The State Budget: A Rocky Road Ahead

The Oklahoma Board of Equalization met last week and acted on several issues that may impact education funding in FY21. Afterward, the governor held a press conference to discuss OMES's state revenue forecast:
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The resultant choices the legislature faces are difficult at best. The question seems to be whether or not it is better to take the loss of allocation now or spread it over the next three years.  We won't know the direct impact on State Aid and other state-funded revenues until after the state budget is negotiated and the legislative process for approving the budget is completed.

Because of the uncertainty in the state’s revenue status, caution is essential in building FY21 district budgets. It is important to examine the following:

1. The largest expenditure for districts is personnel. We advise that a district's personnel budget be in correct proportion to its number of students. If a district anticipates a loss of students due to losing the high-year WADM, any State Aid cut will be magnified.
2. The CARES revenue is designed to assist districts with issues stemming from COVID-19. District leaders should carefully consider how to spend this revenue to maximize benefits for the district. Using the revenue to replace losses due to a State Aid loss may be a correct course of action. One additional point to consider is if districts must use distance learning in the fall; leaders could consider using this money to enhance their ability to provide and/or improve their distance learning methods.  
3. FY20's chargeable losses may negatively impact State Aid for FY21. We won't see the effect on State Aid until after January midterm allocations.
4. We have resources to help you examine your budgets. If you want another set of eyes to review your budget, please contact us. We will continue to monitor the budget discussions and will share updates as they become available.