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Reviewing Past Revenue and Looking Ahead to the Midterm

Reviewing Past Revenue and Looking Ahead to the Midterm

With the beginning of a new year, it is important to look at what happened at the end of the previous year. OMES published the graph below to compare FY18's estimated revenue with collected revenue.

With the beginning of a new year, it is important to look at what happened at the end of the previous year. OMES published the graph below to compare FY18's estimated revenue  with collected revenue. When we evaluate the graph, we see a very obvious surge in net income and sales tax revenues compared to Oklahoma’s general fund. This particular set of data was encouraging news in comparison to the previous 3 years. We placed a full revenue analysis in the OPSRC August Financial Report.

There are two different financial standings reports that the State of Oklahoma issues on a monthly basis. The most optimistic is the State Treasurer’s report that states the income that has been collected for the month. The second report that can sometimes seem like doom and gloom is the OMES report. OPSRC uses the OMES report in our monthly finance report because the OMES report, while being more negative, does back out all of the expenses and tax rebates. It gives a more realistic look at what is happening within the fiscal year at that point in time of the budget for both the year and the month collections just completed. We place a monthly set of tables taken from OMES’s reports with some fundamental analyses. Our goal is to help budget and decision makers stay current on what is occurring within the state budget collections.  

The next table contains the current revenues for this fiscal year. July collections are running below 2.1% expectations for the current fiscal year. Before panic sets in, please remember that this is from two data points, which is a very small sample size to see a true trend. We see the same trend lines continue from the previous year in net income and sales taxes. We also see that some other taxes, like motor vehicle, are slowly improving in their collection patterns. The most underwhelming collection was in the area of Other Tax Collections, which was 32% below expectations. As always, we will monitor this and report the trends monthly. It’s not time to press the panic button, as this will probably rectify itself soon, but after the past three years of financial uncertainty, it does cause some questions to arise.  

The most prevalent question coming into the finance department right now is what will happen at midterm? The simple answer is that you can probably anticipate revenue loss at midterm due to an increase in state wide WADM. We are in the process of projecting out the WADM and the actual collections in chargeables. We will publish our annual chargeable report soon later this month. We will have the net total change in WADM based off the SDE data, but until we see what the changes in chargeables statewide really are, it’s going to be a projection. We can normally get close, but each district will have a different set of data due to changes in enrollment and changes in total ad valorem valuation and in other chargeables.

Points of particular interest are the changes in Salary and Incentive Aid and Foundation Aid. When we look at the difference between the two different portions of State Aid, we  see a $178 increase in Foundation Aid and a $152.12 increase in Salary and Incentive Aid. Any changes will be directly driven by changes in valuation within districts and other chargeables. An expected increase of 3.5% in the ad valorem chargeable and adjusted valuation could cause the two factors to stay up. Several places in the state are experiencing tax protests that could cause some changes and issues for local collections. This will be an area that budget and decision makers need to focus on to protect their budgets due to unexpected changes on both the state and local revenue levels

If we can be of service please feel free to contact me by phone or email.  We will work as quickly as possible to get the needed information to you.  

Andy Evans

Director, Finance

Andy serves as the Finance Director for OPSRC. In this role, he provides help in financial and business-related areas for schools. This includes budgets, managing cash flow, Estimate of Needs, federal programs and general service to aid in the effective use of district resources. Additionally, Andy serves as a resource in customizing budget spreadsheets, projection sheets, and other financial tools essential to administrators in maintaining their district’s financial health.

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