The Latest Downturn in Oklahoma Revenue

The Oklahoma Board of Equalization met last week to begin allocating revenues that the legislature will have to work with for the 2021 budget. The results reflect the published information indicating a flat budget is probably going to be the result of current economic conditions. There are several factors influencing Oklahoma’s current downturn in tax revenue collections:

1. The current downturn in petroleum production and exploration
2. The coronavirus
3. A glut of oil supply on the international market
4. An incredible amount of stored natural gas

The explanation for the lack of revenue can be as complicated as one wishes to make the discussion, but we are in a position where the revenues may not be immediately available. The worst part is this may not be a one-year phenomenon; budgeting will take foresight and patience. As we move into this economic cycle, it will be important for leaders to prepare to make solid financial decisions.  

In a time like this, certain questions will be asked: how much and when will State Aid change? We have a lot of moving parts in this budget cycle, so anything we do right now will be a guess. A few things to remember as we move forward:

1. The State Aid factor may reduce in July due to the loss of chargeables or a slowing of chargeable growth in districts with increasing WADM.
2. The state numbers will probably drop between initial July allocations and mid-term January allocations.  
3. If revenue doesn’t stay up during the second half of the financial year, there could be reductions after mid-term.
4. If a district is coming off a high year, the time to look at absorbing positions (if possible) is now.  

It is important that faculties and staff be right sized to protect the district. Personnel are the costliest portion of any budget, and aligning staffing with the student population is the best way to balance a budget. Both a student and instructional census will help establish the actual instructional needs. If you need to explore this budget area, we can help you. We can also provide support on other projections you may need to adequately budget for in the coming year(s).