FY 2015 Proposed Budget

PROPOSED BUDGETA STATE BUDGET THAT RESPECTS YOUR FAMILY BUDGET

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OCPA is committed to delivering the highest quality and most reliable research on policy issues. OCPA guarantees that all original factual data are true and correct and that information attributed to other sources is accurately represented. OCPA encourages rigorous critique of its research. If the accuracy of any material fact or reference to an independent source is questioned and brought to OCPA’s attention with supporting evidence, OCPA will respond in writing. If an error exists, it will be noted in an errata sheet that will accompany all subsequent distribution of the publication, which constitutes the complete and final remedy under this guarantee.

About OCPAThe Oklahoma Council of Public Affairs (OCPA) is an independent, nonprofit public policy organization— a think tank—which formulates and promotes public policy research and analysis consistent with the principles of free enterprise and limited government.

Table of ContentsBudget Message .............................................................................................................................................................. 5

Government-Wide Reforms ...................................................................................................................................... 10

FY-2015 OCPA Budget Recommendations

Education ............................................................................................................................................................... 14

General Government .......................................................................................................................................... 21

Public Health ......................................................................................................................................................... 26

Human Services ................................................................................................................................................... 30

Natural Resources ................................................................................................................................................ 31

Public Safety ......................................................................................................................................................... 37

Judiciary ................................................................................................................................................................. 39

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Oklahoma’s State Treasurer Ken Miller and Secretary of Finance and Revenue Preston Doerflinger report total state reve-nues at all-time highs. Doerflinger further reports that total state spending too is at an all-time high, eclipsing the $17 billion mark. Total state tax collections have increased $1.5 billion since their low point in the recent recession. The Oklahoma Tax Commission reports that the state is on pace to set another record for tax revenues by the completion of the current fiscal year. The Oklahoma Department of Education reports that total common education available revenues and total spending are the largest yet. As the Oklahoma Council of Public Affairs (OCPA)’s vice president for policy, Jonathan Small, noted in a recent editorial in The Oklahoman:

According to the Comprehensive Annual Financial Report (CAFR), the most recent fiscal year (FY) 2013 set records for total spending. From FY 2003 to FY 2013, total state spending increased by $6.37 billion, or 59.75 percent. This outpaced, over the same period, inflation (27 percent), state population growth (9 percent), and state personal income growth (39 percent). Total state tax collections also reached an all-time high, as did total personal income tax collections, total sales tax collections, and other major tax types.

This is particularly remarkable considering that during FY 2013, hundreds of thousands of Oklahomans experienced increased payroll taxes, increased federal income taxes, increased health insurance premiums, new taxes and fees cre-ated by Obamacare, and a still-sluggish economy.

Oklahoma’s total state tax collections in FY ’13 reached $7.86 billion — $2.1 billion more than in FY 2003. Total personal income tax collections reached $2.84 billion, which is $730 million more than collected in FY 2003. Total sales tax collec-tions in FY 2013 were $2.27 billion. This is $871 million more than the $1.4 billion collected in FY 2003 — an increase of 62 percent in just 10 years.

Recently some have referred to a “shortfall” of state government revenues, but there clearly is no shortfall at all. State tax collections to date are at all-time highs, with major tax types such as sales and income taxes exceeding all prior years. It’s true that state bureaucrats overestimated collections and that lawmakers budgeted relying on the overestimate. In addition, repayment of a loan taken out by the state from the private sector near the beginning of the recession, increases in the amount of lawmaker-dedicated spending, and a structural deficit created by overreliance on stimulus funds during the recession all served to create the current false perception of a revenue “shortfall.”

Budget Message

6 OCPA Budget Book • 2014

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Given the hundreds of millions of dollars in inappropriate state spending, Oklahoma is sandwiched between Kansas and Texas, both with lower personal income taxes (Texas levies no penalty on the price of work). In view too of the fact that taxes have not been cut in two years, it’s time for a tax cut. As we have stated previously, regardless of whether Oklahoma’s tax burden ranks first or 50th in 50-state com-parisons (and here’s hoping we can one day get to 50th), the burden is too heavy.

Consistent with OCPA’s prior budget recommendation, this OCPA budget includes an across-the-board cut of the top personal income tax, lowering the top personal income tax rate from 5.25 percent to 4.75 percent. This will provide much needed tax relief to the vast majority of Oklahoma taxpayers without any arbitrary increases in taxes or taxable income for any Oklahoman. Further, OCPA’s proposed tax cut follows through on policymakers’ promise of tax relief beginning January 1, 2015, without gimmick-ridden triggers that are subject to gamesmanship in the appropriations and dedicated revenues process.

According to Oklahoma’s Office of Management and En-terprise Services, even in a year when personal income taxes were cut, state tax revenues grew by $883 million and fees grew by $194 million from fiscal year (FY)-2012 to FY-2013. The 0.25 percent reduction in the personal income tax effec-tive in 2012 was estimated to reduce state personal income tax revenues by approximately $61 million for FY-2012. So after much doom and gloom were predicted, the threatened doom never materialized.

OCPA’s proposed state budget this year focuses on fund-ing core functions of government. This budget provides what many Oklahomans want and need: lower taxes and a more efficient, effective government which dedicates citi-zens’ hard-earned dollars to the core functions of govern-ment. As we at OCPA like to say, it’s a state budget that re-spects your family budget.

With this growth in state revenue and with the increase in federal payroll taxes, it is imperative that personal income taxes be reduced in order to put money back into the hands of Oklahoma’s private sector, thus spurring economic ac-tivity and even providing some offsetting revenues for the state. But make no mistake: the goal is not to be “revenue neutral.”

Most cuts recently experienced by state agencies, par-ticularly those to core services, are a direct result of the ir-responsible spending spree of FY-1996 to FY-2002 (wherein state appropriations increased more than $1.9 billion—or 49 percent), the irresponsible spending spree of FY-2004 to FY-2010 (wherein state appropriations increased more than $2.1 billion—or 41 percent), and the irresponsible spending spree of FY-2012 to FY-2014 (wherein appropriation of certi-fied revenues increased by $833.7 million in just two years).

Oklahoma’s professional left, along with various tax us-ers in Oklahoma, once repeatedly dreamt of FY-2008 and FY-2009, when state tax revenues were at unprecedented levels, in part driven by a false economy based on a gov-

ernment-inflated housing market, soaring and unsustain-ably high energy prices, and ballooning federal spending. Now that both revenues and spending are at their highest yet, the left and tax consumers have moved the goal posts, straining for whatever selective state-appropriated per cap-ita measure suits their argument. Those that dream of “pre-downturn” years fail to acknowledge that in the boom years appropriations to higher education and other entities were driven by state Senate political leaders’ demands that for ev-ery dollar in tax cuts they wanted a dollar increase in spend-ing. Budgets determined by this sort of hostage-holding of taxpayers are hardly a standard for future budget and rev-enue determinations.

Consistent with prior years, this OCPA budget removes non-core government spending, focusing it on core services and setting it at a level more appropriate for a state with Oklahoma’s level of capital, job creation, and population. This budget demonstrates that personal income taxes can be cut without arbitrary increases in taxable income (born of a desire to be “revenue neutral”) and also demonstrates that considered core functions can be funded by government. It’s clear that there is more than enough money for the state budget. Now is the time to show some concern for Oklaho-mans’ family budgets.

The 9 R’s of Fiscal Responsibility

Consistent with OCPA’s prior recommendation, we ask: what is the core mission of government? This, of course, “is the debate at the heart of government budgeting,” says the John Locke Foundation (JLF), a free market think tank in North Carolina.

What should government do? What does the constitu-tion allow it to do? What does it do well? What can it rea-sonably hand off to other sectors of society?

Government is like Microsoft before broadband, hand-ing down a proprietary operating system (law) for every-one with little ability to fix bad lines of code. It assumes that a few people running “government modified orga-nizations (GMOs)” can make better decisions than the natural, organic interaction of millions of service users and providers. This setup results in, among other things, a Medicaid program that provides less health care than promised, schools that graduate half of African-American males, colleges and universities that graduate less than a quarter of their students in four years, and targeted tax incentives that fail to create or keep jobs.

How did Oklahoma manage to pile up $17 billion worth of annual government and $11.4 billion in government retire-ment liabilities? “In good times, I do think that it’s true that government is subject to ‘mission creep,’” former state treasurer Scott Meacham once observed. “When the revenue is flowing maybe there’s a trend to drift into areas that are outside of the core mission or missions of government. What happens when things are going well is that things that are ‘nice to do’ become new programs, but in hard times or tight times, it’s time to look

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at maybe pruning the tree of government.”Oklahoma, with approximately 3.8 million people and

a gross domestic product of more than $160 billion, is too complex for 149 legislators and several thousand bureau-crats to manage. Oklahoma has a vibrant private sector, and it makes more sense, as JLF points out, to leave more activi-ties in the hands of “individuals and companies who can be contractually bound to produce results, instead of spelling out the methods to state employees and allowing them to choose the results they will achieve.”

Government exists to secure our rights to life, liberty, and property. It does not exist to own and operate a third-rate motel chain, to bribe poor women to leave the fathers of their children, to give people food stamps with which to buy cigarettes, or to provide employment for termed-out state legislators. If policymakers focus on providing core services, government can be smaller and taxes can be lower. In craft-ing a state budget, the analysts at JLF have developed what they call the “9 R’s of Fiscal Responsibility” (reprinted below, adapted for Oklahoma).

Reform Entitlement ProgramsState programs to provide cash assistance, medical care,

or other services to the disadvantaged exist to provide a basic “safety net.” Even philosophers of limited government have justified such programs as needed to ensure order and protect public assets and spaces. But these programs must be carefully structured to minimize dependency and en-courage personal responsibility. When the state pays nurs-ing home bills for the parents of the middle class, subsidizes the daycare expenses of affluent families, and perpetuates social pathologies such as out-of-wedlock births, it strays far from its constitutional moorings.

One of the biggest contributors to Oklahoma’s budgetary problems is rapid growth in the state’s Medicaid program. The nature of this program leads to lawmakers expanding Medicaid programs (such as the Advantage Waiver program) to provide new entitlements (and create new dependents) in good and bad economic times. According to the state’s FY-2013 Comprehensive Annual Financial Report (CAFR), to-tal state spending on social services has grown from $1.59 billion in FY-2005 to $2.19 billion in FY-2013—an increase of 37.7 percent in eight years. Over the next few years the state is going to make significant appropriation increases to the Department of Human Services. And yet total state spend-ing on health services has already grown from $3.14 billion in FY-2005 to $5.44 billion in FY-2013—an increase of 72.9 percent in eight years.

Require More User ResponsibilityIt is appropriate to require those who benefit from general

core state services, such as law enforcement or education, to cover the cost of those services by paying taxes generally as-sessed on all citizens. But for many other state agencies, their programs or services are not constitutional entitlements or responsibilities. Generally assessed taxes are unjust for non-

core services. If the state is to continue its involvement in these enterprises, it would be appropriate to ask those who benefit to shoulder more of the responsibility of paying for them. Services for which this budget recommends addition-al user responsibility include state museums, historic sites, parks, costs of regulation for particular industries, and other non-core functions of government.

Redirect Spending to Higher-Priority UsesAccording to Article II, Section 2 of the Constitution of

Oklahoma, “All persons have the inherent right to life, liberty, the pursuit of happiness, and the enjoyment of the gains of their own industry.” Thus, it is incumbent upon Oklahoma politicians, when formulating tax and budget policies, to secure the people’s right to enjoy “the gains of their own in-dustry.” The state is obligated to perform its basic functions efficiently while leaving to the people as much of their hard-earned money as possible. During a time in which policy-makers find it difficult to fund obligations already in place, it makes little sense to incur new ones. Another way to ap-ply this principle is to sort out which expenditures within a given department or agency are central to the core mission and which are not.

Reorganize State GovernmentEven assuming that current fiscal obligations could con-

tinue into the next year, there remain different ways of orga-nizing the departments that carry them out. There is unnec-essary duplication of core functions throughout Oklahoma state government. In short, there are more efficient meth-ods of organizing the various departments. For example, the Oklahoma Scenic Rivers Commission provides mainly tour-ism- and recreation-related activities by its offering of trails or canoe rides in the Illinois River, yet is a stand-alone agency from the Oklahoma Tourism and Recreation Department (OTRD). Following on the heels of recent consolidations, policymakers should continue to reorganize state govern-ment. Governor Mary Fallin has proposed more agency con-solidations for FY-2015, which will serve to reduce taxpayer funds, spent on administrative duplication, and will reduce the number of taxpayer funded lobbyists at work in the capi-tol finding ways to spend taxpayer funds improperly. For ex-ample, the Governor proposes consolidating the Arts Coun-cil, Historical Society, Scenic Rivers Commission, and others into the Oklahoma Tourism Department. These consolida-tions are desperately needed, as these agencies’ directors are notorious for being active at the state capitol and in the community lobbying for non-core functions of government. For example, the director of the Oklahoma Historical Soci-ety is traveling the state and lobbying lawmakers to build a brand new museum in Tulsa with soon-to-be-experienced taxpayer savings from the retirement of bonds on the Okla-homa History Center. This is the exact kind of activity that must stop. The OTRD is the place to move these functions because the current director has demonstrated a commit-ment to the wise and frugal use of taxpayer dollars.


Revive Free EnterpriseResponding to Oklahoma’s economic challenges, some

policymakers have concluded that state government should take a more active role in attracting investment and guiding development through additional tax credits, cash subsidies, and other incentive programs. This is a mistake. The avail-able public policy research on state economic development does suggest that overall tax rates, especially the marginal rates on individual and corporate income, do have a measur-able impact on state economic growth rates. By focusing on eliminating non-core spending, this budget puts more than $134 million (for FY-2015) back in the hands of taxpaying Oklahomans to invest and spend as they choose.

Restore Civil SocietyNonprofits and charities form a “third” or “independent”

sector that delivers important services and benefits that nei-ther governments nor profit-seeking businesses can deliver as effectively. The state should be careful not to supplant these institutions of civil society.

Remove Advocacy, Waste, and Race-Based ProgramsLaws and programs that invoke racial or ethnic discrimina-

tion violate a basic principle of moral government. All such programs should be ended immediately— especially given that Oklahomans went to the polls in November 2012 and ap-proved State Question 759, which banned affirmative action programs in the state. Similarly, state funds should not be used to subsidize groups that advocate policies or ideas before gov-ernment bodies. Taxpayers should not be forced to pay for the propagation of ideas with which they may disagree.

For example, state law requires the state to administer and process payroll deductions for purposes unrelated to employ-ment benefits. Instead of working on the problems of failing employees, staff at the Department of Human Services host and attend a race-baiting training on “income inequality” be-tween the races in Oklahoma. Instead of focusing on the core job of investigating domestic abuse of children, DHS staff have taken the latitude of acting as a mouthpiece for the Obama administration, stirring up fear regarding modest decreases in food stamp spending. Staff from the Oklahoma Department of Health chose to use the government shutdown as an oppor-tunity to be a mouthpiece for the Obama administration and alarm citizens who use WIC services, instead of rallying private philanthropy to fill any gap. Staff at the Health Department also have diverted focus from core functions and are disseminating numerous lies regarding alternatives to combustible tobacco products. The Tobacco Settlement Endowment Trust has taken it upon itself to expand its footprint by incentivizing local com-munities to enact bans against alternatives to combustible to-bacco products. This must end. Government is instituted solely for the good of the whole, not for special interest groups and bureaucrats that use taxpayer money to advance their agen-das.

Reshape the State-Local Government RelationshipLocal control of local revenues should be a central theme

whenever possible in the relationship between state and local government. The diverse demographic nature of our state leads to problems in local applications of some state programs. An example of this is common education spend-ing. For far too long there has been too much reliance on the state of Oklahoma to support the core functions of common education while local districts forgo local efforts to increase teacher salaries, wisely use resources, and focus on core functions. An example of local common education excesses are the many “activity buses” that are bonded by local citizens at the ballot box, but local ballot initiatives to raise teacher pay aren’t near as popular. Common education schools spend hundreds of millions of dollars on “activities” which do not make the difference in a student being ready for the 21st century, especially as it relates to the areas of reading, writing, arithmetic, work ethic, critical thinking, and personal responsibility. State taxpayers shouldn’t be bur-dened because of the irresponsibility of some local areas or changing demographics and economies of some local areas.

Reduce Biases in the Tax CodeLike most states, Oklahoma has developed its personal

income tax code in a piecemeal fashion rather than using tax reform principles to completely phase out Oklahoma’s penalty on work—the personal income tax—and to build a coherent and efficient system. This budget provides the spending discipline that will allow for reductions in individ-ual taxes for everyone. Long-term, if the state implements an established and irreversible plan to completely phase out Oklahoma’s personal income tax, ensuring tax relief for general taxpayers and not “revenue neutrality,” the need for individually tailored tax breaks can be phased out.

Government-Wide Reforms

State Employee Health Insurance ReformPolicymakers should fully implement the reforms of SB

2052, which was passed by the legislature in 2010 but ve-toed by former Governor Brad Henry. The reforms include consolidation of duplicative administrative functions of the state Employee Benefits Council (EBC) and the Oklahoma State and Education Employees Group Insurance Board (OS-EEGIB) (both are now consolidated into the Office of Man-agement and Enterprise Services, named the Oklahoma Em-ployees Insurance and Benefits Board). This consolidation is estimated to result in an administrative savings of $2 million to $3 million annually. These savings should be allocated to reducing the personal income tax and not absorbed by gov-ernment. Non-appropriated revenue of these consolidated entities is derived from state appropriations for health-ben-efit payments for employees, so any spending reductions at EBC and OSEEGIB equal savings for state-appropriated agencies. Other features of the reform include implementa-tion of a “winner take all” competitive bidding process for

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health maintenance organization (HMO) benefits that are offered by the state to employees (this is how most private-sector firms choose health insurance products). This reform, coupled with the stabilization of the benefit allowance for state employees, would result in savings of more than $75 million annually.

The state should reform the state’s HealthChoice plan so that the insurance offering for all state employees is a Health Savings Account plan. With the current generous benefit al-lowance (which pays well over the costs of health benefits) and implementation of health insurance incentive reforms, all state employees can be converted to Health Savings Accounts without a reduction in the quality of health benefits available to state employees.

As a final part of this reform, the state should immediately apply the same reforms implemented by Oklahoma County re-garding the purchase of surgical procedures in their employees’ health plan. Oklahoma County is now incentivizing its employ-ees to use The Surgery Center of Oklahoma, which posts the full price of surgical procedures online, and often its prices are 1/5th to 1/10th those of competitors. In a fall 2013 legislative committee, the surgery center testified that it tried to provide a rate up to 30 percent less on some prices compared to the proposed contract from the state, but staff of the state insur-ance plan declined because of pressure from medical providers who charge higher prices. If the state moved to such a plan and it saved 10 percent of total claims for state entities covered in the state insurance plan (approximately $197 million in 2012), this could save well over $20 million a year. This change should be implemented immediately; numerous private companies in Oklahoma are making such a change and saving hundreds of thousands a year in their health insurance plans. According to the Oklahoma Tax Commission for 2013, there will be 61,755 tax returns (federal adjusted gross income of $45,000-$49,999), with an average Oklahoma personal income tax liability of $981. Based on this, the amount of money given (annually) by lawmakers to overpay for benefits can be compared to all (and then some) 61,755 taxpayers and their families (at this income level) that are deprived of their hard-earned income.

Savings for FY-2015: $57.8 million (half a fiscal year – $37.8 mil-lion, ceasing overpayment of benefits and $20 million, moving to contracting with providers who transparently post prices)

Savings for FY-2016 and thereafter: 95.6 million (annually)

Telecommunications Efficiency AuditsPolicymakers should require audits of state telecommuni-

cations and data communications utilization. Independent IT efficiency firms, for a flat fee or on a contingency basis, can be employed as negotiators and reviewers of charges from telecommunications and data communications companies used by state agencies. Highly successful Oklahoma com-panies have used these firms and seen significant savings. Some private-sector companies have reduced from 25 to 50 percent the amount spent annually on telecommunications and data communications.

Savings for FY-2015 and thereafter: $3 million (annually)

Employee Compensation, Mandatory Performance Evalu-ations, and Hiring Reform

The state’s current approach to employee compensation is broken. As has been noted in multiple reports, the state spends too much on health and retirement benefits, often short-changing hard-working and excelling employees in regards to salary. This must change. But to truly analyze state employee compensation, several things must be con-sidered. According to the American Legislative Exchange Council’s 6th edition of Rich States, Poor States and other measurements of government employee levels, Oklahoma ranks high in the number of government employees. Only 16 states have more public employees per 10,000 of state population. When you have too many employees, you can’t afford to pay the good employees what they should earn. Also, while there has been much angst over the difference in salary and wages of state employees compared to private sector employees, this comparison in a vacuum is not genu-ine. Government employees have a huge premium that pri-vate sector employees don’t: job security. Bureaucrats have yet to analyze and price this difference, but it is enormous. As OCPA’s vice president for policy Jonathan Small (a former state employee with over six years’ experience) noted in a presentation to a legislative committee on employee com-pensation:

Advocates of increases in pay for all state government employees regularly attempt to selectively compare the pay of state employees to the pay of private or “market” employees. This comparison is flawed. The employment of state employees is governed by state law, including, for example, Title 74 Section 840-1.1-840-6.9, the “Okla-homa Personnel Act.” This law has strict guidelines for the hiring, firing, and treatment of state employees, es-pecially those classified or “Merit” employees. State law provides significant protections for classified state em-ployees, requiring a lengthy process for the firing of non-performing employees. Private or “market” employers can easily (i.e., without a lengthy bureaucratic process) hire, fire, and discipline non-performing private or “mar-ket” employees. This job security for state employees is not valued by compensation studies, but is reality and a significant benefit to state employees. I worked for the state during high- and low-revenue years, but, as a state employee, I was never concerned that I would be fired because revenues were down, nor did I experience the same performance pressure. As a private employee, I am regularly aware that a down economy could affect my employment status and that my continued exemplary performance is the sole reason I am able to maintain pri-vate employment.

Solutions for state employee payPolicymakers and agency managers must recog-nize that salary and wage decisions must be viewed independently, on a per-job and a per-employee basis, and not “across the board.” All employees do not perform the same and all jobs are not equal. It is

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impossible that all employees deserve a raise, and it is also true that some employees have performed in a way to earn a raise, but not received it.State law must be amended to allow state agency managers to construct tailored, performance-based salary structures and end the bureaucratic and “one-size-fits-all” style classified pay bands. These statutory changes can be made without in-creasing state appropriations.State law must be amended to allow state agency managers the flexibility to create performance-based bonus structures, allowing agencies to pay performance-based bonuses of up to 10 percent of salary. These statutory changes can be made with-out increasing state appropriations. Employees and the nature of the economy and workforce require mobile and performance-based structures, which are largely absent from current state employment policy.Policymakers must modernize the current approach to employee compensation by shifting away from centralized, burdensome, and costly defined-bene-fit plans, and implement full defined-contribution plans including a defined-contribution retirement plan for all new state employees and mandatory Health Savings Accounts for all employees.State law must be amended to remove bureaucrat-ic barriers in personnel statutes that prohibit state agency managers from efficiently and effectively managing state agencies.

Further, policymakers should require all state agencies to implement and use rigorous semi-annual performance evaluations for employees. These evaluations would include private-sector-like evaluations of employee computer and Internet time management, benchmarks and requirements for employee output to hours worked, performance and in-centive pay for work that leads to the reduction of full-time equivalent employees (FTEs), and so on. Agencies would then be able to make retention decisions based on the re-sults of these initiatives. Some agencies have started these evaluations and discovered startling information about the low workload and low output of some of their employees. In some agencies, more than 6 percent of the FTEs were gross-ly underperforming their required duties, and contributed little to the completion of tasks at the agency. These evalu-ations have allowed agencies to reward and reassign duties to performing employees, and separate non-performing employees, thus saving hundreds of thousands of dollars in employee expenses.

It is time to reduce FTE authorizations. According to the Governor’s Budget Book, FTEs increased over the prior year by 582, an indication that state agencies are slowly begin-ning to increase employment. Many decisions were made during the 2011 legislative session to adjust to reduced ap-propriations. As with most organizations, when cuts are nec-essary, this will result in reduced FTEs. Every agency that has

experienced FTE reductions to accommodate available rev-enue should have its agency FTE authorization reduced to its current FTE level, the new lower level to be a result of pre-vious spending reduction, or reductions in the 2012 session, whichever is lower. Further, to add much needed account-ability to the hiring process, all state appropriated agencies should be required to notify the Office of State Finance, Division of Personnel Management, and the Governor’s of-fice before any new hires are made. Once the agency has provided a detailed notification and justification for filling the position, the Governor’s office or the Division of Person-nel Management will have 30 days to approve or disapprove the new hire. This will prevent future growth in personnel expenses without careful consideration and approval of the Legislature and the Governor.

Savings for FY-2015: $5.4 million (half a fiscal year)Savings for FY-2016: $23.4 millionSavings for FY-2017: $41.4 million

Continued Retirement ReformPolicymakers enacted significant retirement reforms in

2011, but the work is not done. By the completion of the 2014 legislative session, the legislature should implement a defined-contribution (DC) plan (effective as soon as ad-ministratively possible) for all new state [Oklahoma Public Employees Retirement System (OPERS)]-eligible employ-ees. Adhering to the first rule of holes (“when you’re in one, stop digging”), this plan stops the practice of adding new liabilities for new employees. The plan would pay 4 percent of annual salary immediately, increasing to 7 percent of an-nual salary after 4 years of service. [The state would contrib-ute 4 percent of salary to the employee’s 401(k) beginning when the employee is hired.] The plan would take the dif-ference between the new DC plan contribution and the old DB (defined benefit) plan contribution and inject it into the system, using it to pay down the debt over time. Based on independent actuarial evaluations, this plan would allow for complete elimination of the over $1.6 billion in unfunded li-ability for OPERS over a period of time (between 18 and 30 years), cap immediately the liability exposure to new hires, and allow for a more modern compensation package.

As a part of retirement reform, it is time to consolidate the five separate boards that govern the six active defined-benefit retirement plans operated by the state. Given the similar nature of the governance and fiduciary responsibili-ties of public retirement systems, economies of scale can be achieved by consolidating governance. For example, a major function of a board of a retirement system is to employ fund managers to responsibly and successfully invest the funds of the system that pays benefits to beneficiaries. By consoli-dating, fees charged by fund managers can be reduced be-cause of the larger pooling of decision making — all while keeping the individual funds intact and separate. Also, with combined governance, duplications that exist in agencies can be reduced to yield savings for the system so that op-erational improvements can be more actively pursued. As

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with a number of issues facing government, the status quo is tempting and has a solidified constituency. The problem is that the status quo has produced an unfunded liability that exceeds current state appropriations by 50 percent and threatens the state’s ability to meet its promises to current employees. Consolidation of Oklahoma’s retirement system boards can make sure that government keeps its promises, recruits a qualified workforce, and doesn’t unnecessarily burden taxpayers.

Savings: Long-term elimination of state pension liabilities and future obligations and savings in reductions of unneces-sary administrative costs. Based on current actuarial assump-tions for OPERS, beginning in the 19th year after such a plan is implemented, the savings to state and local government par-ticipants in OPERS would equal $224 million, and grow to $3.8 billion total in the 30th year.

Major Asset SalesThe state owns many assets that are not related to core

functions of government or are not being utilized. These as-sets can be sold. The state should privatize or sell assets such as the Grand River Dam Authority (GRDA), the state’s interest in goodwill and surplus value in CompSource, and multiple other assets. These one-time funds should be used to repair core assets, establish a fund with planned asset repair and placement, and provide savings to continue to cut personal income taxes.

Savings for FY-2016: $50 million to $200 million(privatize CompSource)Savings for FY-2015: $25 million (asset sales)Savings for FY-2016: $25 million (asset sales)Savings for FY-2016: $300 million (privatize GRDA)

Agency, Board, and Commission Reform Whether it is the Oklahoma Health Care Authority board’s

past indifference to a director’s high salary and ballooning Medicaid costs, or the Oklahoma Historical Society’s strong support of the current director lobbying lawmakers to expand more state museums while the state has existing infrastructure needs, it is time to hold board members accountable. This can be done by making all gubernatorial appointments at the will of the Governor. Preferably a number of boards and commis-sions need to be completely eliminated so that bureaucrats are accountable to a prominently elected official, the Governor.

OCPA has made this recommendation on numerous occa-sions, regardless of the political party affiliation of the pres-ent Governor. As we stated last year, despite Oklahoma voters’ mandate for right-sizing government, “old guard” board ap-pointments in some cases will outlast a governor, even a gov-ernor elected to two terms. This explains in part why higher-education regents allow tuition increases of more than 100 percent in just nine fiscal years, why other boards approve the hiring of lobbyists with taxpayer funds, and why still other boards grant completely undeserved salary increases. Making gubernatorial appointments coincide with the term of the gov-ernor provides for accountability, because the governor will be

watching (knowing that the citizens generally hold the gover-nor accountable).

Immediately, the boards of the Oklahoma Health Care Au-thority and the Oklahoma Department of Corrections should be eliminated. These agencies have a history of not being trans-parent with lawmakers about finances and significantly driving up costs for taxpayers when reforms could have been pursued.

Oversight of Federal FundingAs mentioned above, Oklahoma government spending is

at an all-time high. As we made the case in last year’s budget recommendation, the most significant driver of state spending growth is federal funds, or what tax consumers like to think of as “free” money. It is the federally induced welfare programs, such as Medicaid, that require ever-increasing state funding matches for the programs’ exploding costs. Based on this enor-mous growth (172 percent from FY-2003 to FY-2013), lawmak-ers must take a serious look at state programs operated with federal funds. In particular, oversight of state agencies’ applica-tion for federal funds, and operation of programs using federal funds, must begin immediately. The current budget review pro-cess is inadequate. There are simply too many programs being operated by state agencies, and too much money being spent. Just as lawmakers have established committees specifically for certain policy issues needing intense review (e.g., DHS), it is time to designate an oversight committee designed specifical-ly to review and make recommendations for all state programs utilizing federal funds. The legislature’s newly created “non-ap-propriated” committees, whose purpose is to review spending not directly appropriated by lawmakers, are a suitable place for this task of federal funds oversight. The current unchecked growth in state government spending is irresponsible. It is time for policymakers to take fiscal federalism seriously, and chart a new course toward economic freedom.

Privatization of State ServicesMany of the services currently provided by state agen-

cies—the Tourism Department, the Department of Correc-tions, the Office of Juvenile Affairs, and the Department of Human Services come quickly to mind—can be performed at the same or better quality and at lower cost by the private sector or non-profit entities. It is unjust to require taxpayers to support overpriced services—especially when many of these taxpayers are small-business owners being forced to subsidize their own competitors.

In the 2014 session, lawmakers should establish a joint committee, comprising both public and nonpublic sector appointees, specifically tasked with evaluating current ser-vices provided by government that are also provided by the private sector. This committee should create a comprehen-sive list of services that can be privatized, and then lawmak-ers should be required to take formal action accepting or denying the list of services to be privatized prior to the end of the 2014 session.

Savings: Long-term reduction in the costs of providing state services to allow for the re-direction of savings to core services


EDUCATION COMMITTEEArts CouncilCareer and Technology EducationBoard of EducationOklahoma Educational Television AuthorityRegents for Higher EducationLand CommissionDepartment of LibrariesPhysician Manpower Training CommissionSchool of Science and MathematicsCenter for Science and TechnologyOffice of AccountabilityTeacher Preparation Commission

GENERAL GOVERNMENT AND TRANSPORTATION COMMITTEEAuditor and InspectorBond AdvisorElection BoardEmergency ManagementEthics CommissionOffice of Management and Enterprise Services GovernorHouse of RepresentativesLegislative Service BureauLieutenant GovernorMerit Protection CommissionMilitary DepartmentSenateSpace Industry Development AuthorityTax CommissionDepartment of TransportationTreasurer

PUBLIC HEALTH COMMITTEEHealth Care AuthorityHealth DepartmentJ.D. McCarty CenterMental Health and Substance AbuseUniversity HospitalsDepartment of Veterans Affairs

HUMAN SERVICES COMMITTEECommission on Children and YouthOffice of Disability ConcernsDepartment of Human ServicesOffice of Juvenile AffairsDepartment of Rehabilitation Services

NATURAL RESOURCES COMMITTEEDepartment of Agriculture, Food and ForestryDepartment of CommerceConservation CommissionConsumer Credit CommissionCorporation CommissionDepartment of Environmental QualityHistorical SocietyHorse Racing CommissionInsurance Department

FY-14 Appropriation

$4,010,087$138,142,618

$2,407,604,082$3,822,328

$988,549,006$15,062,250

$5,898,633$4,379,254$6,332,274

$17,811,449$661,271

$1,526,179

$4,706,986$143,112

$7,805,808$651,179$738,129

$45,132,347$2,172,900

$16,574,682$9,892,835

$506,591$490,967

$11,747,997$13,171,789

$394,589$46,915,944

$208,707,119$3,553,873

$953,701,274$62,983,682

$4,140,338$336,821,458

$44,530,391$35,698,752

$2,027,167$317,607

$630,958,664$98,187,205$30,949,232

$25,910,247$32,573,212$10,461,684

$31,730$11,324,427

$9,057,973$12,502,546

$2,072,167$1,871,937

FY-15 Appropriation

$0$134,799,901

$2,407,264,448$0

$938,847,377$8,973,028$5,845,537

$0$5,142,849

$14,790,508$661,271

$0

$4,566,463$139,679

$7,785,325$619,710$732,293

$43,594,723$2,141,660

$13,889,774$4,886,541

$502,014$486,390

$11,361,445$10,995,792

$0$46,088,600

$205,983,636$3,502,951

$852,564,287$59,494,926

$3,879,318$317,546,790

$41,609,400$33,258,031

$1,998,788$310,741

$659,592,994$97,351,737$29,907,900

$24,455,071$21,661,582

$9,528,343$0

$10,816,463$6,960,523

$12,225,509$0$0

$ - Change

-$4,010,087-$3,342,717

-$339,634-$3,822,328

-$49,701,629-$6,089,222

-$53,096-$4,379,254-$1,189,425-$3,020,941

$0-$1,526,179

-$140,523-$3,433

-$20,483-$31,469

-$5,836-$1,537,624

-$31,240-$2,684,908-$5,006,294

-$4,577-$4,577

-$386,552-$2,175,997

-$394,589-$827,344

-$2,723,483-$50,922

-$101,136,987-$3,488,756

-$261,020-$19,274,668

-$2,920,991-$2,440,721

-$28,379-$6,866

$28,634,330-$835,468

-$1,041,332

-$1,455,176-$10,911,630

-$933,341-$31,730

-$507,964-$2,097,450

-$277,037-$2,072,167-$1,871,937

% - Change

-100.00%-2.42%-0.01%

-100.00%-5.03%

-40.43%-0.90%

-100.00%-18.78%-16.96%

0.00%-100.00%

-2.99%-2.40%-0.26%-4.83%-0.79%-3.41%-1.44%

-16.20%-50.61%

-0.90%-0.93%-3.29%

-16.52%-100.00%

-1.76%-1.30%-1.43%

-10.60%-5.54%-6.30%-5.72%-6.56%-6.84%

-1.40%-2.16%4.54%

-0.85%-3.36%

-5.62%-33.50%

-8.92%-100.00%

-4.49%-23.16%

-2.22%-100.00%-100.00%

OCPA FY-2015 Budget Recommendation


NATURAL RESOURCES COMMITTEE (Cont.)J.M. Davis Memorial CommissionDepartment of LaborDepartment of MinesScenic Rivers CommissionDepartment of Tourism and RecreationWater Resources BoardWill Rogers Memorial Commission

PUBLIC SAFETY COMMITTEEABLE CommissionDepartment of CorrectionsFire MarshalState Bureau of InvestigationLaw Enforcement Education and TrainingBoard of Medicolegal Investigations Narcotics and Dangerous DrugsDepartment of Public Safety

JUDICIARY COMMITTEEAttorney GeneralCourt of Criminal AppealsDistrict Attorneys CouncilDistrict CourtsIndigent Defense SystemPardon and Parole BoardSupreme CourtWorker’s Compensation CommissionWorker’s Compensation Court

MISCELLANEOUS AGENCIES/APPROPRIATIONSRural Economic Action Plan (REAP)OSU Medical CenterMaintenance of State Buildings Revolving Fund

Government Wide Reforms (Not included in individual agency adjustments)

Telecommunications efficiency auditsHiring ReformState employee health insurance competition incentive reform

Total Appropriations Including Misc Approp

OCPA Recommendations FY-15 Certified Revenue Estimate (February 2014 Estimate) Surplus revenue Estimated FY-2015 revenue decline from income tax cut (All funds Excluding ROADS Fund) Offsets for Estimated FY-2015 revenue decline from income tax cut to ROADS fund (transfer to ROADS fund) Net Surplus Funds after tax cut Surplus funds to carryforward for FY-2016

$306,009$3,311,160

$879,139$271,315

$21,803,003$9,999,671

$740,486

$3,140,334$463,731,068

$1,796,764$14,283,059

$3,757,560$8,698,281$3,616,418

$90,416,790

$15,228,141$3,634,631

$39,687,258$59,600,000$15,699,353

$2,292,454$17,300,000

$1,500,000$4,247,166

$11,532,469$13,000,000$30,000,000

$7,113,700,500

$0$3,234,719

$843,894$259,757

$19,805,182$6,889,130

$0

$3,097,880$458,910,617

$1,771,360$13,944,569

$3,711,215$8,604,218$3,454,954

$75,806,611

$12,954,544$3,602,704

$38,409,166$58,898,303$15,584,692

$2,260,642$17,038,713

$1,500,000$4,163,631

$0$13,000,000

0

-$3,000,000-$5,400,000

-$20,000,000

$6,796,110,822

$6,796,110,822$6,940,352,735

$144,241,913-$117,963,198

-$17,004,762

$9,273,953

$9,273,953

-$306,009-$76,441-$35,245-$11,558

-$1,997,821-$3,110,541

-$740,486

-$42,454-$4,820,451

-$25,404-$338,490

-$46,345-$94,063

-$161,464-$14,610,179

-$2,273,597-$31,927

-$1,278,092-$701,697-$114,661

-$31,812-$261,287

$0-$83,535

-$11,532,469$0

-$30,000,000

-$3,000,000-$5,400,000

-$20,000,000

-$317,589,678

-100.00%-2.31%-4.01%-4.26%-9.16%

-31.11%-100.00%

-1.35%-1.04%-1.41%-2.37%-1.23%-1.08%-4.46%

-16.16%

-14.93%-0.88%-3.22%-1.18%-0.73%-1.39%-1.51%0.00%

-1.97%

-100.00%0.00%

-100.00%

N/AN/AN/A

-4.46%


A major source of revenue for school districts and tech-nology centers is the ad valorem tax, or property tax, which is allowed by Article 10 of the Oklahoma Constitution. The level of support technology centers receive from property-tax sources varies based upon what was approved for the technology centers through a vote of the people in the dis-trict. Support from property tax is capped at five mills for the general fund (a mill = 1/10th cent), five mills for the incentive fund for operations, and five mills for the building fund, al-though not all technology center districts have voted the full millage levy. The use of building funds is generally limited to “erecting, remodeling, or repairing buildings and for pur-chasing furniture.” Partially because of this provision, and be-cause of economic growth in several areas of the state, total CareerTech building fund carry-forward balances increased from $36.8 million in FY-2001 to $106.1 million in FY-2011, and local property tax funds continue to grow. This enor-mous fund growth—161 percent adjusted for inflation—has resulted in technology centers across the state being forced to make building purchases or improvements that they do

not need, while other potentially worthwhile expenses are neglected. This is like a family being forced to use a savings account to buy a new home, when dad just lost his job and the family needs to buy groceries. CareerTech does not need increased state appropriations.

What is needed is a constitutional amendment and statu-tory changes allowing technology centers to use the existing local-district voting process to reallocate the total millage for technology centers as their local citizens and their elect-ed officials see fit. This allows for local control and removes the need for more state funding. Then CareerTech can ad-just its state allocations to local technology centers, saving millions of dollars in state appropriations and allowing for wiser use of local property taxes. This budget recommends that CareerTech receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform, less appropriations to CareerTechs in large MSAs that have sufficient local revenue to support their operations, and less a targeted earmark.

Arts CouncilFY-2014 4,010,087$

Not a core function of government; eliminate appropriation $ (4,010,087) $ -

Total Savings $ 4,010,087 FY-2015 -$

Career and Technology EducationFY-2014 138,142,618$

Savings from state employee health insurance reform $ (292,717)Reduce state subsidy for technology centers with sufficent local revenues to support operations without state funding (Metro, Francis Tuttle, Tulsa) $ (3,000,000)Eliminate targeted funding for Kiamichi Technology Center $ (50,000)

$ - Total Savings $ 3,342,717

FY-2015 134,799,901$

Education

Arts CouncilThis budget, as in prior years, recommends that the Arts

Council operate solely from donations and self-generated funds, without receiving state appropriations. Promotion of the arts is a nonprofit interest, which should not be advan-taged over other nonprofit efforts that do not receive state appropriations. Based on historical median income growth, adjusting from 2011, Oklahoma’s median household income will be $51,726 for 2013. According to the Oklahoma Tax Commission, for 2013 there will be 54,811 tax returns with an average Oklahoma personal income tax liability of $1,375 (based on a federal adjusted gross income of $50,000-$54,999).

Accordingly, the amount of money given by lawmakers for state sponsorship of the arts can be compared to approxi-mately 2,916 taxpaying families deprived of their hard-earned income. State government has core functions which are neglected when limited resources are diverted to phil-anthropic interests such as promotion of the arts. Removing state funding for the Arts Council would not be a unique re-form attempted only by Oklahoma. Kansas eliminated such funding in 2011, providing a great example for all states of wisely using taxpayer funds.

Career and Technology Education


Board of EducationOver the long term, lawmakers in Oklahoma must address

the ever-growing cost of common education, which has been accompanied by results that remain flat at unaccept-ably low levels. According to Dr. Greg Foster, federal data indicate that “only half of Oklahoma’s public education em-ployees are teachers. The bureaucracy is now so big, it takes up half the system.” According to a report from the research affiliate of The State Chamber, Oklahoma public schools spend $9,121 per pupil. This per-pupil expenditure signifi-cantly exceeds the average cost associated with alternatives to public education.

Cost-saving alternatives (such as vouchers, tax credits, and Education Savings Accounts, for example) need serious at-tention from lawmakers.

Imagine a state where a mom using Medicaid could only take her daughter to a government hospital or where child care subsidies from the state could only be used at a gov-ernment-operated daycare center. Imagine a state where Oklahoma Higher Learning Access Program scholarships were granted only to students who enrolled at the college or university nearest their home, and that it had to be a public institution. Better yet, imagine a state in which high school students could only attend the nearest public college or uni-versity. Needless to say, these programs would face signifi-cant operational challenges and would fail to provide these programs to many Oklahomans whom they are intended to serve. Sadly, this is the mode of operation for providing funding for K-12 public education.

Currently in Oklahoma, a child’s residential address largely determines the educational fate of that child. The current state funding formula essentially says to parents: You will only get state assistance for your child’s education if you go to a school designated by bureaucrats—regardless of that school’s performance or quality. This is unfair and discrimi-natory.

Now imagine an Oklahoma where families, students, and educators were connected by state resources to achieve the maximum in education effectiveness, flexibility, and efficien-cy. Imagine a state where students and parents can make a choice about where students will receive an education best tailored for the learning needs of each student. Imagine a state K-12 funding mechanism that can be used to allow stu-dents and families to take supplemental courses as needed at institutions of higher learning when traditional methods are not adequate or satisfactory. This can be accomplished in Oklahoma by implementing a state-funded Education Savings Account (ESA). Arizona is the only state so far to

establish any form of ESAs, but as Dr. Matthew Ladner points out, “Education Savings Accounts are the way of the future.” Under such accounts—managed by parents with state su-pervision to ensure accountability— parents can use their children’s education funding to choose among public and private schools, online education programs, certified private tutors, community colleges, and even universities.

Education Savings Accounts allow parents to withdraw their children from public district or charter schools and re-ceive a deposit of public funds into government-authorized savings accounts with restricted, but multiple, uses. Those funds can cover private school tuition and fees, online learn-ing programs, private tutoring, community college costs, and other higher education expenses. To empower parents and students, it’s time for Oklahoma to change its outdat-ed funding program. Oklahoma should convert its funding mechanism for state support of K-12 education to funding ESAs. It’s time to fund students, not schools. For starters, Oklahoma should begin to offer ESAs for newly enrolled pre-K students starting with the 2014-2015 school year. If parents or guardians choose not to enroll their preschooler in a public pre-K program, the state will deposit the state’s portion of pre-K funds into the parents’ savings account. According to the National Institute for Early Education Re-search (NIEER), state funding (excluding local and federal aid) for 4-year-olds averages $3,461 per student in Oklaho-ma. Parents choosing the ESA could use this money for any of the multiple alternatives mentioned above.

Ideally, the program would be expanded every year, so that parents of K-12 students could also benefit from ESAs. This will instill in students, parents, and families the para-digm shift to saving, planning, and engaging in education throughout life. Thus far during the 2014 legislative session, the efforts to implement Education Savings Accounts have been thwarted by the status quo.

Oklahoma’s funding formula to determine the amount of state aid given to public schools is outdated. The formula uses the highest enrollment number in a three-year period to determine aid, which results in state aid not matching the actual annual enrollment for students and in inequitable school funding. Funding should be adjusted based on the annual enrollment. When this change is made, many schools will justly see an increase in their state aid.

This budget recommends that the Board of Education re-ceive the same appropriation provided for FY-2014, less sav-ings from the implementation of the state employee health insurance reform.

Board of EducationFY-2014 2,407,604,082$

Savings from state employee health insurance reform $ (339,634) $ -

Total Savings $ 339,634 FY-2015 2,407,264,448$


Oklahoma Educational Television AuthorityAs OCPA stated last year, “Public broadcasting is a won-

derful resource, providing quality programming that is cher-ished by many,” then-Governor of Virginia Bob McDonnell correctly noted. Nevertheless, he recommended eliminating state funding for public broadcasting. “In our modern media world,” he said, “there are thousands upon thousands of con-tent providers operating in the free market. They compete with each other, and viewers and listeners have their choice as to what to tune in to or turn on. Simply put, it doesn’t make sense to have some stations with the competitive ad-vantage of being funded by taxpayer dollars. The decision to eliminate state funding of public broadcasting is driven by the fundamental need to reestablish the proper role of gov-ernment, and budget accordingly.” Similarly, in 2011, Florida Gov. Rick Scott vetoed the state’s $4.8 million appropriation for public broadcasting. State-run television is not a core function of government, worthy of taking the hard-earned income of Oklahomans. Based on historical median income growth, adjusting from 2011, Oklahoma’s median household

income will be $51,726 for 2013. According to the Oklahoma Tax Commission, for 2013 there will be 54,811 tax returns (federal adjusted gross income of $50,000-$54,999), with an average Oklahoma personal income tax liability of $1,375. Based on this, the amount of money given by lawmakers for state-run television can be compared to approximately 2,780 taxpayers and their families that are deprived of their hard-earned income.

According to the Oklahoma Educational Television Au-thority (OETA), as of FY-2012, 17 states are not providing state funding for public broadcasting. Consistent with the principles of free enterprise and limited government, this budget removes all state appropriations from OETA and recommends that all OETA assets, including any bandwidth rights, be assigned to the nonprofit OETA Foundation, giving OETA a firm footing to continue operations without any tax-payer funding. Oklahomans who wish to support OETA may send a donation to the OETA Foundation, P.O. Box 14190, Oklahoma City, Oklahoma 73113.

Regents for Higher EducationTimes are changing. As we pointed out in last year’s bud-

get recommendation, Jeff Sandefer, a successful entrepre-neur and former University of Oklahoma professor, wrote:

“The truth is that over the next decade, many universi-ties may bankrupt themselves by clinging to an educa-tional approach that confuses lecturing with learning and protects highly paid, tenured faculties and admin-istrators from a tsunami of technological change that soon will deliver transformational learning at a fraction of today’s costs. There’s a word for business models that have high and increasing fixed costs, and are faced by disruptive strategies that offer better results at a lower price. That word is ‘doomed.’ ... The real problems in higher education are more fundamental than tuition increases alone: (1) A public that increasingly questions the value of a college degree. … (2) High and rising fixed costs from tenured faculty, bloated administra-tive staffs, and expensive new buildings at a time when tenured-faculty teaching productivity is falling ... (3) A tsunami of technologically enabled educational change promises to deliver transformational learning at a frac-tion of today’s costs.”

These problems exist in Oklahoma. Since the Legisla-ture granted the State Regents authority to approve tu-ition and fee increases in 2003, undergraduate resident tuition and fees have increased by 112.59 percent from FY-2003 to FY-2013, according to the State Regents. Dur-ing the same time period, inflation has only increased by approximately 28 percent, while personal income per capita in Oklahoma rose only about 51 percent.

During that time, when comparing each year of Higher Ed appropriations to FY-2004, even after adjusting for inflation and including budget cuts, the Legislature has maintained total appropriations to higher education and in several years substantially exceeded that level.

Tuition at the University of Oklahoma and Oklahoma State University during that time period is even more alarming:

Oklahoma State University (including the Tulsa campus) – Undergraduate Resident Tuition and Mandatory Fee In-creases:

FY-2003 – $100.83 main campus tuition and fees per credit hourFY-2013 – $248.05 main campus tuition and fees per credit hour

Oklahoma Educational Television AuthorityFY-2014 3,822,328$

Not a core function of government, a function of philanthropy, eliminate appropriation $ (3,822,328)


FY-2015 -$

•

•


146.01 percent – main campus tuition and fee increases28 percent – inflation $2,208.30 – increase per 15-hour semester

University of Oklahoma – Undergraduate Resident Tuition and Mandatory Fee Increases:

FY-2003 – $97.62 main campus tuition and fees per credit hourFY-2013 – $244.68 main campus tuition and fees per credit hour150.65 percent – main campus tuition and fee increases28 percent – inflation $2,205.90 – increase per 15-hour semester

Analyzing the State Regents data, tuition increases are not just based on enrollment growth. In the fall of 2003 the full-time equivalent enrollment was 96,856 and by 2009 had grown by 2,059 or 2.13 percent. Meanwhile, over the same period, average undergraduate resident tuition and manda-tory fee increases grew 69.51 percent for research universi-ties and 52.19 percent for regional universities. Inflation over this period of time was 17 percent and the private earnings of Oklahomans grew 35.03 percent over this same period. Oklahoma ranks 35th in personal income per capita yet ranks 18th in per capita higher education appropriations, but ranked 37th in bachelor’s degree attainment. As of 2012, for Oklahoma public four-year institutions, only 19.97 per-cent of students graduate within 4 years, and 55 percent of Oklahoma’s students fail to graduate within even six years. In an investigative review (of FY-2012 and prior years) of Okla-homa college and university budgets, Peter J. Rudy, formerly of Oklahoma Watchdog, reported:

Spending at state colleges and universities this year is 66% higher than it was just 10 years ago according to data obtained by Oklahoma Watchdog through Open Records requests. The Education and General (E&G) bud-gets of the 25 state colleges and universities grew from $1.29 billion in FY-2003 to $2.13 billion in the current fiscal year. … [W]hile Oklahoma suffered two econom-ic downturns during that period, spending never de-creased at state colleges and universities. The last three

years, Oklahoma has experienced a revenue failure and two budget shortfalls, yet Higher Ed spending increased by 2.5%, 2.8%, and 3.9% in those years. The 3.9% increase this year comes despite state lawmakers decreasing state appropriations to Higher Ed by 5% in the budget. Col-leges and universities have other sources of revenue, pri-marily tuition and fees, which allowed spending to rise. Every state college and university raised tuition and fees this year.

According to the State Regents, total student (headcount) enrollment at public colleges and universities was 228,249 for 2002-03 (FY-2003). Allocating the FY-2003 budget to en-rollment for 2002-03 equals an E&G budget of $6,028.83. The headcount for 2011-12 is 256,213. Allocating the FY-2012 budget to enrollment for 2011-12 equals an E&G budget of $8,313.39. Analyzing these data, public colleges and uni-versities in Oklahoma have increased the E&G budget per student by $2,088.14 or approximately $585 million in nine years. Low productivity among professors is also a problem in Oklahoma. For example, in a 2002 study conducted of a non-medical and non-engineering division of an Oklahoma research institution (see nearby table), it was found that multiple professors were paid salaries exceeding $100,000 a year, taught in some cases as little as one class per year, and taught few students compared to non-tenured professors and graduate assistants. Concerning the number of colleges and universities in Oklahoma (25) and the total number of “higher education” centers (52), it is time for the administra-tive and “back office” functions of the colleges and univer-sities to be consolidated into the two research universities. These larger institutions have achieved economies of scale, and their far superior graduation rates are just one example of why it is time to end the political patronage approach to the number of colleges and universities in Oklahoma and their control. It is also time for the State Board of Regents and lawmakers, in coordination with the two research insti-tutions, to consolidate many of the regional and community colleges to vertically achieve efficiency, cost savings, better degree quality, and better graduation rates. One need only look at the salaries of college presidents and the associated college graduation rates to see these reforms are needed.

•••

•

•

•••


In summary, the State Regents community leaders, business owners, and policymakers should address the following challenges:

Lack of “teaching only” tenure track, low professor teach-ing loadsDistractions taking away from core teaching and sound researchNon-applicable course requirementsLack of public access to information such as student eval-uationsLack of collaboration between common education and higher educationPerceived infinite third-party funding sources distorting prices and demand, thus exponentially growing costs of higher education

The State Regents should implement the following reforms immediately:

Enact a moratorium on tuition and fee increases (mora-torium would be enacted by the state Legislature) for the next three years, and then regents would be allowed the authority to increase tuition for inflation onlyCreate a higher education transparency website with information such as a total cost of degree calculator, matched with expected student debt, employment rate of degree, and salary/income return of degree selectedCreate a “Degree Requirements Council,” consisting of employers only, who over a period of two years will eval-uate general education requirements, recommending elimination of non-applicable coursesCreate a “Research Review Council,” consisting of employers only, to review research activities and make recommenda-tions concerning usefulness and resource allocationSeparate teaching and research functions, require ac-countability and transparency for funding and results for each function Create a professor “teaching only” tenure trackGive performance bonuses for teaching more than three

classes a semesterMake student professor evaluations available to the publicMake faculty workloads and costs available to the publicMake higher education and college and university lob-bying costs available to the public, regardless of source (include names of those handling those positions)Make higher education and college and university “gov-ernment affairs” or “legislative liaison” costs available to the public, regardless of sourceRestructure oversight and create a “central office” for educationRemove any effects of the peer-factor multiplier which over-reimburses colleges and universities for coursesJoin the national effort and create a $10,000 bachelor’s de-gree at Oklahoma’s public institutions of higher education

This budget recommends that the State Regents for High-er Education receive the same appropriation for FY-2014 less savings from the implementation of the state employee health insurance reform, and that the State Regents imple-ment the reforms described above. The savings for the re-form are conservatively estimated at the reduction amount recommended for higher education in the Governor’s Bud-get Book. These savings can easily be achieved, especially considering the State Regents for Higher Education’s report on cumulative cost savings it will generate over the next several years, which should be shared with taxpayers by re-ducing spending and taxes. As the Governor’s Budget Book states:

[A]gencies have ample room to find efficiencies and utilize other resources, such as revolving funds, to po-tentially offset reduced appropriations. As long as agen-cies are committed to efficiency, a reduction as small as five percent is manageable and should not result in service interruptions in most cases.

As evident by the … savings achieved by the State Re-gents for Higher Education, agencies truly can find ma-jor efficiencies as they endeavor to be the best possible stewards of taxpayer resources.

•

•

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•

•

•

•

•

•

•

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Regents for Higher EducationFY-2014 988,549,006$

Governor's proposed reductions and OCPA recommended reforms (49,427,450)$ Savings from state employee health insurance reform $ (274,179)


FY-2015 938,847,377$

•••

•

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•


Land CommissionThis budget recommends that the Land Commission re-

ceive the same appropriation provided for FY-2014, less a reduction in authorized funds as proposed by the FY-2015 Governor’s Budget Book, less savings from the implementa-

tion of the state employee health insurance reform, and rec-ommends the Commission allocate any additional savings to schools as required by law.

Department of LibrariesThis budget recommends that the Department of Libraries receive the same appropriation provided for FY-2014, less sav-

ings from the implementation of the state employee health insurance reform.

Office of Educational Quality and AccountabilityThis budget recommends that the OEQA receive the same appropriation provided for FY-2014.

Physician Manpower Training CommissionThis budget recommends that the current state appro-

priation of taxpayer funds to the Physician Manpower Train-ing Commission (PMTC) be replaced with funds as necessary from the Tobacco Settlement Endowment Trust (TSET), and that it operate on as many local government funds and do-nations, without receiving state taxpayer appropriations.

The Physician Manpower Training Commission, according to its website, exists “to enhance medical care in rural and underserved areas of the state by administering residency, internship, and scholarship incentive programs that encour-age medical and nursing personnel to practice in rural and underserved areas. Further, PMTC is to upgrade the avail-ability of health care services by increasing the number of practicing physicians, nurses, and physician assistants in ru-

ral and underserved areas of Oklahoma.” PMTC’s mission meets the funding criteria for TSET well.

Beginning in FY-2015, TSET earnings should be shared in a 75/25 split between the Insure Oklahoma program and the Physician Manpower Training Commission. These health-related programs and efforts are far more beneficial to the state than many of the “pork”-like projects currently funded by TSET, and other activities of TSET in which agency bureau-crats use public money to incentivize ordinances banning al-ternatives to combustible tobacco products, based on their flawed bias. Also, PMTC’s efforts are intensely local functions focused on local workforce training and recruitment. These efforts should be directly funded and supported by the local governments and users that benefit, not through the state-

Department of LibrariesFY-2014 5,898,633$


Total Savings $ 53,096 FY-2015 5,845,537$

Office of Education Quality and AccountabilityFY-2014 661,271$

$ - $ -

Total Savings $ - FY-2015 661,271$

Land CommissionFY-2014 15,062,250$

Reduced revolving fund authorization (6,022,050)$ Savings from state employee health insurance reform $ (67,172)


FY-2015 8,973,028$


School of Science and MathematicsFY-2014 6,332,274$

Implement tuition sharing program $ (1,125,000)Savings from state employee health insurance reform $ (64,425)


FY-2015 5,142,849$

Physician Manpower Training CommissionFY-2014 4,379,254$

Replace funding with TSET earnings, function of local government and local workforce recruitment; eliminate taxpayer appropriation $ (4,379,254)


FY-2015 -$

School of Science and MathematicsConsistent with prior year recommendations, this bud-

get recommends that the Oklahoma School of Science and Mathematics (OSSM) promote individual responsibility by requiring that students who attend OSSM help defray some of the costs of their education. Through local property taxes, state sales taxes, state income taxes, motor vehicle taxes, and other taxes and fees, Oklahoma taxpayers heav-ily subsidize common education by way of the 1017 fund, the general revenue fund, and other sources totaling more than $2 billion annually in appropriations to the state Board of Education. OSSM is a predominantly taxpayer-subsidized

advanced college preparatory school, with a restricted num-ber of students. This budget recommends that OSSM insti-tute a tuition-sharing program for each student of $250 a month, for 9 months. Even with this arrangement, students will only pay approximately 20 percent of the cost of their at-tendance at OSSM. This budget recommends that OSSM re-ceive the same appropriation provided for FY-2014, less the new revenue generated by the tuition sharing arrangement and savings from the implementation of the state employee health insurance reform.

Center for Science and TechnologyThis budget recommends that the Oklahoma Center for

the Advancement of Science and Technology (OCAST) no longer receive state funding for the Oklahoma Technol-ogy Commercialization Center (OTCC). This program directly competes with the private sector and existing market par-ticipants engaged in business formation and development. It is another example of the state picking winners and losers. If the private sector is interested in subsidizing a competi-tor through the continued existence of this program, then it will support this program through donations to OCAST specifically for this program. Based on historical median income growth, adjusting from 2011, Oklahoma’s median household income will be $51,726 for 2013. According to

the Oklahoma Tax Commission for 2013 there will be 54,811 tax returns with an average Oklahoma personal income tax liability of $1,375 (based on a federal adjusted gross income of $50,000-$54,999). Accordingly, the amount of money given by lawmakers for state sponsorship of physician train-ing can be compared to approximately 2,182 taxpayers and their families that are deprived of their hard-earned income. This budget recommends that OCAST receive the same ap-propriation provided for FY-2014, less funding for the OTCC and less savings from the implementation of the state em-ployee health insurance reform.

wide subsidization (by way of tax dollars) of one specific in-dustry.

Based on historical median income growth, adjusting from 2011, Oklahoma’s median household income will be $51,726 for 2013. According to the Oklahoma Tax Commis-sion for 2013, there will be 54,811 tax returns with an aver-age Oklahoma personal income tax liability of $1,375 (based on a federal adjusted gross income of $50,000-$54,999). Accordingly, the amount of money given by lawmakers for

state sponsorship of physician training can be compared to approximately 3,185 taxpayers and their families that are deprived of their hard-earned income. Further, focusing on significant tax relief for Oklahomans, with the associated economic growth and the increase in local revenues, pro-vides a better opportunity for local communities to become self-sufficient and operate local workforce recruitment pro-grams.


Teacher Preparation CommissionThis budget recommends that the Oklahoma Commission

for Teacher Preparation (OCTP) no longer receive a state ap-propriation. OCTP is scheduled to be transferred to the Of-fice of Educational Quality and Accountability. According to its website, the OCTP’s mission is “to develop, implement, and facilitate competency-based teacher preparation, can-didate assessment, and professional development systems.” Since its creation, taxpayers have provided appropriations of more than $32 million to the OCTP, including the $1.5 mil-lion appropriated to the agency for FY-2014. Despite poor results, total state spending on education continues to in-crease. Excluding funds for OCTP, taxpayers already spend billions of dollars on other state agencies, such as the state Department of Education, CareerTech, state aid for common education, OETA, and more than a billion taxpayer dollars for subsidized colleges and universities. These government entities should already “implement and facilitate competen-cy-based teacher preparation, candidate assessment, and professional development systems”— particularly the insti-

tutions granting bachelor’s degrees and higher. Oklahoma taxpayers should not be required to pay for this twice.

Teachers are professionals. Once they enter the workforce, they, like many other professionals, are now providing a ser-vice to their particular employer and their local community. Locally benefiting employers, communities, and teachers should bear the costs for any licensing, credentialing, and additional training or development—just as is the case with many other professions that do not receive taxpayer funds. The Teacher Preparation Commission is a duplicative func-tion of government, as teachers are graduates of heavily taxpayer-subsidized public colleges and universities and pri-vate universities which receive taxpayer-subsidized grants and federally subsidized student loans. Since most teachers are required to have bachelor or higher level degrees, their degree program has or should have already prepared them. Any additional preparation needed is a specific benefit to lo-cal government and districts and should be funded locally if a priority.

Teacher Preparation CommissionFY-2014 1,526,179$

Duplicative function of government and function of local government $ (1,526,179) $ -

Total Savings $ 1,526,179 FY-2015 -$

Auditor and InspectorThis budget recommends that the Auditor and Inspector

receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Auditor and InspectorFY-2014 4,706,986$


Total Savings $ 140,523 FY-2015 4,566,463$

General Government

Center for the Advancement of Science and TechnologyFY-2014 17,811,449$

Savings from state employee health insurance reform $ (20,941)Eliminate state funding of the technology commercialization program, this business development program competes directly with the private sector $ (3,000,000)


FY-2015 14,790,508$


Election BoardThis budget recommends that the Election Board receive

the same appropriation provided for FY-2014, less savings from the implementation of the state employee health in-surance reform.

Emergency ManagementThis budget recommends that Emergency Management


Ethics Commission. This budget recommends that the Ethics Commission receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Ethics CommissionThis budget recommends that the Ethics Commission re-

ceive the same appropriation provided for FY-2014, less sav-ings from the implementation of the state employee health insurance reform.

Bond AdvisorThis budget recommends that the Bond Advisor receive


Office of Management and Enterprise Services (formerly the Office of State Finance)

This budget recommends that the OMES receive the same appropriation provided for FY-2014, less savings from the

implementation of the state employee health insurance re-form.

Ethics CommissionFY-2014 738,129$


Total Savings $ 5,836 FY-2015 732,293$

Emergency ManagementFY-2014 651,179$


Total Savings $ 31,469 FY-2015 619,710$

Election BoardFY-2014 7,805,808$


Total Savings $ 20,483 FY-2015 7,785,325$

Bond AdvisorFY-2014 143,112$


Total Savings $ 3,433 FY-2015 139,679$


Legislative Service BureauFY-2014 9,892,835$

Reduce FY-2013 & FY-2014 one-times (5,000,000)$ Savings from state employee health insurance reform $ (6,294)


FY-2015 4,886,541$

GovernorThis budget recommends that the Governor receive the

same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

House of RepresentativesThis budget recommends that the House of Representa-

tives receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform and less additional funds for FY-2013 and FY-2014. Consistent with prior recommendations, to better facilitate lawmakers’ continuing education on pol-icy development and their need to participate in lawmaker-

led organizations, this budget also recommends that the House of Representatives, the Senate, and the Legislative Service Bureau allocate all funds given to membership orga-nizations on a scholarship basis to each lawmaker. This will allow lawmakers to seek innovative policy solutions from or-ganizations they deem most beneficial.

Legislative Service BureauThis budget recommends that the Legislative Service Bu-

reau receive the same appropriation provided for FY-2014, less one-time funds, less savings from the implementation of the state employee health insurance reform. Consistent with prior recommendations, to better facilitate lawmakers’ continuing education on policy development and their need to participate

in lawmaker-led organizations, this budget also recommends that the House of Representatives, the Senate, and the Legis-lative Service Bureau allocate all funds given to membership organizations on a scholarship basis to each lawmaker. This will allow lawmakers to seek innovative policy solutions from orga-nizations they deem most beneficial.

GovernorFY-2014 2,172,900$


Total Savings $ 31,240 FY-2015 2,141,660$

House of RepresentativesFY-2014 16,574,682$

Savings from state employee health insurance reform $ (255,756)Reduce FY-2013& FY-2014 one-times $ (2,429,152)


FY-2015 13,889,774$

Office of Management and Enterprise ServicesFY-2014 45,132,347$

Savings from state employee health insurance reform $ (1,537,624) $ -

Total Savings $ 1,537,624 FY-2015 43,594,723$


Lieutenant GovernorThis budget recommends that the Lieutenant Governor re-

ceive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insur-ance reform.

Merit Protection CommissionThis budget recommends that the Merit Protection Commis-

sion receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Military DepartmentThis budget recommends that the Military Department re-

ceive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insur-ance reform.

Secretary of StateThis budget recommends that the Secretary of State con-

tinue to operate solely from fees associated with its various regulatory duties and receive no appropriation, as provided for FY-2014. This budget also recommends lawmakers cease the

practice of raiding the operating fund of the Secretary of State and diverting those funds to other sources. These funds are de-rived from Oklahomans. Any surplus funds should be used for the Secretary of State to save for future needs or to reduce fees.

SenateThis budget recommends that the Senate receive the same

appropriation provided for FY-2014, less savings from the im-plementation of the state employee health insurance reform and additional funds for FY-2013 and FY-2014. Consistent with prior recommendations, to better facilitate lawmakers’ con-tinuing education on policy development and their need to

participate in lawmaker-led organizations, this budget also rec-ommends that the House of Representatives, the Senate, and the Legislative Service Bureau allocate all funds given to mem-bership organizations on a scholarship basis to each lawmaker. This will allow lawmakers to seek innovative policy solutions from organizations they deem most beneficial.

Lieutenant GovernorFY-2014 506,591$


Total Savings $ 4,577 FY-2015 502,014$

Merit Protection CommissionFY-2014 490,967$


Total Savings $ 4,577 FY-2015 486,390$

Military DepartmentFY-2014 11,747,997$


Total Savings $ 386,552 FY-2015 11,361,445$


SenateFY-2014 13,171,789$

Savings from state employee health insurance reform $ (175,997)Reduce FY-2013 & FY-2014 one-times $ (2,000,000)


FY-2015 10,995,792$

Space Industry Development AuthorityConsistent with prior recommendations, this budget recom-

mends that the Space Industry Development Authority (SIDA) no longer receive a state appropriation. When created in 1999, SIDA was intended to operate entirely on self-generated rev-enues, according to the SIDA website. Despite this intent, law-makers have given $8.6 million in taxpayer appropriations to SIDA since its inception, including the $394,589 given to the agency for FY-2014. Based on historical median income growth, adjusting from 2011, Oklahoma’s median household income will be $51,726 for 2013. According to the Oklahoma Tax Com-mission for 2013 there will be 54,811 tax returns with an aver-

age Oklahoma personal income tax liability of $1,375 (based on a federal adjusted gross income of $50,000-$54,999). Ac-cordingly, the amount of money given by lawmakers for state sponsorship of space travel can be compared to approximately 287 taxpayers and their families that are deprived of their hard-earned income. State-subsidized space travel is not a core func-tion of state government. Also, the infrastructure of SIDA is now used for more than just attempts at space travel, and some re-ports indicate that if SIDA were freed from state control it could generate enough income to operate on its own.

Tax CommissionThis budget recommends that the Tax Commission receive

the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance re-form.

Department of TransportationThis budget recommends that the Department of Transpor-

tation receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Space Industry Development AuthorityFY-2014 394,589$

Reduce appropriation, function of private industry and local government $ (394,589) $ -

Total Savings $ 394,589 FY-2015 -$

Tax CommissionFY-2014 46,915,944$


Total Savings $ 827,344 FY-2015 46,088,600$

Department of TransportationFY-2014 208,707,119$

Savings from state employee health insurance reform $ (2,723,483)


FY-2015 205,983,636$


Health Care AuthorityAccording to the state’s FY-2013 Comprehensive Annual

Financial Report, total state spending on health services has grown from $3.14 billion in FY-2005 to $5.44 billion in FY-2013—an increase of 72.9 percent in eight years.

According to the Oklahoma Health Care Authority’s FY-2000, FY-2010, and FY-2013 annual reports:

A record of 1,040,332 people, 27 percent of the popula-tion, were enrolled in Medicaid in FY-2013, despite the state having one of the lowest unemployment rates, growing GDP, and growing per capita income.The number of children enrolled in Medicaid has in-creased more than 197 percent since 1997.In FY-2003 there were 498,031 Medicaid (14.27 percent of the population) enrollees and total (state) Medicaid expenditures of $714.9 million. By FY-2013, the number of Medicaid enrollees had ballooned to 1,040,332 (about 27.27 percent of the state’s population) and state expen-ditures had skyrocketed to $1.9 billion—an increase of 172.71 percent in just 10 years. Inflation over this period was just 28 percent. Total population growth in Oklaho-ma over that same period was just 9.3 percent.The unemployment rate for Oklahoma only moderately increased over this period, 4.7 percent in 2002, ranking 12th out of the 50 states, and in Oklahoma in 2012 was 5.2 percent, ranking 5th out of the 50 states.Approximately 63 percent of births are covered by Medicaid.Approximately 72 percent of all Oklahoma children un-der the age of five were covered by Medicaid at some point during FY-2012.In Oklahoma, Medicaid historically was geared for the aged, blind, and disabled, yet now this population only comprises 16.1 percent of enrollees and just 46.5 percent of the cost in Oklahoma.As of FY-2013, of Oklahoma’s 77 counties, 39 counties have 30 percent or more of their population enrolled in Medicaid. Four counties have more than 40 percent of their population on Medicaid.In a March 1, 2013 article, Peter J. Rudy of Oklahoma Capitol Source found that the state Medicaid program in Oklahoma has increased in costs and those served for every year of the last 16 years, citing that “The number of

individuals served has never decreased–no matter what the state’s economic condition is–more than doubling in that same period.” The rate at which the federal government matches Okla-homa state funds on Medicaid is decreasing significantly, going from 70.18 percent federal match all the way down to 62.30 percent match by FY-2015.

The problem is not that there is too little money for Med-icaid; the problem is there are too many people on Medic-aid, which has already been expanded too far—and those enrollees are driving program expenditures beyond sustain-able limits.

While special interests in Oklahoma who receive billions of dollars from Medicaid have peddled the notion that expand-ing Medicaid reduces emergency room use, the Oklahoma Medicaid program demonstrates this is a lie. According to the OHCA, during FY-2013, 289,119 Medicaid enrollees (ap-proximately 28 percent of total Medicaid enrollees) visited the emergency room 548,136 times. The cost to taxpayers for these visits was $178 million. This use of emergency rooms by Medicaid patients is not new. According to the OHCA, during FY-2012, 259,030 Medicaid enrollees (ap-proximately 25 percent of total Medicaid enrollees) visited the emergency room 528,264 times. The cost to taxpayers for these visits was $169 million in FY-2012. Reality and an unbiased view of emergency room visits by Medicaid enroll-ees show they actually use the emergency room more than other populations. A study conducted by Amy Finkelstein, a Massachusetts Institute of Technology economist, showed that Oregon’s attempt to expand Medicaid to adults resulted in those new Medicaid enrollees using the emergency room 40 percent more than those without health insurance. This is not surprising considering most Medicaid programs do not have robust emergency room diversion programs and the federal government makes it very difficult to encourage co-payments in the Medicaid program, thus making health care services in the Medicaid program virtually free to the recipient. According to the OHCA, they have no emergency room diversion program, and do not have incentivized staff present in emergency rooms to assist Medicaid patients in making better and less costly choices for treatment.

Oklahoma voters decided to install a center-right govern-ment because they are looking for real leadership and real solutions. The governor, executive branch leaders, state leg-

Public Health

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TreasurerThis budget recommends that the Treasurer receive the same appropriation provided for FY-2014, less savings from the imple-

mentation of the state employee health insurance reform.

TreasurerFY-2014 3,553,873$


Total Savings $ 50,922 FY-2015 3,502,951$

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islators, and Oklahoma’s congressional delegation should lead an unrelenting effort to obtain waivers from the fed-eral government, or adopt Medicaid program plan amend-ments that would allow Oklahoma to implement significant reforms to the Medicaid program.

Preferably, the state should seek federal approval to con-vert Medicaid into a block grant program, which would give the state more control over how program dollars are spent. Until a block grant and premium assistance program can be fully implemented, state leaders should take advantage of all currently available options to significantly improve Med-icaid by implementing the best Medicaid reforms pursued by Florida, Louisiana, Kansas, and other states looking to make Medicaid serve patients first and empower patients toward self-sufficiency.

The Foundation for Government Accountability in Florida has provided extensive research regarding Florida’s success with its Medicaid reform and the cumulative hundreds of millions of dollars it has saved the state of Florida. Louisiana is pursuing similar reforms. In the first year, Louisiana had ex-perienced savings exceeding $135 million from implement-ing Medicaid reform, only about half-way through the fiscal year.

Fundamentally, the reforms refocus Medicaid programs on the patient, incentivized care coordination, health im-provement, patient empowerment, and taxpayer savings. The reforms include the following (the vast majority of which can be implemented by way of a plan amendment process which is much shorter than a waiver process) and have been approved by the current HHS administration of President Barack Obama:

Mandatory Medicaid benefitsOptional Medicaid benefitsCase manager to help coordinate patient carePatients can switch plansState offers traditional HMO plans (for-profit and not-for-profit)Patients choose from at least four plansPatients get choice counseling that helps them make health plan decisionsPatients can buy private coverage, if availableProvider Service Networks (PSNs) that are hospital runPSNs run by physicians or Federally Qualified Health Cen-ters (FQHCs)Specialty plans that treat specific conditions and populationsPlans can negotiate higher fees to network physiciansPlans can negotiate higher fees to network specialistsPlans can provide richer optional benefits (i.e., more vis-its, more prescriptions)Plans can tailor preferred drug lists (PDLs)Plans can waive copays for patientsPlans can provide additional benefits, such as preventive care and adult vision/dentalPlans can provide disease management and disease-spe-cific benefits and servicesPlans can provide new benefits, such as respite care and over-the-counter pharmacy

Patients get cash incentives for healthy behaviorPlans get more money for enrolling sick patients and making them well (risk-adjusted rates)State has the flexibility for payment reform and innovationState tracks and publicizes patient access and satisfac-tion (CAHPS survey)State tracks and publicizes 30+ patient health outcomes (HEDIS measures)State tracks and publicizes patients’ plan choicesMedicaid produces fixed, budgeted costs per personState has the ability to control Medicaid cost trendsMedicaid produces planned savings for the state

Other Medicaid reform options include:Member Cost-Sharing: It is altogether reasonable to ask welfare recipients or their families (either immediate or extended families) to contribute in a small way to the free medical care they receive at taxpayer expense. With more than 1,000,000 Oklahomans enrolled in Medicaid, a low monthly premium of $10 each month would return more than $100 million to the program annually. Another option is to charge low premiums on a sliding scale, where members with higher incomes would be charged a slightly higher pre-mium than low-income members. This concept is not novel; indeed, it is the basis for the current Insure Oklahoma pro-gram. Both of those options would require a federal waiver, or could be implemented via a plan amendment with incen-tives; however, the Deficit Reduction Act of 2005 (DRA) does give states flexibility to make reforms to their Medicaid pro-grams, including allowing states to charge premiums and require cost-sharing (co-pays and deductibles) to certain enrollees. This can include weighting cost-sharing based on those engaged in unhealthy behaviors such as smoking or obesity and excessive emergency room usage, to incentivize better health for Medicaid participants. Legislators should ensure that the state is requiring member cost-sharing to maximum allowable limits.

Enrollment Integrity: The state should pursue more robust efforts to ensure that Medicaid enrollees are actually eligible for coverage. It has been found that some enrollees are un-lawfully covered, particularly after marital status changes. Other Medicaid fraud efforts such as those implemented in Pennsylvania should be implemented to ensure the integri-ty and sustainability of the program for qualifying enrollees. As of November 2013, in Illinois, auditors determined that half of Illinois Medicaid enrollee cases reviewed were found ineligible, with more than 210,000 of 419,000 case files re-vealing ineligibility. The state should make efforts to ensure that tax cheats who receive Medicaid reimbursement move to a status of properly complying with both federal and state tax laws.

Long-Term Care ReformInsure Oklahoma: Because the Obama administration has chosen to use Insure Oklahoma as a trap for policymakers to

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get them to expand Medicaid, or they will close the program, it’s time for Oklahoma to pursue other alternatives. The In-sure Oklahoma program’s efforts fit well the requirements for funding for the Tobacco Settlement Endowment Trust. Beginning in FY-2015, TSET earnings should be shared in a 75/25 split between the Insure Oklahoma program and the Physician Manpower Training Commission. These health-related programs and efforts are far more beneficial to the state than many of the “pork”-like projects currently funded by TSET, and other activities of TSET where agency bureau-crats use public money to incentivize ordinances banning al-ternatives to combustible tobacco products, based on their flawed bias.

Coordinate Care of “Dual Eligibles”:A number of patients who qualify for Medicaid also qualify for Medicare. These patients have a higher prevalence of medical needs that become costly if not managed and co-ordinated. The OHCA has expressed a desire to move this population to private managed care. The savings from pre-liminary projections of such a reform range from $200 mil-lion to over $1 billion (over several years) once reforms are fully implemented and pursued.

Employer-Sponsored Insurance for Part-Time Workers: Legislators should incentivize employer-sponsored insur-ance for employees (and their dependents) who work at

least 24 hours each week, which current state law defines as “full-time” employment, instead of inducements to enter the state Medicaid program.

Medical Pricing Transparency: The state should incentivize medical providers who are reimbursed by Medicaid to trans-parently post their prices for all procedures performed (prior to the procedure being performed), to help facilitate Medic-aid patients’ efforts to choose care providers that also offer the best medical prices.

Medicaid Reform Task Force: If reforms are not implement-ed in the 2014 legislative session, legislators should create a task force to begin studying Medicaid and options for reduc-ing costs. The above proposals should be part of any task force that convenes to explore real reform efforts.

This budget recommends that the Health Care Authority receive the same appropriation provided for FY-2014, less savings from a complete and dedicated implementation of Florida/Louisiana Medicaid reforms, enrollment integrity ef-forts, and state employee health insurance reform. If Okla-homa were to fully implement the Medicaid reforms imple-mented in Florida, the total state savings per year would exceed $700 million. This budget conservatively reflects the savings in state funds reduced to allow for implementation of the reforms.

Health Care AuthorityFY-2014 953,701,274$

Medicaid reforms including full implementation of coordination of care and Florida/Louisiana/Kansas Medicaid reform models , and implementation of Illinois & Pennsylvania Enrollment Integrity efforts $ (100,543,656)Savings from state employee health insurance reform $ (593,330)

$ - Total Savings $ 101,136,987

FY-2015 852,564,287$

Health DepartmentThis budget recommends that the Health Department re-


Health DepartmentFY-2014 62,983,682$

Reduce FY-2014 increase (1,200,000)$ Savings from state employee health insurance reform $ (2,288,756)


FY-2015 59,494,926$


Mental Health and Substance AbuseThis budget recommends that the Department of Mental

Health and Substance Abuse receive the same appropria-tion provided for FY-2014, less amounts that were given in

FY-2014 for program expansion and less savings from the implementation of the state employee health insurance re-form.

University HospitalsThis budget recommends that the University Hospitals re-

ceive the same appropriation provided for FY-2014, less sav-ings from the implementation of the state employee health

insurance reform and removal of one-time funds for a com-pleted project.

University HospitalsFY-2014 44,530,391$

Reduce FY-2014 increase (2,906,000)$ Savings from state employee health insurance reform $ (14,991)


FY-2015 41,609,400$

Department of Veterans AffairsThis budget recommends that the Department of Vet-

erans Affairs receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Department of Veterans AffairsFY-2014 35,698,752$


Total Savings $ 2,440,721 FY-2015 33,258,031$

J.D. McCarty CenterFY-2014 4,140,338$


Total Savings $ 261,020 FY-2015 3,879,318$

J.D. McCarty CenterThis budget recommends that the J.D. McCarty Center re-


Mental Health and Substance AbuseFY-2014 336,821,458$

Reduce FY-2014 increase (17,400,385)$ Savings from state employee health insurance reform $ (1,874,283)


FY-2015 317,546,790$


Commission on Children and Youth This budget recommends that the Commission on Chil-

dren and Youth receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Office of Disability ConcernsThis budget recommends that the Office of Disability Con-

cerns receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Department of Human ServicesThis budget recommends that the Department of Human

Services receive the same appropriation provided for FY-2014, plus funds to facilitate the progression toward meet-

ing commitments for the “Pinnacle Plan,” less savings from the implementation of the state employee health insurance reform.

Office of Juvenile AffairsThe Office of Juvenile Affairs (OJA) provides housing and

incarceration services for youthful offenders, which the pri-vate sector has demonstrated it can provide at a lower cost to the state. Historically, political and bureaucratic hurdles have prevented the increased use of the private sector in this area. Consistent with prior recommendations by OCPA, during the 2014 session, lawmakers should increase the

number of offenders placed under the jurisdiction of the OJA who are placed in private facilities, in order to achieve annual savings. This budget recommends that the OJA re-ceive the same appropriation provided for FY-2014, less sav-ings from the implementation of the state employee health insurance reform.

Human Services

Commission on Children and YouthFY-2014 2,027,167$


Total Savings $ 28,379 FY-2015 1,998,788$

Office of Disability ConcernsFY-2014 317,607$


Total Savings $ 6,866 FY-2015 310,741$

Department of Human ServicesFY-2014 630,958,664$

Pinnacle plan $ 37,000,000 Savings from state employee health insurance reform $ (8,365,670)

$ - Total Savings $ (28,634,330)

FY-2015 659,592,994$

Office of Juvenile AffairsFY-2014 98,187,205$

Savings from state employee health insurance reform $ (835,468)

$ - Total Savings $ 835,468

FY-2015 97,351,737$


Department of Rehabilitation ServicesThis budget recommends that the Department of Rehabil-

itation Services receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Department of Rehabilitation ServicesFY-2014 30,949,232$


Total Savings $ 1,041,332 FY-2015 29,907,900$

Department of Agriculture, Food and Forestry Consistent with prior OCPA recommendations, this bud-

get recommends that the Department of Agriculture, Food and Forestry receive the same appropriation provided for

FY-2014, less funding increases for FY-2014, less funding for earmarks, and less savings from the implementation of the state employee health insurance reform.

Department of CommerceConsistent with prior OCPA recommendations, this bud-

get recommends that the Department of Commerce receive the same appropriation provided for FY-2014, less a dupli-cative welfare program, less earmarks, less funding for the Native American Cultural and Educational Authority (NA-

CEA) (which was intended to operate on private funds), less one-time funds for the closing fund, and less savings from the implementation of the state employee health insurance reform.

Natural Resources

Department of Agriculture, Food and ForestryFY-2014 25,910,247$

Reduce FY-2014 increase (300,000)$ Savings from state employee health insurance reform $ (450,176)Remove earmark for Oklahoma Youth Expo $ (200,000)Remove earmark for Tulsa State Fair - intensely local function $ (85,000)Remove earmark for National Finals Steer Roping Champioship - intensely local function $ (25,000)Remove earmark for Made In Oklahoma program $ (300,000)Remove earmark for Clem McSpadden Roping $ (25,000)Remove earmark for Reining Horse $ (25,000)Remove earmark for Scenic Rivers $ (20,000)Remove earmark for Medicine Park $ (25,000)

for $ 1,455,176 FY-2015 24,455,071$


Conservation Commission Consistent with prior OCPA recommendations, this bud-

get recommends that the Conservation Commission receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health in-surance reform, and less the amount spent on the 10 dupli-cative conservation district offices. Conservation district of-fices provide administrative services in each of the state’s 77 counties. Each county has at least one district office that can adequately provide the administrative services necessary for each county. As of FY-2012, there are 87 conservation district offices, with 10 providing duplicative administrative

support. These duplicate offices should be eliminated. Based on historical median income growth, adjusting from 2011, Oklahoma’s median household income will be $51,726 for 2013. According to the Oklahoma Tax Commission for 2013, there will be 54,811 tax returns with an average Oklahoma personal income tax liability of $1,375 (federal adjusted gross income of $50,000-$54,999). Accordingly, the amount of money given by lawmakers for duplicative administra-tion through the Conservation Commission’s budget can be compared to approximately 631 taxpayers and their families that are deprived of their hard-earned income.

Department of CommerceFY-2014 32,573,212$

Savings from state employee health insurance reform $ (151,394)Reduce one-time appropriation for Quick Action Closing Fund $ (3,000,000)Duplicative nutrition program, food stamp welfare services already provided through the Department of Human Services $ (2,500,000)

IPRA National Finals Rodeos - remove funds for intensely local function $ (25,000)Make NACEA non-appropriated, require private operational support as originally intended $ (1,325,236)Remove earmark for COGS general operations $ (400,000)Remove earmark for Community Action Agencies $ (550,000)Remove earmark for Community Action Agencies and failed Head Start Program $ (2,400,000)Remove earmark for Rural Enterprises Inc $ (460,000)Remove earmark for Oklahoma Center for Rural Development $ (100,000)


FY-2015 21,661,582$

Conservation CommissionFY-2014 10,461,684$

Reduce funding for duplicative conservation district offices - 10 districts w/out NRCS Office $ (868,000)Savings from state employee health insurance reform $ (65,341)


FY-2015 9,528,343$


Consumer Credit CommissionConsistent with prior OCPA recommendations, this bud-

get recommends that the Consumer Credit Commission (CCC) no longer receive a state appropriation. According to its website, “the Consumer Credit Commission is responsible for the regulation of consumer credit sales and consumer loans in the State of Oklahoma. The Department is also re-sponsible for the licensing and regulation of mortgage bro-kers, mortgage loan originators, pawnshops, deferred de-posit lenders, rental purchase lessors, health spa contracts, credit service organizations, and precious metal and gem dealers.” These products are used by some and not used by

others, but are not a core function of government which should be supported by general taxes on all Oklahomans. The CCC can be operated entirely from fee revenue from those producing, selling, or utilizing these products. Efforts to reduce the CCC appropriated budget were accomplished by lawmakers for FY-2014 and should be fully implemented for FY-2015. Accordingly, the amount of money given by lawmakers for duplicative administration through the Con-servation Commission’s budget can be compared to approx-imately 631 taxpayers and their families that are deprived of their hard-earned income.

Corporation CommissionThis budget recommends that the Corporation Commis-

sion receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Department of Environmental QualityThis budget recommends that the Department of Envi-

ronmental Quality receive the same appropriation provided for FY-2014, less one-time funds for FY-2014, less savings

from the implementation of the state employee health in-surance reform.

Historical SocietyThis budget recommends that the Historical Society be

consolidated into the Tourism Department as recommend-ed by the Governor and receive the same appropriation pro-vided for FY-2014, less savings from the implementation of the state employee health insurance reform and administra-tive savings as a result of the consolidation. In keeping with

the “9 R’s of Fiscal Responsibility” mentioned in the budget message above, this budget recommends that the Histori-cal Society implement a plan to generate more funding from users and private donations, so that beginning in FY-2016 state appropriations to the Historical Society can be reduced by 10 percent.

Consumer Credit CommissionFY-2014 31,730$

Function of government to be funded by users $ (31,730) $ -

Total Savings $ 31,730

FY-2015 -$

Corporation CommissionFY-2014 11,324,427$


Total Savings $ 507,964 FY-2015 10,816,463$

Department of Environmental QualityFY-2014 9,057,973$

Savings from state employee health insurance reform $ (597,450)Reduce one-time funding $ (1,500,000)


FY-2015 6,960,523$


Horse Racing CommissionConsistent with prior OCPA recommendations, this bud-

get recommends that the Horse Racing Commission (HRC) no longer receive a state appropriation. According to its website, “the Horse Racing Commission encourages agricul-ture, the breeding of horses, the growth, sustenance, and development of live racing, and generates public revenue through the forceful control, regulation, implementation, and enforcement of Commission-licensed horse racing and gaming.” Horse racing is an entertainment-related or specific industry endeavor (as are the Lottery Commission, Wheat Commission, Peanut Commission, Liquefied Petroleum Gas Research, Marketing and Safety Board, Construction Indus-tries Board, and many others that are non-appropriated and entirely user supported). Horse racing is not a core func-

tion of government, and should not be supported by gen-eral taxes on all Oklahomans. The Horse Racing Commission should be operated entirely from fee revenue from partici-pants. Based on historical median income growth, adjusting from 2011, Oklahoma’s median household income will be $51,726 for 2013. According to the Oklahoma Tax Commis-sion, for 2013 there will be 54,811 tax returns with an aver-age Oklahoma personal income tax liability of $1,375 (based on a federal adjusted gross income of $50,000-$54,999). Accordingly, the amount of money given by lawmakers for horse racing through the HRC’s budget can be compared to approximately 1,507 taxpayers and their families that are de-prived of their hard-earned income.

Insurance DepartmentConsistent with prior OCPA recommendations, this bud-

get recommends that the Insurance Department no lon-ger receive a state appropriation. According to its website, “the Insurance Department is responsible for enforcing the insurance-related laws of the state. We protect consumers by providing accurate, timely and informative insurance in-formation. We promote a competitive marketplace and en-sure solvency of the entities we regulate. We also license and educate insurance producers and adjusters, funeral home directors, bail bondsmen and real estate appraisers.” These products are used by many and not used by others, but are not a core function of government and should not be sup-ported by general taxes on all Oklahomans. The Insurance Department can be operated completely from fee revenue of those producing, selling, or utilizing these products. The

proof of this is the Legislature’s constant raiding of the In-surance Department’s revolving funds (for more than $12 million in the last four fiscal years alone). Clearly there are adequate fees available to operate the Insurance Depart-ment without legislative appropriations. Based on historical median income growth, adjusting from 2011, Oklahoma’s median household income will be $51,726 for 2013. Accord-ing to the Oklahoma Tax Commission for 2013 there will be 54,811 tax returns with an average Oklahoma personal income tax liability of $1,375 (based on a federal adjusted gross income of $50,000-$54,999). Accordingly, the amount of money needlessly given by lawmakers for insurance regu-lation that can be self-funded can be compared to approxi-mately 1,361 taxpayers and their families that are deprived of their hard-earned income.

Historical SocietyFY-2014 12,502,546$

Savings from state employee health insurance reform $ (179,887)Remove earmark for Wrestling Hall of Fame $ (50,000)Remove earmark for Ft. Reno $ (47,150)


FY-2015 12,225,509$

Horse Racing CommissionFY-2014 2,072,167$

Non-core function, should be funded by users $ (2,072,167) $ -

Total Savings $ 2,072,167 FY-2015 -$


Insurance DepartmentFY-2014 1,871,937$

Function of government to be funded by users $ (1,871,937) $ -

Total Savings $ 1,871,937 FY-2015 -$

J.M. Davis Memorial CommissionConsistent with prior OCPA recommendations, this bud-

get recommends that the J.M. Davis Memorial Commission no longer receive a state appropriation. According to its website, the J.M. Davis Memorial Commission/Museum has, among other things, the largest private gun collection in the

world. Clearly it is an important local entity, visited by some and not visited by others. But it is not a core function of gov-ernment, and should not be supported by general taxes on all Oklahomans.

Department of LaborThis budget recommends that the Department of Labor


Department of MinesThis budget recommends that the Department of Mines


Scenic Rivers CommissionThis budget recommends that the Scenic Rivers Com-

mission be consolidated into the Tourism Department as recommended by the Governor and receive the same ap-

propriation provided for FY-2014, less savings from the im-plementation of the state employee health insurance reform and administrative savings as a result of the consolidation.

J.M. Davis Memorial CommissionFY-2014 306,009$

Local attraction, non-core function, should be completely user supported $ (306,009) $ -


Department of LaborFY-2014 3,311,160$


Total Savings $ 76,441 FY-2015 3,234,719$

Department of MinesFY-2014 879,139$


Total Savings $ 35,245 FY-2015 843,894$


Department of Tourism and RecreationAs OCPA mentioned in last year’s budget book, the Okla-

homa Tourism and Recreation Department (OTRD) is an ex-ample of an agency working hard to use taxpayer dollars wisely. Whether it has been the wise release of state parks with intensely local functions, or leveraging OTRD prod-ucts such as Oklahoma Today magazine to minimize use of taxpayer funds, the OTRD has been a recent leader for other state agencies. Further reform is needed. Policymakers should eliminate any state subsidies or appropriations for golf courses. According to the Governor’s budget books and reports from the OTRD, from FY-2001 to FY-2012 lawmak-ers have appropriated $8.2 million for losses on state golf courses. For FY-2012, appropriations for losses were more than $270,000. Operating golf courses is not a core function of government. If it is a worthwhile park amenity, user fees will support the costs to operate these courses.

Earmarks for intensely local festivals or exhibits, and pro-motion of the arts, are not core functions of government and should be removed. Also, intensely local funding for advertising and other operational efforts for multi-county organizations and some local chambers is not a core func-tion of government. In future years, the OTRD needs to work to duplicate the success of the U.S. Forestry Service and

use the private sector (leasing operation of state parks) to operate parks or resorts at no loss to the state, or fit state parks so that users can adequately support parks and resorts through fees. Those utilizing parks should pay sufficient user fees to support their usage. Park and resort self-sufficiency should begin to allow for further reductions in taxpayer support beginning in FY-2016. Based on historical median income growth, adjusting from 2011, Oklahoma’s median household income will be $51,726 for 2013. According to the Oklahoma Tax Commission for 2013 there will be 54,811 tax returns with an average Oklahoma personal income tax liability of $1,375 (federal adjusted gross income of $50,000-$54,999). Accordingly, the amount of money needlessly given by lawmakers for various targeted earmarks and non-core spending through the OTRD’s budget can be compared to approximately 1,529 taxpayers and their families that are deprived of their hard-earned income.

This budget recommends that the Department of Tourism and Recreation receive the same appropriation provided for FY-2014, less funds for losses on golf courses, less earmarks for intensely local activities, and less savings from the imple-mentation of the state employee health insurance reform.

Water Resources BoardThis budget recommends that the Water Resources Board

receive the same appropriation provided for FY-2014, less one-time increases for FY-2014 and savings from the imple-mentation of the state employee health insurance reform.

Scenic Rivers CommissionFY-2014 271,315$


Total Savings $ 11,558 FY-2015 259,757$

Department of Tourism and RecreationFY-2014 21,803,003$

Eliminate state subsidies for losses on state golf courses $ (271,000)Eliminate non-core intensely local funding for multi-county organizations $ (921,506)Eliminate non-core intensely local funding for Red Earth Festival $ (25,000)Eliminate non-core intensely local funding for Summer Arts Institute $ (25,000)

Eliminate non-core intensely local funding for Jenks Aquarium Exhibits $ (40,000)Savings from state employee health insurance reform $ (715,315)


FY-2015 19,805,182$


Will Rogers Memorial CommissionAs OCPA mentioned in last year’s budget book, this bud-

get recommends that the Will Rogers Memorial Commission (WRMC) no longer receive a state appropriation. According to its website, the Will Rogers Memorial Museums exist “to collect, preserve, and share the life, wisdom, and humor of Will Rogers for all generations. … The Will Rogers Memorial Museums are the premier destinations to introduce, show-case, and celebrate the life, legacy, and spirit of Will Rogers.” Clearly the Will Rogers Memorial Commission is an impor-tant local entity, visited by some and not visited by others. But it is not a core function of government, and should not be supported by general taxes on all Oklahomans. Legisla-

tive earmarks for the WRMC were $740,486 for FY-2014. Based on historical median income growth, adjusting from 2011, Oklahoma’s median household income will be $51,726 for 2013. According to the Oklahoma Tax Commission for 2013 there will be 54,811 tax returns with an average Okla-homa personal income tax liability of $1,375 (based on a federal adjusted gross income of $50,000-$54,999). Accord-ingly, the amount of money needlessly given by lawmak-ers for targeted earmarks and non-core spending through the OTRD’s budget can be compared to approximately 539 taxpayers and their families that are deprived of their hard-earned income.

Will Rogers Memorial CommissionFY-2014 740,486$

Local attraction, non-core function, should be completely user supported $ (740,486) $ -


ABLE Commission This budget recommends that the Alcoholic Beverage

Laws Enforcement (ABLE) Commission receive the same appropriation provided for FY-2014, less savings from the

implementation of the state employee health insurance re-form.

Fire MarshalThis budget recommends that the Fire Marshal receive the

same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Public Safety

ABLE CommissionFY-2014 3,140,334$


Total Savings $ 42,454 FY-2015 3,097,880$

Water Resources BoardFY-2014 9,999,671$

Remove one-time appropriation $ (3,000,000)Savings from state employee health insurance reform $ (110,541)


FY-2015 6,889,130$


State Bureau of InvestigationThis budget recommends that the State Bureau of Investi-

gation receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Law Enforcement Education and TrainingThis budget recommends that Law Enforcement Educa-

tion and Training receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Department of CorrectionsLawmakers trying to be “right on crime” are making the

right moves regarding corrections reform. Efforts should continue to reduce incarceration rates and strengthen fami-lies. These and other efforts to significantly reduce the incar-ceration of non-violent offenders are what’s best for society and also save millions in taxpayer dollars. The Department of Corrections (DOC)—like the Tourism Department, Office of Juvenile Affairs, and many other state-operated services—can utilize the private sector to reduce the cost of provid-ing state services. If the DOC would fully utilize the available private prison beds (“halfway” houses) as authorized by law, the state could save approximately $34 million a year (based

on state costs per bed in 2009). This budget recommends that the DOC receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform. Lawmakers should work to significantly increase the oversight ability of the Gover-nor’s office and the legislature as it relates to the DOC, by eliminating the board of DOC and requiring the director to be appointed directly by the Governor. Efforts to increase the wise use of private alternatives have been thwarted re-peatedly by current and former DOC bureaucrats, and their insubordination must end.

Department of CorrectionsFY-2014 463,731,068$

Savings from state employee health insurance reform $ (4,820,451)


FY-2015 458,910,617$

Fire MarshalFY-2014 1,796,764$


Total Savings $ 25,404 FY-2015 1,771,360$

State Bureau of InvestigationFY-2014 14,283,059$


Total Savings $ 338,490 FY-2015 13,944,569$

Law Enforcement Education and TrainingFY-2014 3,757,560$


Total Savings $ 46,345 FY-2015 3,711,215$


Board of Medicolegal InvestigationsThis budget recommends that the Board of Medicolegal

Investigations receive the same annual appropriation pro-vided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Narcotics and Dangerous DrugsThis budget recommends that the Bureau of Narcotics

and Dangerous Drugs receive the same appropriation pro-vided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Board of Medicolegal Investigations FY-2014 8,698,281$


Total Savings $ 94,063 FY-2015 8,604,218$

Narcotics and Dangerous DrugsFY-2014 3,616,418$


Total Savings $ 161,464 FY-2015 3,454,954$

Department of Public SafetyThe Oklahoma Department of Public Safety (DPS) issues

thousands of drivers’ licenses per year, but users (those re-ceiving the licenses) are not adequately sharing the burden associated with issuing these licenses. According to informa-tion available publicly, taxpayers subsidize DPS’s operation of drivers’ licensing by more than $12 million annually. Driv-er licensing is a direct regulatory service which should be paid for by those being licensed. Reforms that lead to more

efficient and effective licensing, along with requiring users to bear the full cost of the licensing, will allow for the reduc-tion in state subsidies. This budget recommends that the DPS receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform. Efforts should be taken to require users to better share in the burden associated with drivers’ licensing.

Attorney GeneralThis budget recommends that the Attorney General re-

ceive the same appropriation provided for FY-2014, less one-time increases for FY-2014, less savings from the imple-mentation of the state employee health insurance reform.

Judiciary

Department of Public SafetyFY-2014 90,416,790$

Remove state subsidy for drivers' license regulation $ (12,968,193)Savings from state employee health insurance reform $ (1,641,986)


FY-2015 75,806,611$


Court of Criminal AppealsThis budget recommends that the Court of Criminal Ap-

peals receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

District Attorneys CouncilThis budget recommends that the District Attorneys

Council receive the same appropriation provided for FY-2014, less savings from the implementation of the state em-ployee health insurance reform.

District CourtsThis budget recommends that the District Courts receive


Indigent Defense SystemThis budget recommends that the Indigent Defense Sys-

tem receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Court of Criminal AppealsFY-2014 3,634,631$


Total Savings $ 31,927 FY-2015 3,602,704$

District Attorneys CouncilFY-2014 39,687,258$


Total Savings $ 1,278,092 FY-2015 38,409,166$

District CourtsFY-2014 59,600,000$


Total Savings $ 701,697 FY-2015 58,898,303$

Indigent Defense SystemFY-2014 15,699,353$


Total Savings $ 114,661 FY-2015 15,584,692$

Attorney GeneralFY-2014 15,228,141$

Remove one-times $ (2,080,665)Savings from state employee health insurance reform $ (192,932)


FY-2015 12,954,544$


Council on Judicial ComplaintsThis budget recommends that the Council on Judicial

Complaints receive the same appropriation provided for FY-2014, continuing to receive no appropriations from the Legislature.

Pardon and Parole BoardThis budget recommends that the Pardon and Parole

Board receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Pardon and Parole BoardFY-2014 2,292,454$


Total Savings $ 31,812 FY-2015 2,260,642$

Supreme CourtThis budget recommends that the Supreme Court receive


Supreme CourtFY-2014 17,300,000$

Savings from state employee health insurance reform $ (224,287)Reduce funds for one-time project $ (37,000)


FY-2015 17,038,713$

Workers’ Compensation CourtThis budget recommends that the Workers’ Compensation

Court receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Workers' Compensation CourtFY-2014 4,247,166$


Total Savings $ 83,535 FY-2015 4,163,631$

Workers’ Compensation CommissionThis budget recommends that the Workers’ Compensa-

tion Commission receive the same appropriation provided for FY-2014, less savings from the implementation of the state employee health insurance reform.

Workers' Compensation CommissionFY-2014 1,500,000$

$ - Total Savings $ -

FY-2015 1,500,000$


Oklahoma State University (OSU) Medical CenterThis budget recommends that the OSU Medical Center receive the same appropriation provided for FY-2014.

Rural Economic Action Plan (REAP)As OCPA noted in last year’s budget recommendation, ac-

cording to the website of the Kiamichi Economic Develop-ment District of Oklahoma (KEDDO), “In 1996, the Oklahoma Legislature created the Rural Economic Action Plan (REAP). This Plan has made funds available for each of the rural Eco-nomic Development Districts to fund projects in communi-ties with population of less than 7,000 and giving priority to fewer than 1,500 residents. Oversight of the application process is given to each of the Economic Development Dis-tricts ...” While most projects are small, some projects utiliz-ing REAP funds are beneficial (road repairs) while others more resemble political patronage, earmarks, and “pork” (cars, renovations for community centers and storage build-ings, etc.). Legislation in 2010 helped steer REAP funds to

more worthwhile projects, but the program still falls short in providing communities what they really need to thrive: job creators. The failure of government programs to generate sustained “economic development” is nothing new. Oklaho-ma needs a bold, transformational plan that allows citizens and job creators to retain more of their own money to invest and spend, so local communities can attract job creators and not be reduced to reliance on unsuccessful state programs that breed more dependency. This is one of the main rea-sons Oklahoma must not increase taxes in any way on gross

production and must phase out its personal income tax. As noted in the OCPA/Laffer study, “Eliminating the State In-come Tax in Oklahoma: An Economic Assessment” (which was deemed “well founded” by Dr. Eric Fruits and former San Francisco federal reserve vice-president for research Dr. Randall Pozdena), stronger economic growth would mean increased revenues for local governments across Oklahoma. And because there is no static tax reduction, every dollar of increased revenue created by Oklahoma’s stronger econo-my would increase the expenditure power of the economic growth estimated in the study. “Assuming local government revenues’ share of personal income remains constant, in ag-gregate, revenues for local governments would increase by $100 million in 2013, rising to an increase of $3.5 billion by 2022 for local governments.” Oklahomans and their commu-nities need to be empowered and freed to create a thriving future. This budget recommends the sunset of the REAP pro-gram for FY-2014. To encourage entrepreneurial economic development in rural areas, OCPA recommends the state implement in Oklahoma a plan similar to the state of Kan-sas’ tax relief plan for economically challenged rural areas. These areas would be designated rural opportunity zones and those that move to the area and establish residence and work in that area would be exempt from state personal in-come tax.

Rural Economic Action Plan (REAP)FY-2014 11,532,469$

End REAP program $ (11,532,469) $ -

Total Savings $ 11,532,469 FY-2015 -$

OSU Medical CenterFY-2014 13,000,000$

-$ $ -

Total Savings $ - FY-2015 13,000,000$

1401 N. Lincoln Blvd. | Oklahoma City, OK 73104 | 405.602.1667 | ocpathink.orgOklahoma Council of Public Affairs

Documents

FY 2015 Proposed Budget