to $5,865 at DR Step 25 for an average increase across all steps and lanes of $4,902.

Sen. Daniels voted AYE on that measure.

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However, the Senate failed by 2 votes (34-12) to reach 75% approval on HB 1033 to fund that change.

That amended revenue measure included these new taxes:

• $1/pack cigarette tax
• Towards teacher pay in year 1, healthcare fund after that
• 6¢/gallon on diesel and gas
• GPT raise from 2% to 4% on horizontal wells for 1st three years of production

Sen. Daniels voted AYE on that measure.

What are some “options” from legislators?

HB 2403

Speaker McCall has urged funding a teacher pay raise via limiting income tax deductions.

• Would raise $106 million, which translates to a teacher pay raise of approx. $1,700.
• Will not do much about the teacher shortage, since teachers can earn $4,000-$7,000 more, after cost of living adjustments, in Kansas, Arkansas, or Texas. They can readily earn $10,000+ in nearby metros.
• These income tax changes are part of a more comprehensive package of revenue sources that would be needed to provide an adequate teacher salary increase.

What are some “options” from legislators?

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UPDATE:

The attorney general issued an opinion that providing teacher bonuses from the capital gains of the trust was unconstitutional and likely violated the enabling act.

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HB 3440

Originally forced the School Land Commission to fund a $5,000 teacher pay raise, which would have drained the permanent trust fund in 7 years, wiping out a $70 million annual source of school revenues. Bartlesville received almost $932,000 from the Land Office in FY17.

Now amended to only distribute excess proceeds above distributions as a teacher bonus instead of reinvesting them in the permanent trust.

• The permanent trust fund would no longer grow, so annual distributions to districts would no longer grow accordingly.
• 2011-2017 reinvestment grew trust funds by $800 million.
• Secretary Birdwell said HB 3440 in original form was unconstitutional and violated the state’s enabling act.
• Bonus amount would fluctuate annually, and would seem to be a shell game overall, helping teachers at the cost of reducing distributions to district operational funds over time; you can’t get something for nothing

A stubborn minority of legislators are ideologues, not pragmatists

We must focus on those who WILL listen to reason and forget the rest, who only harden under pressure

HB 1054x with $3,000 raise lost by 5 votes

HB 1033xx with $5,000 raise lost by 13 votes

• PAST SUPPORTERS TO REGAIN
• 10 Democrats voted FOR $3,000 raise in HB 1054x but AGAINST $5,000 pay raise in HB 1033xx (Step Up Oklahoma)
• No current Republicans with that record

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• HARDER CASES
• 5 Democrats & 16 Republicans voted against both HB 1054x and HB 1033xx

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Looking at the votes...

TimeIsNowOK.com