The future budget picture for Oklahoma schools is rapidly becoming more clear and improving, a relief as schools wrap up 2020 and look ahead to 2021.
Friday's state Board of Equalization meeting brought clarity to the state of state finances ahead of the 2021 legislative session. Today, Congress is poised to pass a $900 billion stimulus package that would include about $650 million in direct aid for Oklahoma schools -- quadruple what schools received from the initial CARES act stimulus.
Together, this is great news for local education leaders. The anticipated stimulus package should help offset beginning-of-the-year state aid reductions, increasing costs related to COVID-19 and an anticipated mid-year cut in state aid. Despite fears of a dire state budget heading into FY22, the outlook is rosier than expected and discussions with legislative leaders indicate the education budget may not face additional cuts next year even as the economy tries to recover.
Congressional Stimulus Package
We expect the final plan will leave local leaders in a strong position to strategically budget for the rest of FY21 and FY22. The final text of the stimulus package has not been released yet, but votes are expected in the U.S. House and Senate today. What we know of the deal so far includes significant financial relief for public schools.
- $54.3 billion is set aside for public elementary and secondary schools. That's four times the amount in the earlier CARES Act funding, and it is set to be distributed based on the Title I formula in the same manner as the earlier funding.
- Oklahoma is expected to receive about $650 million for public schools in the new package. The state received $160 million for public schools via the CARES Act.
- To see our initial estimate of stimulus allocation by district, click here.
- The final district allocation may vary from the estimate depending on how much the state Department of Education retains for administration and other details in the final language. We will advocate for as much as money as possible to go directly to districts.
- Congress will again authorize governor-controlled discretionary education spending. The roughly $4 billion expected for the Governor's Emergency Education Relief dollars is $1 billion more than the amount allocated for same fund in the CARES Act and is expected to contain a set-aside for private schools. Oklahoma's earlier share of the discretionary fund was $39.9 million.
Board of Equalization
The board's annual December meeting typically serves as a preview of the possible budget numbers for the next year's legislative session. The governor uses the December estimates to build the executive budget proposal unveiled at the State of the State address at the beginning of the session. Then in February, the board meets again to finalize the amount legislative budget writers will use in budget negotiations.
As we discussed in our budget update webinar last week, the state budget is not facing a FY21 shortfall so schools can expect to finish the current school year without state budget-related cuts.
Key highlights from the board meeting:
Key Budget Takeaways
- The board agreed to authorize a Fiscal Year 22 state budget of nearly $8.5 billion. That's about $631 million more than the Legislature appropriated for the current year.
- The board's numbers, along with conversations with legislative leaders, indicate next year's state education budget could remain flat.
- February typically represents the final word on revenue available for legislative appropriations. However, last year the state Board of Equalization revisited its numbers in May to reflect the latest economic developments. That could happen again this year to ensure the most accurate budget projections.
Please don't hesitate to contact me via email or on my cell at 580.747.0179 if you have questions or need additional information.
- Districts should avoid making any major budget decisions before February, when the state budget picture becomes more clear.
- Details matter. The final text of the stimulus package will reveal whether the direct school funding will have the same level of flexibility as the earlier CARES Act funding and whether schools may be able to access via other parts of the stimulus package (i.e. nutrition, broadband, healthcare).
- Breathe a sigh of relief. We know schools are extremely concerned about a mid-year state aid cut. The stimulus package should help shield many districts from the effects of those cuts.
- A Title 1-based funding mechanism means some districts will receive far fewer dollars per student than others, as was the case with the CARES Act stimulus.
- We are committed to working with state leaders on solutions to ensure all schools have money available to protect their students from any state funding reductions for FY21 and FY22.
Shawn Hime, Ph.D.