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Mock Outrage and Real Impact

August 16, 2016

Facts matter. So do details. So does context – well, to most of us at least.

By now, many of you have probably seen the blog post by Steve Anderson at the Oklahoma Council of Public Affairs expressing mock outrage at school districts and the funds we’re allegedly hoarding. If you haven’t, it’s worth your time to read. Here’s his opening:

Oklahomans who have been told repeatedly that Oklahoma’s schools are underfunded may be very surprised to learn that the schools in fact have “savings accounts” that are full of cash sitting idle.

Idle is a pretty strong word. We do end each fiscal year with funds in various accounts. That much is true. Most of those funds are in accounts that have limited purposes. I’ll get to that in a minute.

What really caught my attention is that of all the districts in the state, Anderson chose to highlight 11 in a table on his blog.

2015 School Year Revenues

School District

Cash Forward

Largest Balance Item?

Bartlesville $20,577,066 Yes
Bixby $25,774,424 Yes
Clinton $4,562,120 No
Jenks $57,381,683 Yes
Midwest City-Del City $45,491,461 Yes
Moore $33,185,915 No
Norman $42,912,359 No
Sand Springs $21,590,762 Yes
Stillwater $14,005,455 No
Tahlequah $8,611,547 No
Tulsa Union $87,812,848 Yes

It’s strange for a number of reasons. Many of these districts have outspoken leaders who have pushed back against OCPA’s propaganda. Mid-Del, which is mine, is an obvious target. Still, if the point was to shock their readers, why did Anderson not highlight the two districts with more than $100,000,000 in cash forward balances

Last week, KFOR in Oklahoma City asked us for a statement about the OCPA post. We sent one, which they didn’t use in their report (and that was perfectly fine with me):

The OCPA blog post showing that Mid-Del Public Schools carried forward a balance in excess of $45 million is misleading. Among funds included in their calculation are several that cannot be used for every day operational costs. Examples include:

  • $12.4 million in the Sinking Fund
  • $11.4 million in the Building Fund
  • $2.4 million in the Child Nutrition Fund
  • $1.2 million in various Activity Accounts
  • $939 thousand in the Workers Comp Fund

Mid-Del Public Schools began Fiscal Year 2015 (14-15 school year) with about $7.6 million in the General Fund. Mid-Del received $89.6 million in General Fund revenues for that school year. The cash forward amount represented about 8.5% of that figure. As a district, we strive to achieve a cash forward (or carryover) balance in the General Fund of 6% to 8%, so that we can continue operating fluidly before receiving our first state aid payment of the school year in late August.

As a point of reference, Mid-Del ended FY16 with a 5.9% cash forward balance. Even with the mid-year reductions in spending we were able to make after last year’s statewide budget collapse, we were not able to achieve our target fund balance.

The danger with blog posts such as this is that they only serve to confuse the public. On the other hand, they also open a door for conversations to educate the public at-large about the intricacies of public school finance.

Mid-Del Public Schools remains committed and prepared  to providing a quality public school education to the more than 14,000 students who will arrive to meet their teachers in 11 short days. No level of budget cuts will change that.

Yes, I wrote that over a week ago. It’s just taken me a while to finish this post.

And for the record, I was happy with the comments KFOR used in their report. First was Steve Lindley from Putnam City. Well, actually, OCPA President Jonathan Small spoke first:

I do think, when you look at the way our funding is spent in K-12 education in Oklahoma, that it’s clear that the priority is not first the most important person, which is the teacher in the classroom.

It’s clear? Really? We spend money on salary and benefits. We spend money on facilities and utilities. We spend money on instructional materials and technology. Unfortunately, as the districts have had to count on the state less for funding, most of the costs after salary and benefits have been left to districts’ bond projects and building funds.

As data from the Office of Educational Quality and Assurance (OEQA) show, for the 2014-15 school year, state funding generated 47.7% of what school districts had available to spend. (This doesn’t include bond costs, which vary widely among the school districts.) For the 1999-2000 school year, state funding accounted for 57.3% of what school districts had available to spend. State support for public schools has been on a steady decline for a long time now.

Some districts are growing. They need to add to the size of their facilities. Other districts are aging. They need to replace or upgrade their facilities. There just aren’t funds available through the funding formula to meet these needs, so the districts pass bonds through local elections.Many districts also use bond funds to buy buses, which also have an optimal span of usage. As we drive more and more operational costs into our bond projects, meeting these needs becomes more challenging.

Back to the KFOR piece:

Putnam City Spokesman Steve Lindley showed NewsChannel 4 the district’s finances and the “$83 million surplus” the OCPA reported.

About $14 million (which has since shrunk to about $10 million) is available for use in the general fund, he said, though much of it is being saved to pay bills that will be due before property taxes are collected at the end of the year.

Other money is saved in reserves to deal with emergency situations.

“In the financial situation we’re in now, we don’t know what’s coming or when it’s coming,” Lindley said. “We manage our resources very carefully and make the best use of them that we can. And, why would we do anything else?”

Another $11 million was raised with a specific purpose like MAPS or child nutrition or by a specific group like an activity fund or a gift.

That money can not be used for general operations.

And, the lions share of the Putnam City “surplus,” $57 million, are dedicated to paying off voter-approved bond issues.

In other words, just as the Mid-Del figures I provided at the top show, school districts have multiple funds that have very specific purposes. We’re not hiding money from our teachers, and they know it. Either that, or they just don’t understand how school funding works. This statement by Small further illustrates this:

“A lot of our money ends up going more toward bonds and buildings than it does toward teacher salaries,” he said. “Often, school districts are going to voters asking for increased property tax levies for the purpose of bonding instead of for the purpose of teacher salaries.”

The guy in charge at the OCPA should know better. Maybe he does, and this is just his way of sowing the seeds of discord. That seems to be their specialty anyway. If they truly are a public policy research organization, as their website proclaims, I expect better from their research. Maybe that’s why, when a friend sent me the link to Anderson’s post, my browser was reluctant to let me visit the site.

OCPA Not Safe.png

I’m not the only one who has written about this post. My friend Gary Watts, the recently retired chief financial officer for Sand Springs Public Schools, has started a blog that targets the OCPA for misleading the public.

He also dismisses the real concern districts have with managing cash flow in their general funds:  “They don’t seem to understand that the accrual of those expenses incurred but not paid should already have been made.”  I managed a $40+ million budget for an Oklahoma school district for ten years and I don’t know what he means, probably because he doesn’t.  I think his “accrual of those expenses” is referring to encumbrances under Oklahoma law–and yes those expenses, like salaries, are encumbered fully before they are paid.  The problem that Mr. Anderson chooses not to understand is that revenues are also “accrued”, in our language budgeted, before they are received.

Gary, I think this is the beginning of a beautiful friendship. I can only wonder why Sand Springs was one of the districts in the spreadsheet at the top!

Even The Lost Ogle called out the OCPA. And they did it more beautifully than any of my blogger friends and I could have:

Before we continue, I should probably inform you that the guy who published the article for OCPA is Koch brothers shill Steve Anderson. From 2011 to 2013, he served as a key advisor and state budget director for Kansas governor Sam Brownback…. Under Brownback and Anderson’s regime, the state slashed income taxes for the rich in an attempt to spur economic growth. Sound familiar? As you probably know, the plan backfired. Kansas faced a revenue shortage, made drastic budget cuts to education and transportation, and eventually landed in a recession. Once again, sound familiar?

Same game plan, different latitude.

In reality, the OCPA has one job: to feed the public a narrative that all government spending is bad. They are a non-profit funded by donors, who can write off the donations the same as they would write off donations to St. Jude’s. They exploit any piece of data, no matter how far they have to reach, just to make public education look bad. Their agenda is one in the same with the Heritage Foundation, ALEC, and the Koch brothers.

What we see now is just a trickle. It’s that nuisance of a drip leaking from your bathroom faucet. You don’t think much about it, because it really doesn’t cost you much. We just have to get ready for the fire hose now. As state elections approach(run-off elections for now), they will only seek to strengthen their base’s loathing of all things public – especially education. By November, when the penny sales tax is on the ballot, their effort will be relentless.

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