Rep. Earl Sears responded on March 13 as follows:

March 13, 2018

Bartlesville Board of Education,

I appreciate the Bartlesville Board of Education developing a plan for the legislature to consider. We, as elected officials, must address this critical budget issue for teachers and state programs our citizens utilize.

The Bartlesville, “The Time Is Now Plan,” has many components that have been before the members this Session. Unfortunately, all of the plans have failed. The plan I think that has more support and the one in which I will endorse includes the following:

• GPT at 4%: $135 million
• Cigarette tax increase at $1.00 per pack: $163 million (these funds would go to support health programs)
• Gasoline increase to 3 cents and diesel to 6 cents: $113 million (these funds would go to support transportation)
• Little cigar: $13 million
• Wind GPT: $23 million
• Gaming Ball and Dice: $22 million
• Income tax reform: $74 million
• Total: $543 million

With this plan, we would generate $543 million which allow funding for the following:

• $5,000 dollars for teacher pay raise: $289 million
• $1,000 dollars for school support employees: $26 million
• $1,000 state employees raise: $36 million
• Total: $351 million

Additional funds to cover our hole for the teaching hospitals.

The remaining funds would create funding for identified agencies in need of funds.

Whatever plan we move, it must be now, not the future. The time is now to invest in Oklahoma.

Representative Earl Sears

District 11

Does Rep. Sears' response adequately address the interests?

Below is Mr. Meador's evaluation of how well Rep. Sears' response addresses the interests:

• Address the teacher shortage: is the teacher salary increase adequate?
  • Inadequate: Since the average teacher salary, after cost of living adjustment, is $4,000 higher in Kansas and Arkansas but $7,000 higher in Texas, a $5,000 teacher raise is a good but still inadequate beginning to address the teacher shortage. It will only make us temporarily competitive with Kansas and Arkansas and does not adequately address the $7,000 average pay differential with Texas nor how a move to metro areas in any of the neighboring states will earn an Oklahoma teacher a raise that is much larger than $5,000. It would be better to either increase the teacher raise above $5,000 or give districts sufficient formula funding to do so at their discretion.
• Address the school funding crisis: is there a sufficiently large and flexible increase in school operational funding?
  • Insufficient by far: While a $1,000 salary increase for support personnel will help with a limited area of district operations, it is both inflexible and wholly inadequate. The proposal does nothing to help with textbooks, classroom supplies, eliminated electives, etc. Also, a mandated support salary increase would likely NOT apply to outsourced positions. So districts like Bartlesville which outsource many support jobs (e.g. custodians, school age care, lawn services, student meals) would receive no help with those expenses.
• Address the state funding crisis: does the response fill the budget hole and adequately protect core services?
  • Good: The specified funding would be sufficient to fill the $170 million budget hole for FY19, provide modest raises for state employees, and leave a small remainder to cover emergency expenses or help with some core needs.

General evaluation:

This is a much better plan than others we've seen from the legislature as of mid-March. However, it is inadequate and should NOT be accepted by the OEA. It does not provide sufficient funds for school operations. Total revenue increases must approach $700 million to adequately address the state and public school funding crisis.

PRESCRIPTION FOR ADEQUATE IMPROVEMENTS:

1. Increase the GPT from 4% to 5%, gaining back $29 million.
2. Restore the $17,000 deduction limit on income tax reform, rather than the $25,000 limit in this plan, to restore that revenue to $160 million, gaining back $86 million.
3. Accepting his figure of $113 million for the fuel tax, which is similar to our $120 million, retain his $26 million earmark for support employee raises, but add $115 million to flow through the school funding formula.

Change #3 would give districts the discretion to fund teacher salary increases above $5,000 and/or increase funding to outsourced employees or district-employed support personnel, and/or address textbooks, supplies, and other operational expenses, and/or reduce class sizes.

Sen. Julie Daniels responded on March 16 as follows:

On Wednesday [3/14] I supported a plan that would award our hard-working teachers a 12.7% pay increase, which could be in place for the 2018/2019 school year. I voted for the bill that adjusted the minimum salary schedule to reflect the increase and for the measure that included tax increases to fund it, totaling $450,000,000.

The taxes included: 4% gross production tax on all oil and gas wells, $1.00 tax increase on tobacco products and an increase of $.06 on gasoline and diesel.

These tax revenues would also provide for a $2,500.00 annual increase in pay for state employees and restore earned income tax credit payments to low and moderate income Oklahomans.

We continue to advance a number of spending reform measures. Those that are successful will yield additional resources for education and core government services. Reliable estimates of savings depend on the final versions of these bills.

The House plan announced yesterday has merit as it works to increase teacher compensation beginning with the next school year and over time. Oklahoma has enjoyed great success with this decade old approach to transportation funding. We in the Senate are interested to hear what revenue will be used to begin implementation.

The following are revenue sources I have supported or could consider supporting. I appreciate Bartlesville researching and offering its own plan, which has been widely circulated at the Capitol.

• 4% or 4.5% GPT on oil and gas production
• GPT on zero emission energy production (wind)
• $1.00 on tobacco products
• $.06 on fuel
• Tobacco Endowment Settlement Trust Fund (TSET) constitutional amendment to add ability to direct spending to graduate medical education (this Senate bill is headed to the House. This reform would eliminate a possible future demand on the state general revenue fund to make up for a possible loss in federal funding for our medical schools)
• Repeal of sales tax exemptions on some categories (I don’t have that list with me to review)
• Reforms of:
  • Pass through spending
  • Apportionments (capping some apportioned funds passed the Senate)
  • Tax credits (caps on coal, rail and zero emissions passed the Senate)
  • Moving towards zero-based budgeting (passed the Senate)

I am optimistic that a combination of elements exists that can bring a compromise and a good result before the end of this session. The key is for all interest groups to focus on that which can garner a super majority of votes in both houses. And, with an improving economy already generating increased tax revenues, the way ahead is very promising for additional funding.

Does Sen. Daniels' response adequately address the interests?

Below is Mr. Meador's evaluation of how well Sen. Daniels' response addresses the interests:

NOTE: On 3/14, Sen. Daniels voted for SB 133 for a $4,029-$5,865 teacher raise, and also voted for an amended HB 1033 for $450 million in new revenue, although the latter bill failed to pass the Senate with the required 75% supermajority.

• Address the teacher shortage: is the teacher salary increase adequate?
  • Inadequate: The increased teacher salaries in SB 133 would be a good beginning, as they would slow the teacher drain to other states. However, since the average teacher salary, after cost of living adjustment, is $4,000 higher in Kansas and Arkansas but $7,000 higher in Texas, a $4,029-$5,865 teacher raise will not reverse the teacher shortage. It will only make us temporarily competitive with Kansas and Arkansas and does not adequately address the $7,000 average pay differential with Texas nor how a move to metro areas in any of the neighboring states will earn an Oklahoma teacher a raise that is much larger than the raises in the bill. Of particular concern is that starting salaries would only rise by $4,029 when the cost-adjusted average starting salary in Texas is $5,768 higher than in Oklahoma.
• Address the school funding crisis: is there a sufficiently large and flexible increase in school operational funding?
  • Non-existent: The measures we've seen thus far do nothing to address class sizes, textbooks, classroom supplies, eliminated electives, etc. The other revenue measures Sen. Daniels mentions are too vague to evaluate.
• Address the state funding crisis: does the response fill the budget hole and adequately protect core services?
  • Inadequate: This legislation helps state employee pay, but does nothing to fill the budget hole to prevent yet another round of school and agency funding cuts. However, the Senate has passed SB 1086, despite Sen. Daniels' opposition, which would bring $120 million in new revenue by eliminating a wasteful capital gains tax deduction. Going to a 4.5% GPT, which Sen. Daniels seems to support, would raise additional revenue, although even then there would still not be enough new revenue to completely fill the $170 million budget hole.

General evaluation:

It is most encouraging that Sen. Daniels has voted AYE on a significant revenue increase of $450 million. HOWEVER, additional revenue increases will be needed to fill the $170 million budget hole and provide additional operational funding for the schools, and the proposed teacher salary increase is inadequate. Total revenue increases must approach $700 million to adequately address the state and public school funding crisis.