Oklahoma should prioritize students, teachers — not oil, gas companies

On March 5, the superintendent of Tulsa Public Schools district, Deborah Gist, presided over what became a less than typical school board meeting. Gist rallied school board members to vote for a resolution supporting the thousands of Oklahoma teachers threatening a strike over low pay. In a written statement, the district mentioned “joining school districts … to advocate for a proposal to restore funding to education and increase teacher salaries.”

Pinning the entire blame of Oklahoma’s current circumstances on one event or one person is difficult. But the most blame sits at the desks of Mary Fallin, governor of Oklahoma and the state legislators who have protected the oil and gas industry.  Now, the state’s budget cannot accommodate for basic services like adequate education funding and decent teacher pay.

{mosads}Gov. Fallin, and her colleagues in the state legislature have intentionally left revenue-generating opportunities on the table. Chief among them is more appropriately taxing energy companies.

Oklahoma ranks third in the country for producing natural gas, second in drilling rigs, and fifth in both crude oil production and reserves. Of the approximate $181 billion state GDP, $39 billion are attributable to the energy industry’s contribution. With such resources, tax revenue on such earnings would ordinarily return significant resources to the state.

But Oklahoma stands apart. Energy companies in Oklahoma pay uniquely low taxes. Unlike in like Texas and North Dakota, companies drilling for oil and gas in Oklahoma pay no property taxes on reserves. Gross production taxes are usually excised on firms in addition to such taxes, but not in Oklahoma. So, the effective tax rate on firms is 3.2 percent on drilling compared to comparable states like Louisiana (13.3 percent), Arkansas (12 percent), or Texas (8.3 percent).

The argument is simple and relatively unoriginal. Imposing more taxes limits economic activity, which would ultimately harm Oklahoma’s economy.

Forgoing these revenues sting even more because state appropriations, adjusting for inflation, are still 15.6 percent below pre-recession levels (pre-2009). Many of the agencies under the 2018 budget will be cut by 4.9 percent and the most recent deal requires agencies cutting 1 to 2 percent from their remaining spending projections.

The state’s rainy-day fund hovers at $106 million, compared to the former levels of $229 million just two years earlier. And in all of this, the governor and Legislature cut taxes during 2014. The projected loss in 2019 as a result of these cuts, according to the state’s tax commission, is $267 million.  This foregone tax revenue serves as a de facto subsidy for Oklahoma’s oil and gas companies and educators pay the price through uncompetitive pay.

Enter Deb Gist, a popular education reform leader who the education philanthropic community, of which I was a part, adulated and recruited to Oklahoma. She came armed with gravitas borne of experience and an accolade-ridden resume. She came ready to implement solutions for Tulsa Public Schools in partnership with Tulsa parents, its charitable community, and teachers and school leaders.

But instead of tackling the large, systemic issues, she found herself scrambling for teachers, emergency certifications for untrained teachers, while still providing quality education.

Why?

Teachers in Oklahoma could find better salary in neighboring states. According to the NEA, Oklahoma’s average gross teacher pay went from $47,691 in 2009 to $44,921 in 2015. That salary ranked 48th in the country.

Even more, the limited tax revenues from protecting oil and gas companies has created political actors who have pursued uncommon means of paying teachers fairly. Last year, Gist became a more active political actor than she probably anticipated as she advocated for passage of now-failed 2016 State Question 779 (SQ779), a 1 percent sales tax which would have given teachers a $5,000 raise. As a near final death knell, Gist now must figure out how to further cut her budget by $12 million because, since 2008, the state has cut common education funding by 28.2 percent. Some of her other Oklahoma-based counterparts have even moved to four-day school weeks to make their budgets work.

The dire straits in which we find Oklahoma’s education system is not a stroke of bad luck. It is partially the result of nearly a decade of steadily increasing protective measures for oil and gas. For Oklahoma, the groundswell of support for the teacher strike opens the unique opportunity to interrogate how the state should tax, spend, and allocate resources.

Caleb Gayle is a Tulsa native and a joint degree candidate at the Harvard Business School and the Harvard Kennedy School of Government. He is a former program officer at the George Kaiser Family Foundation.