Presented by Steven Crawford June 13/15, 2017 OSAC Conference Financial Update FY2018 Presented by Steven Crawford June 13/15, 2017 OSAC Conference

State Budget and Funding Information All data provided by: Oklahoma Legislative Staff Oklahoma Policy Institute Oklahoma State Department of Education Oklahoma Tax Commission Commissioners of the Land Office

Mandatory 0.7% Cut Due to General Revenue Failure Purpose GR Reduction Adjusted % Formula $1,038,594,450 $7,270,161 $1,031,324,288 0.7% Activities $91,956,442 $643,695 $91,312,746 0.7% FBA $442,030,522 $3,094,213 $438,936,308 0.7% Math $1,000,000 $7,000 $993,000 0.7% SDE $15,831,344 $110,819 $15,720,524 0.7% Total GR Reduction $11,125,889

Education Reform Revolving Fund 1017 Purpose GR Reduction Adjusted % Formula $696,954,056 $39,151,255 $657,802,801 5.62%

Total Impact to funding formula: Overall Impact Total Reduction: $50,277,144.31 Total Impact to funding formula: $46,421,416.15 General Revenue: $7,270,161.15 1017: $39,151,255.00

Cash Shortfalls In the June payment, the formula will be adjusted to reflect the actual cash shortage – once it is known.

Current Financial Status February 23rd Allocation changes WADM $3,008.60 Reduction of $42.00/WADM March-May Combined Payment Reduction $43.1 million cash shortfall 88.62% of payment received instead of 91%

Changes to Public School Activities Total Reduction: $643,695.09 NBCT: $593,695.09 (All payments have been made) Oklahoma Technical Assistance Center: $50,000

Ad Valorem Reimbursement for FY 2017 SB 842 provides an appropriation to the State Board of Education from the State Rainy Day fund for FY 2017 in the amount of $60,185,000.00.

FY17 Ad Valorem Reimbursement Expect the majority of the ad valorem reimbursement payments to be made to school districts before June 30. SB 842 appropriated $60,185,000 from Rainy Day Fund, effective June 15. Approximately $3,000,000 is currently in the account. SB 860 appropriated $9,815,000 and was signed by the Governor June 1.

FY 2018 Budget SB 860 provides the general appropriation to the various agencies of state government. SB 852 provides an appropriation to Common Education from the State Rainy Day Fund for FY 2018 in the amount of $ 33,000,000.00. HB 2360 provides an appropriation to Common Education from the State Rainy Day Fund for FY 2018 in the amount of $18,000,000.00. This is the only withdrawal from Rainy Day Fund for FY 2017 budget

SB 842-GA Bill for FY 2018 “Financial Support of Schools”: General Revenue $1,036,429,437.00 1017 Fund $ 695,407,138.00 Tech. Revolving Fund $ 47,372,299.00 Mineral Leasing (2018) $ 4,275,000.00 Mineral Leasing (2016) $ 2,624,038.00 Lottery (2018) $ 25,939,910.00 Lottery (2016) $ 5,429,844.00 School Consolidation Fund (260) $ 2,500.000.00 SB 852 (RDF) $ 33,000,000.00 HB 2360 (RDF) $ 18,000,000.00 Total Formula $ for FY 2018 $1,870,977,666.00

SB 1616 – GA Bill for FY 2017 “Financial Support of Schools”: General Revenue: $ 1,038,594,450.00 SB 1584 (RDF): $ 65,865,088.00 1017 Fund: $ 696,954,056.00 Tech. Revolving Fund: $ 41,168,478.00 Mineral Leasing (2017): $ 3,610,000.00 Mineral Lease (2015): $ 1,113,795.00 Lottery (2017): $ 22,116,071.00 Lottery (2015): $ 1,281,686.00 TOTAL Formula FY17 $1,870,703,624.00

FY 2018 vs 2017 GR $1,036,429,437 $1,038,594,450 -$ 2,165,013 1017 $ 695,407,138 $ 696,954,056 -$ 1,546,918 Tech $ 47,372,299 $ 41,168,478 +$ 6,203,821 ML 18 $ 4,275,000 $ 3,610,000 +$ 665,000 ML 16 $ 2,624,038 $ 1,113,795 +$ 1,510,243 Lot 18 $ 25,939,910 $ 21,116,071 +$ 4,823,839 Lot 16 $ 5,429,844 $ 1,281,686 +$ 4,148,158 RDF $ 51,000,000 $ 65,865,088 -$14,865,000 Consol $ 2,500,000 +$ 2,500,000 Total $1,870,977,666 $1,870,703,624 +$ 274,042

History from FY 12 to FY 18 Textbook Allocation FY 12: $ 33,000,000.00

The SDE Activities Budget

History from FY 12 to FY 18 FY 12: $ 401,224,655.00 Lump sum given to SBE without line items FY 13: $ 7,925,974.00 FY 14: $ 507,772,781.00 FY 15: $ 5,400,000.00 Lump sum given to SBE for school reward grants FY 16: $ 130,178,226.00 $ 116,373,952.17 (w/ rev. failure) FY 17: $ 91,956,442.00 Lump sum given to SBE without Line Items FY 18; $ 92,074,033.00

Math Intervention Partnership Section 10 of SB 1616 makes an appropriation of $1,000,000.00 for the “support of a partnership for math intervention for grades 4-8.”

FY 2018 Activities Account $92,074,033.00 is appropriated to the Oklahoma State Board of Education to be used at the discretion of the State Board to fund various reforms, academic programs, and other services. This is an $882,409.00 cut from the initial FY 17 levels.

FY 17: Activities Account Program Name FY 17 Allocation Percentage Cut vs. FY 16 Alt. Ed. $ 9,472,400.00 30.91% Sooner Start $ 14,400,341.00 0.00% School lunch $ 3,500,000.00 29.35% OTRS $ 32,712,137.00 National Board $ 5,500,000.00 41.04% Testing / ACE $ 11,064,293.00 11.39% Subtotal for Required Programs $ 76,649,171.00 Total Available for FY 17 Activities Account $ 91,556,442.00 23.84%

FY 17: Activities Account Program Name FY 17 Allocation Percentage Cut vs. FY 16 RSA $ 4,507,271.00 30.57% Student Information System $ 704,053.00 61.81% AP, AVID, NMSI $ 1,100,000.00 65.02% Early Childhood $ 8,000,000.00 23.72% TLE $ 95,947.00 90.41% Standards Implementation $ 350,000.00 0.00% Alt. Ed. (OTAC) $ 150,000.00 49.94% Great Expectations $ 300,000.00 73.11% Teach for America $ 250,000.00 89.99% Street School 25.00% Arts Institute $ 100,000.00 71.39% Subtotal for Non-mandated Programs $ 15,707,271.00

FBA Appropriation in FY2018 Certified Personnel: $ 299,320,340.00 Support Personnel: $ 163,375,627.00 Total FY 18 FBA Appropriation: $ 462,695,967.00, an increase of $20,665,445.00 over FY 17 levels. FY 2016 FBA Allocations Certified Personnel: $ 267,559,579.00 Support Personnel: $ 148,463,986.00 Total FBA Appropriation: $ 416,023,565.00

Flexible Benefit Allowance Allocation (In Millions $) This slide simply shows the trend line of how health insurance has increased since 2010. $151.4 million increase over the last seven years.

FY2018: Other Common Education Appropriations SDE Agency Operations: $ 15,681,105.00 Consolidation Assistance Fund: $ 2,882,213.00 (Lottery 2018) Consolidation Assistance Fund: $ 603,316.00 (Lottery 2016) OTRS Dedicated Revenue Fund: $ 2,882,213.00 (Lottery 2018) OTRS Dedicated Revenue Fund: $ 603,316.00 (Lottery 2016) Total: $ 22,652,763.00 Difference FY18 – FY17: (+) $ 1,621,917.00 FY 2016 Additional Appropriations SDE Agency Operations: $ 22,399,295.00 Consolidation Assistance Fund: $ 2,717,023.00 (lottery 2016) Consolidation Assistance Fund: $ 551,412.00 (lottery 2014) OTRS Dedicated Revenue Fund: $ 2,717,023.00 (lottery 2016) OTRS Dedicated Revenue Fund: $ 551,412.00 (lottery 2014) Total Additional Appropriations: $ 28,936,165.00

Historical Review

Total Appropriations Comparison FY 2012: $ 2,278,158,382.00 FY 2013: $ 2,333,604,082.00 FY 2014: $ 2,407,604,102.00 FY 2015: $ 2,479,424,061.00 FY 2016: $ 2,484,873,132.00 FY 2017: $ 2,426,721,434.00 FY 2018: $ 2,448,399,829.00 Difference FY2018 – FY2017: (+) $ 21,678,395.00

State Aid Factors / Per Pupil Funding Fiscal Year Initial Notice Final Notice Growth / Decline Within Fiscal Year FY 2009 $ 3,221.40 $ 3,275.60 + $ 54.20 FY 2010 $ 3,291.60 $ 3,206.62 - $ 84.98 FY 2011 $ 3,110.38 $ 3,111.58 + $ 1.20 FY 2012 $ 3,041.40 $ 3,040.20 - $ 1.20 FY 2013 $ 3,039.20 $ 3,035.00 - $ 4.20 FY 2014 $ 3,038.60 $ 3,032.00 - $ 6.60 FY 2015 $ 3,077.20 $ 3,075.80 - $ 1.40 FY 2016 FY 2017 $ 3,079.60 $ 3,050.60 $ 3,049.80 $ 3,008.60* - $ 29.80 - $ 41.40 * As of SDE Tentative Final Allocation Notice dated 05/05/2017

Loss Per Weighted Student State Appropriated Dollars FISCAL YEAR FY 2009 FINAL ALLOCATION NOTICE TENTATIVE FINAL ALLOCATION NOTICE FOR FISCAL YEAR DIFFERENCE COMPARED TO FY 2009 FY 2009 $ 3,221.40 $ 3,275.60 N/A FY 2010 $ 3,206.62 - $ 68.98 FY 2011 $ 3,111.58 - $ 164.02 FY 2012 $ 3,040.20 - $ 235.40 FY 2013 $ 3,035.00 - $ 240.60 FY 2014 $ 3,032.00 - $ 243.60 FY 2015 $ 3,075.80 - $ 199.80 FY 2016 FY 2017 $ 3,050.60 $ 3,049.80* $ 3,008.60 - $ 225.80 - $ 267.00 * As of SDE Tentative Final Allocation Notice dated 05/05/2017

Weighted Student Numbers Fiscal Year Initial Notice Final Notice Growth FY 2010 996,510.32 1,018,540.10 22,029.78 FY 2011 1,013,727.86 1,036,456.96 22,729.10 FY 2012 1,030,947.83 1,053,078.80 22,130.97 FY 2013 1,041,986.72 1,071,200.32 29,213.60 FY 2014 1,057,955.47 1,088,759.91 30,804.44 FY 2015 1,075,133.91 1,105,279.04 30,145.13 FY 2016 FY 2017 1,088,632.55 1,099,516.99 1,123,016.13 1,138,464.44 34,383.58 38,947.45 Average WADM Growth Prior Four Years 33,570.15 * As of SDE Tentative Final Allocation Notice dated 05/05/2017

Weighted Student Increase Comparing Initial FY2009 to Final FY2017*, Oklahoma’s enrollment has increased by 141,954.12 weighted students. * As of SDE Tentative Final Allocation Notice dated 05/05/2017

Per Pupil Funding Reduction Comparing Final Allocation Notice of FY2009 to Tentative Final Allocation Notice of FY2017* the amount of state aid available per student is considerably less! Schools now have $267.00 less per weighted student. * As of SDE Tentative Final Allocation Notice dated 05/05/2017

Returning to Pre-Recession Per Pupil Formula Funding Levels Enrollment Increase Initial ‘09 to April ’17 = 141,954.12 Current Per Pupil Funding = $ 3,008.60 Restore Per Pupil Funding = $ 267.00 1,141,954.12 X $3,275.60 = $3,740,584,915.47 1,141,954.12 X $3,008.60 = $3,435,683,165.43 Difference $ 304,901,750.04 Numbers as of 05/05/2017

Difference of FY2009 – FY2017: (-) $ 166,022,334.00 State Appropriations from the Legislature to the Financial Support of Public Schools 2018 $ 1,870,977,666.00 2017 $ 1,870,703,624.00 After GR & 1017 Failure $ 1,824,282,208 (as of 05/05/2017) 2016 $ 1,876,735,176.00 After GR Failure $ 1,846,436,409 (as of 04/08/2016) 2015 $ 1,877,570,777.00 2014 $ 1,837,570,779.00 2013 $ 1,816,091,355.00 2012 $ 1,814,403,898.00 2011 $ 1,894,000,000.00 2010 $ 1,924,000,000.00 2009 $ 2,037,000,000.00 Difference of FY2009 – FY2017: (-) $ 166,022,334.00

The Cumulative Effect The Oklahoma Legislature has annualized funding cuts to the state aid funding formula. For the period of FY 2010 through FY 2017, common education has sustained $ 1,735,372,181.95 in reduced State Aid! Annualized Cuts as compared to FY 09 state appropriations to formula: FY 10: 113,000,000.00 FY 11: 143,000,000.00 FY 12: 222,596,102.00 FY 13: 220,908,645.00 FY 14: 199,429,221.00 FY 15: 159,429,223.00 FY 16: 160,264,824.00 FY 17: 166,296,376.00  Cumulative Effect: 1,218,628,015.00   Total state aid: 13,040,371,985.00 (10-16) Potential state aid: 14,259,000,000.00 (10-16 at 09 levels) Difference: 1,218,628,015.00

Looking Ahead for Initial FY2018

Average Decrease in Statewide WADM Prior Year Final Allocation vs Average Decrease in Statewide WADM Prior Year Final Allocation vs. Current Year Initial Allocation Fiscal Year Final Notice Initial Notice Difference FY 2012 1,053,066.77 FY 2013 1,041,986.72 (11,080.05) 1,071,320.35 FY 2014 1,057,955.47 (13,364.88) 1,088,587.43 FY 2015 1,075,133.91 (13,453.52) 1,105,279.04 FY 2016 1,088,728.88 (16,550.16) FY 2017 1,123,016.13 1,138,464.44 FY 2018 1,099,516.99 1,115,464.44 est (23,499.14) (23,000.00) est Average Decline From Final Notice to Initial Notice (17,973.54) * As of SDE Tentative Final Allocation Notice dated 05/05/2017

Chargeable Revenues Available for Initial Allocation July 2017 Chargeable Revenue Stream Tentative Allocation Notice FY 2018 Final Allocation Notice FY 2017 Difference Gross Production $ 58,879,495 $ 56,773,680 $ 2,105,815 Rural Electric $ 38,899,601 $ 38,598,762 $ 300,839 Motor Vehicle $ 238,630,834 $ 251,872,024 $ (13,241,190) School Land $ 106,621,830 $ 102,171,961 $ 4,449,869 Ad Valorem $ 1,080,098,100 $ ??? County Four Mill $ 98,525,698 $ 95,930,749 $ 2,594,949 TOTAL $ 1,621,655,558 $ 1,625,445,276 $ (3,789,718)

Initial FY2017 Factor I believe that the FY2018 initial funding factor will be approximately $3,052.60 per WADM. This represents a $42.00 increase from your current funding factor of $3,008.60 per WADM.

Midterm FY17 If current revenue and enrollment trends remain steady, and if the state budget does not fail, we believe that the factors at midterm could be approximately $ 3,030.00 per WADM.

I believe the FY2018 Midterm Factor will be approximately $3,050 I believe the FY2018 Midterm Factor will be approximately $3,050.00 per WADM.

Steven Crawford Crawford Consulting, LLC 405-301-5535 paulacrawford@crawfordconsult.net www.crawfordconsult.net