By Carolyn Cole
Published on January 24, 2008

A Mustang school official remained optimistic this week regarding Oklahoma’s economy and tax revenue to fund education, despite a rough ride for investors on the U.S. stock market.

Oklahoma tax revenue collected for December broke a trend of below average collections seen for October and November, which had concerned Mustang School District officials, Superintendent Karl Springer said.

“I don’t think we are out of the woods yet,” he said. “I am feeling better about the state’s economy than two months ago.”

Oklahoma Treasurer Scott Meacham reported recently the state’s General Revenue Fund collected $529.7 million for December, which is 7.8 percent above the prior year and 4.6 percent above the estimate.

For the first six months of fiscal year 2008, Meacham reported growth, but at a slower rate than in previous years. The state collected $2.8 billion in its General Revenue Fund, or 0.4 percent above the prior year and 3.3 percent above the estimate.

“Halfway through the fiscal year, General Revenue Fund collections are ahead of both prior year collections and the estimate,” Meacham said. “However, as we’ve been seeing for several months, the rate of growth has slowed significantly.”

In October, revenue fell short in three out of four tax categories. The state general revenue fund collected $444.3 million, which is 6.4 percent below the same month of the prior year, and $16.6 million below the state’s estimate. For November, tax collections still lagged behind the state’s estimate and last year’s revenue, but it wasn’t as drastic a dip as in October. In November, general revenue fund collections totaled $403.6 million, or 6.4 percent below the same month of the prior year and 2.7 percent below the estimate for the same period.

While state tax revenue has improved, worries of recession linger as a bust in real estate and fall-out from variable and high interest rate loan foreclosures rock Wall Street. This week, the Federal Reserve Board cut interest rates by three-quarters of a percent to 3.5 percent with hopes it will boost the economy, but the Dow Jones Industrial Average continued to slip.

Springer said he is optimistic about Oklahoma’s economy, with its roots embedded in oil, natural gas and energy. As fuel and energy prices continue to hover at near record levels, he said it helps cushion the economic blow in Oklahoma.

“I’m pretty encouraged,” he said. “All of this dark stuff around us, but Oklahoma seems to be hanging in there pretty well.”

New homes are still being built in eastern Canadian County, and the number of foreclosures within the school district hasn’t increased, Springer said. Families are looking to buy houses in the district while developers are still purchasing former farmland to turn into housing additions, he said.

“Our local economy is still pretty strong,” he said.
If state revenue collections continued to slide, echoing a downturn in the state’s economy, school and state agency budgets would be cut. School funding never completely recovered from record cuts in 2002 following the Sept. 11, 2001, terrorist attacks, which was followed by a laundry list of unfunded mandates in addition to rising operational costs.

“We have a lot of muscle and connective tissue — we have very little fat when it comes to operations,” Springer said.

Legislators have promised to consider additional funding for the costs, including diesel fuel, utilities and insurance expenses. Springer said the price per gallon for diesel has more than doubled since state officials allocated more funding for operations.

Legislators have about $32 million in new dollars to allocate this legislative session, which begins Feb. 4, and it is expected to make for a tight budget year with needs ranging from transportation and health care, prisons and education vying for dollars.

The state lottery revenue shortfall is another top financial concern for educators. For the second year, lottery revenue fell short of expectations, this time by about $4.6 million for public schools, compared to $17 million short the previous year. If the $4.6 million shortfall is passed on to school districts, Springer said he expects it will cut about $45,000 from Mustang’s budget.

State Superintendent Sandy Garrett advocates that lottery revenue be sent directly to school districts for their local boards to divvy up instead of being rolled into the state aid funding formula. Springer said he supports the idea, given when voters approved the lottery in 2004, they were told the proceeds would fund additional educational programs, not salaries and operations.