Funding for higher education remains embattled in the legislature

April 21, 2017 Featured Slider, Frontpage News, News Print Print
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Oklahoma faces several hurdles to fixing its education and funding crisis.

While the legislature continues to debate the appropriate source of funding for its three education systems, two-year campuses, including Oklahoma City Community College, watch their budgets shrink.

Former State Representative Joe Dorman said he believes this is partly due to a rise of anti-intellectualism – not only in college classrooms, but in the Oklahoma legislature.

“There is an overall mentality nationwide of less value in a quality education,” he said.

Dorman said some members of the Oklahoma legislature have a disdain for high levels of education and fact based arguments.

“Many people want to believe what they read on social media even when there is no basis of fact behind it. Rather, decisions are based on emotion,” he said.

This change in perception concerns Dorman because it has led to problems with funding education at all levels, he said.  

OCCC Political Science professor Dr. Sharon Vaughan agrees. She said there is a suspicion for academics and that feeling has bled over into the state legislature.

“Higher education is under attack at the capitol. They think that in higher education we have too much money, we don’t spend the money wisely, and they think that professors are overpaid and underworked. They have this idea that we are just at home reading a book and smoking a pipe. That’s just not how it is here,” Vaughan said.

House majority leader Jon Echols, R-Oklahoma City, acknowledged there is a communication problem between higher education officials and some state lawmakers.

“There is a feeling that higher education needs to make sure they are reaching out to their House and Senate members so that they fully understand what is happening on their campuses,” he said.

Echols said higher education could do a better job at showing that it is the economic driver for this state’s future. He stressed the importance of a continued dialogue between both groups. He pointed to events like Higher Education Day at the state Capitol and speaking with constituents as a major point of opening lines of communication.  

“I think almost every issue, at the end of the day can be solved through communication,” he said.

This breakdown in communication is causing repercussions for state college students.

Dorman said that when he was a college student in 1994, roughly one-third of a student’s education was paid for by the state. Now, that assistance is substantially lower. In particular, specialized programs like nursing have seen state support drop even lower.

“This is the wrong direction. We should be investing in opportunities,” he said.

A 2015 report from the Center on Budget and Policy Priorities indicates that since 2000, there has been a near 200 percent increase in the cost of college tuition per student. Despite the rise in cost, the median family income has stayed static while the income for the top 1 percent of families has increased steadily.

The Pew Research Institute found that from 1090-2013, state funding for higher education has dropped 37 percent even though college enrollment increasing substantially by 60 percent.

This places more financial hardship on the backs of middle and working class families. As a result, the number of students forced to take out federal student loans has skyrocketed by 376 percent.. For college students in Oklahoma, this issue is further complicated by the state’s recent $878 million dollar revenue failure because that failure has translated into increased tuition.

A 2016 budget report compiled by the Oklahoma State Regents for Higher Education shows that in fiscal years 2014-2016, the percentage of Oklahoma’s total appropriations going to higher education was only 14.4-14.8 percent, the lowest since 1986. For fiscal year 2017 that number plummeted to 12.9 percent.

Not an Easy Fix

How state lawmakers intend on making up this shortfall is the subject of controversy.

Normally when faced with an economic crisis, the state would pull from the state’s Constitutional Reserve fund. The fund was created to collect extra revenue so that money could be saved and used during times of revenue shortage.

Just three weeks ago State Finance Secretary Preston Doerflinger announced he had drained the fund down to zero when he used nearly $300 million to fund state agencies, because revenue was coming in slower than expected. That money is usually distributed through the House and Senate appropriations process.

With more budget cuts looming, OCCC President Jerry Steward held a faculty meeting where he addressed concerns about the school’s financial future.

At the meeting he questioned the legality of the use of these funds by Doerflinger. “There are legitimate legal questions about whether he had the constitutional authority to borrow that money,” Steward said.

In order to fill the budget hole and the depleted reserve fund, lawmakers must either decrease state spending or increase the money coming into coffers of the General Revenue Fund. This money comes from a handful of sources, including personal income tax, corporate income tax, sales tax, motor vehicle tax, and the gross production tax on oil.

Representative Echols said he might support increasing the Gross Production tax on oil in exchange for removing regulations on horizontal well drilling.

“By doing this, I have put Oklahomans to work and I have unlocked profit potential. So at that point it seems fair to me that we turn around and increase the Gross Production tax,” he said.

Campaign contribution records show that Echols has received thousands from major oil companies like Chesapeake, Devon, Continental, and Chevron to name a few.

The Problem with Horizontal Wells

Initially the state taxed new horizontal wells at only 1 percent as a means to spur new production and industry growth. In fiscal year 2004, the cost of those tax breaks was only $2 million according to the Oklahoma Policy Institute.

Flash forward to 2015, that amount exploded to $470 million.

Dorman notes that now, even some in the oil industry support the idea of an increase of up to 7 percent tax. The Oklahoma Energy Producers Alliance is one such group. In early April, the alliance lobbied at the state capitol in support of the increase. This group represents a small handful of local oil and gas producers.

Horizontal drilling like that advocated for by Echols,  drills down vertically like a traditional well and then drills laterally into the porous shale layer. The shale is filled with a mixture of chemicals and highly concentrated salt water that crack open deposits of precious oil in a process referred to as fracking. Access to these deposits spurred an oil boom in Oklahoma from 2008-2014 and led to significant revenue gains for the state.

According to the Center on Budget and Policy Priorities, during that time, Oklahoma failed to set much of that money back for education. In fact, per pupil funding in Oklahoma fell by nearly 25 percent.

Since that oil boom, the price of oil has again fallen out from under the state. Historically, oil has been a fickle funding source due to the unreliable ebb and flow of oil prices.

House Appropriations and Budget Chair Leslie Osborn, R-Oklahoma City said she remains hopeful that revenue will increase.

“I believe the economy is growing again due to higher oil prices and increased new rig counts drilling across the state. That makes me cautiously hopeful that we will be able to invest in higher education,” Osborn said.

Osborn said the state’s constitution requires any extra revenue generated from the spike in oil prices to be used to refill the rainy day fund first before any appropriations could be funneled towards education

All Options On The Table

Dorman said Echols is on the right path to consider an increase in the Gross Production tax on oil. However, he disagrees in making that exchange for deregulation on horizontal wells. He would rather see the state continue to invest in ecologically conscious green energy like wind turbines.

Former Oklahoma Governor Frank Keating disagrees with Dorman on wind energy. During his tenure as governor, Keating was instrumental in passing the Zero Emissions Tax Credit for the wind energy sector as a means to grow a blossoming industry. In recent years, Keating who was once in the mineral industry himself, has become a vocal opponent of this tax credit.

“We gave a lot of substantial tax credits and exemptions, particularly to wind power. The result is that the needs of the state and higher education are jeopardized because we have given away the revenue base. Everybody should pay their fair share. The wind industry does not pay any tax and the oil and gas industry does,” Keating said.

Revenue gained from the wind energy sector will not be available to fund education until 2028.

Along with proposals to increase taxes on the wind and oil sector, earlier this year, Governor Mary Fallin released her plan to fill the state’s budget hole. Her plan incorporates an increase on taxes on nearly 170 services. She has also called for an increase in taxes on cigarettes and motor fuel. In addition to these tax increases, her proposal calls on the elimination of corporate income taxes and sales tax on groceries.

Revenue gained from the cigarette tax will automatically go to healthcare and revenue from the motor oil tax will go towards transportation.  

After the release of the governor’s proposal, both Democrats and Republicans were critical of her plan.“I do not support a taxes on service. I dont think thats the direction the state of Oklahoma needs to go. I supported my governor. Proud she is my governor, but we are allowed to disagree,” Echols said.

Although he does not support a service tax increase, Echols does support an increase in the cigarette tax.

Despite the numerous plans being proposed from both sides of the political aisle, Echols is confident that the parties can come together to fix not only the stated budget issues, but education as well.

“I serve with some of the greatest people I’ve ever meet, Republicans and Democrats. I mean that with all of my heart. The bad apples get all the press, but the truth is that their are great men and women here trying to make a difference. I believe we will come together and we will pass a budget.

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