OCPA Budget: A State Budget that Respects Your Family Budget

Submitted by theOklahoma Council of Public Affairs, Inc.

To theTaxpayers of the

State of Oklahomaand Their Elected Officials

A STATE BUDGET THAT RESPECTS YOUR FAMILY BUDGET

PROPOSED STATE BUDGETFOR THE FISCAL YEAR ENDING JUNE 30, 2007

OCPA BUDGET

About the Oklahoma Council of Public Affairs

The Oklahoma Council of Public Affairs (OCPA) is a public policy research organization – a think tank –

whose mission is to formulate and promote public policies consistent with the principles of free enterprise

and limited government. OCPA was founded in 1993 by board chairman Dr. David R. Brown, a retired

orthopedic surgeon who also serves as chairman of the Heritage Foundation, the nation’s leading conser-

vative think tank.

OCPA is governed by a board of trustees composed of 32 distinguished Oklahomans – leaders in the

fields of business, medicine, law, agriculture, and philanthropy. All of these men and women have one

thing in common: They care about freedom. They love Oklahoma and want to advance economic and

educational freedom in our state.

To that end, OCPA’s staff and adjunct scholars (19 college and university professors from around the

state) are committed to delivering the highest quality and most reliable research on Oklahoma issues.

Through a variety of publications, programs, and public forums, OCPA is helping to improve the quality

of life for all Oklahomans by promoting sound solutions to state and local policy questions.

OCPA Board of Trustees

OCPA Adjunct Scholars

Greg S. AllenEnid

Blake ArnoldOklahoma City

Mary Lou AveryOklahoma City

Lee J. BaxterLawton

Steve W. BeebeDuncan

G.T. BlankenshipOklahoma City

John A. BrockTulsa

David R. Brown, M.D.Oklahoma City

Aaron BurlesonAltus

Paul A. CoxOklahoma City

William FlanaganClaremore

Josephine FreedeOklahoma City

Kent FrizzellClaremore

John T. HanesOklahoma City

Ralph HarveyOklahoma City

John A. Henry, IIIOklahoma City

Paul H. HitchGuymon

Henry F. KaneBartlesville

Robert KaneTulsa

Tom H. McCasland, IIIDuncan

Lew MeibergenEnid

Ronald L. MercerBethany

Lloyd Noble, IITulsa

Robert E. PattersonTulsa

Russell M. PerryEdmond

Patrick RooneyOklahoma City

Richard SiasOklahoma City

John SnodgrassArdmore

William Thurman, M.D.Oklahoma City

Lew WardEnid

Gary W. Wilson, M.D.Edmond

Daryl WoodardTulsa

Will Clark, Ph.D.University of Oklahoma

David Deming, Ph.D.University of Oklahoma

J. Rufus Fears, Ph.D.University of Oklahoma

Bobbie L. Foote, Ph.D.University of Oklahoma (Ret.)

E. Scott Henley, Ph.D., J.D.Oklahoma City University

James E. Hibdon, Ph.D.University of Oklahoma (Ret.)

Russell W. Jones, Ph.D.University of Central Oklahoma

Andrew W. Lester, J.D.Oklahoma City University (Adjunct)

David L. May, Ph.D.Oklahoma City University

Ronald L. Moomaw, Ph.D.Oklahoma State University

Ann Nalley, Ph.D.Cameron University

Bruce Newman, Ph.D.Western Oklahoma State College

Stafford North, Ph.D.Oklahoma Christian University

Rex J. Pjesky, Ph.D.Northeastern State University

Paul A. Rahe, Ph.D.University of Tulsa

W. Robert Reed, Ph.D.University of Oklahoma

Michael Scaperlanda, J.D.University of Oklahoma

Andrew C. Spiropoulos, J.D.Oklahoma City University

Daniel Sutter, Ph.D.University of Oklahoma

OCPA Legal CounselDeBee Gilchrist � Oklahoma City

OCPA StaffMark Nichols / President

Brett A. Magbee / VP for Finance and OperationsBrandon Dutcher / VP for Policy

Margaret Ann Hoenig / Director of DevelopmentBrian Hobbs / Director of Marketing and Public Affairs

Mary Ferguson / Executive Assistant and Event Coordinator

1401 N. Lincoln Boulevard � Oklahoma City, OK 73104 � (405) 602-1667 � FAX: (405) 602-1238www.ocpathink.org � [email protected]

This document was prepared by OCPA research fellow Steve Anderson, OCPA vice president BrandonDutcher, and independent researcher Grant Gulibon. Valuable research assistance was provided byOCPA intern Jonathan McFadden.

Table of Contents

1. OCPA Budget Message ................................................................................................................................ 3

2. Summary of FY-2007 OCPA Budget .......................................................................................................... 11

3. FY-2007 OCPA Budget Recommendations

Governor .............................................................................................................................................. 13

Lieutenant Governor .......................................................................................................................... 14

Agriculture ........................................................................................................................................... 15

Commerce and Tourism .................................................................................................................... 17

Education ............................................................................................................................................ 29

Energy .................................................................................................................................................. 41

Environment ........................................................................................................................................ 43

Finance and Revenue ........................................................................................................................ 45

Health .................................................................................................................................................. 53

Human Resources and Administration ........................................................................................... 60

Human Services ................................................................................................................................. 64

Military Affairs .................................................................................................................................... 71

Safety and Security ............................................................................................................................ 72

Science and Technology Development ........................................................................................... 79

Secretary of State............................................................................................................................... 80

Transportation .................................................................................................................................... 82

Veterans Affairs .................................................................................................................................. 84

Legislature .......................................................................................................................................... 85

Judiciary............................................................................................................................................... 86

4. Summary by Cabinet .................................................................................................................................. 87

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OCPA Budget Message

Every year the governor submits for consider-ation an executive budget and asks citizens andstate legislators to give serious consideration tohis recommendations. Again this year, theOklahoma Council of Public Affairs (OCPA) islikewise submitting a proposed state budget forconsideration.

At a time when Oklahoma’s population-growth-plus-inflation rate is only 4.2 percent,and Oklahomans’ income is growing at 5.4percent,1 the governor is proposing an eye-popping increase of $1.11 billion – or 18.46percent – over the current year’s appropriationof $6.03 billion. This, mind you, after the politi-cians at 23rd and Lincoln grew the governmentby a whopping 12.7 percent in the current year.

Unlike the governor, OCPA is proposing astate budget that respects your family budget.Whereas the governor’s budget increasesspending by 18.46 percent and provides for only$17 million in tax cuts, the OCPA Budget in-creases spending by 4.2 percent and providesfor $899 million to be returned to thehardworking Oklahoma families who earnedthe money.2

After all, Oklahoma families have real needs:school clothes and dental work for the kids, newbrakes for the car, ever-increasing healthinsurance premiums – the list goes on and on.Indeed, Oklahoma families have a multimillion-dollar backlog of health care, transportation,education, and retirement needs. They deservea state budget that respects their family budget.

Accordingly, this budget provides for a reduc-tion in the Oklahoma personal income tax rate.This budget applies $700.4 million towards apermanent reduction in the overall tax rate,which would take the rate to 4.45 percent. Hadpolicy-makers followed OCPA’s advice last year(when our proposed state budget also grewgovernment at the rate of population growthplus inflation), Oklahomans could now findthemselves with an income tax rate of approxi-mately 2.78 percent. That is not a misprint: a

2.78 percent rate would now be possible had thepoliticians simply grown government for twoyears at the modest rate that a strong majorityof Oklahomans say they prefer.

This budget also provides for the eliminationof the Oklahoma estate tax. Other initiatives inthis budget include expanded school-choiceopportunities for Oklahoma families, the cre-ation of a charitable tax credit for donations tocharities and religious organizations that deliversocial services, and a $500 million transportationbond issue financed by existing revenues.

It’s the Spending, Stupid

Oklahomans are a fiscally conservativepeople. As the sidebar on page 5 indicates,reputable public opinion surveys indicate thatOklahomans think taxes are too high and thatstate government is too big.

Nonetheless, Oklahoma’s state budgetcontinues to grow and grow and grow.3 Gover-nors and legislators have usually chosen to addnew programs to the state budget withoutconsidering the merits of existing programs andfinding ways to fund higher-priority items byeliminating lower-priority items. As a result, thebudget has grown by leaps and bounds. Untilstate leaders learn to exercise fiscal discipline,or until the people write fiscal discipline into theconstitution, the budget will continue to expandduring years of normal or superlative revenuegrowth, creating strong pressure on state law-makers to raise taxes in tight years.

Most people would agree that state govern-ment growth should keep up with populationgrowth and inflation. That is a reasonablebenchmark.4 In this OCPA Budget, we use apopulation-plus-inflation estimate of 4.2 per-cent.5 Unfortunately, in recent years state gov-ernment growth has exceeded this population-plus-inflation benchmark.

Appropriations

Our friends on the left like to use appropria-

Summary: Unlike the governor, OCPA is proposing a state budget that respects your familybudget. Whereas the governor’s budget increases spending by 18.46 percent and provides foronly $17 million in tax cuts, the OCPA Budget increases spending by 4.2 percent and provides for$899 million to be returned to the hardworking Oklahoma families who earned the money.

tions as a yardstick for measuring state spend-ing. But this fails to consider the money that thestate removes from citizens’ pockets that neverenters the appropriations process. Legislators infact divert hundreds of millions of tax dollarsevery year directly to government programs.

For example, the Oklahoma Teachers Retire-ment System (OTRS) receives nearly four per-cent of all sales, use, individual income, andcorporate income tax revenues before those taxdollars can be appropriated. The fact that thisfour percent is not appropriated does not meanit has not been extracted from taxpayers. Andthe OTRS is only one example; many otherscould be cited. The ability of legislators to makeany tax revenue source a “dedicated, directed”funding source for their pet projects severelylimits the usefulness of using “appropriations”to measure the growth in government.

Total State Tax Revenues

A more valid yardstick for measuring growthin government would be total state tax revenues.This category includes all the traditional “non-voluntary” taxes (such as income taxes, sales

taxes, and use taxes) as well as the “voluntary”taxes (such as alcohol taxes, telephone sur-charges, and cigarette taxes). This is a moredirect way to measure the amount of money thatis extracted annually from the pockets of Okla-homa taxpayers.

Between FY 1987-88 and FY 2005-06, Okla-homa tax revenues increased from just under$3.1 billion to an estimated $6.98 billion, or by126.9 percent – a rate 65.2 percent faster thanthe concurrent estimated combined rates ofinflation and population growth.6 What wouldtax revenue growth have looked like had it beenlimited to the rate of population growth plusinflation?

Let’s assume that tax revenue growth in agiven fiscal year would be limited to the previ-ous year’s combined rates of inflation andpopulation growth. Chart 1 compares the actualgrowth of Oklahoma state tax revenue with statetax revenue growth under such a revenue limit.Calculations are made assuming that the firstyear of the spending limit is FY 1988-89, andthat the estimated revenue limit for that year isequal to the sum of (a) the FY 1987-88 tax

Chart 1. Oklahoma State Tax Revenues: Actual vs. Estimated at Previous

Year’s Inflation Plus Population Growth Rate, FY 1988-89 to FY 2005-06

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Source: Oklahoma Governor’s Historical Budget Books, FY-1988 through FY-2006; OCPA calculations

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Oklahoma Voters: Government Is Too Big,Taxes Are Too HighWhich would you rather see in Oklahoma? (Rotate)

A smaller government with fewer services .................. 49%A larger government with many services ..................... 27%Undecided (vol.) ........................................................... 24%

In 2005, the average tax rate for an Oklahoman was 26.5percent of their income. This is the total tax burden for alllevels of government – federal, state and local. Do you thinkthis amount is too high, too low, or just about right?

Too high ........................................................................ 53%Too low ........................................................................... 3%Just about right ............................................................. 35%Undecided (vol.) ............................................................. 9%

I’d like you to consider the following campaign scenario andtell me, all other things being equal, which candidate forgovernor, lieutenant governor, or state legislator you wouldbe more likely to support: (Rotate)

A candidate who favors eliminating the estate tax....... 66%A candidate who wants to keep the estate tax ............ 23%Undecided (vol.) ........................................................... 12%

Do you favor or oppose repealing the death (or estate) tax inOklahoma? (After response, ask: Would you say you stronglyfavor/oppose or only somewhat favor/oppose?)

Strongly favor ............................................................... 42%Somewhat favor ........................................................... 15%Somewhat oppose ......................................................... 8%Strongly oppose ........................................................... 14%Undecided (vol.) ........................................................... 21%

Thinking about state government spending in Oklahoma, howfast do you think state government spending should grow incomparison to the growth of average family income? Do youthink government spending should increase faster, slower, orat about the same rate as family income?

Faster ............................................................................. 4%Slower .......................................................................... 37%About the same rate ..................................................... 52%Undecided (vol.) ............................................................. 7%

Sources: For the first three questions – Cole Hargrave Snodgrass & Associates,telephone interviews of 400 registered voters in the state of Oklahoma, January22-24, 2006. The confidence interval associated with a sample of this type issuch that 95 percent of the time results will be within +/- 4.9 percent of the truevalues, i.e., the results obtained if it were possible to interview all the qualifiedrespondents. Percentages may not add to 100 due to rounding. For the last twoquestions – Cole Hargrave Snodgrass & Associates, telephone interviews of500 registered voters in the state of Oklahoma, November 14-17, 2005. Theconfidence interval associated with a sample of this type is such that 95 percentof the time results will be within +/- 4.3 percent of the true values, i.e., theresults obtained if it were possible to interview all the qualified respondents.values, i.e., the results obtained if it were possible to interview all the qualifiedrespondents.

revenue figure and (b) the FY 1987-88 tax revenue figure multiplied bythe combined rates of inflation andpopulation growth correspondingto that fiscal year (here assumed tobe those for 1987). It is also as-sumed that if actual tax revenue fora given year is lower than theamount estimated at the limit, theactual revenue figure will be usedfor subsequent calculations.

In each of the years covered bythe revenue limit, actual Oklahomastate tax revenues would haveexceeded the amount permitted bythe growth of the combined rates ofinflation and population. For FY2005-06, Oklahoma state taxrevenues would have been $1.426billion lower than the projectedfigure of $6.98 billion – a reductionof more than 20 percent – if statetax revenue growth had beenlimited to inflation and populationgrowth.

Total State Government

Collections

Another way to measure thegrowth of government is to look attotal Oklahoma governmentcollections. This yardstick mea-sures the total consumption ofresources by Oklahoma stategovernment. It comprises revenuesfrom all sources – including taxes,licenses, fees, permits, fines,forfeits, income from property,grants from the federal govern-ment, and more.

Between the 1987-88 and 2003-04 fiscal years, the cost of Okla-homa state government (as mea-sured by total state governmentcollections from all sources)7

increased by 149.4 percent, from$5.499 billion to $13.713 billion.This increase outpaced the concur-rent combined rates of inflation8

(57.7 percent) and statewidepopulation growth (9.2 percent) by123 percent.

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On a per capita basis (for every man, womanand child in the state), Oklahoma governmentcollections increased from $1,713 in FY 1987-88to $3,910 in FY 2003-04, or by 128.3 percent – arate 91.6 percent above the concurrent com-bined rates of inflation and population growth.Put another way, total state government collec-tions per Oklahoma family of four increasedfrom $6,852 in FY 1987-88 to $15,640 in FY 2003-04.

One may reasonably ask, don’t new pro-grams and service additions – some of themnecessary and reasonable – account for some ofthis additional spending? Perhaps so, but thesenew program costs pale in comparison to itemswe need to account for on the other side of theequation. For example, Oklahoma’s statebudget is full of items, programs, or wholeagencies that either fall outside the properscope of government or are not among thehighest-priority needs of the state. For proof,look no further than the 2004 Oklahoma Piglet

Book, published by OCPA and Citizens AgainstGovernment Waste.

What’s worse, the state – much like formercorporate giant Enron – carries billions ofdollars of debt with no underlying assets. UnlikeEnron, however, Oklahoma politicians knowthey can always count on the deep pockets ofOklahoma taxpayers to bail them out. With that

knowledge, legislators often pass legislationcreating current-period costs – like retirementbenefit improvements for teachers and stateemployees – with “delayed funding.” This debt-without-funding in the state pension systemsalone is rapidly approaching $10 billion. Andjust as with Enron’s Ponzi scheme, there will bea day of reckoning in the future if this hiddengrowth continues apace.

In short, no matter how you slice it, govern-ment growth in Oklahoma has been excessive.This points clearly to the need for sound, conser-vative principles to guide the budgeting process.

9 R’s of Fiscal Responsibility

The idea for the OCPA Budget originated withthe Freedom Budget, a proposed state budgetpublished by the John Locke Foundation, a free-market think tank in North Carolina. “TheFreedom Budget is a concise but broad-rangingexamination of every function that state govern-ment attempts to perform in North Carolina,” thefoundation explains. “This is not an attempt toclose billion-dollar budget gaps and financehundreds of millions of dollars in tax cuts by‘eliminating waste, fraud, and abuse’ or ‘rootingout duplication.’ These may be good ideas, butthey will inevitably fall short of generating thesavings needed to balance the budget and to

Chart 2. Oklahoma State Government Collections vs.

Inflation and Population Growth: FY 1988 - FY 2004

Source: Oklahoma Governor’s Historical Budget Books, FY-1988 through FY-2006, Schedule B; United States Bureau of LaborStatistics; United States Bureau of Economic Analysis

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invest significantly more dollars in our inad-equate highway system. Our purpose was toapply a consistent set of principles to the task ofsetting North Carolina’s budget priorities. Ifpolicymakers follow our lead, they will need tobe prepared to rethink some longstandingassumptions about what state governmentexists to do.”

In preparing our budget, OCPA employed thecriteria developed by the John Locke Founda-tion. Here are the foundation’s “nine R’s of fiscalresponsibility.”9

Reform Entitlement Programs. State pro-grams to provide cash assistance, medical care,or other services to the disadvantaged exist toprovide a basic “safety net.” Even philosophersof limited government have justified such pro-grams as needed to ensure order and protectpublic assets and spaces. But these programsmust be carefully structured to minimize depen-dency and encourage personal responsibility.When the state pays nursing home bills for theparents of the middle class, subsidizes the daycare expenses of affluent families, and perpetu-ates social pathologies such as out-of-wedlockbirths, it strays far from its constitutional moor-ings. One of the biggest contributors toOklahoma’s budgetary problems is rapid

growth in the state’s Medicaid program. Thecounter-cyclical nature of this program leads tolawmakers expanding Medicaid programs toprovide new entitlements (and create newdependents) in good economic times thatcannot be sustained when downturns in theeconomy occur. This budget puts spendingcontrols in place and removes entitlements tonon-poverty recipients that will result in costcontainment, and ensures the availability ofquality services for the truly disadvantaged.

Require More User Responsibility. It isinappropriate to require those who receive corestate services, such as law enforcement orpublic education, to cover a significant share ofthe cost of those services. But for many otherstate agencies, their programs or services arenot constitutional entitlements or responsibili-ties. If the state is to continue involvement inthese enterprises, it would be appropriate to askthose who benefit to shoulder more of theresponsibility of paying for them. Services forwhich this budget recommends additional userresponsibility include state museums, historicsites, parks, colleges and universities, and theaccommodation of prison inmates.

Redirect Spending to Higher-Priority Uses.

According to Article II, Section 2 of the Constitu-

Chart 3. Total Oklahoma Government Collections Per Capita: FY 1988 - FY 2004

Source: Oklahoma Governor’s Historical Budget Books, FY-1988 through FY-2006, Schedule B; United States Bureau of LaborStatistics; United States Bureau of Economic Analysis

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tion of Oklahoma, “All persons have the inherentright to life, liberty, the pursuit of happiness, andthe enjoyment of the gains of their own indus-try.” Thus, it is incumbent upon Oklahomapoliticians, when formulating tax and budgetpolicies, to secure the people’s right to enjoy“the gains of their own industry.” The state isobligated to perform its basic functions effi-ciently while leaving to the people as much oftheir hard-earned money as possible. During atime of fiscal distress, in which policymakersfind it difficult to fund obligations already inplace, it makes little sense to incur new ones.Another way to apply this principle is by sortingout which expenditures within a given depart-ment or agency are central to the core missionand which are not.

Reorganize State Government. Even assum-ing that current fiscal obligations could continueinto the next year, there remain different ways oforganizing the departments that carry them out.Oklahoma’s state government structure isrelatively more costly than those of its neigh-bors. Public employees per capita in Oklahomaexceed the national average. There is unneces-sary duplication of core functions throughoutOklahoma state agencies. In short, there aremore efficient methods of organizing the variousdepartments. Millions of dollars in agencyexpenses are hidden in cross-subsidization byother agencies’ appropriations.

This budget attempts to identify areas wherecosts are hidden within one agency that in factshould reside in the budget of another agency.For example, staffers in the Office of StateFinance budget division spend the majority oftheir time serving the needs of the governor’soffice, including preparing the governor’sbudget book. These costs should be shown inthe governor’s budget, especially since thebudget book is essentially a political documentlaying out the governor’s agenda for the comingyear. OCPA believes every taxpayer dollarshould be traceable and accountable. Efforts todistort agency expenditures by hiding costslimits the transparency of government. Thesedistortions also preclude effective comparisonsof agency expenditures to those in other statesand in the private sector.

Revive Free Enterprise. Responding toOklahoma’s economic challenges, some policy-makers have concluded that state government

should take a more active role in attractinginvestment and guiding development throughtax credits, cash subsidies, and other incentiveprograms. This is a mistake. The availablepublic policy research on state economic devel-opment does suggest that overall tax rates,especially the marginal rates on individual andcorporate income, do have a measurableimpact on state economic growth rates. Byeliminating incentive programs, marketingsubsidies, and other encroachments on freeenterprise, we can consider a reduction inmarginal income tax rates, as well as thepossible elimination of the death and franchisetax. These tax changes would improve economiccompetitiveness across the board far moresuccessfully than any incentive program forindividual businesses can accomplish. TheOCPA Budget puts nearly $900 million back inthe hands of taxpaying Oklahomans to investand spend as they choose. We believe this cashinfusion into the economy will have a far greaterimpact on economic development than anyincentive program for an individual industry.

Restore Civil Society. Nonprofits and chari-ties form a “third” or “independent” sector thatdelivers important services and benefits thatneither governments nor profit-seeking busi-nesses can deliver as effectively. The stateshould be careful not to supplant these institu-tions of civil society.

Remove Advocacy, Waste, and Race-Based

Programs. Laws and programs that invokeracial or ethnic discrimination violate a basicprinciple of moral government. All such pro-grams should be ended immediately. Similarly,state funds should not be used to subsidizegroups that advocate policies or ideas beforegovernment bodies. Taxpayers should not beforced to pay for the propagation of ideas withwhich they may disagree. Government is insti-tuted solely for the good of the whole, not forspecial interest groups that use taxpayer moneyto advance their agendas.

Reshape the State-Local Government Rela-

tionship. Local control of local revenues shouldbe a central theme whenever possible in therelationship between state and local govern-ment. The diverse demographic nature of ourstate leads to problems in applications of somestate programs. For example, a program likeMedicaid should be tailored to fit the most

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pressing needs of the disadvantaged citizens itserves. However, the health issues of southeast-ern Oklahoma, Oklahoma City, and the pan-handle of Oklahoma are not the same. Forexample, any expansions of the existing Medic-aid program could be both funded and targetedat the local level. The Oklahoma Health CareAuthority should serve only to administrate thematching of federal funds with the local dollars.

Reduce Biases in the Tax Code. Like moststates, Oklahoma has developed its state taxcode in a piecemeal fashion rather than usingtax reform principles to build a coherent andefficient system. As a result, a variety of specialrates, exemptions, exclusions, deductions, andcredits litter the code. In the corporate tax codealone, special tax credits for job creation,research and development, machinery, workertraining, and other expenditures limit corporateincome taxes the state collects. Another problemis the income tax code’s bias against savingsand investment, including the investment thatfamilies make in their children through privateeducation, health care spending, and at-homeparenting. The OCPA Budget provides thespending controls that will allow for reductionsin individual taxes for everyone, thus reducing theneed for these individually tailored tax breaks.

Conclusion

Governor Brad Henry’s proposed budget forFY-2007 is alarming. It increases spending by18.46 percent and provides for only $17 millionin tax cuts. It is a state budget that does notrespect your family budget.

By way of contrast, the OCPA Budget in-creases spending by 4.2 percent and providesfor $899 million to be returned to thehardworking Oklahoma families who earnedthe money. After all, Oklahoma taxpayers havebeen forced to shoulder an increasingly heavyburden in recent years. The total amount col-lected by state government has risen by $8,788per family of four between FY 1987-88 and FY2003-04. Worse yet, Oklahoma’s spendingincreases have been accompanied by substan-dard economic and population growth, relativeboth to the nation as a whole and to its nearesteconomic competitors.

It’s time to allow private businesses andfamilies, not state bureaucrats, the opportunityto use that money according to their priorities,

not state government’s priorities. It’s time for astate budget that respects your family budget.

Endnotes1 http://www.bea.gov/bea/newsrelarchive/2006/spi0306.htm

2 According to the Tax Foundation, in 2005 the averageOklahoman was forced to work all of January, all of February,all of March, and the first week of April just to earn enoughmoney to pay the federal, state, and local tax collectors. Thatkind of tax burden is inappropriate for a free people in a freesociety. Policy-makers at all levels should seek to reduce thisburden on Oklahoma families.

3 If Oklahomans are fiscally conservative, why does govern-ment continue to grow faster than citizens would like? “Theanswer lies in the logic of concentrated benefits and diffusecosts,” University of Oklahoma economist Daniel Sutterexplains. “The full cost of rent seeking or pork barrel spending… exceeds the benefit to recipients. But typically a relativelysmall number of people benefit, while the costs are spreadover the remainder of the population. Thus, the beneficiaries ofpork barrel spending typically have a lot more at stake on thisissue than the taxpayer. … As a result, the beneficiaries tendto be a lot more vocal than taxpayers when specific budgetitems are considered. Only the beneficiaries have enough atstake to write their legislator or attend a committee hearing ormake campaign contributions based on this one issue.Taxpayers hardly notice the extra couple of dollars annuallyfor this spending project.” See Daniel Sutter, “Why Constitu-tional Constraints on Government Are Necessary,” Perspective,January 2005, pg. 1.

4 Indeed, a recent statewide survey (Cole Hargrave Snodgrass& Associates, telephone interviews of 500 registered voters inthe state of Oklahoma, November 14-17, 2005) asked Okla-homa voters: “It has been proposed that Oklahoma adopt anamendment to our state constitution that would restrict the rateof growth in government spending to no more than the rate ofinflation plus the rate of population growth. That is, forexample, if we had three percent inflation and one percentpopulation growth, government spending could increase nomore than four percent for that year. If the state receivedexcess revenues, they would be placed in a reserve fund foremergencies and then, when the reserve fund is full, it wouldbe returned to the taxpayers. Would you favor or oppose suchan amendment?” A full 74 percent of respondents said theyfavor the idea, while 17 percent said they oppose it.

5 The Census Bureau estimates that Oklahoma’s populationincreased 0.7 percent from 2004 to 2005 (see http://www.census.gov/popest/states/tables/NST-EST2005-03.xls),and the Bureau of Labor Statistics puts the inflation rate forSouth urban areas at 3.5 percent (see http://www.bls.gov/news.release/cpi.t03.htm). We are familiar with, butunpersuaded by, the argument that it is unfair to use inflationas a measurement because the cost of providing governmentservices (education and medical welfare, for example) oftengrows faster than inflation. In the private sector, advances inproductivity help to keep prices low. But in the government’seducation and medical welfare sectors, economists tell usproductivity advances are virtually nil. Indeed, the left-wingCenter on Budget and Policy Priorities recently acknowledgedthat a state government’s basket of public services is ineconomic sectors that are “less likely to reap efficiency andproductivity gains than other sectors of the economy.” So ineffect, the spending lobby is saying to taxpayers: “Becausewe’re so inefficient, you should reward us with more money.”We think it makes more sense to say: “Because you’re soinefficient in your stewardship of the taxpayers’ money, you

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must now inject some choice and competition into youroperations in order to spur productivity gains.“

6 Inflation data for the second half of 2005 estimated usingprevious years’ data from the Consumer Price Index-South,United States Department of Labor, Bureau of Labor Statistics.Population data for 2005 estimated using previous years’ datafrom the United States Department of Commerce, Bureau ofEconomic Analysis.

7 A report of total collections is available at http://www.osf.state.ok.us/06appndx_b.pdf.

8 Inflation is measured by the percentage change in theConsumer Price Index-South for the years 1987 through 2003.

9 http://www.johnlocke.org/acrobat/policyReports/freedom_budget_2003.pdf

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Summary of FY-2007 OCPA Budget

FinalRevenue

1. Appropriations Authorized in December 2005 Equalization Board Meeting $ 6,485,500,8062. Lottery Estimate $ 117,733,5013. Gaming Revenue for Higher Education Tuition Aid Grant $ 4,927,8004. Excess CLO Funds $ 3,915,171

Total Amounts Available from Certification Packet $ 6,612,077,278

Revenue Changes5. Excess Gross Production Oil Funds $6. Convert State Transportation Certified Fund into a Revolving Fund $ 10,498,3917. Lapsed Funds - Other $ 6,907,0978. Allow Counties to Collect Interest on County Bridges and Roads Fund $ (600,000)9. Excess General Revenue FY-2006: Oklahomans’ Economic Production in

Excess of Board of Equalization estimates $ 392,000,00010. Cash Flow Reserve Fund $ 145,521,92011. Debt Refinancing Savings Freed Up by OCPA’s

$500 Million Transportation Bond $ 21,000,000Total General Revenue Changes $ 575,327,408

Changes to Revolving Funds/Special Cash FundSpecial Cash

12. Agency Transfers to Special Cash $ 3,500,000Total Special Cash $ 3,500,000

Total Changes to Certification $ 578,827,408

Total Revenue Available for FY-2007 Budget $ 7,190,904,686

Tax Cuts1. Full Retirement Exemption to Incomes of $25K/50K $ 13,900,0002. Eliminate Estate Tax $ 85,000,0003. Education Tax Credit $ 100,000,0004. Reduction in State Individual Income Tax $ 700,404,710

Total Tax Cuts $ 899,304,710

Expenditures1. Recommended OCPA Agency-by-Agency Expenditures $ 6,183,408,0592. Funds Available for Supplementals and Special Needs $ 108,191,917

Total Recommended Expenditures $ 6,291,599,976

Expenditures and Tax Cuts $ 7,190,904,686

Balance / (Shortage) of Funds Available $ —

Revenue Items 1-8, 10, 12 from Gov. Brad Henry, FY-2007 Executive Budget, pg. A-9

Revenue Item 9 from Gov. Brad Henry, FY-2007 Executive Budget, pg. A-12

Revenue Item 11 from Oklahoma House of Representatives, FY-2006 Legislative Appropriations, pg. 86; and OCPA, FY-2007 OCPA

Budget, pg. 81

Tax Cuts Item 1 from Gov. Brad Henry, FY-2007 Executive Budget, pg. A-9

Tax Cuts Items 2-4 from OCPA, FY-2007 OCPA Budget

12

13

Governor“As Chief Magistrate of the State, the Gover-

nor is vested by the Oklahoma Constitution with‘the Supreme Executive power.’”1

OCPA commends Governor Henry for increas-ing appropriations to his office by only 1.8percent from FY-04 to FY-05.2 However, there arestill areas where spending could be moreeffectively controlled. As OCPA and CitizensAgainst Government Waste pointed out in the2004 Oklahoma Piglet Book, “According to travelrecords with the Oklahoma Office of StateFinance, the state picked up a $13,743 tab forsecurity costs for the three vacations taken byGov. Henry between June and August.”3 This billwas so high because the governor chose tovacation not just outside the state but outsidethe country, which required his security team toincur additional travel expenses.

In addition, the governor should stop spend-ing taxpayer dollars for membership in theNational Governors Association (NGA), a liberalnonprofit association. As the Capital ResearchCenter points out, groups like the NGA ostensi-bly “help state and local government officials doa better job. But such ‘help’ includes instructingelected and appointed officials and bureaucratsin the fine arts of increasing tax revenues,expanding the police powers of government anddeveloping new regulations, ordinances andstatutes on every subject imaginable.”4 In 1997“Alabama Governor Fob James, Jr. became thefirst governor ever to resign from the NGA. Heannounced that Alabama taxpayers weregetting nothing valuable for their $100,000annual dues. ‘Essentially what we are getting isjust another liberal lobbying group,’ saysMichael Ciamarra, a policy advisor to James.”5

As is the case with many state agencies,much of the governor’s actual expense to theOklahoma taxpayer is hidden by cross-subsi-dies from other agencies which perform thegovernor’s work. For example, the Office ofState Finance prepares the governor’s budgetbook and provides technology staff to his office

but pays for those services from its own budget.The OCPA Budget attempts to assign costsproperly to each agency to increase the trans-parency of government.

The OCPA Budget recommends thegovernor’s office receive its FY-2006 appropria-tion, adjusted upward for population growthand inflation. In addition, the governor’s officewill receive increased appropriations due toreorganization of government (see the sectionscovering the Office of State Finance and theOffice of the State Bond Advisor).

Endnotes1 Governor Brad Henry, FY-2005 Executive Budget, pg. 79.

2 Oklahoma House of Representatives, FY-05 Legislative

Appropriations, pg. 57.

3 Oklahoma Council of Public Affairs and Citizens AgainstGovernment Waste, 2004 Oklahoma Piglet Book, pg. 7.Available at http://www.ocpathink.org/ViewPolicyStory.asp?ID=512.

4 Sarah Foster, “‘Big Seven’ Fuel Big Government: State &Local Leaders Promote Liberal Policies Through NonprofitAssociations,” Organizations Trends, February 1998, pg. 2.Available at http://www.capitalresearch.org/pubs/pdf/Organization%20Trends%20February%201998.pdf.

5 Sarah Foster, “‘Big Seven’ Fuel Big Government: State &Local Leaders Promote Liberal Policies Through NonprofitAssociations,” Organizations Trends, February 1998, pg. 3.Available at http://www.capitalresearch.org/pubs/pdf/Organization%20Trends%20February%201998.pdf.

FY-2007 OCPA Budget Recommendations

14

Lieutenant Governor“The Office of Lieutenant Governor was

created by Article 6, Sec. 1 of the OklahomaConstitution. … In Oklahoma and about half ofthe 50 states, the Lieutenant Governor serves inplace of the Governor when the chief executiveofficer leaves the state, becomes incapacitatedor resigns. Oklahoma’s Lieutenant Governoralso serves as the President of the OklahomaState Senate, casting a vote in the event of a tieand presiding over joint sessions of the StateLegislature.”1 Constitutionally, or by state law,the Lieutenant Governor presides over or is amember of 10 state boards and commissions.

Commission Status

Tourism and RecreationCommission Chairman

State Insurance Fund Member

Film Office AdvisoryCommission Chairman

State Board of Equalization Vice Chairman

School Land Commission Vice Chairman

Archives and Records Member

Oklahoma LinkedDeposit Board Vice Chairman

Oklahoma Capitol ComplexCentennial Commission Member

Capital ImprovementAuthority Member

Native American Cultural& Education Authority Member

Source: http://www.ltgov.state.ok.us/ok/history/

The OCPA Budget recommends the lieutenantgovernor’s office receive its FY-2006 appropria-tion, adjusted upward for population growthplus inflation.

Endnotes1 http://www.ltgov.state.ok.us/ok/history/

15

Department of Agriculture, Foodand Forestry (ODAFF)

“The Department of Agriculture is the leadagency in the state for improvement and regula-tion of the agricultural industry in Oklahoma.”1

While many of the agency’s functions arenecessary and appropriate, we believe thattaxpayers are not obligated to subsidize indus-tries or individuals unnecessarily. Many of thetasks performed by this department should befee-based so that the cost of the product beingregulated truly reflects all the costs of bringing itsafely to the consumer who purchases it. TheOCPA Budget proposes that industries beingregulated for consumer safety be charged feesfor inspections that reflect the actual cost of theinspection.

However, of equal importance is the examina-tion of the regulatory process for any unneces-sary regulations or costs. OCPA believes theregulatory process should be as efficient aspossible to minimize the impact on industriesand the consumers they serve. Indeed, efficientregulatory processes would be one way ofensuring minimal regulation costs to industries.For an example of the bureaucratic red tapewithin the department, consider Oklahoma’spork-producing industry, in which jobs andcapital investment have been moved across thestate line to Texas simply because of the costand the length of time required to obtain per-mits.

Similarly, the promotion of any industry’sproducts at taxpayer expense is a questionableexpenditure and should be removed from thebudget. It is also a potential conflict of interest

when an agency both regulates and promotesan industry. OCPA believes that instead ofsubsidies to favored industries, the state shouldprovide a stable, low-tax, low-regulatory institu-tional environment with strong private propertyrights and high degrees of economic freedomthat will encourage all industries.

Department of Agriculture, Food and Forestry

FY-06 Budget Resources

General Revenue Fund $26,296,069

Federal Funds $8,505,845

Revolving and Carryover Funds $7,094,703

REAP Gross Production Tax $900,000

Total $42,796,617

Source: Oklahoma House of Representatives, FY-06 Legislative


Many Oklahomans would be surprised tolearn that 38 percent of the department’s expen-ditures are related to forestry services. Thereare approximately 10 million acres of trees inOklahoma. There are more than 6.2 millionacres of commercial forests, largely owned byprivate landowners, across the state.3

The department also maintains a waterquality division that can best be managedwithin the Department of Environmental Quality(DEQ). This would eliminate redundanciesbetween the two departments in testing equip-ment, and would reduce the potential for con-flicts of interest which occur when an agencyboth promotes and regulates an industry. TheOCPA Budget consolidates the water testing and

monitoring of all agenciesto DEQ in order to gainefficiencies in operations,but also to place regulationin a “one-stop shop” forbusinesses and individuals.

OCPA has long pointedto the Rural EconomicAction Plan (REAP) as anexample of the misalloca-tion of taxpayer dollars. Forexample, $1.4 million inREAP water project fundingwas diverted to the “opera-

Sector Program % of TotalExpenditures Expenditures

Forestry Services $13,366,000.00 58%

Administrative Services $5,762,000.00 16%

Food Safety/Agriculture Laboratory $5,522,000.00 15%

Plant Industry & Consumer Services $5,204,000.00 14%

Legal/Public Information/Marketing $3,283,000.00 9%

Wildlife Services $1,721,000.00 5%

Agricultural Environmental Management $1,231,000.00 3%

Department of Agriculture

FY-2005 Actual Expenditures2

Agriculture

16

tions” of the Department of Agriculture ratherthan funding the rural water projects it wasintended for.4

In researching the true costs of public educa-tion in Oklahoma, OCPA discovered educationexpenditures hidden in agency budgetsthroughout the state. For example, the Depart-ment of Agriculture includes a program called“Ag in the Classroom,” which this budget re-moves from Agriculture and transfers to theDepartment of Education in order to more cor-rectly calculate the cost of education in this state.

By removing unnecessary corporate welfare,reviewing programs for inefficient services, andtransferring the water quality division, the OCPA

Budget believes $9 million can be removed fromthe department’s budget base for FY-2007.

Conservation Commission

“The Conservation Commission providestechnical assistance, financial incentives andeducational information through Oklahoma’s 88conservation districts to promote and sustainprivate land conservation.”5



General Revenue Fund $7,403,928.00

Federal Funds $12,996,914.00

REAP Fund from GrossProduction Tax $2,400,000.00

Revolving and Carryover Funds $100,000.00

Total $22,900,842.00




FY-2005 Program Expenditures6

Program % of TotalSector Expenditures Expenditures

Field Service $6,488,000.00 36%

Abandoned MineReclamation $5,016,000.00 28%

Water Quality/Wetlands $3,924,000.00 24%

Watershed Opsand Maintenance $2,085,000.00 13%

Administration $771,000.00 5%

The OCPA Budget believes the removal ofredundancies in governmental functions will notonly reduce the cost of government but alsoprovide better service. This budget proposesthat watershed operations and water qualityfunctions be moved to the Department of Envi-ronmental Quality (DEQ) to allow for a morecomprehensive approach to controlling pollu-tion in Oklahoma’s water while removing dupli-cate layers of administration. This budgetremoves $5.9 million from the Commission’sbudget and transfers it to DEQ, less $590,000(which represents savings in reduced adminis-trative costs).

The subsidizing of private businesses is notan acceptable use of taxpayer dollars, and weencourage the commission to look at its pro-grams for these expenditures. Where the pri-mary beneficiary of the commission’s service isthe private landowner, this budget proposes thatthe landowner bear the state’s cost of anyproject. This budget holds the commission’sbudget at FY-2006 levels after removing the $5.9million being transferred to DEQ.

Endnotes1 Governor Brad Henry, FY-2007 Executive Budget, pg. B-5.

2 Governor Brad Henry, FY-2007 Executive Budget, pg. B-5.





6 Governor Brad Henry, FY-2006 Executive Budget Historical

Data, pg. B-13.

17

Commerce and TourismOklahoma Capitol Complex andCentennial CommemorationCommission

The Commission was formed to coordinatecentennial celebrations throughout the state.The Commission encourages and supportsparticipation from all geographical areas of thestate.1

The Commission operates in conjunction witha 501(c)(3) charitable organization whichprovides the conduit for the private contributionsfor the state capitol building’s dome and whichcontinues to operate to raise private money forcentennial projects.

The OCPA Budget recommends the appro-priation for the commission be fixed at theamount of the bond payment and that all othercommission events for FY-2007 be financed byprivate donations.

Oklahoma Department of CommerceThe practice of offering taxpayer-subsidized

incentives to companies in order to induce themto leave one state for another (or to keep a givenfirm in its current location) has become in-grained within state government economicdevelopment policy. However, recent eventshave the potential to significantly alter thisseemingly settled practice.

In late September 2005, the United StatesSupreme Court agreed to review the constitu-tionality of an investment tax credit given by thestate of Ohio to DaimlerChrysler AG for theconstruction of a Jeep assembly plant in Toledo.Ohio taxpayers who brought the suit in anappeals court successfully contended that thecredit favors companies expanding in the stateover those that expand in another state, andthat it therefore violates constitutional provisionsgoverning interstate commerce.2

It is clear that the outcome of the Ohio casecould dramatically impact the operations ofother government agencies tasked with stimu-lating economic growth, among them the Okla-homa Department of Commerce (ODOC).

ODOC was created by statute in 1986 andthen revised the following year by the EconomicDevelopment Act of 1987 (HB 1444). It serves as“the primary economic development arm of

state government,” and as such, is charged withimproving Oklahomans’ quality of life by “sup-porting communities, growing existing busi-nesses, and attracting new businesses.”3 Toaccomplish its stated mission, ODOC “recruitsnew businesses, develops economic incentivesto stimulate job growth, assists existing busi-nesses with expansion, facilitates internationaltrade and export assistance, managesworkforce development programs, and providesfunding to rural Oklahoma communities forprograms and activities aimed at sustainabilityand economic growth.”4

According to the Governor’s FY-2006 Execu-

tive Budget, ODOC acts as a “one-stop shop” forprivate sector businesses wishing to expandand locate in Oklahoma. Primarily funded byfederal and state appropriations, it providesservices in the following program areas:• Business Development. This program (also

known as Business Solutions) has beenreorganized during the Henry administrationin order to place greater emphasis on re-sponding to the needs of existing Oklahomabusinesses.5

• Community Development. The mission of thisprogram is to “invest federal and state fundsin communities and community-based, non-profit organizations” for the purpose ofbuilding “local capacity” and encouraging“sustainability.” It provides a number ofprograms for technical assistance andplanning for communities, over 400 of whichare preparing capital improvement plans tomaintain and prioritize civic assets for repairand replacement. Such assets include waterand sewer improvements, economic develop-ment infrastructure enhancements, multipur-pose senior citizen center development, fireprotection equipment, and street and drain-age repairs. These projects are primarilyfunded by federal Community DevelopmentBlock Grants, but money is also availablethrough the state energy plan and other stateappropriations.6

• Business Location. This program is designedto market Oklahoma as a “profitable loca-tion” for investment in manufacturing, pro-cessing and service businesses by recruiting

new domestic investment, encouraging andassisting Oklahoma companies looking toexpand to do so in the state, and helpinglocal communities and economic develop-ment organizations lure new businesses.7

• Global Business Services. Initiatives in thisdivision assist Oklahoma businesses indeveloping a revenue source that is “resilientto state economic downturns.” The programsearches for Oklahoma companies withexport capability and prepares them tomaximize their potential in the global market.Global Business has oversight of all Com-merce International Trade Offices.8

• Contracts for Commercial and Economic

Development.

ODOC has atwo-part budget,consisting ofdepartmentoperations and“pass-throughs” tosubstate planningdistricts, commu-nity action agen-cies, and a num-ber of otherentities. (“Pass-throughs” strikesus as an oddly descriptive phrase which calls tomind Ronald Reagan’s observation that “gov-ernment is like a big baby – an alimentarycanal with a big appetite at one end and nosense of responsibility at the other.”) The 11substate planning districts, or council of govern-ments (COGs), were established by the Okla-homa legislature to provide “economic develop-ment leadership” and operate independently.

The COGs receive funding from state appro-priations, membership dues from towns, andstate and federal grants. According to ODOC,state appropriations to the COGs increased by541.1 percent between FY-1998 and FY-2005, butthe Department has no oversight of these funds.9

Therefore, while some of the “pass-through”funds to COGs are used for what are termed“quality economic development purposes,” oftenthey are used for the renovation of local parks,golf courses, baseball parks, and other recre-ational and community facilities. Perhaps in aneffort to address these issues, the governor’s FY-2006 budget proposal called for reducing

funding to the COGs by $10.15 million, amend-ing relevant statutes to more clearly define“economic development,” increasing auditingand monitoring of recipients of economic devel-opment funding, and using performance mea-sures to determine how effectively this funding isused.

All told, over the past ten years, appropria-tions to ODOC increased by 44.7 percent, from$18.2 million in FY-1997 to $26.3 million in FY-2006. The FY-2006 spending figure actuallyrepresents a 21 percent decrease from the FY-2005 total, largely due to the removal of $9.27million in one-time expenditures, but it alsoexceeded the governor’s FY-2006 budget requestof $24.627 million by 6.9 percent.10

Ten-Year Appropriation History

FY-97 ................................................$18,203,600

FY-98 ................................................$20,070,376

FY-99 ................................................$21,830,694

FY-00 ................................................$22,934,902

FY-01 ................................................$25,653,941

FY-02 ................................................$31,175,324

FY-03 (Orig.) ....................................$30,241,666

FY-04 ................................................$22,008,606

FY-05 ................................................$33,337,845

FY-06 ................................................$26,334,663



Government has a legitimate role to play ineconomic development policy and planning –but that role should be strictly limited to theprovision of infrastructure that can be used byall businesses, such as water and sewer im-provements, roads, and bridges. But when stategovernment assigns itself a leading role instimulating and directing economic develop-ment (as it has in Oklahoma), it produces

18

Oklahoma Department of Commerce Budget Resources

FY-05 FY-06 % Change

General Revenue Fund $18,630,677.00 $21,411,135.00 14.9

Special Cash $4,707,168.00 $4,923,528.00 4.6

Federal Tax Relief Fund $10,000,000.00 $0.00 (100.0)

Revolving and Carryover Funds $1,792,528.00 $1,700,000.00 (5.2)

Federal Funds $49,460,076.00 $78,000,000.00 57.7

Total $84,590,449.00 $106,034,663.00 25.4

Source: Oklahoma House of Representatives, FY-06 Legislative Appropriations, pg. 144.

economic distortions that harm all businesses ina state – including those that receive govern-ment assistance.

The issues surrounding the use of the “pass-through” funds by the COGs – specifically thelack of accountability and questionable projectchoices – are a microcosm of the problems thathave arisen because governments have ex-panded the definition of “quality economicdevelopment purposes” far past the provision oflegitimate infrastructure. Indeed, that definitionhas been stretched so far as to include aid toselected businesses and industries; the con-struction of sports arenas, arts and culturalfacilities; programs for workforce development,education and training; and myriad otherincentives.

While some of ODOC’s activities are gearedtoward the provision of traditional infrastructurethat benefits all businesses, many others di-rectly benefit individual firms and industriesand are the proper responsibility of those firmsand industries, not state government. For ex-ample, individual Oklahoma businesses, notstate government, should commit their ownresources to the search for “global business”opportunities, because the businesses them-selves are the primary beneficiaries of thoseefforts and should not be subsidized by generaltaxpayers. Likewise, business recruitmentshould be the responsibility of voluntary asso-ciations of local businesses that would benefitfrom the addition of a given firm to the localeconomy. And with regard to projects such assenior citizen and community centers, parks,and other recreation amenities, it should be theusers of those facilities who are responsible fortheir funding and upkeep.

The economic distortions caused by theexpansion of state government’s role in eco-nomic development policy are the product ofseveral factors. First of all, the primary consider-ations underlying most, if not all, governmentinvestment decisions are political, rather thaneconomic in nature. It is an unpleasant fact thatnot every area of a state is equally attractive toprivate sector businesses, and they allocatetheir capital so as to minimize their risk andmaximize their potential return on investment.When state government makes an “investment,”however, projects that the free market wouldreject are often approved in order to serve the

political interests of officials in a given region ofa state. While there is generally nothing sinisterabout this practice, it does not usually lend itselfto an efficient allocation of scarce resources.

Second, the political calculations involved ingovernment economic development decisionslead to a bias in favor of projects and programsassociated with the largest numbers of potentialjobs created, rather than the greatest possiblerates of return. Making job creation a primarymeasurement of a project’s economic impactmay provide flashy sound bites for politiciansand development officials, but it often providesan incomplete picture of a given program’seffectiveness. A good example of that mindset inOklahoma is the state’s much-lauded QualityJobs Program, which, since its inception in 1993,has distributed $400 million in tax dollars to 418companies.11

The Quality Jobs Program offers quarterlycash rebates for up to 5 percent of newly cre-ated taxable wages for up to 10 years to qualify-ing enrolled companies in what the state deter-mines to be “qualifying basic industries” (gener-ally, manufacturers and certain service compa-nies with a new payroll investment of $2.5million or more, with a lower payroll require-ment for companies in certain industries or thatlocate in targeted areas).12 In 2005, Senate Bill407 modified the Quality Jobs Program to giveexisting recipients added incentive to bringhigher-wage jobs to Oklahoma, allowing for a 6percent payment (if economic impact warrants)on payroll for direct jobs that exceed 150 per-cent of a company’s average wage. The bill alsoadded the civilian workforce at the FederalAviation Administration’s (FAA) Mike MonroneyAeronautical Center in Oklahoma City to the listof “basic industries” in the hope of giving it anadvantage in competing for new missions andconsolidations.13

However, Oklahoma’s job creation rate sinceQuality Jobs was created in 1993 was 26.5percent below the national average rate, and asof 2004, the state’s per capita personal incomefigure was 14.7 percent below the nationalaverage.14 Indeed, the structure of and changesto the Quality Jobs program illustrate several ofthe problems with government-controlled eco-nomic development projects. First of all, since itis government – not the private sector – thatdetermines which industries are eligible, the

19

program has the effect of favoring one class ofOklahoma businesses over another, as well asof forcing some taxpayers to subsidize theoperations of others. It also causes businessesto allocate time, money and manpower toseeking state subsidies that could have other-wise been used to improve their products and/orservices. In addition, the expansion of the“basic industry” list to include the FAA facility inOklahoma City illustrates the ever-escalatingcost of a government-centered economic devel-opment strategy, as increasingly mobile busi-nesses leap from state to state in search of themost lucrative possible incentive package.

Finally, it is not clear how many of the jobsQuality Jobs is credited with creating would

have been generated in its absence (in the past,ODOC has admitted that as many as half ofthose jobs would have been created in anycase), but regardless of the answer to thisquestion, the program is still a lose-lose propo-sition for state taxpayers.15 If those jobs wouldhave been created in any event, Oklahomataxpayers are, in effect, paying to increase theprofits of private businesses. If the jobs wouldnot have been created in the absence of theincentives, then those jobs are not grounded inthe reality of the market and are wholly depen-dent on continued government subsidies.

According to the Pollina Corporate RealEstate Report, Oklahoma ranked among the“Top 10 Pro-Business States for 2005,” and the

state bills itself as having “one ofthe most competitive and aggres-sive business incentive packagesin the country.”16 However,Oklahoma’s experience leads oneto question whether or not a statecan truly be considered “pro-business” when it relies on aneconomic development strategythat puts some businesses in theposition of subsidizing the opera-tions of others, forces generaltaxpayers to add to the profits ofprivate businesses, and promotespolicies that cause an inefficientallocation of scarce resources. Astate with a truly “pro-business”climate would recognize theprivate sector as the primary forcedriving economic developmentdecision-making, with stategovernment performing the vital(but limited) roles of guarantor ofindividual freedom, enforcer ofcontracts, protector of privateproperty, and provider of legiti-mate infrastructure that can beused by all businesses.

Regardless of its outcome, theOhio case currently pendingbefore the United States SupremeCourt should spur Oklahomapolicymakers to re-evaluate stategovernment’s role in economicdevelopment. ODOC shouldconduct a rigorous examination of

20

You Thought Subsidizing Your Competitors WasBad? Try Subsidizing Your Former Torturers

In a front-page story, the state’slargest newspaper reported that “topstate officials recently spent about$44,000 on a Southeast Asia trip,where they entertained Vietnameseexecutives and Communist Partyleaders with meals and wine.” More fromThe Oklahoman:

But members of the Oklahoma City Vietnamesecommunity are offended by the trip the 17-member statedelegation took. They say they already were slightedearlier this year when the state Commerce Departmentopposed legislation to give the former South Vietnameseflag official state recognition.

“We are here, we have businesses here,” said VinhNguyen, chairman of the Vietnamese American Associa-tion of Oklahoma City. “We have students here. We’vebeen doing good and we are helping the state ofOklahoma’s economy. But they [Commerce Department]don’t please us, they please the communists of Vietnam.”

Rep. Kevin Calvey, who proposed the South Vietnam-ese flag legislation, said he was flabbergasted and angrywhen a state Commerce Department official told him theyweren’t pleased with it. “The message was, ‘We don’twant you to run it because it might interrupt some thingswe have going with the Vietnamese government,’” saidCalvey, R-Del City. “I got a little heated at that point andsaid, ‘I’m not in the practice of disrespecting good Okla-homans because their former torturers don’t like it.’”

Source: Ryan McNeill and Steve Lackmeyer, “Trip angers Vietnamesecommunity,” The Oklahoman, August 7, 2005, pg. 1.

the programs and incentives it currently offerswith an eye toward eliminating or reducingthose that are not core responsibilities of gov-ernment and should limit its role to the provisionof legitimate infrastructure that can be used byall businesses. Targets of this examinationshould include programs such as the “pass-through” appropriations to the 11 substateplanning districts (COGs), which currentlyoperate in a largely unaccountable manner andfund projects which even ODOC admits are not“quality economic development.” EliminatingCOG funding for all but legitimate infrastructurepurposes would be a large step toward return-ing ODOC to its proper role.

Similarly, the $1 million approved for theOklahoma Military Strategic Planning Commis-sion Incentive Fund, intended to protect Okla-homa military installations from closure, shouldbe eliminated. While Oklahoma’s military basescertainly benefit neighboring communities,national security considerations, rather thaneconomic impact, should be the primary factorin federal decision-making in this area.

The savings generated by the elimination orreduction of ODOC programs could be returnedto Oklahoma’s private sector economy throughtax reductions. This would help to return respon-sibility for growing Oklahoma’s economy to theproper place – its private-sector entrepreneurs,workers, and families.

The use of taxpayer dollars for corporatesubsidies is inappropriate, and the OCPA

Budget removes the funding for such subsidies.This budget also proposes reducing stateappropriations to “pass throughs” and recom-mends a complete review of projects to elimi-nate those that fund anything but essentialcapital improvements for struggling communi-ties. Additionally, this budget calls for a thor-ough, top-to-bottom review of Commerce De-partment programs.

The Community Development Block Grant isa federal program to which the OklahomaDepartment of Commerce has added staterequirements for applying communities. Someof these requirements actually encouragecommunities to allow assets, such as sidewalksand water systems, to deteriorate in order toqualify for these grants. The OCPA Budget pro-poses that state requirements that exceed federalguidelines be removed and that the Commerce

Department staff be reduced accordingly.The OCPA Budget reduces the funding for the

Commerce Department by $10 million from theFY-2006 level and encourages further reviewand removal of pork and corporate subsidies.

Oklahoma Historical Society (OHS)“The OHS preserves and perpetuates the

history of Oklahoma and its people by collect-ing, interpreting, and disseminating knowledgeof Oklahoma and the Southwest.”17 Each of thestate’s 32 museums and sites has an individualmission statement according to the history itrepresents. The agency’s primary source offunding is taxpayer dollars. Appropriationsamounted to $10,142,253 and funded 87 percentof the agency’s budget for FY-2005.18

A small number of these museums chargeadmission. However, the majority currently havefree admission. The OCPA Budget recommendsthat a fee structure be put in place and that theadmission fees received by each individualmuseum be left with that museum. This will letattendance decide which museums are actually“historical places of interest” and which areunnecessary pork which divert funds fromhigher-priority areas of government. Addition-ally, the incentive to improve these attractionswill now fall on each site’s manager. The abilityto retain the revenue generated from theseimprovements should lead to better manage-ment and better museums for Oklahomans andour visitors.

This budget also calls for the removal of themyriad of loosely related programs receivingtaxpayer dollars under the guise of OHS, suchas the Humanities Council. In FY-2005 GovernorHenry wisely vetoed a $500,000 increase infunding to OHS, which included a $75,000increase in Humanities Council funding and$75,000 for a higher education exhibit at thenew Oklahoma History Center.19 This budgetconcurs with the governor and proposes that wenot only prevent funding increases but removethe funding altogether for these types of pro-grams.

This budget proposes a reduction of 10percent from OHS’s FY-2006 appropriation. Theappropriation should be reviewed annually forfurther reductions as the new fee structure andthe removal of unnecessary expenditureseliminate the need for tax dollars.

21

22

J. M. Davis Memorial CommissionThe J.M. Davis collection in Claremore is one

of the largest firearms museums in the UnitedStates. “The museum houses an extensivecollection of firearms, knives, swords, steins,saddles, Indian artifacts, music boxes, WorldWar I posters and more. In FY-2004 approxi-mately 33,000 people visited the museum.”20

The OCPA Budget recommends that fees forentrance to the museum be raised to cover allthe costs of operations or that custodianship beassigned to the local government municipality,which can then decide if the economic andhistorical benefit justifies local funding tooperate the museum.

Department of LaborThe duties of the Oklahoma Department of

Labor (ODOL) are as follows:21

1. The Department administers state andfederal labor laws, such as child labor andwage and hour laws.

2. The U.S. Department of Labor targets thoseemployers who have high lost workday injuryand illness rates and the ODOL contactseach employer to ensure they are aware theyare on the list and offers ODOL consultationservices. The most recent list included 293Oklahoma employers. This free, voluntary,non-punitive and confidential program helpssmall (250 or less), high-hazard employersprevent injuries and illnesses. Federal fundscover 90% of the department’s fundingsources for this program. The OSHA consult-ant first identifies hazardous conditions andpractices without the cost impact often asso-ciated with federal OSHA rulings and whichODOL estimated saved Oklahoma busi-nesses $7.57 million in potential federalOSHA fines.

3. State statutes require ODOL to inspectboilers and pressure vessels on an annualbasis. Boilers and pressure vessels must beinspected because of the extremely volatilepotential of faulty boilers and pressurevessels for explosions and fires. Many boilersand pressure vessels are in highly traffickedplaces such as schools, churches and hospi-tals. Currently, 11,840 boilers and pressurevessels are registered in the state.If the services to industry are worthwhile they

should be borne by the businesses who receive

the services, not the taxpayer. If millions ofdollars are being saved in federal fines andreduced worker’s compensation costs, thenindustry should be expected to reimburse ODOLfor the cost of providing the services that gener-ated the savings.

The legislature raised boiler inspection feesin FY-2005. The OCPA Budget praises thatincrease and encourages the expansion of theconcept. Some might argue that sites such asschools should not be charged a cost-based fee.However, not charging a fee amounts to cross-subsidization of the Department of Educationthrough ODOL’s appropriations. This budgetpromotes transparency in government expendi-tures so that taxpayers can truly know whatgovernment services cost.

The OCPA Budget recommends that ODOLreceive its FY-2006 appropriation, adjustedupward for population growth plus inflation.

Oklahoma Scenic RiversCommission (OSRC)

The OSRC was established in 1977 by theScenic Rivers Act. The OSRC became its ownagency in 2002.22 The Commission establishesminimum standards for planning and otherprovisions of the Scenic Rivers Act to preserveand protect the aesthetic, scenic, historic,archaeological and scientific features of theIllinois River and its tributaries.

The OCPA Budget recognizes the need toprotect Oklahoma’s natural resources but findsthe creation of a separate agency for the ex-press purpose of protecting a small number ofstreams in one region to be inefficient. Thisbudget recommends that the tasks of the Com-mission be transferred to the Department ofEnvironmental Quality with a 10 percent reduc-tion in appropriations to reflect savings fromredundancies in administration.

In addition, this budget suggests that theremaining funding for enforcing the ScenicRivers Act should be from the Oklahoma WaterResources Board Rural Economic Action PlanWater Projects Fund. This fund was createdwhen in January 1999 the legislature met inspecial session to address concerns over fallingoil prices. At that time legislation was approvedwhich lowered gross production tax rates on oilproduction. The legislation also establishedseveral funds to receive revenues from oil

production in future years when the rates are inexcess of the amounts appropriated to schoolsand counties. One of the new funds created wasthe Oklahoma Water Resources Board REAPWater Projects Fund. This fund should be inexcellent shape financially given the record oilprices of the last year and could bear the fullfunding of the Scenic Rivers Act.

Oklahoma Tourism and RecreationDepartment

The origin of the Oklahoma Tourism andRecreation Department (OTRD) was a 1931appropriation of $90,000 by the OklahomaLegislature for the land where Lake Murray islocated. Officially created by the Legislature in1972, OTRD’s mission is to “enhance the qualityof life in Oklahoma” by administering the state’spark system, protecting its natural resources,and stimulating economic development bydeveloping and marketing “travel and tourismopportunities to and within the state of Okla-homa.”23 OTRD also advances this mission byconducting a public information campaignabout Oklahoma’s people, attractions, andactivities.

OTRD is supervised by an executive directorin accordance with policies developed by anine-member Oklahoma Tourism and Recre-ation Commission (OTRC), which is chaired bythe lieutenant governor and comprised ofrepresentatives from Oklahoma’s tourism andbusiness communities appointed by the gover-nor. In recent years, primarily as a consequenceof a 25 percent budget cut enacted in FY-2002,OTRD has made a number of administrativeand operational changes that merged sevendivisions into three “functional areas of opera-tion,” along with an administrative servicesdivision. The following are brief descriptions ofthe responsibilities for each program area.• Administrative Services. This division “coordi-

nates the fiscal activities of the OTRD operat-ing divisions, provides fiscal information,fiscal control, and payroll, personnel, pur-chasing and vendor payment services.” Italso “interprets policy and procedures” setforth by the OTRC and “operates theDepartment’s central computer system andnetwork.”24

• State Parks, Resorts and Golf. This division isin charge of public recreation facilities in

Oklahoma, including “50 state parks, 4resorts, 2 lodges, 10 golf courses, 455 cabinsand cottages,” a number of campsites andscenic trails, boating, and other recreationfacilities. It also administers contracts withlease concessionaires, and operates aresearch and development division thatperforms “statistical research and analysis”and provides “economic development andplanning assistance” to OTRD and localcommunities around the state. Finally, thisdivision “administers federal Land and WaterConservation Fund (LWCF) and RecreationTrails Program (RTP) grants.”25

• Travel and Tourism. The purpose of thisdivision is to “develop information, marketingplans, and programs designed to attracttourists” to Oklahoma. It provides informationon both government-owned and privatetourist attractions with the goals of promotingeconomic development and “awareness ofOklahoma as a travel destination.” Its activi-ties include production of the weekly “Dis-cover Oklahoma” television show, operationof 12 tourism information centers that serveas gateways for travelers entering the state,and provision of a Traveler Response Infor-mation Program (TRIP). TRIP “operates a toll-free call center” and website, along with a“destination database” for more than 9,000attractions, events, and Oklahoma busi-nesses that may be of interest to tourists.26 Atthe same time, this division helps localcommunities and organizations promotespecial events and attract conferences,meetings and conventions. Finally, the state’sFilm Office is charged with increasing musicand film business in Oklahoma.

• Oklahoma Today Magazine. This division haspublished the official state magazine since1956. Oklahoma Today is a bi-monthlyregional publication that focuses onOklahoma’s “culture, heritage, history,people, environment and attractions.”27 Italso produces “promotional products” suchas shirts, tote bags and mugs for both in-state and out-of-state marketing purposes.OTRD is funded primarily by state general

revenue appropriations and budgeted revolvingfunds, and all told, 73 percent of FY-2005 bud-geted expenditures were allocated to parks,resorts and golf courses. Over the past 10 years,

23

24

appropriations to OTRD have fluctuated, risingfrom $25.406 million in FY-1997 to a peak of$33.35 million in FY-2002, but then falling to alow of $22.616 million in FY-2004. The FY-2006appropriation of $25.956 million represents a 2.1percent increase over the FY-1997 amount, but a7.4 percent increase over FY-2005. The bulk ofthat increase can be attributed to the effect ofthe recently enacted statewide employee payraise (an increase of $983,319) and a $1 millionappropriation for park maintenance and capitalimprovements. However, the FY-2006 appropria-tion ultimately approved by the legislature wasmore than $1 million below the amount re-quested by the governor.

Most Oklahomans undoubtedly believe thatOTRD’s overarching mission – to preserve andprotect precious natural resources and promotethe state’s virtues as a visitor destination – is aworthy one. However, it is not at all clear thataccomplishing this mission requiresOklahoma’s state government to own andoperate enterprises – such as resorts, lodges,golf courses, and magazines – that not only usetaxpayer dollars to directly compete with privatebusinesses that provide the same services orproducts, but also, in some cases, do so in amanner that inefficiently utilizes those scarcetaxpayer resources by failing to meet criticalneeds in a timely fashion.

Indeed, the economic distortions that resultwhen governments expand into areas outsidetheir limited responsibilities increase the cost ofgovernment and depress private-sector invest-ment and job creation. These distortions mani-fest themselves in several ways.

First of all, when governments decide tobecome owners and operators of facilities thatare usually the proper responsibility of theprivate sector, one of the justifications is oftenthat the enterprise in question will be a revenuegenerator for the state. However, as internation-ally recognized public policy consultant WendellCox has noted, the tax-exempt status of govern-ment-run entities means that even if they areprofitable, taxpayers lose out – because thosetaxpayers are forced to pay higher taxes tomake up for the lost tax revenues that wouldhave been generated if the operations wereprivately owned.

At the same time, privately owned businesseshave another important advantage over their

would-be government competitors. Becausebusiness owners and investors are risking theirown money, and therefore directly reap therewards of successful operations and directlysuffer losses when ventures fail, they have muchmore incentive to be judicious in their invest-ment decisions than do government officials,who can simply ask for more tax dollars when aparticular project loses money and receive nodirect benefits when their “investments” succeed.

The fact that private business owners aredirectly accountable for the performance of theirfirms also provides a powerful impetus for themto make timely capital improvements to main-tain and expand their capacity to provideproducts and services. Governments, on theother hand, due in large part to their generallyslow-moving, bureaucratic nature, often delaycritical maintenance expenditures for enter-prises and properties under their control.Oklahoma’s state parks, resorts and golfcourses are glaring examples of howgovernment’s difficulty in responding to prob-lems as they arise not only causes the ultimatesolution to those problems to dramaticallyincrease in cost, but also harms current perfor-mance and future competitiveness. (One isreminded of an observation from former Gov.Frank Keating, who once compared one ofOklahoma’s government-owned-and-operatedlodges to “a North Korean resort.”)

Oklahoma’s state parks currently have morethan $88 million in maintenance and infrastruc-ture needs. Perhaps not surprisingly, betweenFY-2001 and FY-2004 state park attendancedeclined by 4.6 percent, from 15.1 million to 14.4million visitors. Over the same time period, parkrevenues also declined slightly, from $11 millionin FY-2001 to $10.8 million in FY-2004, whilestate appropriations to the parks rose by 22.7percent, from $9.7 million to $11.9 million. Andwhile the overall self-sufficiency of the parks (interms of the percentage of park expenditurescovered by park revenues) has increasedslightly, the governor’s FY-2006 budget notesthat while Lake Murray has an 81 percent self-sufficiency rate, other, smaller parks fare con-siderably worse.

The governor’s FY-2006 budget also attributes(at least in part) the declining performance ofthe state’s resorts and golf courses to a lack ofpast maintenance. While Oklahoma’s state-

25

owned resorts increased their self-sufficiencyrate between FY-2001 and FY-2004, their occu-pancy rate has declined “as the facilities con-tinue to age and deteriorate from a lack ofcapital maintenance.” With regard to the golfcourses, their usage, revenues and expenditureshave declined, and “declining revenues resultsin lower maintenance and declining coursequality.” In fact, FY-2004 saw the lowest numberof rounds of golf played at state courses withinthe past four years – a figure that was morethan 15,000 rounds below the FY-2002 level.

The governor’s FY-2006 budget’s presentationof the golf course operations provides a usefulillustration of the mindset that entices govern-ments into activities that are properly the re-sponsibility of the private sector – and why thedecision to enter those activities is usuallymisguided. It notes that when Oklahoma origi-nally decided to build many of its golf courses,there were few private and municipal competi-tors, and for a time, state courses performedwell. But as competition increased, state courseswere unable to maintain their advantage. Thus,the gap between the state courses and, espe-cially, privately run courses widened even morebecause “competitors are able to constantlyimprove assets, while state golf courses havedeteriorated” – to the point where “many stategolf courses now sell 30 to 38 percent fewerrounds than their competitors.”

Despite the problems associated with govern-ment operations that directly compete withprivate businesses, as many OTRD operationsdo, government officials are usually loath togive up control of such entities. This can beexplained by a critical difference in the incen-tives faced by government officials who operatecommercial activities as opposed to private-sector business owners. Mr. Cox notes thatgovernment officials often measure success notby profits and losses, but by whether or not theyare able to increase the size and power of theiragencies, which requires ever-higher levels oftax dollars – and in turn leads to decreasedeconomic growth as those increased tax dollarsare removed from the private-sector economy.

It is time for OTRD to chart the oppositecourse, and empower the private sector toenhance tourism and recreation amenities forOklahoma residents and visitors alike. It mustbegin to reduce the number of areas in which its

operations compete with and potentially crowdout investment by private businesses. In sodoing, it will create the conditions for lastingeconomic growth in Oklahoma, as the sale orlease of golf courses, resorts, and similarproperties will put new assets on the tax rollsand allow more capital to remain in the handsof consumers and business owners.

Fortunately, some recent developmentsregarding the operations of OTRD signal thatOklahoma officials may be ready to try a differ-ent approach for future provision of sometourism and recreation opportunities. For example,perhaps in response to the factors detailed above,the governor’s FY-2006 budget proposal did callfor leasing five non-resort/lodge golf coursesoperated by OTRD for private management anddevelopment, and for the proceeds of any suchdeal to be re-invested in state park maintenanceand capital improvements.

Two other initiatives also show great promisefor Oklahoma taxpayers and the state’seconomy. According to a state House pressrelease, HB 2542, sponsored by Rep. John Careyand Sen. Jay Paul Gumm (both D-Durant) andsigned into law in 2004, authorized the stateCommissioners of the Land Office (CLO) “to buyup to 1,500 acres of U.S. Army Corps of Engi-neers land leased by the state for the TexomaLodge and Resort” in order to make the landavailable for private development.

In late August, the CLO and OTRD finalized adeal to purchase the Texoma Lodge and golfcourse, along with the Chickasaw Pointe golfcourse, for private development. According to apress release from Sen. Gumm, the CLO is tochoose “a qualified developer and enter into apartnership for development of public andprivate facilities around Chickasaw Pointe andin the area of the current lodge and cabins.” ByFebruary 2006, CLO will either transfer owner-ship of the property or enter into long-termleases with developers, while OTRD will main-tain Texoma State Park in a smaller area andcurrent employees will be given preferentialtreatment for job openings within the agency.

In the words of Sen. Gumm, who also notedthat the land would now be on the tax rolls toproduce more revenue for local roads andschools: “This is about creating jobs in mydistrict and preserving Lake Texoma as apremier tourist destination. This new partner-

26

ship will also spur additional economic expan-sion in the area, creating even more jobs andopportunity for the people of Marshall Countyand the surrounding area.”

Also encouraging for Oklahomans is the factthat Lt. Gov. Mary Fallin, who described theLake Texoma deal as an opportunity to “makeone of Oklahoma’s crown jewels a regional andnational tourism destination,” is currentlyheading up the Re-evaluation, Assessment andManagement Plan (RAMP) task force, which isstudying ways to improve the state’s parksystem. One of the options that the task force,which includes OTRC members, is consideringis privatization of some state parks, perhapsalong the lines of the Lake Texoma deal.

Oklahoma’s below-average economic perfor-mance of the past two decades, relative to boththe nation as a whole and to it closest geo-graphic competitors, illustrates that continuedgovernment growth will not generate lastingprosperity. Increasing the private sector’s role inthe state’s tourism and recreation industry byleasing or selling underperforming state-ownedassets to private investors will allow Oklahomato free up more dollars for tax reductions, re-prioritize the revenues government alreadyreceives to core government functions, and gener-ate the private investment that will pay for much-needed improvements to deteriorating state-owned properties.

The OCPA Budget recommends that thosestate parks whose revenues are below a 30

percent self-sufficiency level be given to thelocal government authorities. This budgetdeducts $3 million from OTRD to reflect thesavings upon removing these operating losses.The local economy is the recipient of the ben-efits of expenditures made by visitors to theseparks who spend money in their area motels,restaurants, and stores. Local governmententities can best decide if these parks are trulytourist draws or merely wasteful pork projectswhich draw relatively few tourists.

This budget also suggests that the majority ofpark revenues should stay with the park thatgenerates them. This provides incentives forpark managers to improve the attractiveness oftheir parks to visitors.

This budget recommends that all state golfcourses be sold to private operators. Addition-ally, it is recommended that the proceeds fromthese sales be used to fund the projects labeledby OTRD as being crucial environmental issuesto the parks remaining in the system.

This budget recommends the liquidation ofthe state resorts and removes $2 million fromOTRD’s appropriation. Any net revenues real-ized by the sale should be used to fund theprojects labeled by OTRD as being crucialenvironmental issues to the parks remaining inthe system.

This budget recommends the OTRD receiveits FY-2006 appropriation (after removing the $5million discussed above), adjusted upward forpopulation growth plus inflation.

Will Rogers MemorialCommission

The Will Rogers MemorialCommission was established in1938 to honor the life and works ofWill Rogers. The Rogers familydonated the Rogers ranch homeas well as many of the items onexhibit in the museum. The mu-seum and ranch host more than200,000 visitors annually. Admis-sion is free and both facilities areopen 365 days a year. More than96 percent of the Commission’sbudget is comprised of state-appropriated funds. The remain-ing funding is derived fromdonations and federal funding. A

Oh, Well. It’s Only Money“Misspellings, errors and a picturedepicting a Confederate flag causedstate tourism officials to destroynearly $46,000 worth of eventguides meant for distribution at theOklahoma State Fair,” TheOklahoman’s Ryan McNeill reported

October 5, 2004. “About 200,000 copiesof the 2005 Annual Events Guide were

ordered destroyed recently by newly appointed state Tour-ism and Recreation Director Robb Gray. He said the guidecontained too many errors and pictures that invited ridiculeto Oklahoma. Tourism officials are compiling a new versionof the guide – minus the errors and with fewer pages – thatGray said could cost taxpayers about $30,000 more.”

27

full one-third of the museum’s budget was spenton educational outreach.28

The 2004 appropriation included not only thecost of operating the museum but the purchaseof a vehicle. Appropriated taxpayer dollarsincreased 11.3 percent in FY-2005 to total morethan $882,000.29

Will Rogers was one of Oklahoma’s finestcitizens, but using taxpayer dollars to subsidizethis museum is not appropriate. Claremore andthe surrounding area benefit from the moneythat the 198,000 visitors spend when they stop tovisit this museum. The OCPA Budget recom-mends removing the appropriated dollars fromthe museum and assigning custodianship to thelocal government municipality, which will thendecide if the economic and historical benefitjustifies local funding to allow the museum’scontinued operation without charging anyentrance fee.

The original gift from the Rogers familyrequired that no fee be charged and accommo-dation would need to be made in the trustdocument for any charges. Returning the prop-erties to the family or to a 501(c)(3) charitableorganization might be the best course of actioninstead of asking taxpayers to provide funding.

Rural Economic Action PlanThe Rural Economic Action Plan (REAP) is a

grant program. REAP dollars pass through twoagencies – the state auditor’s office and theWater Resources Board. The premise is thatsmall communities lose a portion of their taxbase to larger cities. To qualify for a REAPgrant, a community must have a population ofless than 7,500 and priority is given to communi-ties with a population of less than 1,500.30 TheCouncils of Government (COGs) receive thefunds and administer the programs.

REAP pass-throughs gained notoriety witharticles in the Daily Oklahoman citing question-able expenditures that were directly controlledby individual legislators.31

The COGS also get pass-through funds fromother sources including the CommerceDepartment’s Office of Community Developmentand monies linked to REAP in the OklahomaWater Resources Board water projects.

While the OCPA Budget recognizes the needto help rural areas retain infrastructure, thenumber of superfluous projects requires a

reassessment of REAP. This budget recommendsthat the legislature redefine these expendituresto fit the original premise that small communi-ties have lost a portion of their tax base tolarger cities.

Local governments typically control theirexpenditures to service local needs and statelegislators are not involved in the direction ordetail of the expenditures. This budget recom-mends that the formula which controls the flowof REAP money be restructured to direct thefunds directly to those local governmental unitsthat would have normally received them. Forexample, city governments would receive thatportion which represented retail sales flow tothe cities. OCPA believes that local control andresponsibility for these funds correspond moreclosely with the original premise of REAP.

This budget freezes REAP funding at FY-2004 lev-els until program corrections can remove the waste.

Native American Cultural andEducational Authority

Senate Bill 746 created the Native AmericanCultural and Educational Authority (NACEA) onSeptember 1, 1994. The bill established aproject to build a facility to include a museum,interpretive center, native languages instituteand resource center.32 Oklahoma City donatedland and a future portion of its CommunityDevelopment Block Grant contingent on NACEAhaving $25 million in other funds. Congresspassed federal legislation last year that pro-vides $33 million over four years for the center.Oklahoma must provide $2 for every $1 offederal funds.33

The OCPA Budget recognizes the importanceof the Native American community to the past,present, and future of Oklahoma. This budgetbelieves that an attraction of this magnitudedoes not need taxpayer dollars for financing.However, funding for costs already agreed to bythe Legislature cannot be withdrawn on shortnotice and this budget recommends the FY-2006appropriation be continued for FY-2007.


2 Bill Brubaker, “Court to Rule on Building Incentives,”Washington Post, September 28, 2005, http://www.washingtonports.org/members_only/nesroundups/september2005/092805.htm.

28

3 “Commerce Overview,” http://www.okcommerce.gov/index.php?option=content&task=section&id=8&Itemid=100.

4 Ibid.

5 Secretary Kathy Taylor’s remarks to the Konawa Chamber ofCommerce banquet, May 15, 2004.



8 Ibid.

9 Ibid.

10 Oklahoma House of Representatives, Fiscal Year 2006

Legislative Appropriations, pp. 142-144.

11 Oklahoma Department of Commerce, Oklahoma Quality

Jobs Program Guidelines and Application 2005, Version 2006,http://staging.okcommerce.gov/test1/dmdocuments/QJP_Guidelines_2006.pdf.

12 “Quality Jobs,” www.okcommerce.gov.

13 Oklahoma House of Representatives, Fiscal Year 2006

Legislative Appropriations, pg. 143.

14 Employment growth rates are calculated using data from theCurrent Population Survey, United States Bureau of LaborStatistics (September 1993-September 2005). Per capitapersonal income growth rates are calculated using data fromthe United States Bureau of Economic Analysis.

15 John Perry, “Economists Debate Jobs Program, Income Gap,”The Oklahoman, July 13, 1997.

16 “Business Incentives,” http://www.okcommerce.gov/index.php?option=content&task=view&id=267&Itemid=336.


18 Governor Brad Henry, FY-2006 Executive Budget, pg. B-38;Oklahoma House of Representatives, FY-06 Legislative



Appropriations, pg. 154


21 Governor Brady Henry, FY-2006 Executive Budget, pg. B-42.




Data, pg. 73.



27 Ibid.





31 Oklahoma Council of Public Affairs and Citizens AgainstGovernment Waste, 2004 Oklahoma Piglet Book, pp. 4-5.


33 Ibid.

29

EducationArts Council

The Arts Council is primarily a grant-makingentity which “awards matching grants to culturalorganizations, schools and local governments inorder to increase resources available to non-profit organizations producing community artsand arts education programs throughout Okla-homa.”1

OCPA believes that “discussions of policyissues should begin with first principles,” as theCato Institute’s David Boaz points out. “As mycolleague Ed Crane notes, there are only twobasic ways to organize society: coercively,through government dictates, or voluntarily,through the myriad interactions among individu-als and private associations. … The bottom lineof political philosophy, and therefore of politicsitself, is, ‘Who is going to make the decisionabout this particular aspect of your life, you orsomebody else?’”2

“Do you spend the money you earn or doessome politician?” Boaz asks. “In a civil societyyou make the choices about your life. In apolitical society someone else makes thosechoices. …

“In a free society coercion should be reservedonly for such essential functions of governmentas protecting rights and punishing criminals.People should not be forced to contribute moneyto artistic endeavors that they may not approve,nor should artists be forced to trim their sails tomeet government standards.”3 If Oklahomanshave less money extracted from them via taxa-tion, they will have more money available tocontribute to art exhibits, symphonies, or what-soever they may choose.

Oklahoma Arts Council FY-06 Budget Resources


Interagency Transfers $175,085.00

Federal Funds $589,200.00

Total $5,007,623.00

Source: Oklahoma House of Representatives, FY-2006


The OCPA Budget recommends the elimina-tion of the council’s appropriation, with a sav-ings of $4,243,338 in FY-2007 to redirect tohigher-priority areas.

Career and Technology Education(CareerTech)

CareerTech provides customized businesstraining for industries and prepares secondarystudents for postsecondary education.Oklahoma’s system serves a client base rang-ing from youth in high school and incarceratedyouth to senior citizens. The system offersprograms and services in 29 technology centerdistricts operating through 54 campuses, 398comprehensive school districts, 23 skill centersand three juvenile facilities.4 The system re-ceived 2.3 percent of total appropriations for FY-2005, making it the eighth-largest agency instate government.5

“CareerTech focuses on career-technologyand economic development through severalprograms.

“Comprehensive School programs helpstudents develop the technical, academic andemployability skills needed to become finan-cially independent citizens.

“Technology Center programs provide Okla-homa businesses with skilled, competent em-ployees.

“Business and Industry Training programsinclude training customized for specific employ-ers, open enrollment classes for adults that wantto enhance their job skills on a part-time basisand bid assistance services.

“Skills Centers programs help incarceratedindividuals realize their potential by creatingopportunities for them to experience and applya quality education. Skills center training helpsprepare inmates and juveniles for life outsidethe confines of prison and detention.”6

As the table on page 30 indicates, the major-ity of CareerTech’s expenditures support publicschools. This cross-subsidization of the Depart-ment of Education does not make for transpar-ency in government spending. Essential datathat impact the amount of dollars spent perstudent in Oklahoma classrooms are hiddenfrom Oklahoma citizens when this occurs. Forthis reason, the OCPA Budget reassigns apopulation-and-inflation-adjusted 74 percent ofCareerTech’s budget to the Department ofEducation.

30

FY-2005 CareerTech Expenditures by Activity

Local Schools Financial Suortpp 75%Business/Industry/Adult 5%Statewide Services 12%Inmate and Skills Centers 4%Administration 3%Contingency 1%

Source: Governor Brad Henry, FY-2007 Executive Budget, pg. B-66

State Board of Career and Technology

Education FY-06 Budget Resources

General Revenue Fund $130,287,358.00Federal Funds $24,004,846.00Revolving Funds $6,504,294.00Total $160,796,498.00



Similarly, this budget transfers an inflation-plus-population-adjusted portion of the fourpercent of CareerTech’s budget spent on in-mates to the Department of Corrections to endthe cross-subsidization and improve the trans-parency of government.

This budget recommends that the rest ofCareerTech’s programs be reviewed for fee andtuition adjustments. This budget freezes tuitionsand fees at the FY-2005 level for those childrenwhose parents make less than 185 percent ofthe Federal Poverty Level (FPL) with a slidingscale of increases up to 350 percent of FPL. Thisbudget recommends that tuition for studenteducation classes (unrelated to specializedbusiness or individual self-improvementclasses) be increased over the next five yearsuntil a target of 50 percent of costs is met.

Additionally, businesses seeking specializedtraining should bear the entire cost of thattraining. Individuals who enroll in self-improve-ment classes, such as cooking classes, shouldbe charged a fee commensurate with the cost toprovide the class.

This budget recommends that the appropria-tions remaining in CareerTech after removingthe cross-subsidization should be kept at the FY-2006 level, adjusted upward for populationgrowth plus inflation.

Oklahoma Educational TelevisionAuthority (OETA)

“OETA is a federally licensed and regulated

agency which operates non-commercial educa-tional television, associated microwave andchannels assigned by the Federal Communica-tions Commission (FCC). Full-powered analogtelevision stations operate in Oklahoma City,Tulsa, Eufaula and Cheyenne with translatorsextending service to the remainder of thestate.”7

“Operations funding comes from severalsources. State appropriations provide thelargest percentage while funds from the OETAFoundation provide funding for programmingnearly equal to that provided by state funds.”The OETA Foundation “is a non-profit organiza-tion operating for the purpose of receiving,investing and expending privately donatedfunds which support public broadcasting. TheFoundation provides a portion of the operatingbudget for the network. The Foundationmatched the earlier state appropriation of $5.6million for the first phase of the conversion toDTV.”8

OETA is at a point in its existence wheresignificant investment is required for the con-tinuation of service. The Federal Communica-tion Commission (FCC) is requiring conversionfrom the current analog to digital transmission.However, OETA will also continue analogservice for the entire state for the foreseeablefuture. The FCC requires continued analogservice until 85 percent of the households in acoverage area are able to receive a digitalsignal. OETA estimates that this transition maytake up to 10 years.

During this time, signals must be transmittedby both means and equipment must be main-tained for both. The estimated cost of this phaseof the conversion is $15.6 million. This costincludes replacement of the four analog trans-mitters in the primary service areas as well astrue digital conversion costs. The final phasedeals with the conversion of translators in theareas outside the range of the four full-servicetransmitters. This phase will cost approximately$8.1 million.

The widespread availability of satellite TVservice to Oklahoma’s remote rural areas hasreduced the need to ask Oklahoma taxpayers tocontinue to finance OETA, especially taxpayerswho may not approve of the perceived bias inany number of PBS news programs, documenta-ries, or other programming.

31

Oklahoma Educational Television Authority


General Revenue Fund $4,624,059.00Federal Funds $467,999.00Revolving Funds $3,894,457.00Total $8,986,515.00



The OCPA Budget removes $4.624 million instate appropriations from OETA, as well assaving Oklahoma taxpayers the cost of digitalconversion. It should be noted that Oklahomataxpayers continue to provide a source offunding for OETA through the favorable taxtreatment that the OETA Foundation receives.This budget suggests that all OETA assets,including any bandwidth rights, be assigned tothe OETA Foundation, giving OETA a firmfooting to continue operations without usingtaxpayer funding. Oklahomans who wish tosupport OETA may send a donation to the OETAFoundation, P.O. Box 14190, Oklahoma City,Oklahoma 73113.

Elementary and SecondaryEducation

The state’s commitment to common educationis unmistakable. Appropriations for commoneducation (excluding supplemental appropria-tions) were $2.175 billion in FY-2006, or 36percent of all state appropriations. Commoneducation is the single largest expenditure inthe state budget.9

Conventional wisdom holds that Oklahomataxpayers are stingy when it comes to educa-tion. This is incorrect. For a relatively poor state,Oklahoma is making a strong (thoughunderappreciated) effort. Figures from thenation’s largest school-employee labor unionshow that Oklahoma ranks a reputable 19th inK-12 spending as a percentage of personalincome, and ranks 15th in the nation in theshare of total government revenue spent oneducation at all levels.10

Popular opinion holds that Oklahoma schoolsare “under-funded” and that spending moremoney on education will result in better studentperformance. Again, this conventional wisdomdoes not correspond with the available data.

From 1959-60 to 1999-00, inflation-adjustedspending per pupil in Oklahoma rose by a

multiple of 3.22, similar to the national multipleof 3.42. Yet educational attainment has been flat(at best) and productivity has plummeted.11

Consider:• According to the highly regarded National

Assessment of Educational Progress (whichthe American Federation of Teachers callsthe “gold standard” in education data), onethird of Oklahoma’s fourth graders cannotread at even a basic level – they cannotunderstand a simple paragraph in achildren’s story.12

• The numbers are even worse for Oklahoma’sminority students: Two-thirds of black fourthgraders, and half of Hispanic fourth graders,cannot read at basic level.13

• Despite the fact that Oklahoma has a lawrequiring school attendance, there are morethan 421,000 adult illiterates in the state,according to Oklahoma literacy experts.(“That startling figure prompted Gov. BradHenry last week to throw his support behinda campaign to raise awareness of literacyprograms,” The Oklahoman reported inOctober 2003.14)

• 63 percent of Oklahoma’s high school gradu-ates lack the skills necessary to attend a four-year college.15

More could be said about Oklahoma’s disap-pointing student performance – flat ACT scores,18-year-olds who can’t read their diplomas, thebooming remediation industry in colleges andthe private sector, etc. – but the overall picture isclear. Hoover Institution economist EricHanushek summarizes the situation well. Afteran exhaustive study of U.S. public education, heconcluded:

“The patterns of expenditure on schools tell afairly simple story. Real spending on schoolshas been increasing for a long time. The spend-ing has in broad-brush terms been happeningin the way that is commonly advocated: teachereducation has been increasing, teacher experi-ence has been increasing, and pupil-teacherratios have been falling. Yet, at least for thepast three decades when student performancehas been measured, there is little indication thatthese increases in resources have led to discern-ible improvements in student outcomes.

“Consideration of other factors that mightdistort the resource outcome picture does notchange the conclusions. Although cost pres-

32

Oklahoma Voters Want Choices, Say Schools’ Problems ‘Not About Money’Which do you believe is more important toimprove public education in Oklahoma?

Increase funding .................................... 25%Raising standards and accountability .... 68%Undecided (vol.) ....................................... 8%

Which of the following comes closest to yourbeliefs? (Rotate)

The simple fact is that our schools needmore money ........................................... 41%Our schools would have enough moneyif they spent it appropriately instead ofwasting it ................................................ 52%Undecided (vol.) ....................................... 8%

To the extent that Oklahoma’s public schoolshave problems, what do you think is causingthe problems? Are these problems: (Rotate)

Related to the amount of money available –such as low teacher salaries, too fewteachers, overcrowded classes,inadequate supplies and facilities, andother problems that could be fixed withmore funding .......................................... 27%Not related to the amount of money avail-able, but rather with the lack or parentalinvolvement, lack of discipline, ineffectiveteachers and administrators, inappropriatecurriculum, and a bureaucratic system thatwastes the money it has ........................ 63%Undecided (vol.) ..................................... 11%

Which of the following comes closest to yourbeliefs? (Rotate)

Parents should be allowed to send their childto the school of their choice ................... 62%Children should be required to attend schoolsin the district in which they live ................. 35%Undecided (vol.) ....................................... 3%

Do you favor or oppose giving parents taxbreaks or credits to send their children to apublic, private, or church-related school of theirchoice? (After response, ask: Would you sayyou strongly favor/oppose or only somewhatfavor/oppose?)

Strongly favor ......................................... 37%Somewhat favor ..................................... 19%Somewhat oppose ................................. 17%Strongly oppose ..................................... 21%Undecided (vol.) ....................................... 6%

If you had a school-age child and were given avoucher or a tax credit that would cover tuitionto any of the following, which would you per-sonally choose for your child? (Rotate)

Public school .......................................... 41%Church affiliated private school .............. 38%Other private school ............................... 15%Undecided (vol.) ....................................... 6%

Do you favor or oppose the right of parents tohome school their children? (After response,ask: Would you say you strongly favor/opposeor only somewhat favor/oppose?)

Strongly favor ......................................... 40%Somewhat favor ..................................... 30%Somewhat oppose ................................... 8%Strongly oppose ..................................... 15%Undecided (vol.) ....................................... 8%

Pre-kindergarten programs are becomingincreasing popular in Oklahoma. In fact, Okla-homa leads the nation in the percentage of 4-year-olds enrolled in pre-K programs. It hasbeen proposed that parents be allowed to sendtheir 4-year-olds to any public, private orchurch-related pre-K program. Under thisproposal, those parents choosing non-publicschools could then claim a tax credit worth alimited amount of the tuition they pay at thenon-public school. Would you favor or opposethis proposal? (After response, ask: Would yousay you strongly favor/oppose or only some-what favor/oppose?)

Strongly favor ......................................... 28%Somewhat favor ..................................... 28%Somewhat oppose ................................. 14%Strongly oppose ..................................... 23%Undecided (vol.) ....................................... 7%

Source: Cole Hargrave Snodgrass & Associates, telephone inter-views of 400 registered voters in the state of Oklahoma, January22-24, 2006. The confidence interval associated with a sample ofthis type is such that 95 percent of the time results will be within +/- 4.9 percent of the true values, i.e., the results obtained if it werepossible to interview all the qualified respondents.

In Oklahoma, the government isoperating a school system whichthe majority of people would exitif they could afford to.

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sures on teachers and special education havehad some influence on the resource flows intoschools, they do not change the overall conclu-sions. … All this suggests that resources per se

are not the issue. And there is little reason tobelieve that future resource flows will have thedesirable impact on student outcomes unlessother, more fundamental factors change.”16

In an attempt to improve public education,Oklahoma has undertaken many of the samereforms and policies that have swept throughthe rest of the country over the past two de-cades. Among the most high profile are in-creased spending, smaller classes, revisedteaching methods, and new teacher trainingprograms. Yet after a decade of smaller classes,higher spending, and curriculum reform, there isno sign of substantial improvement in theperformance of Oklahoma’s students.

So if more spending and smaller classeswon’t improve public education, what will?Interestingly enough, research shows thatschool choice improves public schools.

School choice opponents, of course, claimthat choice harms public schools. Research,however, shows the opposite. A study17 pub-lished by Harvard economist Caroline Hoxbyaddresses the question: “Do public schoolsrespond constructively to competition inducedby school choice, by raising their own productiv-ity?” The answer: Yes, they do, and the benefitsare greatest where large numbers of studentsare eligible for choice.

The fact that choice benefits public schools –not just students who switch to private schools –is a key aspect of school choice. Because publicschools improve due to competition, schoolchoice benefits reach beyond those studentswho take advantage of the opportunity to attenda private school with a voucher or tax creditscholarship. Because competition forces bothpublic and private schools to improve, choice islike a rising tide that lifts all boats. Even stu-dents whose parents don’t “shop around” for aprivate school will benefit because their existingpublic schools will get better.

It’s true that some studies have shown noproductivity gains for public schools whenchoice is introduced. But these have examinedprograms where choice is limited to only a smallnumber of students or where the program is toonew for effects to be visible. Hoxby, in contrast,

looked at those programs that have existed forsome time and which are large enough toproduce real competition.

In Milwaukee, for example (where childrenreceive vouchers worth up to $5,783), the im-provement in the public schools has beenimpressive. Students in public schools where atleast two-thirds of students were eligible forvouchers scored 8.1, 13.8, and 8.0 nationalpercentile rank points higher in math, science,and language, respectively. Although stillpositive, achievement gains were somewhatsmaller for students in public schools wherefewer students were eligible for vouchers.

The story in Michigan and Arizona is similar.In both states, public schools raised achieve-ment in response to competition. The largestachievement gains were in those public schoolsthat faced the most competition.

Hoxby also points out that there is plenty ofroom for improvement in our nation’s publicschools. Using economic analysis and a histori-cal examination of spending as it relates toachievement, Hoxby shows that public schoolscurrently operate at about 50 to 65 percent oftheir achievement potential. Much of theirproductivity is currently lost due to hard and fastrules that dictate hiring practices, pay scales,and investment in philosophically appealing butunsuccessful educational methods. Dissatisfiedparents who are able to move their child andmoney to another school create pressure forpublic schools to become more effective andefficient. That positive pressure benefits thosestudents who remain in those schools.

Even when it comes to money, school choicebenefits public schools. The costs of U.S. privateschools are, on average, 60 percent of publicschool costs. That means students can switch toprivate schools and pay less than what the statespends to educate them in public school. Statesand localities would continue collecting thesame tax revenues they do now, but would havefewer students to spend it on, so students inpublic schools would enjoy more funding, notless. If smaller class sizes in public schools area good thing, allowing more students to useprivate schools is the most cost-effective way toachieve it. Instead of vilifying school choice asan attack on public schools, school leadersshould embrace choice as a way to get moreresources for their students.

One of the best things for public schools is toopen them up to competition from privateschools. Without the positive pressure of outsidecompetition, any industry will remain contentwith the status quo. Everywhere we look in oureconomy, competition and consumer choiceprovide the engine that fuels change, as well assuperior goods and services. It has always beenthis way and it always will be. The rules ofeconomics are as natural as breathing, andbasic economics tells us that choice matters.

The low academic quality of many ofOklahoma’s public schools is neither flatteringnor comfortable. If we are going to changethings, we will have to accept this basic eco-nomic fact: Consumer choice lifts all boats.

Policy-makers in many states have realizedthis and have embraced school choice. Indeed,when President Bush on December 30, 2005signed the largest school choice bill in Ameri-can history (providing tuition assistance for upto 372,000 students displaced by hurricanesKatrina and Rita), it put an exclamation mark onthe best legislative year ever for school choice.According to the Alliance for School Choice, arecord number of states introduced and passedschool choice bills in 2005.18

A Proposal for Oklahoma

The OCPA Budget proposes an Education TaxCredit for private school tuition, home schoolingcost and/or donations to scholarship funds forlow-income children to attend private schools.For every dollar of Education Tax Credit al-lowed, one dollar will be removed from theDepartment of Education’s appropriations.Since the per-student expenditure in Oklahomais $6,554,19 the net effect of this tax credit will beto put more money per pupil into the publicschools. Approximately 53 percent of dollars perstudent are state dollars, while one-third arelocal dollars which will not be affected bystudents leaving the public school.

For parents, grandparents, or other individu-als paying for private school education for achild, a tax credit of up to $2,200 per child willbe available. Homeschooled children’s parentswill receive the same $2,200 tax credit as indi-viduals paying for private school education toapply to all direct education expenses. Expendi-tures for materials, such as textbooks andtutoring, would be included.

Individuals donating to a qualified scholar-ship program for private school education thatserve low-income groups will be allowed anEducation Tax Credit equal to the amount of thecontribution. To qualify, a scholarship programmust have in place a means-testing requirementand 90 percent of the program’s expendituresmust go directly to tuition payments. Full tuitioncan be paid for students whose parent(s) in-comes are at 185 percent of the Federal PovertyLevel (FPL) or below, with the percentage oftuition paid decreasing on a sliding scale until aparental income threshold of 350 percent of FPLis reached. This program’s structure ensuresonly low-income children will be receiving freeprivate-school education and creates incentivesfor the growth in dollars available for thesechildren by placing no limit on the tax creditavailable to donors.

The OCPA Budget recommends that approxi-mately $100 million of funding should be usedto offset the tax credits that will now becomeavailable to the parents of the approximately50,000 Oklahoma children20 who are alreadyhomeschooled or in nonpublic schools.

The OCPA Budget recommends the StateDepartment of Education receive its FY-2006appropriation, adjusted upward for populationgrowth plus inflation.

Higher EducationOklahoma has made it a priority to provide

higher education services to its citizens. But justbecause the state provides those servicesdoesn’t mean the state necessarily has toproduce those services. The dominance ofpublic institutions in Oklahoma poses a threatto the state’s independent colleges and universi-ties and is damaging to the foundations of ourdemocratic society. Altering the funding methodfor higher education in Oklahoma so that itfocuses more on individuals and families andless on supporting the existing system wouldlead to greater efficiencies in providing educa-tional services.

In the states that subsidize higher educationvery heavily, students (or their parents or otherfinancial supporters) pay only a very smallfraction of the total cost. In Oklahoma for ex-ample, tuition and fees cover only 37 percent ofthe costs, according to the Oklahoma StateRegents for Higher Education.21

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In-state tuition at the University of Oklahoma,for example, is $146.93 per credit hour forresidents and $410.03 for nonresidents.22 Assum-ing a normal course load of 15 credits persemester, this means resident students payroughly $4,408 per year. At other public collegesand universities in Oklahoma tuition is evenlower, with community colleges as low as $65.45per credit hour for in-state tuition.23 By way ofcontrast, in-state students at one of the bestknown of the high-tuition state schools, theUniversity of Michigan, pay more than twice theamount that resident students pay at the Univer-sity of Oklahoma.24

The tuition-setting debate is an old one.Proponents of low (i.e., heavily taxpayer-subsi-dized) tuition contend that the societal benefitsof extending higher education to the largestnumber of students is worth the cost to taxpay-ers. But there is also a downside to this ap-proach. According to a report from the FederalReserve Bank of New York, high-subsidy, low-tuition policies can actually have negativeeffects on human capital formation. “Althoughsubsidizing tuition increases enrollment rates, itreduces student effort,” the study finds. “Thisfollows from the fact that a high-subsidy, low-tuition policy causes an increase in the percent-age of less able and less highly motivatedcollege graduates. Additionally and potentiallymore important, all students, even the morehighly motivated ones, respond to lower tuitionlevels by decreasing their effort levels.”25

The benefits of a college education accruechiefly to the students who partake of it. There isno reason to tax the majority of taxpayers in thestate who do not have children attending a stateinstitution in order to subsidize those who do,especially when it is the more affluent citizenswho, on the whole, are most likely to havechildren enrolled in the institutions.26

University of Oklahoma president DavidBoren recently pointed out that some states (hementioned Colorado and Virginia, and there areothers) have consciously reduced the level ofstate appropriations for higher education. Theuniversities have increased tuition and havebeen beating the bushes for added privatefunding as a result.

Mr. Boren suggests that reducing governmen-tal subsidies for higher education will close thedoor of opportunity for many students. However,

this ignores the readily available facts thatshow increases in the numbers of studentsenrolled in state two- and four-year institutionsin Colorado and Virginia. In Colorado, thenumber of students enrolled in public collegesand universities in 1999-2000 was 209,183. By2004-05, despite the reduction in governmentappropriations, the enrollment figure hadincreased to 222,815. (Data are from TheChronicle of Higher Education almanac editionsfor 1999-2000 and 2004-05.)

In Virginia, the story was the same. Enroll-ments increased from 292,412 to 326,758.

People and institutions have a tremendouscapacity to adapt to change. When students forwhom a college education would be a goodinvestment find that its cost has risen, do they(and their parents, school counselors, andothers who care about their future) simply giveup? Of course not. Even students from very poorfamilies can find ways to deal with an increasein cost.

There are many, many scholarships availableto students with limited means. Another option isto enter into a human capital contract withlenders, who cover some or all of the cost ofeducation in return for a promise to pay apercentage of earnings for a number of yearsafter graduation. One company in this businessis My Rich Uncle. The firm has been arranginghuman capital contracts since 2000. Of course,it’s worth remembering that most college stu-dents are not from poor homes and can easilyafford to pay somewhat more for their collegeeducation.

Looking at this question from the standpointof efficiency, there is much to be said in favor ofthe policy of reducing state support for highereducation. Richard Vedder, a professor ofeconomics at Ohio University who has writtenand spoken for OCPA, points out in his recentbook Going Broke by Degree that Americanhigher education suffers from very low produc-tivity. In contrast to almost every other industry,per-unit (pupil) costs in education continuerising. It keeps costing more and taking longerto educate students to any desired level ofproficiency.

Why is that? Mainly because colleges anduniversities don’t have to pass the test of themarket. Students and institutions are subsidizedto a considerable extent, so the schools can get

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away with lots of needless spending andfrivolous course offerings. These days, parentsand taxpayers spend gigantic sums in order toproduce college graduates, many of whomhave lower basic ability levels than did highschool graduates of 50 years ago.

The advantage of putting the burden ofpaying for higher education on willing parties isthat they can more easily say “no” and look forother options than politicians can. When peopleare spending their own money, they tend toweigh costs and benefits carefully. That, in turn,causes institutions to be more mindful of costsand benefits and more accountable for results.

There is no argument that a college educa-tion increases the income of the diploma holder.We believe a college education should beaccessible for everyone but that those who canafford to pay should shoulder more of the costof their education – rather than ask Oklahoma’staxpayers to foot the bill. Rather than subsidiz-ing tuition, policy-makers should charge highertuition and then discount it for students whocannot otherwise afford to attend. Oklahomashould announce that it will gradually raisetuition, but do so in steps so that families canincrease their savings to pay the higher cost.

Higher education’s budget, like the budgetsof all other state agencies, needs to be re-viewed for unnecessary expenditures. Theoperation of the Kerr Center in Poteau, QuartzMountain Lodge, and the Faculty House restau-rant near the State Capitol, for example, arequestionable higher education expenditures.Other examples could doubtless be cited if onecould to take the time to review higher educa-tion spending line by line. For now, consider afew examples from a March 3, 2000 articlewhich cited payroll data from the Office ofPersonnel Management. One can reasonablyquestion whether Southeastern State needs tobudget $78,501 for a head coach, whether TulsaCommunity College needs eight “notetakers” at$43,504 each, whether Oklahoma City Commu-nity College needs a $58,125 personnel assis-tant, or whether Eastern Oklahoma StateCollege needs two publicity directors at $33,064each.27

Oklahoma legislators should also considerproviding higher education vouchers. “Supposeinstead of giving money to the schools toprovide education services, Oklahoma gave

money (or vouchers) directly to the students,”writes University of Central Oklahoma econom-ics professor Mickey Hepner. “We could makethe schools compete for funding by competingfor students. If schools were forced to competein this manner, they would have a greaterincentive to recruit and retain students. Schoolswould work to improve the quality of education,to increase student services, and to enhancestudent life. Higher ed vouchers, in short, willmake our colleges and universities more re-sponsive to the needs of our students.”28

Better still, make the higher education vouch-ers redeemable at public or private institutionsof higher learning. As Nobel Prize-winningeconomist Milton Friedman has written, “Re-stricting the subsidy (for higher education) toschooling obtained at a state-administeredinstitution cannot be justified on any grounds.Any subsidy should be granted to individuals tobe spent at institutions of their own choosing.”Oklahoma taxpayers would save thousands ofdollars for each student that moves from thehighly subsidized public system to the privatesystem. On May 10, 2004, Colorado Gov. BillOwens signed into law a college voucher planwhich is the first of its kind in the nation. Itallows students to use vouchers at public orprivate institutions. A step in the right directionwould be for the legislature to provide fundingfor the Oklahoma Tuition Equalization Grant(OTEG). Legislation creating the OTEG wassigned into law by Governor Henry in 2003. TheOCPA Budget recommends removing the capthat limits the number of students eligible forOTEG, and that OTEG be funded by removingfrom Higher Education’s budget, dollar fordollar, the amount of grants utilized by students.

OTEG’s state appropriation for FY-2006 was$2.3 million. The OCPA Budget recommends thatOTEG receive $5.6 million for FY-2007, to com-pletely fund the 2,800 students eligible for thegrant.

The OCPA Budget freezes tuitions at the FY-2006 level for those children whose parentsmake less than 185 percent of the FederalPoverty Level (FPL) with a sliding scale ofincreases up the 350 percent of FPL. This in-crease will apply to out-of-state students in thesame proportionate amounts. This budgetrecommends a target for tuition fees of 50percent of costs over the next five years.

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State Regents for Higher Education FY-06

Budget Resources


Special Cash $9,500,000.00

Job Growth and Tax Relief Fund $17,000,000.00

Higher EducationCapital Revolving Fund $63,318,647.00

Oklahoma Student AidRevolving Fund $59,318,647.00

Education Lottery Trust Fund $28,022,139.00

OHLAP Trust Fund $7,232,343.00

Tuition And Fees $567,548,475.00

Total $1,456,982,355.00



The OCPA Budget recommends that highereducation receive its FY-2006 appropriation,adjusted upward for population growth plusinflation.

Oklahoma Department of LibrariesThe Oklahoma Department of Libraries (ODL)

provides information services and acts as arepository for government documents. The ODLprovides archives and records management, alaw and legislative reference branch, andpublic library development.29

Oklahoma Department of Libraries FY-06

Budget Resources


Federal Funds $3,088,648.00

Revolving Funds $772,669.00

Total $10,542,672.00



The OCPA Budget recommends that the ODLreceive its FY-2006 appropriation, adjustedupward for population growth plus inflation.

Board of Private Vocational Schools“The Board of Private Vocational Schools

licenses, regulates, and sets standards for theoperation of private schools that conduct occu-pational training.” The nearly 200 schoolslicensed by the Board have a total enrollmentexceeding 50,000 per year. “Additionally, there

are approximately 100 solicitors licensed torecruit students for the licensed schools.”30

Schools licensed by the Oklahoma Board ofPrivate Vocational Schools are the “silentservice” of education. They are generally pri-vately owned, and are mostly small institutionswith a student body counted in the tens orhundreds rather than in the thousands. Theirphysical plants are modest in size and appear-ance, and they have no lobbyists roaming thehalls of the capitol building seeking appropria-tions. However, these unnoticed andunderappreciated schools render a greatservice to the State and its citizens.

Private vocational schools provide programsranging from short one- or two-day seminars tofour-year academic degrees. About 140 of theschools are focused on education for specificcareers. The results are impressive: • These 140 schools train about 15,000 stu-

dents annually without state funding. If theState of Oklahoma were to educate these15,000 students at a conservative cost of$5,000 each, excluding capital costs, it wouldrequire an additional $75 million in legisla-tive appropriations. With capital costs in-cluded, the figure could substantially exceed$100 million.31

• The student completion rate exceeds 70percent – which is higher than any publicinstitution. Oklahoma City Community Col-lege admits to a completion rate of 13.6percent, and Rose State College of 11.9percent.32

• Thousands of private career school graduatesare removed from welfare rolls, saving Okla-homa millions of dollars in welfare payments.

• Licensed private career schools employ over4,000 full-time employees, have an annualpayroll of $75 million, and pay more than$500,000 annually in Oklahoma sales taxesfor books, supplies, and equipment. Thisalone far exceeds the legislative appropria-tion. Licensed private career schools also paymillions of dollars in state and federal in-come taxes.Beginning with FY-2007, the Board’s legisla-

tive appropriation will come fully from a revolv-ing fund supported by fees collected by theBoard from licensed schools.

Private career schools are an important partof job training in Oklahoma. They educate and

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train a population largely unserved by publiceducation. Because of inherent differencesbetween public and private education, the latteroffers choices not offered by public education –choices in programs, length of time to complete,program structure, level of personal attention,and location, to name a few. Many who wouldnot attend a public institution choose privatecareer schools because of those differences.

Unlike privately owned entities licensed byother state boards (banks and funeral homes,for example), licensed private career schoolsperform a service normally performed by thestate. In providing educational services, privatecareer schools reduce state educational andwelfare expenses, offer choice in education, andproduce job-ready graduates. The benefitsinuring to Oklahoma through the private careerschools regulated by the Oklahoma Board ofPrivate Vocational Schools are enormous. Thevery large majority of the schools are taxpayingentities, they produce taxpayers, and they accom-plished this without legislative appropriation.

Because private vocational schools offervocational education at less cost and achievebetter outcomes than their public counterparts,the legislature should consider providing vouch-ers or tax credits for students to attend theseschools.

Oklahoma School of Science andMathematics (OSSM)

“OSSM maintains a tuition-free residentialhigh school for 144 students. Residential stu-dents represent the entire state with over half ofthe enrollment from smaller communities. …Maintaining a tuition-free residential highschool requires significant investment. The costper OSSM student is higher than traditionalpublic education for two reasons. First, classsizes are considerably smaller than those ofother public schools, thereby increasing theneed for teachers and classrooms. Second, thestudents are not required to pay their educa-tional or residential costs.”33

Actual costs per student at OSSM were nearly$28,604 in FY-2005.34 By way of comparison,official government reports indicate the cost perstudent is roughly one-fourth that amount inOklahoma’s public schools. Even in Oklahoma’selite private schools, tuition is less than half thecost of OSSM.35

“OSSM also operates regional centers forother students talented in science and math-ematics. The regional centers serve students intheir local areas. … The students attend theregional centers one half of the school day whilecontinuing to attend their local high school forthe remainder of the day.”36 With the advent ofcomputers and online classes, the wide avail-ability of Advanced Placement courses, and themyriad of colleges available for gifted highschool students, busing students to a differentfacility to do focused work on mathematics andscience is a questionable expenditure of tax-payer dollars.

Taxpayers will also be disappointed to learnthat only 58 percent of OSSM graduates stay inOklahoma for undergraduate education, andthat only 46 percent of OSSM graduates arecurrently employed in the state.37 Something isamiss when Oklahoma’s hardworking wait-resses, single moms, and truck drivers – whoseown children are trapped in substandardschools – are paying taxes to supply Texas andother states with top-flight graduates.

Governor Henry’s FY-2007 budget book pointsout that 26 states have various forms of mathand science residential programs, but that somerequire the payment of tuition.38 Given theextraordinary effort Oklahoma taxpayers aremaking for OSSM students, it would not beunreasonable to require students to pay for atleast a portion of their education. This could bedone on a means-tested basis.

The OCPA Budget recommends that OSSMreceive its FY-2006 appropriation, adjustedupward for population growth plus inflation. Inaddition, given that policy-makers have seen fitto fund this particular school choice option, theOCPA Budget recommends that policy-makersalso provide options for some of Oklahoma’sless fortunate students, as outlined on page 34.

Oklahoma School of Science and Mathematics


General Revenue Fund $7,020,313.00Revolving Funds $12,000.00Total $7,032,313.00



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Oklahoma Commission for TeacherPreparation (OCTP)

“The OCTP serves as an independent stan-dards board for teacher education. This compe-tency based system of teacher preparationincludes an evaluation of teacher educationprograms, a teacher assessment system andprofessional development institutes. Fifteenother states have an independent standardsboard with four more considering it. All otherstandards boards are under the individualstate’s Department of Education.”39

The professional development institute (PDI)functions of the OCTP were recently called intoquestion. According to an Aug. 27, 2003 pressrelease from state Rep. Thad Balkman (R-Norman), “Records show the Oklahoma Educa-tion Association (OEA) was awarded vendorcontracts for more than $540,000 in 2002 andmore than $360,000 in 2003 for mentoring andmathematics PDIs.”40 Given that the OEA pro-vides financial contributions to union-friendlyincumbents in the state legislature, there ap-pears to be a conflict of interest here.

The OCPA Budget recommends placingOCTP in Higher Education’s budget. The univer-sities and colleges of the state train the majorityof our teachers and are in a position to monitorand mentor them without the redundanciesassociated with a separate organization. Thisbudget transfers OCTP’s appropriations toHigher Education at the FY-2006 level with a 10percent reduction for administrative savings.

Oklahoma Commission for Teacher

Preparation FY-06 Budget Resources

General Revenue Fund $2,022,875.00Interagency Transfers $3,735,285.00Revolving Funds $592,517.00Total $6,350,677.00

Endnotes1 http://www.state.ok.us/~arts/aboutus.html

2 David Boaz, “The Separation of Art and State,” remarks atthe Delaware Center for Contemporary Arts, May 3, 1995.Available at http://www.cato.org/speeches/sp-as53.html.3 Ibid.4 Governor Brad Henry, FY-2006 Executive Budget, pg.B-69.

5 Governor Brad Henry, FY-2006 Executive Budget, pg. B-68.6 Governor Brad Henry, FY-2006 Executive Budget, pg. B-68.7 Governor Brad Henry, FY-2006 Executive Budget, pg. B-75.




10 National Education Association, Rankings & Estimates:

Rankings of the States 2004 and Estimates of School Statistics

2005, June 2005, pg. 53 and pg. 56, http://www.nea.org/edstats/images/05rankings.pdf.11 “Education Spending and Performance,” chap. in Oklahoma

Policy Blueprint ’04, pg. 18. Available at http://www.ocpathink.org.12 The NAEP figures are available at OCPA’s literacy websitewww.noexcuses.info.

13 Ibid.14 Carmel Perez Snyder, “Drive seeks to draw attention toilliteracy,” The Oklahoman, October 19, 2003.15 Associated Press, “Report: Most Okla. High School StudentsNot Ready For College,” February 15, 2005.

16 Eric A. Hanushek, “Spending on Schools,” chap. in A Primeron America’s Schools, ed. Terry M. Moe (Stanford, CA: HooverInstitution Press, 2001), pp. 85-86.17 Caroline M. Hoxby, ‘‘School Choice and School Productivity(or Could School Choice Be a Tide That Lifts all Boats?),”National Bureau of Economic Research, Working Paper no.8873, April 2002.18 http://www.allianceforschoolchoice.org/media_center.aspx?IITypeID=3&IIID=2452

19 This is the “official” number given by the Oklahoma Office ofAccountability, Profiles 2004 State Report, May 2005, pg. vii. Forthe actual number ($11,250 per student), see Steven J.Anderson and Brandon Dutcher, Education in Oklahoma: The

Real Costs, Oklahoma Council of Public Affairs, August 2005,available at http://www.ocpathink.org/PolicyAnalysis/EdinOKtrc.pdf.20 http://www.ocpathink.org/ViewPerspectiveStory.asp?ID=58721 Governor Brad Henry, FY-2007 Executive Budget, pg. B-73.22 http://www.okhighered.org/student-center/college-cost/tuition.shtml23 Ibid.24 http://www.umich.edu/~regoff/tuition/full.html25 Aysegul Sahin, “The Incentive Effects of Higher EducationSubsidies on Student Effort,” Federal Reserve Bank of NewYork Staff Report no. 192, August 2004. Available at: http://www.ny.frb.org/research/staff_reports/sr192.pdf26 For example, the 2004 Consumer Expenditure Survey,published by the Bureau of Labor Statistics, shows thatexpenditure on education increases as income increases. Seehttp://www.bls.gov/cex/2004/stnderror/higherincome.pdf.27 Brandon Dutcher, “State government: ‘We’d like to cut yourtaxes, but …’” The Daily Oklahoman, March 3, 2000, pg. 11A.28 Mickey Hepner, “Idea for the Legislature: Higher EducationVouchers,” December 13, 2004. Available at: http://www.busn.ucok.edu/mhepner/articles/2004/20041213.htm29 Governor Brad Henry, FY-2006 Executive Budget, pg. B-103.30 Governor Brad Henry, FY-2006 Executive Budget, pg. B-106.31 Cost calculations are based on an average course length of500 clock hours of instruction at a cost of $10 per hour.32 http://www.okhighered.org/studies-reports/student-data/2003-2004/section5.pdf33 Governor Brad Henry, FY-2006 Executive Budget, pp. B-107.34 Governor Brad Henry, FY-2007 Executive Budget, pg. B-105.35 For example, tuition at Casady School in Oklahoma Cityranges from $8,370 in the primary division to $12,800 in the

40

upper division, according to The Education Guide for Okla-

homa, 2004 Edition, a publication of the Journal Record.

36 Governor Brad Henry, FY-2007 Executive Budget, pg. B-105.37 E-mail from Donna Roberts, director of public information atOSSM, March 21, 2005. Graduation and employment figuresare for “students who graduated from the Oklahoma School ofScience and Mathematics from the first class, 1992, throughthe graduating class of 2000, a total of 535 students. Studentsfrom the classes of 2001 through 2004 are still pursuingundergraduate degrees.” Updated information from Robertswas not available as the FY-07 OCPA Budget went to press.38 Governor Brad Henry, FY-2007 Executive Budget, pg. B-104.

39 Governor Brad Henry, FY-2006 Executive Budget, pg. B-110.40 Oklahoma Council of Public Affairs and Citizens AgainstGovernment Waste, 2004 Oklahoma Piglet Book, pg. 12.Available at http://www.ocpathink.org/ViewPolicyStory.asp?ID=512.

41

Energybacklog of sites to be cleaned up.

As in all cases where industry is asked tobear the cost of regulation, those regulationsshould be reviewed for obsolete regulatory rulesand procedures and the costs of regulationshould be contained to the fullest extent possible.

In addition, OCPA has long pointed to theRural Economic Action Plan (REAP) as anexample of the misallocation of taxpayer dol-lars. For example, $3 million in REAP waterproject funding was diverted to the “operations”of the Corporation Commission rather thanbeing spent on the rural water projects for whichit was intended.3

The OCPA Budget recommends the Corpora-tion Commission receive its FY-2006 appropria-tion less the $3 million in REAP funding. Thecurrent oil and gas boom provides increasedfees for regulatory duties that, along with theremoval of industry subsidies, will generateenough revenue to fund the Commission’sduties.

Department of Mines“The Oklahoma Department of Mines is the

regulatory authority for surface and sub-surfacemining in Oklahoma. The Department is em-powered to implement and enforce state andfederally mandated programs in health, safety,mining and land reclamation practices. Theagency issues mining permits and performsinspections of all mining and mining-relatedland reclamation activities in the state.”4

Department of Mines FY-06 Budget Resources

General Revenue Fund $849,165Revolving and Carryover Funds $877,482Federal Funds $840,000Total $2,566,647



The department’s divisions include:5

• The Oklahoma Miner Training Institute,located in Wilburton, which provides class-room and on-site training for mine operators.This division accounted for 9 percent ofexpenditures.

• The Coal Program, which monitors opera-

Oklahoma Corporation Commission“The mission of the Oklahoma Corporation

Commission is to regulate and enforce laws andactivities associated with the exploration andproduction of oil and gas, public utilities, thesafety aspects of motor carrier, rail and pipelinetransportation, and the storage and dispensingof petroleum-based fuels. The Commissionoversees the conservation of natural resourcesto avoid waste and protect the environment.”1

Corporation Commission FY-2005 Budgeted

Program Expenditures

Transportation $7,967,000Oil and Gas Conservation Division $6,957,000Petroleum Storage Tank Division $3,983,000Public Utilities $2,693,000Administration $2,402,000Data Processing $2,154,000Administrative Proceedings $2,062,000General Counsel $1,689,000Consumer Services $882,000Underground Injection Control $550,000Total $31,339,000

Source: Governor Brad Henry, FY-2006 Executive Budget

Historical Data, pp. 262-263.

The divisions of the Corporation Commissionare as follows: Consumer Services Division; Oiland Gas Conservation Program; PetroleumStorage Tank Division; Public Utility Division;Transportation Division; Data Processing Divi-sion/Web Application Project; and Office ofAdministrative Proceedings.2

A review of the Commission’s revenue sourcesreveals that only 37 percent comes from appro-priations. The Commission is to be applaudedfor its use of user financing. However, the OCPA

Budget recommends several additional areasfor review. The Oil and Gas ConservationProgram, the Transportation Division, and theData Processing Division/Web ApplicationProject contain areas where total user financingshould be instituted. Oklahoma taxpayersshould not be financing certain industry seg-ments through free or under-priced services.

In addition, the Leaking Underground Stor-age Tank Fund should be reviewed. The fundhas had a large balance building up with a

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tions so that they are conducted to protect theenvironment, adjacent landowners, and thepublic from the effects of mining operations.This division accounted for 41 percent ofexpenditures.

• The Non-Coal Program, which is responsiblefor protecting the environment, the health ofminers, and the health and property ofcitizens who are affected by mining activities.This division accounted for 30 percent ofexpenditures.The OCPA Budget recommends that the

subsidization of the mining industry be elimi-nated. Many of the department’s programs andservices should be the responsibility of themining industry. As in all cases where industryis asked to bear the cost of regulation, thoseregulations should be reviewed for obsoleteregulatory rules and procedures, and the costsof regulation should be contained to the fullestextent possible.

This budget also recommends that the De-partment of Mines be merged into the Corpora-tion Commission because of the similarity ofpurpose and the administrative redundanciesthat occur. This would allow the cost of regula-tion that is passed on to industry to be immedi-ately reduced.

This budget recommends that the department’sFY-2006 appropriation be reduced by 75 percentand that the funds be transferred to the Corpo-ration Commission for FY-2007.

Endnotes1 Governor Brad Henry, FY-2006 Executive Budget, pg. B-117.2 Governor Brad Henry, FY-2007 Executive Budget Historical

Data, pp. 235-236.3 Oklahoma House of Representatives, FY-06 Legislative

Appropriations, pg. 149.4 Governor Brad Henry, FY-2007 Executive Budget, pg. B-116.5 Ibid.

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EnvironmentDepartment of EnvironmentalQuality (DEQ)

The Department of Environmental Quality(DEQ) is responsible for the regulation of indus-trial and municipal environmental programs.The DEQ focuses its program efforts on threemajor areas of responsibility: air quality, waterquality, and land protection.

Department of Environmental Quality FY-06

Budget Resources

General Revenue Fund $8,166,580Revolving and Carryover Funds $24,636,210Federal Funds $14,314,846Total $47,117,636



“The Air Quality, Water Quality, Land Protec-tion Divisions, Environmental Complaints andLocal Services (ECLS) Division and the Cus-tomer Services Division (CSD) support DEQ’sefforts to improve the quality of Oklahoma’senvironment. ECLS provides the staffing for 30local offices across the state and is primarilyresponsible for complaint response, mediaspecific inspections and/or enforcement andresponse to citizen requests for local services.

“Within CSD, the Customer Assistance Pro-gram offers non-regulatory approaches tocompliance through technical assistance toindustries seeking permits to locate or operatein Oklahoma. This program also works withexisting Oklahoma companies to prevent pollu-tion, encourage recycling and meet compliance.In addition, the CSD houses the State Environ-mental Laboratory, which provides analyticalsupport for the agency’s regulatory programs aswell as those of other environmental agencies.”1

DEQ has done an excellent job of applyinguser fees to industry. However, the OCPA Budget

recommends a review of all services to find andremove any corporate subsidies within DEQ’sappropriations. As in all cases where industry isasked to bear the cost of regulation, thoseregulations should be reviewed for obsoleteregulatory rules and procedures, and the costsof regulation should be contained to the fullestextent possible.

The Department of Agriculture maintains itsown water quality division. The OCPA Budget

suggests that division is best managed withinthe Department of Environmental Quality (DEQ).This would eliminate redundancies between thetwo departments in testing equipment, and alsoeliminate potential conflicts of interests in caseswhere the Department of Agriculture bothpromotes and regulates an industry. This bud-get removes $1.38 million from the budget of theDepartment of Agriculture and transfers it toDEQ, less $138,000 in savings in administrativecosts.

This budget also proposes that watershedoperations and water quality functions in theConservation Commission be moved to theDepartment of Environmental Quality (DEQ) toallow for a more comprehensive approach tocontrolling pollution in Oklahoma’s water whileremoving duplicate layers of administration.This budget removes $2.1 million from theConservation Commission’s budget and trans-fers it to DEQ, less $210,000 in savings in ad-ministrative costs.

Additionally, this budget suggests that theOklahoma Water Resources Board be mergedinto the Department of Environmental Qualitybecause of the similarity of purpose and theadministrative redundancies that occur in aseparate organization. This budget removes$6.57 million from the Oklahoma Water Re-sources Board’s budget and transfers it to DEQ,less $657,000 in savings in administration costs.

The OCPA Budget recommends the DEQreceive its FY-2006 appropriation, adjustedupward for population growth and inflation,plus the appropriations for the agencies mergedinto DEQ, less the savings from consolidation.

Oklahoma Water Resources Board“The Oklahoma Water Resources Board is the

lead agency in Oklahoma for water rights andwater quality issues. Anyone who uses freshwater for anything other than domestic use isrequired to obtain a permit from the OWRB.Agency geologists and hydrologists conducthydrologic investigations of each stream waterbasin and groundwater basin (aquifer) todetermine the amount of water available for

appropriation according to state statute andBoard rules. The staff is responsible for updat-ing every ten years the Oklahoma Comprehen-sive Water Plan to assure that Oklahomanshave adequate quantities of good quality waterfor future use.

“The Board sets water quality standards andclassifies Oklahoma waters with respect to theirbest use. OWRB employees conduct scientificstudies and surveys which analyze the physical,chemical and biological parameters of ourwater. They also work closely with the Okla-homa Attorney General, the United StatesEnvironmental Protection Agency and otherenvironmental agencies regarding water man-agement issues and litigation. …

“The OWRB also:• Coordinates the Beneficial Use Monitoring

Program to collect ambient water qualityinformation on Oklahoma’s surface water.

• Guides water use through the issuance ofstream water and groundwater permits.

• Licenses water well drillers and pump install-ers to reduce potential contamination of thestate’s groundwater resources.

• Provides loans for infrastructure.”1

Oklahoma Water Resources Board FY-06

Budget Resources

General Revenue Fund $6,573,896Revolving and Carryover Funds $5,277,387USGS Cooperative Program $353,950Federal Funds $10,746,152Total $22,951,385



The OWRB also “administers programs toprovide funding for infrastructure repairs,maintenance and capital improvements. TheOWRB provides low-interest loans to publicentities including rural water districts, munici-palities and public works authorities.”2

The OCPA Budget recommends that theOWRB’s duties be reviewed for any subsidiza-tion of industry and that any such subsidizationbe eliminated. As in all cases where industry isasked to bear the cost of regulation, thoseregulations should be reviewed for obsoleteregulatory rules and procedures, and the costsof regulation should be contained to the fullestextent possible.

Additionally, this budget suggests that OWRBbe merged into the Department of Environmen-tal Quality because of the similarity of purposeand the administrative redundancies. Thiswould allow the cost of regulation that is passedon to industry to be reduced immediately.

The FY-2006 appropriation should be reducedby 10 percent and moved to the Department ofEnvironmental Quality’s budget for FY-2007.


2 Governor Brad Henry, FY-2005 Executive Budget, pg. B-132 - 133.3 Governor Brad Henry, FY-2006 Executive Budget, pg. B-133.

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Finance and Revenueofficials of the same party. These audits shouldbe contracted out to private firms, just as U.S.Securities and Exchange Commission rulesrequire of publicly traded companies.

Many quasi-government entities (such asrural water districts) and local governmentdivisions (such as schools and cities) alreadycontract for their own audits. Contracting out theaudits serves several functions in improvingstate government for Oklahoma taxpayers:• Reduced conflicts of interest;• Increased damage recovery from the private

audit company’s liability insurance if theaudit is improperly done;

• Expanded number of audited agencies everyyear, which helps to ensure proper spendingof taxpayer dollars;

• Decreased costs of audits through competi-tive bidding; and

• Returned dollars to the private economythrough additional employees in privateaudit firms and the resultant taxes on profitsand payrolls.

State Auditor and Inspector FY-06 Budget

Resources

General Revenue Fund $5,988,786.00Special Cash Fund $0.00Revolving Funds $6,100,000.00Total $12,088,786.00



The OCPA Budget proposes both a redirectionin monies appropriated to the A&I and a reduc-tion in the total amount appropriated. $500,000is recommended for FY-2007 in appropriationsfor the A&I office for general duties, conductingcompetitive bids, and monitoring contractedaudits, whether they are performance audits orfinancial audits. The remaining funding foraudits and performance reviews will come fromthe agencies receiving the services.

Office of the State Bond AdvisorAccording to the governor’s executive budget

book, “The State Bond Advisor was establishedas an independent position within the Depart-ment of Central Services in 1987. SB 722 (2003)

State Auditor and InspectorAs the governor’s executive budget book

points out, “The Constitution (Article VI, Section19) and/or statutes require the Auditor andInspector (A&I) to audit the following entities:• State and County Treasurers twice each year;• Each Emergency Medical Services District;• County Solid Waste Management Opera-

tions;• State Officers who Collect Money;• District Attorney’s and District Attorney’s

Council (continuous);• Department of Corrections (continuous); and• OSEEGIB (contracted out).

“Unless an agency has specific legislativeauthority to contract its audit outside (e.g.Higher Ed., trust authorities and Commerce), theAuditor and Inspector’s office is generallyresponsible for auditing all state agencies.”1

However, the Auditor and Inspector’s officedoes not have enough auditors to do detailedaudits of every agency. In addition, most agen-cies do not have the funds to reimburse the A&Ifor the cost of the audit. Therefore, the A&I is notable to audit every state agency every year. Thestatewide Comprehensive Annual FinancialReport (CAFR) and the Single Audit both includemost agencies.

When the A&I absorbs all or part of the costsof auditing a state agency, those unreimbursedcosts represent a subsidization of the auditedagency by the A&I. Exact amounts of A&I subsi-dies by agency are not currently available,though the Office of State Finance did estimate,for example, that only 50 percent of the cost ofthe state-mandated FY-2003 audit of Parks andTourism was reimbursed to the A&I.2 This ar-rangement does not promote efficiency and itmasks from the taxpayer the true cost of agencies.

The OCPA Budget requires agencies to paythe full cost of any audit conducted by the A&I.This will remove the cross-subsidization andrestore transparency to government.

The State Auditor and Inspector is an electedofficial who usually belongs to one of the twomajor political parties. The question of indepen-dence, even if only in appearance, is raisedwhen an individual from one of the majorparties is asked to audit offices of elected

46

established the Office of the State Bond Advisoras a separate and distinct state agency. Thisseparate agency assures impartiality whendealing with the issuance of obligations bygovernmental entities.

“The Office of the State Bond Advisor servesas staff to the Council of Bond Oversight andprovides advice and assistance to the Governorand Legislature on matters relating to capitalplanning, debt issuance, and debt management.The Office also serves as staff to the Long-RangeCapital Planning Commission and administersthe Private Activity Bond Allocation Act.

“The Office of the State Bond Advisor is thecentral clearinghouse for information providedto bond rating agencies, credit enhancementproviders, and credit markets with respect toOklahoma’s credit quality.”3

The Office of the State Bond Advisor isfunded by appropriations and by fees derivedfrom the proceeds of bond issues. Appropria-tions totaled $181,212 for FY-2006.4

Office of the State Bond Advisor FY-06 Budget

Resources

General Revenue Fund $181,212.00Revolving Funds $193,788.00Total $375,000.00



The OCPA Budget recommends that appro-priations be reduced to $60,000 for the Office ofthe State Bond Advisor for general duties. Theremaining $121,212 of the current appropriationwill be reassigned to the governor and thelegislature to remove cross-subsidization ofthose entities. Fees on bond proceeds should beraised to reflect actual costs and to removecross-subsidization by transferring all the costsof the issuing of bonds to the agencies receivingthe bond monies.

CompSource Oklahoma“The Oklahoma Legislature created

CompSource Oklahoma in 1933 with an originalinvestment of $250,000 by the State. The pur-pose of the Fund is to furnish Oklahoma employ-ers a financially stable workers’ compensationinsurance program at the lowest possible pricewhile providing maximum service and assistance.In that function, they have operated as the ‘carrier

of last resort’ for businesses unable to obtaincoverage elsewhere in the insurance market.

“The intent was for CompSource (then knownas the State Insurance Fund) to be structuredwithout liability on the part of the State beyondthe amount of the Fund. CompSource hasoperated as an enterprise function of the Statesince inception.

“Currently, CompSource Oklahoma is thelargest workers’ compensation insurance carrierin the state, serving more than 27,000 busi-nesses and government agencies. CompSourceOklahoma carries almost all of the State agen-cies’ workers compensation insurance and anincreasing amount for private businessesaround the state.

“Total workers’ compensation premiumscontinue to increase and CompSource continuesto write an increasing portion of those premi-ums.” CompSource Oklahoma writes 40 percentof the total workers’ compensation premiums inOklahoma.5

CompSource has achieved its status ofmarket leader in Oklahoma with a number ofadvantages over private carriers. CompSourceis supported by indirect subsidies from Okla-homa taxpayers since it is not subject to corpo-rate income tax, ad valorem taxes on its twobusiness locations, or the 2.25 percent premiumtax that the State of Oklahoma charges allprivate carriers.

CompSource serves as the workers’ compen-sation carrier for nearly all state agencies. Butinstead of rating each state agency according toits claims and adjusting premiums accordingly,it rates the state as one entity. This approach notonly creates cross-subsidization from agencieswith low workers’ compensation claims to thoseagencies with high claims, but also provides noincentive for agencies to control their workers’compensation costs.

The OCPA Budget proposes that CompSourcebe required to adjust workers’ compensationpremiums for each state agency based on theclaims history of that agency, just asCompSource would do for any business. Thisapproach should, in the long run, force thoseagencies with high claims to examine their busi-ness practices and put in place procedures to limitthose injuries. Oklahoma state workers will get asafer environment and Oklahoma taxpayers willobtain government services at a lower cost.

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This budget also encourages CompSourceand the Oklahoma Health Care Authority towork together to share information on doctorswho may be facilitating workers’ compensationand Medicaid fraud.

This budget recommends that the State ofOklahoma investigate selling CompSource and/or its book of business. CompSource’s advan-tages over private insurers create a non-com-petitive environment and drives taxpayingprivate companies out of business, with anaccompanying reduction in private-sector jobs.

Consumer Credit CommissionThe Commission administers the Uniform

Consumer Credit code and regulates the follow-ing entities:6

• Lending institutions other than banks orcredit unions

• Deferred Deposit Lenders• Pawnbrokers• Credit service organizations charging fees to

provide assistance on credit problems• Rent-to-own stores• Health Spas• Precious Metal and Gem Dealers• Mortgage Brokers• Mortgage Loan Originators

Consumer Credit Commission FY-06 Budget

Resources

General Revenue Fund $637,925Revolving and Carryover Funds $360,847Total $998,772



Given that the commission’s function isregulatory, it appears that the amount of appro-priated dollars (compared to fee income) is anindication of an industry subsidy. The OCPA

Budget recommends that the fees be raised tobe commensurate with the costs of regulationand the appropriation be removed for FY-2007from the Commission. As in all cases whereindustry is asked to bear the cost of regulation,those regulations should be reviewed for obso-lete regulatory rules and procedures and costsof regulation should be contained to the extentpossible.

Office of State Finance“The Office of State Finance (OSF) is part of

the Executive Branch. It is under the administra-tive control of the Director of State Finance whois appointed by the Governor, with the adviceand consent of the Senate. The OklahomaBudget Law of 1947 (Title 62, Section 41.3)created the Division of the Budget and theDivision of Central Accounting and Reporting(Office of the State Comptroller). The otheragency divisions are the Information ServicesDivision and the Fiscal and Research Division. …

“The Budget Division prepares the Governor’sbudget and assists in drafting supportinglegislation for the Governor’s proposals. BudgetDivision staff manages the state’s budgetsystem and makes appropriate allotments andtransfers as authorized by law. The divisionconducts fiscal policy research and analysis toimprove the cost-efficiency and cost-effective-ness of current financial practices. Developingand monitoring performance measures areanother integral function of this division. BudgetDivision personnel prepare analyses of appro-priation and substantive legislation and makerecommendations based on their research.”7

Office of State Finance FY-06 Budget

Resources

General Revenue Fund $11,756,515.00Special Cash $11,000,000.00Revolving Funds $14,500,000.00Carryover $325,000.00Total $37,581,515.00



The OCPA Budget removes $603,000 of thebudget division’s appropriations and transfersthat amount to the recommended appropriationfor the governor’s office. This will end the cross-subsidization and improve the transparency ofgovernment.

“The Division of Central Accounting andReporting (DCAR) reviews and processes claimsfor payrolls and payment to vendors from moststate agencies. DCAR is also responsible forpreparing statewide financial reports, reconcili-ation functions, preparation of W-2’s and 1099’sreporting to the federal government, and man-aging the State accounting system.”8

The OCPA Budget removes DCAR’s appropri-

48

ated funds and requires DCAR to recover costsvia user fees for all services provided to agen-cies. The OCPA Budget recommends thatDCAR’s appropriated funds be reassigned touser agencies by instituting a policy of billingfor DCAR services. This assignment of true costswill end the cross-subsidization of user agenciesand improve the transparency of governmentexpenditures. In addition, user agencies willnow have an incentive to examine the qualityand cost efficiency of OSF’s services in compari-son to equivalent private business services.

“The mission of ISD [Information ServicesDivision] is to provide Oklahoma State agencieswith quality, cost effective and secure informa-tion technology and telecommunications prod-ucts and services. ISD manages the state’s dataprocessing and telecommunications infrastruc-tures. ISD sets standards for these areas toensure compatibility of voice and data commu-nications. They manage the local area networksfor OSF, the Governor and several other stateagencies. They manage a communicationsinfrastructure including a state backbone offiber connecting the most populous areas of thestate to high-speed internet capabilities. ISDalso manages the State telephone system;negotiating for long-distance and local servicesfor the majority of state agencies.”9

The OCPA Budget recommends that ISD’sappropriated funds be reassigned to useragencies by instituting a policy of billing forservices. This assignment of true costs will endthe cross-subsidization of user agencies andimprove the transparency of government expen-ditures. In addition, user agencies will now havean incentive to examine the quality and costefficiency of OSF’s services in comparison toequivalent private business services.

This budget recommends that the baseappropriation for OSF be adjusted upwards forpopulation growth plus inflation. This budgetleaves the current base appropriations intact inOSF but assumes that the costs will be spreadamong the user agencies when billing practicesbegin.

Insurance Department“The Insurance Department regulates the

insurance industry. Regulation protects thepublic by assuring a solvent insurance marketand well-educated insurance agents. The

Department also regulates Real Estate Apprais-ers and Bail Bondsmen.”10

“The Department’s major source of funding isrevolving funds. Of the department’s FY-2004actual funding, 67% was by way of revolvingfunds.”11

OCPA believes that instead of subsidies tofavored industries, the state should insteadprovide a stable, low-tax, low-regulatory institu-tional environment with strong private propertyrights and high degrees of economic freedomthat will encourage all industry. The OCPA

Budget recommends the removal of thedepartment’s state appropriation and that userfees be raised to reflect the costs of regulation.The department has balances in its revolvingfunds that will help absorb this cut until theregulated parties and the department havereached equilibrium.

In addition, this budget encourages legisla-tors to examine the allocation of insurancepremium taxes. Nearly 50 percent of insurancepremium taxes are diverted to various lawenforcement and firefighter retirement plans.OSF estimated the amount going to theseretirement plans at $145 million for FY-2006.This constantly growing funding source hasresulted in questionable retirement expendi-tures including DROP (Deferred RetirementOption Plan) plans that bear no relation to theoriginal purpose of these retirement plans.These funds would be better used to fund taxcredits for small businesses and individualswho purchase health insurance.

Commissioners of the Land Office“The mission of the Commissioners of the

Land Office (CLO) is to generate maximumearnings for the various Trust beneficiariesthrough management of Trust lands, mineralsand permanent funds and to protect the assetsof the Trusts. The Trust beneficiaries are allcommon education institutions and the follow-ing colleges and universities:• University of Oklahoma;• Oklahoma State University;• Langston University;• Northern Oklahoma College;• Southeastern OSU;• University of Central Oklahoma;• East Central OSU;• Northeastern OSU;

49

• Northwestern OSU;• Southwestern OSU;• Cameron University;• Oklahoma Panhandle State University; and• University of Science and Arts of Oklahoma.

“ … The Trusts managed by the CLO are: theCommon School Fund, the Education Institu-tions Fund, the University of Oklahoma Fund,the University Preparatory School Fund, theOklahoma State University Fund, the NormalSchools Fund, the Langston University Fund, thePublic Building Fund and the Greer 33 Fund.

“The CLO is also charged with the sale,rental, disposal and management of SchoolTrust lands and assets, and of the funds andproceeds derived from these assets. The principalfunctions of the agency consist of the following:• Leasing lands for agricultural, commercial

and grazing purposes;• Leasing lands for oil, gas and other minerals

including water rights;• Investing permanent funds as authorized by

law;• Sale of lands as prescribed by law;• Improving, protecting and preserving lands

owned by the Trusts; and• Distributing the revenues of the various Trusts

to the institutions to which the funds be-long.”12

The Office of State Finance (OSF) looked atthe overall portfolio of the CLO and found thatthe continued reliance on agricultural land asan investment medium had resulted in short-changing the Trusts. The United States Depart-ment of Agriculture’s statistics on farm landvalues indicated that from 1980 to 2000 Okla-homa farm land only increased in value a totalof 3.3 percent for the entire 20-year period.13 Inaddition, the ownership of land by a govern-ment entity such as the CLO removes that landfrom the ad valorem tax rolls and the rentalincome to CLO from the state income tax rolls.Selling all CLO lands to the private sector, andinvesting the proceeds, would increase returnsto the Trusts as well as to counties’ ad valorembase and state tax revenues.

The current method for funding the variousTrusts is not an efficient system. There aresignificant areas where, given some legislativechanges, increased revenue opportunitieswould be available to the Trusts. The CLO iscurrently allowed to invest trust assets in a mix

of stocks and bonds that is controlled by statute.The current requirements for investment not onlyfail to produce maximum yields for Oklahoma’sschools, but also fail to allow investments thatwould minimize risk.

OSF calculated that if CLO had been able touse the same investment criteria as the Okla-homa Teachers Retirement System (OTRS), thetotal amount of funds available to the Trustsfrom investment income since 1992 would havebeen nearly 10 percent greater.14

The OCPA Budget recommends that theagricultural land investment portfolio for CLObe liquidated and reinvested under OTRS’smanagement. It is also recommended that thestatutes limiting investment types be broadenedto mirror OTRS’s guidelines.

The sales of the agricultural land wouldimmediately begin to increase investmentreturns for schools while reducing CLO’s staff-ing needs. In addition, returning these lands tolocal ad valorem tax rolls would provide morelocal money for schools, firefighters, and policeservices. Selling these lands to the privatesector would make the rents paid on these landstaxable, thus raising revenues for the state.

Commissioners of the Land Office FY-06

Budget Resources

Commissioners ofthe Land Office Fund $4,719,497.00



This budget transfers the remaining CLO staffto the Department of Education after transfer-ring investment management to OTRS andstarting land liquidation. In addition, it reducesthe budgeted appropriation to 50 percent of theFY-2006 appropriation, to reflect the removal ofredundant layers of management and thereduction in responsibilities. CLO will continueto exist in its constitutional form but will havemost internal functions, such as accounting anddata processing, performed by the Departmentof Education.

Retirement Systems“The State retirement systems consist of

seven defined benefit pension plans:• Oklahoma Public Employees Retirement

System (OPERS);

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• Uniform Retirement System for Justices andJudges (URSJJ);

• Oklahoma Teachers Retirement System(OTRS);

• Oklahoma Police Pension and RetirementSystem (OPPRS);

• Oklahoma Firefighters Pension and Retire-ment System (OFPRS);

• Oklahoma Law Enforcement RetirementSystem (OLERS); and

• Retirement Plan for Full-time Employees ofthe Department of Wildlife (DWR).“ … There are two main types of plans in the

system. OPPRS, OFPRS, and OLERS are re-ferred to as ‘twenty and out’ plans. Additionally,within the structure of OPERS a ‘twenty and out’plan is maintained for correctional officers,probation and parole officers and fugitive appre-hension officers in the Department of Correctionsas well as firefighters in the Military Department.

“OPERS, URSJJ, OTRS, and DWR are definedbenefit plans. These plans have a guaranteedbenefit that is a function of years of service andsalary. In order to be entitled to these benefitsthere is a requirement for a certain number ofyears of service before a member becomesvested.

“The twenty and out plans are aimed atpublic services where it is in the interest of thepublic to have the active members made up ofyoung, healthy individuals. These individualsoften serve in areas that are defined as hazard-ous duty. … These plans are extremely gener-ous in their benefits and are designed to allowretired members to go on to other careers.”15

The remaining systems are called regulardefined-benefit plans. In order to be entitled tothese benefits there is a requirement for acertain number of years of service before amember becomes “vested.” In OPERS, DWR,and URSJJ the requirement is eight years and inOTRS it is ten years before a member vests. Thedefined-benefit plan type has been almostentirely replaced in the private sector by de-fined-contribution plans.

OTRS is a concern because the systemcarries an Unfunded Accrued Actuarial Liability(UAAL) in excess of $7 billion.16 A UAAL reflectsthe excess liability to provide benefits that havebeen “accrued” over the amount of assetsavailable to pay those benefits. This accrualreflects an actuary’s best estimate as to costs

that will be incurred due to benefits that havebeen promised as of a certain date. It should benoted that a review of past actuarial reports ofState systems indicates that, due to constantlychanging factors such as lifespan, these esti-mates have historically understated liabilities.17

The 2004 actuarial study released on OTRSindicated that the time to pay off the UAAL wasinfinity, which is an actuary’s way of saying“never.”18

OTRS’s funding problem is one of the worst inthe nation. This gap in funding of OTRS liabili-ties is considered an absolute obligation of theState, according to Attorney General’s OpinionNo. 96-21. Ultimately, therefore, the responsibil-ity for this debt will fall on the shoulders ofOklahoma taxpayers.19

OTRS currently receives a percentage ofindividual income, corporate income, sales anduse taxes before those revenues can be used forappropriations. Even with these large andgrowing revenue sources, OSF estimated that atsome time within the next decade OTRS willbegin to cash flow negatively to the point thatthe only solution available to the State will beincreased dedicated revenues.20

The OCPA Budget recommends the conver-sion of OPERS, OTRS, DWR, and URSJJ todefined-contribution systems and freezing thetax revenues dedicated to OTRS at the FY-2005dollar amount. This will stop the accumulationof unfunded debt and force fiscal prudence onlegislators who have used the retirement sys-tems as tools to give entitlements to votingblocs. This budget also transfers the fixedamount of dedicated revenue pertaining toOTRS to the Department of Education’s andhigher education’s appropriations to improvethe transparency of government expenditures.

OTRS is not the only system that has dedi-cated revenue streams in addition to employeeand employer contributions. OFPRS, OLERS,and OPPRS are recipients of 50 percent of thetotal premium tax revenues that are received.This stream of revenue has led to the threesystems establishing extremely generousbenefits for their members.

This budget recommends freezing revenuefrom the premium tax at the FY-2006 level forOFPRS, OLERS, and OPPRS.

The State’s retirement systems each performa number of the same tasks for their members,

51

including benefit distribution and record keep-ing. OSF examined the per-member per-yearcost of each individual system and determinedthat there would be savings to each systemusing economies of scale if these functions werecombined.21 This is made evident in the follow-ing table by the low cost of the administrativefunction in the State’s largest system.

The savings via consolidation are obviouswhen one considers that OPERS already per-

forms these functions for the URSJJ system.Despite being by far the smallest system, thecost of administration for URSJJ is less than halfthe cost of the next smallest system.

The OCPA Budget recommends that theretirement funds consolidate accounting andadministrative functions. This savings in effi-ciency will help to offset the net decrease indedicated revenues to each system currentlyreceiving them.

Securities Commission“The Securities Commission deters and

remedies securities fraud on behalf ofOklahoma’s citizens. To accomplish this mis-sion, the agency:• Enforces the Securities, Business Opportunity

Sales, Subdivided Land Sales and Take-Over Disclosure Acts;

• Registers offerings and sales of securities,business opportunities and subdivided land;

• Registers securities sales and adviser profes-sionals;

• Performs on-site examinations of securitiesprofessionals and issuers; and

• Provides investor education.”22

The regulatory tasks the Commission pro-vides should be included in the cost of thebusiness transactions that they effect. The

subsidizing of private businesses is not anacceptable use of taxpayer dollars. The OCPA

Budget recommends the Commission’s appro-priation be removed and the cost of servicesprovided be transferred to a user fee for indus-try. This budget also recommends that theregulatory process be re-examined for anyunnecessary regulations and be required to beas efficient as possible to minimize the impacton industry and consumers.

Oklahoma TaxCommission

“The primary responsibilities ofthe Tax Commission [OTC] in-clude the collection and distribu-tion of approximately 75 differenttaxes, fees and licenses. TheCommission allocates revenues tostate funds and local governmentunits, and collects and distributeslocal sales taxes levied by citiesand towns in Oklahoma.

“The Tax Commission consists of threedistinct departments: Taxpayer Services, Rev-enue Administration and Support Services.”23

Effective July 1, 2000, legislation required theOTC to review professional license applicantsfor income tax compliance. This tax review isconducted before a state license is issued. TheCommission established a section, the Profes-sional Licensing Compliance Unit, to assisttaxpayers with this new law. Currently thesefollowing professions are reviewed through theprogram: doctors, nurses, attorneys, insuranceagents, teachers, architects, accountants, allmedical-related licenses, engineers, abstrac-tors, cosmetologists, process servers, all HealthDepartment licenses, abstractors, funeraldirectors, and securities brokers.24

Oklahoma Tax Commission FY-06 Budget

Resources

General Revenue Fund $45,626,291.00Federal Funds $100,000.00Revolving Funds $62,807,970.00Total $108,534,261.00



The OCPA Budget recommends that the OTCexpand this program to include commercial

State Retirement Funds’ FY-04 Administrative Costs

Fund Administrative No. of Cost perName Expense Members Member

OTRS $3,417,796 131,369 $26.43OPERS $2,825,116 69,800 $40.47OFPRS $903,920 12,191 $74.15OPPRS $1,350,000 6,356 $212.40OLERS $802,026 2,191 $366.05URSJJ $65,663 429 $153.06

Source: FY-2004 Individual fund actuarial reports

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driver’s licenses, bail bondsmen, and all otherareas where the state issues special licensesconveying privileges. Additionally, this budgetrecommends the OTC receive its FY-2006 appro-priation, adjusted upward for population growthplus inflation.

Garnishment, Anyone?In his FY-2004 executive budget Gov.

Brad Henry proposed that all state employ-ees be required to, umm,pay their state incometaxes. “To be compliant, ataxpayer must have filedan income tax return and

paid any state liability ornegotiated a payment plan

with the Tax Commission,” Gov. Henry said.Regrettably, there appears to be quite a bit

of noncompliance out there. We haven’t seenthe latest numbers, but according to Gov.Henry, “for FY-2004, the fiscal impact is anincrease in income tax collections of $2million.”

Is it too much to ask that all state employ-ees – and for that matter, all elected officials– pay their taxes?

State Treasurer“The mission of the State Treasurer’s Office is

to provide sound financial services (banking,investing and cash management), reunitecitizens with their unclaimed property, andpromote economic development opportunities ina fiscally responsible and efficient manner.”25

State Treasurer FY-06 Budget Resources

General Revenue Fund $4,424,498.00Special Cash $100,000.00Revolving Funds $1,687,763.00Carryover $300,000.00Total $6,512,261.00



The OCPA Budget recommends thetreasurer’s office receive its FY-2006 appropria-tion adjusted upward for population growth plusinflation.

Endnotes1 Governor Brad Henry, FY-2006 Executive Budget, pg. B-141.2 Governor Frank Keating, FY-2003 Executive Budget, pg. 228.3 Governor Brad Henry, FY-2005 Executive Budget, pg. 214.4 Oklahoma House of Representatives, FY-2006 Legislative

Appropriations, pg. 49.5 Governor Brad Henry, FY-2006 Executive Budget, pg. B-147.6 Governor Brad Henry, FY-2007 Executive Budget, pg. B-144.7 Governor Brad Henry, FY-2006 Executive Budget, pg. B-149.8 Governor Brad Henry, FY-2006 Executive Budget, pg. B-149.9 Governor Brad Henry, FY-2006 Executive Budget, pg. B-150.10 Governor Brad Henry, FY-2006 Executive Budget, pg. B-152.11 Governor Brad Henry, FY-2006 Executive Budget, pg. B-152.12 Governor Brad Henry, FY-2006 Executive Budget, pp. B-153 –B-154.13 Governor Frank Keating, FY-2003 Executive Budget, pg. 231.14 Governor Frank Keating, FY-2003 Executive Budget, pg. 231.15 Governor Brad Henry, FY-2006 Executive Budget, pg. B-157.16 Oklahoma Teachers Retirement System, FY-2005 Actuarial

Report, pg. 108.17 Governor Frank Keating, FY-2003 Executive Budget, pg. 237.18 Oklahoma Teachers Retirement System, FY-2004 Actuarial

Report, pg. 102.19 Governor Frank Keating, FY-2006 Executive Budget, pg. B-158.20 Governor Frank Keating, FY-2003 Executive Budget, pg. 237.21 Governor Frank Keating, FY-2003 Executive Budget, pg. 239.22 Governor Brad Henry, FY-2007 Executive Budget, pg. B-132.23 Governor Brad Henry, FY-2006 Executive Budget, pg. B-167.24 Governor Brad Henry, FY-2006 Executive Budget, pg. B-167.25 Governor Brad Henry, FY-2005 Executive Budget, pg. 334.

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HealthOklahoma Health Care Authority

The Oklahoma Health Care Authority (OHCA)was created by HB 1573 on July 1, 1994, andbecame the single designated state Medicaidagency as of January 1, 1995. Medicaid, createdin 1965 under Title XIX of the Social SecurityAct, is “a federal and state entitlement pro-gram” that provides “medical benefits to certainclasses of lower-income individuals who haveno health insurance.”1 The program is adminis-tered federally by the Centers of Medicare andMedicaid Services within the United StatesDepartment of Health and Human Services, andit guarantees basic health and long-term careservices to enrollees based on income levelsand resources.2

As an executive agency, OHCA has themandate to purchase Medicaid benefits andstate and education employee health carebenefits, to study all state-purchased and state-subsidized health care systems, and to makerecommendations and changes aimed atminimizing the financial burden on the statewhile allowing the state to provide the mostcomprehensive possible care.3 It also “leads theeffort” to access the maximum amount of fed-eral funds for itself and for the OklahomaDepartments of Human Services, Mental Healthand Substance Abuse Services, Health andEducation; the Oklahoma Office of JuvenileAffairs, and the Oklahoma University andOklahoma State University medical schools andteaching hospitals (all of which have a part inthe administration of the Oklahoma Medicaidprogram). OHCA’s “revenue maximizationinitiatives” are scrutinized to make sure thatthey meet all legal requirements and do not putthe state “in jeopardy of a future disallowance.”4

OHCA’s administrative duties include “provid-ing funds to Medicaid contractors, developingMedicaid payment policies, managing pro-grams to fight waste, fraud and abuse, main-taining operating systems that support Medic-aid payments, developing cost-effective healthcare purchasing approaches, monitoring con-tracting and provider performance, promotingand preserving beneficiary rights and protec-tions, and disseminating information to theOklahoma legislature, congressional delega-

tion, beneficiaries and the general public.”5 Theagency is overseen by a board of directorsappointed by the Governor, the Senate Presi-dent Pro Tempore, and the Speaker of theHouse, and it also receives direction from aDrug Utilization Review (DUR) board, a MedicalAdvisory Committee (MAC), and a joint legisla-tive oversight committee. The purpose of theseoversight bodies is to ensure that OHCA’s deci-sions “best serve the beneficiaries’ needs whilemaintaining the fiscal integrity of the agency.”6

OHCA provides Medicaid services to recipi-ents included in each of the following categories– those using Temporary Assistance for NeedyFamilies (TANF), as well as the aged, blind,disabled and institutionalized.7 OHCA providesthose services through either a traditional fee-for-service system or through the SoonerCareChoice program – a primary care case manage-ment program under which the state contractswith primary care providers/case managers(PCP/CM) throughout Oklahoma to deliver basichealth care services to eligible Oklahomans.8

Eligibility for Medicaid is determined by theOklahoma Department of Human Services(OKDHS). In the course of purchasing Medicaidservices, OHCA has the following responsibilities:• Informing individuals who are potentially

eligible for Medicaid and enrolling those whoare qualified.

• Determining what benefits it will cover inwhat settings.

• Determining how much it will pay for thebenefits it covers and from whom it will buythose services.

• Establishing standards for providers fromwhich it will purchase covered benefits, andenrolling (or contracting with) those whichmeet the standards.

• Processing and paying claims from fee-for-service providers and making capitationpayments to primary care providers.

• Monitoring the quality of the services itpurchases to ensure that beneficiaries areprotected from, and that taxpayers are notsubsidizing, substandard care.

• Ensuring that state and federal health carefunds are not spent improperly or diverted byfraudulent providers.

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• Having a process in place for resolvinggrievances by applicants, beneficiaries andproviders.

• Collecting and reporting information neces-sary for effective administration and programaccountability.9

Between FY-1997 and FY-2006, state appro-priations to OHCA increased from $289.84million to $634.79 million, or 119 percent. Duringthe same time period, total OHCA expenditures(from all sources) rose even faster, moving from$1.208 billion to $3.359 billion – an increase of178.1 percent.

In his famous 1964 address, “A Time forChoosing,” Ronald Reagan noted that “nogovernment ever voluntarily reduces itself insize. So governments’ programs, oncelaunched, never disappear. Actually, a govern-ment bureau is the nearest thing to eternal lifewe’ll ever see on this earth.”10 Medicaid is aperfect illustration of how government programsperpetuate themselves by continually expand-ing their size and reach.

Though Medicaid was originally intended toprovide health insurance to the truly indigent,the federal government and its state “partners,”such as OHCA, have been busily expanding theprogram’s eligibility guidelines, adding newservices, and conducting “outreach” effortsaimed at enrolling more people – even thosewho could obtain insurance coverage withoutgovernment help. In Oklahoma, for instance, afamily of four with an income under $35,797 cancurrently qualify for Medicaid,11 and nationwide,the number of people covered by Medicaid grewby more than one-third (38 percent) between1999 and 2004, from 34 million to 47 million.12

The OHCA section of the FY-2006 governor’sbudget argues that Medicaid spending has apositive economic impact on Oklahoma – evencomparing its effects to those of a manufactur-ing plant that brings jobs and income to thestate.13 This comparison is flawed on severallevels, beginning with the fact that most manu-facturing plants are (even in this era of ever-increasing government “investments” in “eco-nomic development”) funded by private inves-tors, not taxpayers. But at the same time, relyingon an unpredictable stream of governmentfunding to stimulate economic activity is not asound economic development strategy in anyindustry. Even worse, increasing government

health care spending dampens entrepreneurialactivity by “crowding out” private sector alterna-tives and diminishing personal responsibility forone’s own well-being – both of which are long-term detriments to economic growth.

Indeed, the unpredictable nature of Medicaidfunding was illustrated during the past budgetyear, as Oklahoma’s Federal Medical Assis-tance Percentage (FMAP) – the rate at which thefederal government matches state Medicaidspending – fell from 70.18 percent for FY-2005 to67.91 percent for FY-2006.14 This means thatOklahoma taxpayers will have to provide moreof their dollars in FY-2006 to get back the sameamount of federal money as they received in FY-2005.

Since the FMAP is determined by the relation-ship of a state’s per capita personal income(PCPI) to the average PCPI for all states (withthe federal government providing a highermatch to states with lower PCPI), this develop-ment should be seen as a positive one forOklahoma. After all, a higher state PCPI shouldmean that residents are relatively more prosper-ous, and therefore more capable of arrangingfor health insurance without government’s help.

Instead, the opposite has occurred. Okla-homa policymakers provided millions of dollarsin additional funds in the FY-2006 budget inorder to adjust to the lower FMAP, and wereforced to beat back a proposal by the Okla-homa Hospital Association to assess a“provider’s fee” – in effect, a new tax – onhospitals.15 While this new spending was adisappointing result for Oklahoma taxpayers, itwas entirely predictable, given that the steadyincreases in Medicaid’s cost drivers – such asenrollment volume, service utilization, andnumber of covered services16 – are likely tocontinue to cause severe budget pressures foryears to come if present policy trends continue.

Indeed, recent data illustrate the rapidexpansion of Medicaid enrollment volume inOklahoma. The number of unduplicated benefi-ciaries enrolled by OHCA moved from 458,558in FY-1995 to 696,743 in FY-2005 – an increase of52 percent. The number of enrollees actuallyreceiving services rose even faster during thattime period, from 396,496 in FY-1995 to 687,451in FY-2005, or 75 percent.17 From FY-2004 to FY-2005, the number of Oklahomans enrolledincreased by 4 percent and the number served

55

by 3 percent. Overall, 19.1 percent of stateresidents were enrolled in Medicaid at somepoint during FY-2004, and that figure wasestimated to rise to 20.2 percent by FY-2005.18

Much of the recent enrollment increase canbe attributed to OHCA’s efforts to sign up alarger percentage of the expanded pool ofMedicaid-eligible Oklahomans. One of the twomain groups served by OHCA, the “TANF-related” group (pregnant women and childrenwithin 185 percent of the federal poverty line),experienced a major eligibility expansion in1997. As a result of the expansion and subse-quent “outreach,” 212,332 more Oklahomachildren were enrolled in June 2005 than inNovember 1997. Currently, 65 percent of totalMedicaid enrollees in Oklahoma are childrenunder age 18, and a majority of all births in thestate are covered by Medicaid. 19

Yet despite the aforementioned large enroll-ment increases for low-income women andchildren (to the point where nearly 75 percent ofall OHCA enrollees were in the “TANF-related”category), such enrollees accounted for just over35 percent of total OHCA expenditures in FY-2005. Aged, blind and disabled enrollees, onthe other hand, comprised just 20 percent ofenrollees in FY-2005, but accounted for 65percent of total expenditures in that year.20 Inthe coming years, this group will exert evenmore upward pressure on OHCA’s costs, asmany members of the “baby boomer” genera-tion will seek to avail themselves of Medicaid-provided services.

Oklahoma Health Care Authority FY-06 Budget

Resources

General Revenue Fund $603,481,864Federal Funds $2,724,540,827Special Cash Fund $18,000,000Tobacco Settlement Funds $13,304,491Total $3,359,327,182



Data from the governor’s FY-2006 budget alsoindicate that utilization of medical services hasalso increased among some OHCA enrollees.For example, the percentage of young childrenenrolled in Medicaid having a “well-child” visitwith a physician increased from 47.3 percent inFY-2003 to 58.1 percent in FY-2004, while the

percentage of adolescents doing so rose from23.7 percent in FY-2003 to 36.7 percent in FY-2004. Similarly, the percentage of childrenenrolled in Medicaid receiving up-to-dateimmunizations is expected to increase from 65percent in FY-2003 to an estimated 90 percentfor FY-2005.21

Finally, several new OHCA initiatives havebroadened the scope of services eligible forMedicaid coverage. In 2005, OHCA extendedMedicaid eligibility to include coverage forfamily planning (under the SoonerPlan pro-gram) and breast and cervical cancer (throughthe Oklahoma Cares initiative).22 And as ofNovember 2005, OHCA began accepting appli-cations from employers seeking to participate inthe Oklahoma Employer-Employee Partnershipfor Insurance Coverage (O-EPIC). O-EPIC,which is to be funded via proceeds of a tobaccotax increase approved by state voters in 2004(and matched with federal funds), is touted as a“first-of-its-kind” voluntary program that will payfor a portion of the health plan premiums foremployees working in qualifying Oklahomasmall businesses (those with less than 25employees). O-EPIC is the first phase of theinsureoklahoma initiative, which is slated toinclude a “Public Product Health Care Plan” bythe spring of 2006 that will allow Oklahomans tobuy health insurance directly through the state.23

Gov. Brad Henry has argued that a programlike O-EPIC is necessary since more than 20percent of Oklahomans were uninsured as ofFY-2003. However, as OCPA pointed out in its2005 budget blueprint, this figure overstates the“crisis” of the uninsured in Oklahoma – espe-cially in light of the following mitigating factors:• The state’s large Native American population

has access to free Indian health centers andIndian hospitals. Many Native Americans,consequently, do not carry private healthinsurance.

• A number of middle-to-high income individu-als have, for whatever reason, made theconscious choice to forego health insurance.

• The age groups most likely to be uninsured(those from 18-24 and 25-34 years of age) arealso the least likely to need medical care.

• Some Oklahomans who meet Medicaid’seligibility guidelines have simply made aprincipled decision to refuse taxpayer-fundedhealth insurance.24

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Ironically, the funding source for O-EPIC – thetobacco tax increase – may threaten theprogram’s future if it succeeds in two of itsstated objectives: reducing the prevalence ofsmoking and funding smoking cessation pro-grams. The instability of O-EPIC’s revenuestream merits close scrutiny in the coming years.

Instead of considering reforms that wouldhelp to put the brakes on runaway Medicaidspending in Oklahoma, the policy directionOHCA is currently following mostly amounts tomashing the gas pedal. Expanding the eligiblepopulation and offering new services will onlyexacerbate the fiscal problems associated withMedicaid, while continuing to weaken the senseof responsibility that individual Oklahomanshave to provide for their own health insurance.Nevertheless, experience at the federal level, aswell as innovative reform approaches nowunder development in other states, can help tosolve these two problems without adding newtaxes or “fees” on Oklahomans.

Possible Solutions

First of all, the 1996 federal welfare reformlaw, while not addressing the vast majority ofMedicaid expenditures, did eliminate Medicaideligibility for non-citizen immigrants. Opponentsof this change were sure that the change wouldlead to a decrease in coverage for this group –but the opposite occurred, as those affectedresponded to the loss of taxpayer-funded cover-age by supplying more labor, thus giving them-selves a better chance of getting employer-based coverage. In fact, the increase in prob-ability of the affected immigrants receivingemployer-provided health coverage was largeenough to completely offset the cutbacks, andstates that offered coverage to those affectedsaw coverage levels for this group decrease,while states that did not saw that coverageincrease.25

This example seems to indicate that Okla-homa would not have as much to fear as somemight expect if eligibility guidelines were tight-ened, and some of those currently receivingMedicaid (especially those with higher incomes)were no longer eligible for the program. Reform-ing Oklahoma’s Medicaid requirements in amanner that eliminates people who could findcoverage elsewhere frees up scarce resourcesthat can be used for the truly indigent, and

strengthens the incentives for Oklahomans towork to obtain coverage on their own, therebyincreasing economic growth and productivity.Otherwise, as Michael F. Cannon of the CatoInstitute put it, “Offering people Medicaid in lieuof (allegedly) inferior private coverage … tellsthem that the way to get more is by doing less:work less, save less, cultivate less self-reliance.That is a recipe for dependency.”26

At the same time that OHCA must refocus itsresources on those in real need, it should alsochange many of the ways it delivers Medicaidservices. Two states that are currently in theprocess of reforming their Medicaid deliverysystems are Florida and South Carolina, andboth are doing so in three ways: by encouragingcompetition in the design of benefit packagesfor Medicaid recipients between private plansand networks, by allowing enrollees to choosethe health insurance options that best fit theirneeds, and by giving Medicaid recipientsdefined contributions to spend themselves(which mitigates the problem of unpredictablefunding streams).27

These defined contributions could be used tochoose a state-approved managed care plan,preferred provider organization, or provider-based network; to participate in employer-based coverage; or, as in South Carolina’s plan,“to choose a self-directed option that would besimilar to a Health Savings Account (HSA)arrangement.”28 The defined contribution fea-ture of the Florida and South Carolina initiativesis far from an untested idea – it closely re-sembles the Federal Employee Benefit HealthPlan (FEBHP), under which “federal workersreceive a defined contribution from the govern-ment and are able to select from a menu ofcompeting private plans.”29

It is clear that the best way to solve theproblems OHCA faces is to bring market forces– choice, competition, and individual responsi-bility – to bear on those problems. The begin-nings of such an approach may be taking shapein the form of the recently enacted OklahomaSelf-Directed Care Act, which directs OHCA “toestablish self-directed care pilot programsbased on consumer choice and control.”30 TheAct establishes “cooperative agreements withthe Oklahoma Department of Human Services(OKDHS) to implement and administer theseprograms and allow persons enrolled in the

57

Medicaid home and community-based programto choose the providers of the services anddirect the delivery of services best meetingparticipants’ long-term care needs,” and OHCAwas also “directed to apply for waivers neces-sary to allow any eligible person to self-directtheir own personal care services.”31

Moreover, as this year’s OCPA Budget was inthe process of going to press, the Oklahoma

House of Representatives “passed historiclegislation to replace Oklahoma’s outdated andexpensive Medicaid program with a new patientempowerment system.”32 This plan deservesserious consideration.

By giving OHCA enrollees more healthinsurance options that are better tailored toindividual preferences, and by providing incen-tives for those enrollees to take an active role in

decisions about the types of carethey receive, Oklahomapolicymakers can achieve the twinobjectives of improving the healthof the state’s neediest residentsand controlling the cost of Medic-aid to taxpayers.

The OCPA Budget encouragesOHCA, CompSource, and privateinsurers to cooperate to form a“watch list” for doctors who maybe the source for fraudulentclaims on their services. Thiswatch list could provide theimpetus for cracking down on themyriad of schemes that plaguethe health and workers compen-sation fields.

This budget also recommendsthat OHCA be required to providethe state legislature with a com-prehensive report on the health oftheir users benchmarked againstthe rest of the state’s residents, aswell as against residents insurrounding states. Oklahomataxpayers who care about thetruly needy expect their tax dol-lars to be well spent, and resultsare the best measure of that.

This budget recommends thatOHCA receive its FY-2006 appro-priation, adjusted upward forpopulation growth plus inflation.

Health DepartmentThe mission of the Department

of Health is to promote, protectand improve the health of allOklahomans through strategiesthat focus on preventing diseaseand injuries. Local health servicedelivery is performed by approxi-

Great Moments in Medical WelfareJanice Francis-Smith reportedNovember 11, 2005 in The JournalRecord that 3,500 “illegal aliens inOklahoma received $7.8 million inMedicaid benefits last year, saidNico Gomez, director of governmen-tal and public affairs for the Okla-

homa Health Care Authority. The state’sshare of that total was $2.3 million. Which

raises an interesting question: Why should a strugglingsingle mom in Muskogee or a hardworking truck driver inAltus – especially those who stay off the dole as a matter ofprinciple – have to pay taxes to support lawbreakers?

Let’s add “medical welfare for illegal aliens” to the ever-growing list of things the Oklahoma Health Care Authoritypays for that it really ought not to. As OCPA has docu-mented elsewhere, that list currently includes condoms,vasectomies, and nursing-home care for wealthy Oklaho-mans who are shrewd enough to shelter their assets andincome. Oh, and let’s not forget breast-reduction surgery.

“Taxpayers paid $928 for breast reductions for threemales serving time in juvenile detention, according to aninvestigation,” Jack Money reported May 14, 2005 in thestate’s largest newspaper. “The surgery, on three adoles-cent residents of the Tecumseh detention center, was notmedically necessary, according to the Office of JuvenileSystem Oversight report obtained by The Oklahoman. …The surgeries weren’t warranted, said Dr. John Stuernky,chief of pediatrics at Children’s Hospital at OU MedicalCenter. He reviewed records kept by the juvenile centerdoctor, Dr. Clinton Smith of Shawnee; the surgeon, Dr.Norman Hanks of Shawnee; and the juvenile center nurse.… ‘It is concerning that these three young men were sub-jected to unnecessary surgical procedures for ... normalphysiological changes of adolescence,’ Stuernky wrote. Thebill for the surgeries totaled about $14,200. The OklahomaHealth Care Authority, which juvenile affairs uses to pay forinmates’ medical procedures, denied payment for all butabout $928.”

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mately 2,223 employees located at 69 countyhealth departments throughout the state.33 TheDepartment has 35 statutory programs within itscontrol.34

The size and complexity of this many pro-grams and employees makes evaluating theDepartment’s expenditures of taxpayer dollarsvery difficult. However, according to the 2005edition of the United Health Foundation’s statehealth rankings, Oklahoma’s ranking amongstates fell by four places to 44th.35 This continua-tion of the trend of Oklahomans’ health decreas-ing relative to the residents of the other 49 statespoints to serious problems within Medicaid and

the Department of Health’s many programs.The Office of State Finance (OSF) under both

Governor Keating and Governor Henry havepointed to examples that suggest that there aremany opportunities to overhaul or replaceexisting programs with more cost-effectiveapproaches. OSF suggested that the countyhealth programs in counties with lower popula-tions and/or low department utilization rates beadministered through the local hospitals. Thehospital in Cordell was cited as an example.The Cordell hospital runs all county healthfunctions, including the federal Women, Infantsand Children (WIC) food supplement program.

At a time when many rural hospitals are strug-gling financially it makes good sense to exam-ine from both an economic and health-outcomeperspective if this prototype should be ex-panded.36

Programs such as the Certificate of Need(CON) should be eliminated. As currentlyinstituted, in order to build a nursing home onemust obtain a CON for every bed that is to beoffered. This serves only to provide an unneces-sary layer of government between consumersand the free market. This limitation of the abilityto compete and the reduction in consumers’options may have helped foster the protected

environment that re-sulted in the DOHnursing home scandal.

Governor Keating’sbudget noted that whileOklahoma was the firstto initiate the ChildrenFirst program, whichdoes prenatal work withexpectant mothers, “theprogram has producedsome disappointingstatistics to date. OSFsuggests that thisprogram should beconverted to a meanstested program withinthe umbrella of Medic-aid services. MakingChildren First a Medic-aid program wouldallow for a federalmatch on state funds.Currently the State

expends over $11 million to fund the program.”OSF went on to estimate that over $9.3 millioncould be saved in the first year alone.37

A review of DOH programs also indicates thatmore programs should incorporate meanstesting. The use of means testing would not onlyeliminate from the programs people who canafford services but in many cases may open upthe availability of additional federal funding forthe programs. County health departments inparticular would benefit from this change inoperations as some of their functions overlapwith Medicaid and/or other government programs.

The OCPA Budget recommends that the

Oklahoma Voters: Empower Patients with ChoicesMedicaid is a joint federal and state health program that provides

health care insurance to the poor, disabled, and other groups. Over thepast few decades, this program has been taking a larger and largershare of the state budget. Which of the following four options do youthink is the best way to handle this situation?

Continue the increased funding of the Medicaid program, even if thatmeans it takes money away from other parts of state government likeschools and roads. ........................................................................... 11%

Continue the increased funding of the Medicaid program, but insteadof cutting other functions of state government, raise taxes. .............. 9%

Limit the costs of Medicaid by reforming the program by institutingmarket-based solutions like patient choice and more healthcarecompetition. ...................................................................................... 43%

Limit the costs of Medicaid by limiting those eligible for theinsurance. ........................................................................................ 19%

Undecided (vol.) ............................................................................... 19%

Source: Cole Hargrave Snodgrass & Associates, telephone interviews of 400 registered voters inthe state of Oklahoma, January 22-24, 2006. The confidence interval associated with a sample ofthis type is such that 95 percent of the time results will be within +/- 4.9 percent of the true values,i.e., the results obtained if it were possible to interview all the qualified respondents.

Department of Health’s budget be fixed at theFY-2006 level until a program-by-programreview is performed and meaningful perfor-mance measures of outcomes are put in place.

Department of Mental Health andSubstance Abuse Services(ODMHSAS)

The agency’s mission is to promote healthycommunities and provide the highest qualitycare to enhance the well being of all Oklaho-mans. The three principal realms of ODMHSASactivity are mental health, substance abuse,and domestic violence/sexual assault supportservices.38

OCPA endorses the view expressed by Gover-nor Henry that “focuses on placing persons withmental illness in the most appropriate environ-ment possible for ongoing care and treatment.Service providers, advocates and family mem-bers agree that placement in the ‘community’where persons with mental illness are closer tofamily and friends provides the best atmospherefor success.”39 The OCPA Budget encouragesODMHSAS to expand this to partner with faith-based and other private charitable organiza-tions to provide an even better “atmosphere forsuccess.”

We must continue to require ODMHSAS tohave a clear accountability system in place formonitoring the outcomes of its services in orderto know if its behavioral health care system isproviding effective, cost-efficient treatment.ODMHSAS will then be better able to identifysystem problems and direct funds to the mosteffective services for the clients.

ODMHSAS is both a purchaser and providerof mental health and substance abuse services.By serving both roles, ODMHSAS has a conflictof interest in evaluating its own services, andthis lessens the agency’s ability to focus onaccountability. Trends such as the decreasingnumber of inpatient hospital days40 are encour-aging signs of ODMHSAS programs but addi-tional performance measures (such as daysworked per client) should be added to moreaccurately track the success or failure of theseprograms.

This budget recommends that ODMHSASreceive its FY-2006 appropriation, adjustedupward for population growth plus inflation.

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Endnotes1 Governor Brad Henry, FY-2006 Executive Budget, pg. B-169.2 Ibid.3 Oklahoma Health Care Authority, State Fiscal Year 2005

Annual Report, pg. 42. Available at http://www.ohca.state.ok.us/reports/PDFlib/AR_2005.pdf.4 Ibid.5 Ibid.6 Ibid.7 Governor Brad Henry, FY-2006 Executive Budget, pg. B-170.8 Oklahoma Health Care Authority, State Fiscal Year 2005

Annual Report, pg. 51.9 Oklahoma Health Care Authority, State Fiscal Year 2005

Annual Report, pg. 43.10 Ronald Reagan, “A Time for Choosing.” Available at http://www.reaganfoundation.org/reagan/speeches/rendezvous.asp11 Mick Hinton, “State Tries to Diagnose Waste in Medicaid,”Tulsa World, December 12, 2005.12 Dennis Cauchon, “Medicaid Insures Historic Number,” USA

Today, August 1, 2005. Available at http://www.usatoday.com/news/washington/2005-08-01-medicaid_x.htm13 Governor Brad Henry, FY-2006 Executive Budget, pg. B-172.14 Assistant Secretary for Planning and Evaluation, UnitedStates Department of Health and Human Services, “FederalMedical Assistance Percentages.” Available at http://aspe.hhs.gov/health/fmap.htm15 Mick Hinton, “State Tries to Diagnose Waste in Medicaid,”Tulsa World, December 12, 2005.16 Governor Brad Henry, FY-2006 Executive Budget, pg. B-171.17 Oklahoma Health Care Authority, State Fiscal Year 2005

Annual Report, pg. 15.18 Governor Brad Henry, FY-2006 Executive Budget, pg. B-170.19 Oklahoma Health Care Authority, State Fiscal Year 2005

Annual Report, pg. 14.20 Ibid.21 Governor Brad Henry, FY-2006 Executive Budget, pg. B-170.22 Governor Brad Henry, FY-2006 Executive Budget, pg. B-169.23 O-EPIC Newsletter, “O-EPIC Program Update,” October 2005.Available at http://staging.okcommerce.gov/test1/dmdocuments/O_EPIC_Newsletter_October_2005.pdf24 Oklahoma Council of Public Affairs, State of Oklahoma State

Budget for the Fiscal Year Ended June 30, 2006, pp. 47-48.25 Michael Cannon, “Medicaid Reform: Finishing the Job ofWelfare Reform,” Oklahoma Council of Public Affairs Perspec-

tive, July 1, 2005. Available at: http://www.ocpathink.org/ViewPerspectiveEdition.asp?ID=97#60826 Ibid.27 Nina Owcharenko, “Florida and South Carolina: TwoSerious Efforts to Improve Medicaid,” Heritage Foundation

WebMemo #920, November 18, 2005.28 Nina Owcharenko, “Florida and South Carolina: TwoSerious Efforts to Improve Medicaid,” Heritage Foundation

WebMemo #920, November 18, 2005.29 Ibid.30 Oklahoma House of Representatives, Office of Budget andPerformance Review, FY-2006 Legislative Appropriations.31 Ibid.32 http://www.okhouse.gov/OkhouseMedia/pressroom.aspx?NewsID=58133 Governor Brad Henry, FY-2007 Executive Budget, pg B-182.34 Governor Brad Henry, FY-2007 Executive Budget Historical

Data, pp. 365-366.35 Governor Brad Henry, FY-2007 Executive Budget, pg. B-182.36 Governor Frank Keating, FY-2003 Executive Budget, pg. 255.37 Governor Frank Keating, FY-2004 Executive Budget, pg. 148.38 Governor Brad Henry, FY-2005 Executive Budget, pg. 267.39 Governor Brad Henry, FY-2007 Executive Budget, pg. B-155.40 Governor Brad Henry, FY-2007 Executive Budget, pg B-155.

Human Resources and AdministrationDepartment of Central Services

The Department of Central Services providesa variety of support services to state agencies.Services provided by the Department include:1

• Facilities Management• Central Purchasing• Construction and Properties Division• State Leasing• Federal Surplus Property Distribution• State Surplus Property• Interagency Mail• Risk Management• Fleet Management (formerly Motor Pool)• Alternative Fuels Program• State Recycling Program• State Inventory Management Program• Central Printing• Public Employee Relations Board• Capital Medical Zoning• State Use Committee• Capitol Preservation Commission

Department of Central Services FY-06 Budget

Resources

General Revenue Fund $10,382,390Public Building Fund $1,880,645Carryover $1,765,000Revolving Funds $57,850,000Total $71,878,035



An analysis of the tasks performed and thefees charged indicates that DCS is to be com-mended for beginning the process of eliminat-ing cross-subsidization. The OCPA Budget

recommends the continuation of this approach.DCS should charge a fee commensurate withthe cost to DCS of providing the service. Agen-cies then would be able to compare costs ofother possible service providers on an equalbasis. OCPA believes that competition results ina more efficient use of taxpayer dollars.

This budget freezes DCS appropriations atFY-2006 levels while the process of eliminationof cross-subsidization is occurring.

Employees Benefits Council (EBC)In the 2004 Oklahoma Piglet Book, OCPA and

Citizens Against Government Waste pointed outthat the “Employees Benefits Council (EBC) andthe Oklahoma State Education Employees GroupInsurance Board (OSEEGIB) are responsible forproviding health insurance and ancillary benefitplans to public and education employees. As thechart below shows, the functions of these twostate agencies overlap considerably.

“A Senate legislative committee examiningstate employee benefits in 2003 found that elimi-nating EBC and folding its non-duplicative func-tions into OSEEGIB would improve the servicesoffered to state and education employees andsave taxpayers more than $3.8 million annually.”2

The OCPA Budget recommends that EBC’sfunctions be transferred to OSEEGIB and that$4 million be removed from general appropria-tions to reflect the savings to taxpayers of thisreorganization. EBC does not receive directappropriations but instead is financed bycharges to state employees, which creates alabor cost to state agencies. Savings would beallocated via a per-agency appropriation reduc-

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Function EBC OSEEGIBSelect Alternative Health Plans ---------------------------------------------------------- X-------------------------- XConduct Annual Benefit Elections ------------------------------------------------------- X-------------------------- XManagement of Health Plans and Assets ------------------------------------------------------------------------- XAdminister Section 125 Plan Benefits and Assets --------------------------------- X---------------------------Select Optional Employee Benefits ----------------------------------------------------- X-------------------------- XManagement of Dental Plans and Assets ------------------------------------------------------------------------- XManagement of Term Life Plan Benefits and Assets ----------------------------- X-------------------------- XHuman Resource Management ---------------------------------------------------------- X-------------------------- XPublic Budget Management --------------------------------------------------------------- X-------------------------- XPublic Purchasing Management --------------------------------------------------------- X-------------------------- XStatutory Reporting Management------------------------------------------------------------------------------------ XFinancial Assets Management ----------------------------------------------------------- X-------------------------- XRecords Act Management ------------------------------------------------------------------ X-------------------------- X

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tion based on the number of agency employees.

Horse Racing Commission“The Oklahoma Horse Racing Commission

(OHRC) encourages state horse production andregulates horse racing activities at four race-tracks and gaming activities at the first three.• Remington Park in Oklahoma City• Will Rogers Downs in Claremore• Backstretch, LLC doing business as Blue

Ribbon Downs in Sallisaw• Fair Meadows at Tulsa

“The Commission provides the followingservices at these racetracks:• Law enforcement agents who conduct investi-

gations and present evidence at hearings;• Employees who license participants; and• Employees who verify horses in the paddocks

are actually the horses registered to race.”3

The Commission received $2,360,889 intaxpayer dollars through appropriations in FY-2006.4 Voters who passed the legislation thatopened up the four tracks currently operatingwere promised that race tracks would be rev-enue sources – not an expense for every tax-payer regardless of whether they gamble or not.

The OCPA Budget finds this to be an egre-gious example of corporate welfare and elimi-nates the appropriation for FY-2007.

Human Rights Commission (HRC)The mission of the Human Rights Commission

(HRC) is to “promote equality through educationand enforcement in the areas of employment,housing, and places of public accommodationregardless of race, color, sex, religion, nationalorigin, disability, and age.”5

The OCPA Budget believes that human rightsviolations should be punished under applicablelaws. To that end, it would better serve allinterests to have the HRC become a function ofthe attorney general’s office, which has consid-erably more power to prosecute and punishviolators of Oklahoma’s Anti-Discrimination Actthan the HRC. The removal of administrativeduplication will result in a savings to taxpayers.HRC’s FY-2005 administrative expenditures werea startling 28 percent of total expenditures.6

This budget recommends that HRC’s FY-2006appropriation be reduced by 10 percent foradministrative savings and transferred to theattorney general’s office.

‘The Number of Passenger Vehiclesthe State Owns Is Unclear’

In November 2004 stateauditor and inspector JeffMcMahan released aperformance audit ofOklahoma’s motor vehicle

fleet. “The results of this auditidentify opportunities for

potential cost savings approaching$21,000,000 related to the operation andmanagement of the State’s passenger vehiclefleet,” McMahan said. “State officials needmore assurances that the State’s fleet is beingused efficiently.”

One of the audit’s most troubling findings:“The number of passenger vehicles the Stateowns is unclear.” According to one inventorylisting, as of December 2003 the state owned11,365 vehicles with a total cost of $195million. Disturbingly, there were 428 purchaserequests for vehicles in 2003, and none of therequests were denied. The auditors concludedthat “justifications required for vehicle purchasesare insufficient or nonexistent.”

The auditors also found there are 1,944vehicles assigned to employees who com-mute to work in a state vehicle, of which 1,264of the instances appear to be lawful. The auditdidn’t say the remaining 680 instances were allillegitimate, but did say “it would appear that thepractice of allowing employees to commute in astate vehicle is often not adequately docu-mented and/or justified.”

Though auditors did acknowledge that“keeping a vehicle clean is an important partof the overall maintenance of the vehicle,”they were troubled by “739 instances totaling$20,720, where the price of the wash/detailwas in excess of $20. This included 38instances of washes/details greater than $50and 13 of these $100 or more.”

The auditors say the state owns at least233 SUVs. “If the State purchased 233 se-dans rather than SUVs, potential savings overthe life of these vehicles would have beenapproximately $1,800,000. We recognizethere is likely a legitimate need for some SUVs;however, we believe many of the State’s SUVscould be replaced with a less costly vehicle.”Source: http://www.sai.state.ok.us/

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Merit Protection CommissionThe mission of the Merit Protection Commis-

sion is to design, implement, and enforce adispute resolution system for state employees.7

As in the case of OPM, this function is a humanresource function that should be billed to agen-cies at the cost to provide the service. This willeliminate cross-subsidization and improve thetransparency of government expenditures.

Merit Protection Commission FY-06 Budget

Resources

General Revenue Fund $565,684Revolving Funds $47,500Total $613,184


Legislative Appropriations, pg. 70

The OCPA Budget recommends that theCommission’s appropriation be held at FY-2006levels while the process of eliminating cross-subsidization takes place.

Office of Personnel Management(OPM)

The Office of Personnel Management (OPM)provides “service and regulatory personneladministration functions that are efficient andeffective in meeting the management needs ofvarious state agencies. OPM maintains aclassified system of employment and a fair andequitable compensation system for state em-ployees. OPM recommends a flexible stateemployee pay system based on relevant marketdata, provides recruitment and referral servicesfor state agencies, and assists with affirmativeaction program needs. OPM provides manydifferent management training and develop-ment opportunities, including the Carl AlbertPublic Internship Program, a Certified PublicManager Program, the Quality OklahomaProgram, the State Mentor Program, and theState Personnel Interchange Program.”8

Office of Personnel Management FY-06 Budget

Resources

General Revenue Fund $4,633,249Carryover $450,000Revolving Funds $750,000Total $5,833,249



Essentially, OPM provides the human re-source management for all state agencies. Acheck of state agencies will reveal that eachagency has an internal human resource man-agement group. Therefore, not only is therecross-subsidization but there is also the exist-ence of potentially redundant duties.

The OCPA Budget recommends the servicesof OPM should be valued at the cost to provideand billed to the applicable state agencies. Thiswould bring increased transparency to govern-ment expenditures. Additionally, agencieswould be able to compare costs of other pos-sible service providers on an equal basis. Thisbudget believes that competition results intaxpayer dollars being spent in the most effi-cient manner.

This budget recommends that OPM’s appropria-tion be held at FY-2006 levels while the process ofeliminating cross-subsidization takes place.

Endnotes1 Governor Brad Henry, FY-2005 Executive Budget, pg. 279.2 Oklahoma House of Representatives, FY-05 Legislative

Appropriations, pg. 47.3 Governor Brad Henry, FY-2005 Executive Budget, pg. 282.4 Oklahoma House of Representatives, FY-05 Legislative

Appropriations, pg. 145.5 Governor Brad Henry, FY-2005 Executive Budget, pg. 283.6 Oklahoma Council of Public Affairs and Citizens AgainstGovernment Waste, 2004 Oklahoma Piglet Book, pp. 2-3.

Bureaucratic OverheadIn 2004, Northeastern

State University economistRex Pjesky compared thesize of Oklahoma’s stategovernment to the national

average and found that wehave about 6,100 too many

state employees (and no, not because wehave too few local government employees).

In 2006, Cato Institute economist ChrisEdwards, using the latest data from theCensus Bureau, calculated the number ofstate and local government workers in eachstate as a share of employment in the state.Oklahoma ranked a hefty 13th among the 50states.Sources: http://www.ocpathink.org/ViewPerspectiveStory.asp?ID=294; http://www.ocpathink.org/ViewPerspectiveStory.asp?ID=672

Available at http://www.ocpathink.org/ViewPolicyStory.asp?ID=512. For further discussion, seeBrandon Dutcher, “Big Spenders Resent Spotlight on Govern-ment Waste,” Perspective, April 2004, pg. 1. Available at http://www.ocpathink.org/ViewPerspectiveStory.asp?ID=168.7 Governor Brad Henry, FY-2005 Executive Budget, pg. 285.8 Governor Brad Henry, FY-2005 Executive Budget Historical

Data, pg. 403.9 Governor Brad Henry, FY-2005 Executive Budget Historical

Data, pg. 405.10 Governor Brad Henry, FY-2005 Executive Budget, pg. 288.11 Governor Brad Henry, FY-2005 Executive Budget, pg. 289.12 Oklahoma House of Representatives, FY-05 Legislative

Appropriations, pg. 69.13 Governor Brad Henry, FY-2005 Executive Budget, pg. 291.14 Governor Brad Henry, FY-2005 Executive Budget, pg. 292.

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64

Human Services

environment.”4 DHS is responsible for threepublic institutions for people with develop-mental disabilities (generally ranging in agefrom 12 to 60 and above, suffering frommultiple physical and developmental dis-abilities, and requiring 24 hour medicalattention. The Department also runs threedifferent waiver-based programs that offerservices to the non-institutionalized develop-mentally disabled population.5

• Children and Family Services. This divisionhas three primary functions – investigatingreports of child abuse and neglect; providingfoster care, kinship placements, and familypreservation programs to children fromabusive homes; and finding permanenthomes for children seeking adoption.6

• Child Care. This category consists of theChild Care Subsidy Program and Child CareLicensing. Qualifying families may have partor all of their child care expenses paid bytaxpayers, as parents or caretakers work,attend school or receive training. DHS subsi-dies vary according to the level of accredita-tion earned by the provider (under the so-called “Stars System,” child care facilitiesare assigned one, one-plus, two, or three-starratings). The Child Care division also li-censes and inspects more than 6,200 childcare entities serving children ages six weeksto 12 years, as well as 114 residential andshelter facilities licensed to provide care forchildren unable to live at home and 62 childplacing agencies for adoption and fosterhomes.7

• Aging Services. This division is responsiblefor the Congregate Meals, Ombudsman,Advocacy, and Volunteer Programs, as wellas two Medicaid programs – ADvantageWaiver and Personal Care. ADvantageWaiver contracts with the Long-Term CareAuthorities of Tulsa and Enid to allow for ahome health care alternative to nursing homecare for qualifying patients. Personal Care, inthe form of aides who provide non-medicalservices to people in their homes, is availableto those Oklahomans who meet medicaleligibility criteria as determined by an AgingServices long-term care nurse.8

Department of Human ServicesThe Oklahoma Department of Human Ser-

vices (DHS) traces its roots to 1936, when Okla-homa voters approved a state constitutionalamendment creating a Department of PublicWelfare. This new agency was to be responsiblefor “the relief and care of needy aged personswho are unable to provide for themselves, andother needy persons who, on account of imma-ture age, physical infirmity, disability or othercause, are unable to provide or care for them-selves …”1

Beginning in the 1950s, as a result of newfederal requirements and legislative transfers,the Department became responsible for healthcare, social services, vocational, and incomemaintenance programs. The additions of Medic-aid in 1965 and the Food Stamp program in1977 also expanded the menu of human ser-vices options available to Oklahomans. In 1980,the Department was officially renamed theDepartment of Human Services, but, as notedon its website, it retained its constitutionalmandate to “to promote the general welfare ofthe people of the state of Oklahoma … for theirprotection, security and benefit.”2 In carrying outthis mandate, DHS administers the followingprograms:• Family Support Services. This category

includes Temporary Assistance to NeedyFamilies (TANF), which replaced Aid toFamilies with Dependent Children (AFDC) in1996 as the public cash assistance program.TANF is a block grant program that pays forservices in four major areas – cash assis-tance, work activities, marriage initiatives,and family formation/stabilization services.Food stamps and adult protective servicesare also included under Family SupportServices.3

• Developmental Disabilities. Services in thiscategory include institutional and commu-nity-based services to people with a “primarydiagnosis” of mental retardation (having anIQ of 70 or below), as well as those withautism, cerebral palsy, or Down Syndrome.The goal of this division is “to enable chil-dren and adults to lead more independentand productive lives in the least restrictive

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• Child Support Enforcement. This programarea is responsible for locating non-custodialparents, establishing paternity, and collect-ing and distributing support payments, but italso seeks to “find more and better ways tofoster positive and nurturing relationshipsbetween fathers and children.”9

As of FY-2005, DHS was the fourth largeststate agency in Oklahoma, “comprising 7.6percent of the state appropriated budget.”10

Between FY-1997 and FY-2006, state appropria-tions to DHS increased by 44.8 percent.11 Thegovernor’s FY-2006 budget request for DHSincluded a supplemental appropriation of $22million for FY-2005, and the recommendedspending level for FY-2006 was nearly 20 per-cent in excess of the FY-2005 amount.12 The$481.99 million appropriation ultimately ap-proved by the legislature was slightly less thanthe amount requested by the governor, but it didrepresent an increase of 18 percent over FY-2005, and the total funds available to DHS (fromall sources) increased from $1.347 billion in FY-2005 to $1.68 billion in FY-2006, or by 24.8percent.13

DHS was created in the midst of the GreatDepression – a period of unimaginable humansuffering to which the federal and state govern-ments responded by dramatically expandingtheir size and scope to encompass all manner ofsocial services. However, this expansion, whilewell-intentioned on the part of many of itsarchitects, was ultimately unsuccessful atbringing the United States back to economicand social health.14 Indeed, it can be arguedthat government’s attempts (in the words ofDHS’s constitutional mandate) “to promote thegeneral welfare of the people … for their protec-tion, security and benefit” were – and are –actually destructive of the types of efforts thatwould provide lasting improvement in the livesof Oklahoma’s neediest citizens.

Public officials often speak of government’sneed to show “compassion” to society’s lessfortunate members. Their definition of “compas-sion,” however, is not the same one as thatunderstood by most Oklahomans (or, for thatmatter, by most Americans). For all too manypolicymakers, “compassion” – which literallymeans “suffering with” – does not mean the useof one’s own money, time and talents to helpfellow citizens. Rather, it means the expenditure

of ever-increasing amounts of other people’smoney (i.e., tax dollars) in an attempt to dealwith common problems. In fact, government-funded “compassion” is a double-edged sword– for whatever a state such as Oklahoma givesto one citizen in the name of “compassion” itmust first take away from another in the form oftaxes or fees. Little “compassion” is shown tothe families and businesses – many of whichare struggling themselves to make ends meet –who are forced to fund “compassionate” effortsby their governments.15

But the negative impact of government’sattempts to be “compassionate” is not limited tothe tax burden those attempts require. Evengreater damage is done to individual andcommunity-based voluntary efforts to aid fellowcitizens. By involving itself in an ever-broaden-ing range of social services, governments havedirectly usurped the role of private institutions(such as charities, churches, and other serviceorganizations) in fighting poverty and alleviat-ing suffering. Indeed, governments have indi-rectly weakened those groups by taking, in theform of taxes and the additional working timeneeded to pay them, the resources they need toserve people in need. In short, government’sexpansion into areas beyond its core responsi-bilities “crowds out” opportunities for privatecitizens to show real compassion for their fellowman.16

The size of DHS’s budget and the scope of itsresponsibilities are powerful testimony to thefact that a sizeable segment of society has cometo depend on the “compassion” of government.One example of how pervasive this dependencehas become is DHS’s Child Care SubsidyProgram. According to the governor’s FY-2006budget presentation, 86,600 children were insubsidized child care in FY-2004, and more than40 percent of the families in the program had noco-pay due to their income level (making lessthan $900 per month).17 This outcome wouldseem to directly contradict the stated mission ofDHS, which in part seeks to help those in needlead “more independent and productive lives.”Oklahoma taxpayers can be forgiven for askinghow absolving a segment of the state’s popula-tion from a basic parental responsibility –providing for the care of their children – helpsthose affected to be more independent andproductive.

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associations. The sluggish, cumbersome effortsof government agencies were woefully inad-equate, especially when contrasted with themuch more prompt and agile replies of privatecharities and service organizations. The privaterelief work was a powerful illustration of thesuperiority of voluntary collective action insolving community problems over merely wait-ing for government to act.18

Oklahomans have shown that they are fullycapable of banding together to help theirneighbors in a time of crisis without governmentdirection – and they are certainly capable ofdoing so in other, ongoing situations wheresocial services are needed. In fact, the Cata-

logue forPhilanthropy’s2005 Generosity

Index, whichmeasures chari-table giving ineach state inrelation to itspersonal income,ranked Okla-homa 4th amongthe 50 states.19

However, Okla-homans couldgive even moretime and moneyto such causes ifstate governmentwould stopchoking off realcompassion byusurping func-tions that are theproper responsi-bility of private,voluntary asso-ciations of like-minded citizens.

There areseveral steps thatOklahoma can

take to enhance the role of charities, churches,other service organizations, and individualcitizens in the delivery of human services. Firstof all, DHS should be subjected to a thoroughreview of its operations in order to determine theextent to which it currently competes with (and

By contrast, an alternative exists to this policythat would be consistent with DHS’s mission andreduce the size and cost of state government –allowing at least a portion of the money thatcurrently subsidizes child care to remain in theprivate sector, rather than being taxed away.Families keeping more of their own money maybe able to allow one parent to stay home, andbusinesses keeping more of their money may beable to raise wages for their current workers orhire new ones – thus improving the economiccircumstances for many Oklahoma families.Most Oklahomans would likely agree that “thegeneral welfare” of their fellow citizens wouldbe better promoted by a policy that makes them

– not state government – primarily responsiblefor their families’ well-being.

Finally, recent natural disasters – in particu-lar, Hurricane Katrina – displayed the vastdifferences in response to human sufferingbetween governments and private, voluntary

Policymakers Should Empower the Highest-Quality Child CareProviders –– They’re Called ‘Parents’Who do you think should be primarily responsible for ensuring that familieshave access to child care? (Rotate)

Government ............................................................................................ 9%Employers ............................................................................................. 19%Individual families .................................................................................. 67%Undecided (vol.) ...................................................................................... 6%

Which of the following do you believe is the best childcare situation during achild’s earliest years?

One parent at home .............................................................................. 69%Both parents working different shifts ....................................................... 4%Being cared for by close relatives ........................................................... 7%Being in a quality daycare center ............................................................ 8%Staying with another mother in the neighborhood .................................. 2%Having a babysitter in the child’s home .................................................. 5%Undecided/Depends (vol.) ...................................................................... 5%

Assuming there is a limited amount of money, which is more important?(Rotate)

Having the government give tax breaks to working families when they useprofessional childcare so it becomes more affordable. ............................. 27%

Having the government give tax breaks to working families when one parentstays home with children when they are young. ....................................... 58%

Undecided (vol.) .................................................................................... 15%

Source: Cole Hargrave Snodgrass & Associates, telephone interviews of 400 registered voters in thestate of Oklahoma, January 22-24, 2006. The confidence interval associated with a sample of this typeis such that 95 percent of the time results will be within +/- 4.9 percent of the true values, i.e., theresults obtained if it were possible to interview all the qualified respondents.

67

“crowds out”) non-government entities thatprovide social services. At the same time,instances of waste, fraud and abuse at DHSshould be aggressively investigated and elimi-nated.

Once these reviews are completed, thederived savings should be allocated to a per-child tax credit, modeled on the federal $1,000per-child credit, that allows more money to stayin the pockets of parents, who can then decidehow best to spend it.20 At the same time, OCPA

has also advocated the creation of a charitabletax credit for donations to charities and reli-gious organizations that deliver social services.Such a credit would be limited to charities thatprovide services similar to those currently

provided by DHS, and it would be available tonon-itemizing taxpayers (meaning that manylower- and middle-income taxpayers would beable to take advantage of it). Most of all, acharitable tax credit would allow for more directcitizen involvement in solving community prob-lems, as connecting individuals more directlywith the social service programs they supportincreases the incentive for them to more closelymonitor how their contributions are spent. Atpresent, Arizona, Colorado, Michigan and North

Carolina offer similar taxcredits.21

Individual Oklahomans,working together, can betteraccomplish the objective of“promoting the generalwelfare” of themselves andtheir fellow citizens than canstate government. It’s time forthat government to take a stepback and let them. The OCPA

Budget increases the FY-2006budget of DHS by adjustingfor population growth plusinflation.

Oklahoma Commissionon Children & Youth

The duties of the Commis-sion are as follows:22

1. The Commission is chargedwith the responsibilities toplan and coordinate withpublic and private agenciesfor the improvement of ser-vices to children and youthand to report its findingsannually to the Governor,Speaker of the House, Presi-dent Pro Tempore of theSenate, Chief Justice of theSupreme Court and to eachagency affected. The Office ofPlanning and Coordinationcollects information fromcommunity partnership

boards and submits an annual report ofneeded system improvements to the Commis-sion and each agency affected by the report.The Commission reviews and approves thestate’s child abuse prevention plan. This plan

Faith-Based Initiatives ‘Good for Oklahoma,’ ShouldBe EncouragedFaith-based initiatives – that is, spiritual or religious-basedprograms that address social problems such as after-schoolcare for disadvantaged children, drug and alcohol counseling,gambling addiction, and many others – have become more andmore widespread. Do you believe these faith-based initiativesare a good or a bad thing for Oklahoma? If they have no effect,just say so.

Good.................................................................................. 56%Bad .................................................................................... 11%No effect ............................................................................ 22%Undecided (vol.) ................................................................ 11%

Sometimes government encourages people to contribute tocharitable endeavors. When it comes to faith-based programssuch as those that address social problems such as after-schoolcare for disadvantaged children, drug and alcohol counseling,and gambling addiction, which of the following options comesclosest to your belief?

No change is needed because they already receive a taxdeduction for these donations on their state income tax thatequates to a little less than 7 cents for every dollar theydonate. .............................................................................. 26%Oklahomans should get a tax credit of 50 cents for everydollar they donate to these groups. .................................. 19%Oklahomans should receive a dollar-for-dollar tax credit. .... 27%We should not allow any deductions or tax credits for thistype of charitable donation. ............................................... 15%Undecided (vol.) ................................................................ 13%

Source: Cole Hargrave Snodgrass & Associates, telephone interviews of 500registered voters in the state of Oklahoma, November 14-17, 2005. The confidenceinterval associated with a sample of this type is such that 95 percent of the timeresults will be within +/- 4.3 percent of the true values, i.e., the results obtained if itwere possible to interview all the qualified respondents.

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is developed by the Interagency Child AbusePrevention Task Force which is appointed bythe Commission.

2. The Office of Juvenile System Oversight(OJSO) is responsible for independent over-sight of all children’s services in Oklahoma,including the investigation of complaints ofmisfeasance and malfeasance. Additionally,the OJSO makes announced and unan-nounced visits of children’s facilities todetermine compliance with establishedresponsibilities.

3. Other services of the agency include admin-istration of the state’s Post AdjudicationReview Boards, the Child Death ReviewBoard, the Board of Child Abuse Examinationprogram, and the Joint Oklahoma Informa-tion Network (JOIN). Funding for the Okla-homa Area Services Information System(OASIS), an information and referral pro-gram for families of children with disabilities,and for the training of personnel who workwith children and youth is appropriated tothe OCCY as well.A review suggests that the investigations of

misfeasance and malfeasance – as well as theenforcement of compliance at children’s facili-ties, the Child Death Review Board, and theBoard of Child Abuse Examination program –would best serve the interests of Oklahoma’schildren if these duties were performed in theOffice of the Attorney General. The AttorneyGeneral has the investigative and legal experi-ence on staff to aggressively seek protection ofat-risk children.

The remaining duties would most effectivelyand efficiently be carried out within the Okla-homa Department of Human Services (DHS).DHS provides many of the services childrenreceive from the state and provides the enroll-ment function for Medicaid. The Commission’sadministration and data processing servicesconsumed 25 percent of its total expenditures.The elimination of redundant positions andservices would save money without affecting theCommission’s services. In fact, the ability todraw on the many resources of DHS may wellprovide the Commission much greater ability toperform its duties for Oklahoma’s children.

This budget transfers $360,000 to the Okla-homa attorney general’s office and $1.2 millionto DHS. The total amount appropriated for these

children’s services remains at the FY-2006 levelof $1.725 million,23 but there is a net increase infunds actually available for the children via thesavings in administrative and support costs.

Office of Handicapped ConcernsThe Office of Handicapped Concerns (OHC)

has the following powers and duties:24

1. To identify the needs of the handicapped ona continuing basis and to attempt to meetthose needs.

2. To serve as a referral and information sourcefor the handicapped seeking services and foragencies seeking assistance in their provi-sion of services.

3. To generate community awareness andsupport of handicapped programs.

4. To advise and assist the Governor and theLegislature in developing policies to meet theneeds of citizens with disabilities.

5. To assist agencies in complying with federallaws.

6. To enhance employment opportunities forpeople with disabilities.This budget recommends that OHC be

merged into the Department of Human Services(DHS) in order to remove redundant administra-tion. DHS is the enrollment mechanism fordisabled individuals who qualify for Medicaid.DHS also provides services that the disableduse, and has staff knowledgeable on federalregulatory requirements.

The OCPA Budget believes that lobbyingefforts on behalf of any group should not befunded by taxpayer money. These expendituresshould be redirected to services that directlybenefit the handicapped or be removed from thebudgeted appropriations. This budget recom-mends the FY-2006 appropriation level beretained for FY-2007. Given the savings inadministrative costs and the redirection oflobbying monies, this funding level reflects amajor increase in funding for handicappedindividuals.

Oklahoma Indian AffairsCommission

“The Oklahoma Indian Affairs Commission ischarged with the mission of serving as theliaison between Oklahoma’s tribal populationand governments and the Oklahoma Stategovernment. The Oklahoma Indian Affairs

69

Commission accomplishes this mission bymaintaining consistent involvement in the areasof legislation development and tracking, policyconcerns, legal issues, economic developmentand education.”25

The OCPA Budget recommends the elimina-tion of the agency’s appropriation of $255,53026

and the redirection of this money to higherpriorities.

J.D. McCarty CenterThe J.D. McCarty Center (JDMC) is a pediatric

rehabilitation facility that evaluates and treatsOklahoma’s developmentally disabled children.

The OCPA Budget recommends the JDMCreceive its FY-2006 appropriation, adjustedupward for population growth plus inflation.

Office of Juvenile Affairs“The Office of Juvenile Affairs is a state

agency entrusted by the people of Oklahoma toprovide professional prevention, education andtreatment services as well as secure facilities forjuveniles in order to promote public safety andreduce juvenile delinquency.”27

As the following chart indicates, privatedetention beds are cheaper on a per-day basis,even when one considers an indirect overheadcost of 20 percent for the Office of JuvenileAffairs (OJA) to monitor the facilities. The OCPA

Budget encourages OJA to expand the use of

private beds when appropriate and redirect thesavings toward rehabilitating offenders.

The OCPA Budget recommends the OJAreceive its FY-2006 appropriation, adjustedupward for population growth plus inflation.

Physician Manpower TrainingCommission

“The mission of the Physician ManpowerTraining Commission is to enhance medicalcare in rural and underserved areas of Okla-

homa by administering residency, internshipand scholarship incentive programs that en-courage medical and nursing personnel toestablish a practice in rural and underservedareas. Further, PMTC is to upgrade the avail-ability of health care services by increasing thenumber of practicing physicians and nurses inrural and underserved areas of Oklahoma andto increase the total number of primary carephysicians and nurses in the state.”28

OCPA believes the continued difficulty inrecruiting physicians and nurses to rural Okla-homa underscores the ineffectiveness of thisprogram. In fact, according to PMTC’s ownstatistics, only “17.6% of communities request-ing physicians received them.”29

Oklahoma’s rural hospitals continue tostruggle financially, which inhibits their abilityto build the sorts of facilities and pay the sala-ries that draw medical professionals. The OCPA

Budget recommends that PMTC’s appropriationbe removed and instead directed towardsraising Medicaid reimbursement rates for ruralhospitals.

The use of the FY-2006 amount of $5,361,49030

in appropriations for Medicaid would generatemore than $12 million in Federal matchingfunds. The addition of more than $17.5 millionannually for struggling rural hospitals wouldhave a significant impact on their fiscal stability,allowing for the sorts of improvements in sala-

ries andfacilitiesthat wouldnot onlyattractmedicalprofession-als butwouldincrease

rural hospitals’ ability to retain them. Thisbudget transfers PMTC’s FY-06 appropriation tothe new rural hospital Medicaid fund andeliminates this program.

Department of RehabilitationServices

“The mission of the Department of Rehabilita-tion Services is to provide opportunities forindividuals with disabilities to achieve produc-tivity, independence and enriched quality of life.

Per Diem Bed Costs

Facility FY-01 FY-02 FY-03 FY-04 FY-05 FY-06 BWPSOJC $185.65 $216.28 $218.52 $206.32 $218.44 $239.59COJC 225.08 240.97 199.72 181.79 187.36 206.05LERC 196.81 216.60 184.36 186.46 207.88 226.36UCJC (private) 128.04 129.78

Source: Governor Brad Henry, FY-2007 Executive Budget, pg. B-195

… The Department of Rehabilitation Servicesprovides services to individuals with a widerange of disabilities with an emphasis onserving the severely disabled.”31

The OCPA Budget recommends the depart-ment receive its FY-2006 appropriation, adjustedupward for population growth plus inflation.

University Hospitals Authority andTrust

“The University Hospitals Authority, by virtueof a Joint Operating Agreement with HCA HealthServices of Oklahoma Inc., is responsible for theassurance of the provision of Indigent Care tothe citizens of the State of Oklahoma. Addition-ally, the Authority takes an active role in thepromotion and support of research and educa-tion at the University of Oklahoma HealthSciences Center.”32

The OCPA Budget recommends the authorityreceive its FY-2006 appropriation, adjustedupward for population growth plus inflation.

Endnotes1 “Born of the Dust Bowl: A Brief History of the OklahomaDepartment of Human Services.” Available at http://www.DHS.org/info/borndust.htm2 Ibid.3 Governor Brad Henry, FY-2006 Executive Budget, pp. 213-214.4 Ibid.5 Governor Brad Henry, FY-2006 Executive Budget, pp. 215-216.6 Ibid.7 Governor Brad Henry, FY-2006 Executive Budget, pg. 218.8 Governor Brad Henry, FY-2006 Executive Budget, pp. 218-219.9 Ibid.10 Ibid.11 Oklahoma House of Representatives, FY-2006 Legislative

Appropriations, pg. 125.12 Governor Brad Henry, FY-2006 Executive Budget, pg. B-220.13 Oklahoma House of Representatives, FY-2006 Legislative

Appropriations, pg. 125.14 Lawrence W. Reed, “Great Myths of the Great Depression,”Mackinac Center for Public Policy, pg. 3. Available at http://www.mackinac.org/archives/1998/sp1998-01.pdf15 Grant R. Gulibon, “Government Doesn’t Have a Monopoly onCompassion,” Pennsylvania Manufacturers’ Association The

Bulletin, March 3, 2003, pg. 4. Available at http://www.sitestrux.com/~paman/_files/bull_03_03_03.pdf16 Ibid.17 Governor Brad Henry, FY-2006 Executive Budget, pg. 218.18 Naomi Lopez Bauman, “Revitalizing Oklahoma’s CharitableSector,” Oklahoma Council of Public Affairs Perspective,December 2005. Available at http://ocpathink.org/ViewPerspectiveEdition.asp?ID=10219 Catalogue for Philanthropy, The Generosity Index 2005.Available at http://www.catalogueforphilanthropy.org/cfp/db/

generosity.php?year=200520 Oklahoma Council of Public Affairs, State of Oklahoma State

Budget for the Fiscal Year Ended June 30, 2006.21 Naomi Lopez Bauman, “Revitalizing Oklahoma’s CharitableSector,” Oklahoma Council of Public Affairs Perspective,December 2005. Available at http://ocpathink.org/ViewPerspectiveEdition.asp?ID=10222 Governor Brad Henry, FY-2005 Executive Budget Historical

Data, pg. 489.23 Oklahoma House of Representatives, FY-2006 Legislative

Appropriations, pg. 116.24 Governor Brad Henry, FY-2005 Executive Budget Historical

Data, pg. 494.25 Governor Brad Henry, FY-2007 Executive Budget, pg. B-176.26 Oklahoma House of Representatives, FY-2006 Legislative

Appropriations, pg. 126.27 Governor Brad Henry, FY-2005 Executive Budget Historical


Data, pg. 535.29 Governor Brad Henry, FY-2007 Executive Budget, pg. B-199.30 Governor Brad Henry, FY-2007 Executive Budget, pg. B-200.31 Governor Brad Henry, FY-2007 Executive Budget, pg. B-201.32 Governor Brad Henry, FY-2005 Executive Budget Historical

Data, pg. 544.

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71

Military AffairsMilitary Department

“The Oklahoma Military Department’s (OMD)mission is to preserve the state and the nationthrough the organization and training of theOklahoma National Guard. To that end, OMD iscommitted to providing adequate trainingfacilities for the Oklahoma National Guard.”1

“The Oklahoma National Guard providesready units and personnel to the State andNation in three roles:

1. Our Federal role is to support nationalsecurity objectives of the United States.

2. Our State role is to protect life and prop-erty, and to preserve peace, order and publicsafety.

3. Our Community role is to participate inLocal, State and National programs that addvalue to America.”2

Military Department FY-06 Budget Resources

General Revenue Fund $12,196,432Special Cash $350,000Federal Funds $45,643,568Revolving Funds $60,000Total $58,250,000



The OCPA Budget recommends the MilitaryDepartment receive its FY-2006 appropriation,adjusted for population growth plus inflation.

Endnotes1 Governor Brad Henry, FY-2007 Executive Budget, pg. B-209.2 Governor Brad Henry, FY-2006 Executive Budget Historical

Data, pg. 585.

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Safety and SecurityAttorney General

“The mission of the Office of Attorney General(AG) is to represent Oklahoma by serving andprotecting citizens, government and the law. Afew of the services they provide to accomplishtheir mission are:• Representing the state in criminal appeals;• Investigating criminal matters in the state

through the Multi County Grand Jury;• Providing advice and counsel to State Offic-

ers, Boards and Commissions;• Writing opinions, upon all questions of law

submitted to the Attorney General by personsor bodies with statutory authority; and

• Appearing, as required by statute, and pros-ecuting or defending, any cause or proceedingin which the state is an interested party. “… Under state law various agencies con-

tract with the AG’s office for legal services.Contracting with the AG guarantees that anassistant AG will spend a certain amount of hisor her time working for the agency. Contractswith the AG vary from 12.5% of an attorney’stime to 100%.”1

The OCPA Budget recommends the continua-tion and/or expansion of this concept to includebilling any agency, state officer, board or com-mission which has its own revenue sources, thusreducing cross-subsidization and improving theefficiency and transparency of government.

Attorney General FY-06 Budget Resources

General Revenue Fund $11,286,462Federal Funds $3,208,408Revolving Funds $6,027,748Carryover $30,000Total $20,552,618


Appropriations, pg. 181

This budget freezes the base appropriationsof the Attorney General at the FY-2006 level untilthe impact of the additional revenues from theexpansion of contract billing can be fully as-sessed. This budget also transfers some func-tions from other agencies to the Attorney Gen-eral and adds the base budget of the HumanRights Commission and parts of the OklahomaCommission on Children and Youth budget.

Additionally, the Domestic Violence Programfunds formerly in the Department of MentalHealth and Substance Abuse are transferred tothe AG in FY-2006 and are included in thisbudget’s recommendation.

Department of CorrectionsThe responsibilities of the Department of

Corrections (DOC) include:2

• housing inmates safely and securely;• providing opportunities for inmates to be-

come rehabilitated;• facilitating a successful transition for inmates

back into society; and• monitoring inmate behavior upon release.

The majority of funding for DOC operationscomes from state appropriations. DOC’s FY-2006 appropriation made up 63.2 percent of thestate appropriated budget for Judiciary, PublicSafety and Law Enforcement.3

DOC’s revolving funds come from the sale ofproducts and services to inmates and from thesale of inmate-produced products via the Okla-homa Correctional Industries program. DOCtypically receives federal grant funds for spe-cific programs or services such as sex offendermanagement or substance abuse treatment.Last year the revolving and Federal fundscompromised about 13 percent of total fundsexpended by DOC.4

Community Sentencing

“The Community Sentencing Act providesincarceration alternatives for certain nonviolentcriminal acts. The Act established a communitysentencing system that improves public safetyand punishes felony offenders under a court-ordered community sentence. This marks animportant shift in public policy by providingcost-effective alternatives to prison incarcerationwhile still protecting the public. Currently thereare two regions, covering 77 counties. DOC’s FY-2006 budget for the program is $11.5 million.

“The local community sentencing systemprovides a continuum of sanctions that gives thecourt a variety of measures to change offenderbehavior. The array of options allows the courtto match offenders with the most appropriatesanctions and establishes degrees of increased

73

control for individuals who fail to conform to therules and conditions of their sentence. While inthe community, the offender is employed, re-ceives treatment and pays restitution and courtfees. Among others, sanctions may includecommunity service, special needs programs,and supervision or education programs. Eachlocal sentencing system supervises its offenderswith state probation and parole officers or withanother qualified source of the council’s choos-ing. In FY-2005, there were 3,470 active partici-pants in the program.”5 This actually representsa decline from the previous year and indicatesalmost no increase over the last three yearsdespite the fact that in FY-2005 DOC’s bedcapacity was at nearly 24,000, with nonviolentcrime accounting for 80 percent of total newincarcerations to DOC.6

Oklahoma Correctional Industries

“The Oklahoma Correctional Industries (OCI)provides training and work experience forinmates. The manufacturing division of OCIproduces a variety of products including furni-ture, modular panel systems, furniture renova-tion, metal fabrication, license plates, signs,clothing and footwear, bedding, chemicals andjanitorial cleaning supplies, corrugated boxes,binders, printing services and a variety ofrecord conversion services. There are currently25 manufacturing and service operationslocated within nine correctional facilities state-wide. OCI also operates an agri-services divi-sion that provides DOC’s meat, milk and eggs.FY-2005 OCI sales are budgeted at $22.6 mil-lion. OCI was originally intended to be self-supporting, with all sales revenues returned tothe program to finance its operations.”7 Theprogram has failed to become self sufficient andrequires a yearly subsidy from DOC.

Justice Fellowship has some useful reform guide-lines8 which OCPA endorses with some minor modi-fications for the Oklahoma state prison system:• Prison work programs should expand oppor-

tunities for inmates to work, learn usefulskills, and earn wages while developing agood work ethic. If these goals are met, theinmates will be able to pay restitution to thosethey have harmed, contribute to the support oftheir families, and develop skills that willease their return to free society.

• To maintain community support for these work

programs, it is important that these goals be ac-complished without displacing currently em-ployed workers, and that the prison industries beresponsive to the needs of their customers.

• Justice Fellowship does not believe that thesegoals can be achieved under the currentsystem of government-run prison industries.The solution is to replace the current pro-grams with private industries, which aresubject to market forces and pay inmatesreal-world wages.

• Deductions from inmates’ wages should bedesigned to do the following (in this order):address the harm the offenders have causedany victims, contribute to support of theirfamilies, maintain contact with their familiesthrough postage and phone calls, and pro-vide them with ‘gate money’ on their releaseand a modest amount to spend on personalarticles from the commissary.The OCPA Budget recommends the removal

of the subsidy from OCI and requiring DOC toseek bids from private industry to replace thework opportunities currently provided by OCImanufacturing. This budget fully endorses theconcept of prisoners providing for their own foodthrough the OCI agri-business division, but italso recommends a review of the cost effective-ness of OCI’s agri-business operations com-pared to private contractors.

Health Care of Inmates

“The state has both a moral and legal obliga-tion to provide adequate health care for thoseconfined under state custody. However, provid-ing health care in a prison setting is more costlyand complicated than in other settings. Thenature of the prison population makes injuriesand wounds more common, and inmates gener-ally do not lead healthy lifestyles. Consequently,instances of hepatitis and other communicablediseases are much more prevalent. The cost ofhealth care nationwide is continuing to escalatefaster than the inflation rate. This cost growth iscompounded by the special, and usually costly,precautions that must be taken to protect othercitizens when an inmate needs treatment out-side the prison facility.”9

The OCPA Budget recommends that inmateswho are overweight or have other correctablelifestyle health issues be offered counseling anda plan to improve their health. If they refuse to

74

participate in improving their own health, theyshould be required to pay higher co-pays onhealth care costs related to their lifestylechoices. While this budget recognizes no sav-ings from this initiative, it is these sorts ofrecipient participation measures that areneeded to control cost increases in an areawhere DOC spent more than $45 million in FY-2005.10 If it does not pose a threat to an inmate’soverall health, the current co-pays on inmate-requested care should be raised to be commen-surate with the service requested. Additionally,this budget recommends that DOC expand thetelemedicine program to reduce the costs oftransporting and controlling prisoners on out-of-prison doctor visits.

Shortage of Correctional Officers

OCPA has examined the budgeted Full TimeEquivalent (FTE) employees allocated to DOCand discovered it is not a funding issue that iscausing the shortfall of employees. In fact, DOChas funding for many more correctional officersthan it currently employs. Officer staffing levelsfor budgeted positions, i.e., positions for whichDOC was provided funding, approach a va-cancy rate of nearly 18 percent.11 This points toissues beyond simply not having enough funds,as some of our elected officials have implied.

It is interesting to note that private prisonoperators have not reported the same difficultyin finding and keeping correctional officers.According to DOC’s per bed per day statistics,private prisons provide from $3.40 to $6.59 perbed per day per prisoner in savings over DOC’sfacilities.12 The simple answer to the shortage incorrectional officers is to expand the use ofprivate prisons for medium and minimumsecurity prisoners, which solves DOC’s ongoinglabor issues and decreases costs simultaneously.

Department of Corrections FY-06 Budget

Resources

General Revenue Fund $409,433,403Federal Funds $13,300,000Revolving Funds $61,243,672Carryover $3,000,000Total $486,987,075



The OCPA Budget recommends that the

department receive its FY-2006 appropriation,adjusted upward for population growth plusinflation. Given the savings that should occurvia reallocation of inmates to work camps andcommunity sentencing, more use of privateprisons, removal of the OCI subsidy, and health-care-cost-containment measures, it is likely thatDOC will in fact see a substantial increase infunding available for critical needs.

District Attorneys’ CouncilThe District Attorneys’ Council (DAC) supports

local District Attorneys who provide local pros-ecution for crimes. DAC operates with a budgetof more than $96 million, of which approxi-mately $31 million is state-appropriated.13 OtherDAC duties include:14

• Developing a formula to distribute state-appropriated funds to local District Attorneyoffices;

• Providing administrative support for localDistrict Attorneys;

• Educating state leaders on the District Attor-neys’ positions on criminal justice issues; and

• Providing assistance to the state’s multi-jurisdictional drug task forces.“There are 27 locally elected District Attor-

neys in the state. They are responsible forprosecuting state criminal cases on behalf ofthe public. Their prosecution practices and thelevel of crime in the state have significantimpacts on the Department of Corrections’inmate population.”15

The OCPA Budget recommends that the DACbe encouraged to develop a formula to distrib-ute state-appropriated funds to local DistrictAttorneys’ offices that includes a component thatrewards local District Attorneys for asking forcommunity sentencing and work camps when itis does not endanger the public safety. DAC’scooperation is essential to help alleviate theproblems in the Department of Correctionscaused by the large number of inmates. Okla-homa incarceration rates are at 132 percent ofthe national average, with only three states(Louisiana, Mississippi, and Texas) havinghigher rates. Only with the DAC’s participationcan we achieve a better allocation to workcenters and community sentencing for non-violent offenders.16

OCPA believes the use of any appropriateddollars by any agency to lobby state officials is

75

inappropriate. Though it is important for theDAC to “educate state leaders,” any dollarsidentified as funding anything other than statis-tical or other general information requested bystate officials should be removed from DAC’sstate appropriations.

Seizure and forfeiture proceeds, along withfederal grants, fund the state’s multi-jurisdic-tional drug task forces. The federal grants forthe task forces are from the U.S. Department ofJustice’s (DOJ) Byrne Grant program with theintended purpose of improving the criminaljustice process. This broad purpose allows somediscretion as to how funds are expended. DOJallocates a certain amount of dollars to allstates, and each state’s governor designateswho oversees and distributes the grants. Thegovernor has designated the DAC for thispurpose.17

Again this year, the OCPA Budget proposesthat DAC provide remuneration to OklahomaIndigent Defense System (OIDS) for the cost ofdefending clients who are found innocent. Thegreat majority of individuals charged are foundguilty, so this should not have a significantimpact on DAC’s $96 million budget.

District Attorneys’ Council FY-06 Budget

Resources

General Revenue Fund $30,592,742Federal Funds $25,800,000Revolving Funds $39,857,258Carryover $450,000Total $96,700,000



The OCPA Budget recommends the DACreceive its FY-2006 appropriation, adjustedupward for population growth plus inflation.

Oklahoma Department ofEmergency Management

This department is divided into four mainareas: hazard mitigation, community prepared-ness, emergency response, and disaster recov-ery.18

Oklahoma Department of Emergency

Management FY-06 Budget Resources

General Revenue Fund $701,561Special Cash $654,000Revolving Funds $5,465,815Total $6,821,376



The OCPA Budget recommends the depart-ment receive its FY-2006 appropriation, adjustedupward for population growth plus inflationafter removing $654,000 of appropriations thatwere used in replacing the operations centerunderneath the state capitol.

Oklahoma Indigent Defense System“The Oklahoma Indigent Defense System

(OIDS) provides representation for indigentOklahomans charged with committing criminalacts. … OIDS provides services in three ways:”19

• legal services contracts with local firms fornon-capital trials on a county-by-county basis;

• staff attorneys who defend capital trial casesand those that have reached the appellatelevel;

• staff attorneys who represent indigents innon-capital trials in the 16 counties wherethey are unable to contract with local firms;and

• appointing conflict counsel in cases whenthere is not a contract firm available andOIDS has a conflict of interest.The fundamental right to a fair trial requires

that OIDS have the funding necessary to pro-vide a competent defense. In his proposed FY-2004 budget, Governor Henry proposed twodifferent funding streams for OIDS besidesappropriations: “Current law requires judges toassess fees on convicted offenders for represen-tation costs. OIDS has recently been steppingup their efforts to convince judges to assessthese fees. During this effort, OIDS has pro-posed to Judges that they assess minimum feeson cases. Under OIDS proposal, factors sur-rounding the case determine the level of theminimum fee like, whether the charge is amisdemeanor or felony, and whether the casegoes to trial or not.”20

The governor went on to say that “due toeffective law enforcement efforts, some agencies

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within the state have seen increases in seizureand forfeiture proceeds. DPS, OBNDD, andDistrict Attorneys have used these funds forvarious law enforcement purposes. In manycases OIDS has to defend the accused whohave had their property seized, thus exhaustingstate resources. Therefore, this budget proposesOIDS receive 75% of all seizures until OIDS’share reaches $1 million.”21 These seizures grewfrom $1.9 million in FY-2000 to nearly $14 millionin FY-2002.22 This is revenue used by theseagencies outside of the appropriations process.

OCPA endorses the concept of fairly estab-lished user fees for all state services whereapplicable and believes a modification of thegovernor’s proposal would best serve OIDS andthe indigents they serve. The governor’s budgetproposal only required convicted defendants topay a fee. It seems perfectly appropriate thatwrongly charged indigents should not be askedto bear the burden of their defense. However,the perverse incentive that is offered OIDS is apartial payment if their client is convicted andno payment at all if their client is found inno-cent. (Even though lawyers are duty-bound tozealously represent their clients, there is adubious incentive at work here.)

OCPA proposes that for every indigent clientfound innocent the District Attorneys Council,using money from seizure funds, reimburseOIDS for a fair and reasonable cost of OIDS’defense.

According to Governor Henry, the minimumfee payments by convicted indigents wouldraise between $1.3 million and $2.5 millionannually.23 The fee was instituted in Senate Bill1399 in FY-2004 and will be in effect for the fullfiscal year in FY-2006. Combined with revenuereceived from the defense of indigents foundinnocent, OIDS would realize a sizeable in-crease in funding. The OCPA Budget proposesremoving $2.2 million from the OIDS appropria-tion for FY-2007.

Indigent Defense System FY-06 Budget

Resources

General Revenue Fund $15,633,001Revolving Funds $1,675,971Carryover $1,920,000Total $19,228,972



Pardon and Parole Board“The Pardon and Parole Board determines

the best possible recommendations for thesupervised release of adult felons, through acase-by-case investigative process.”24

Pardon and Parole Board FY-06 Legislative

Resources

General Revenue Fund $2,316,329Carryover $100,000Total $2,416,329



The OCPA Budget recommends the Pardonand Parole Board receive its FY-2006 appropria-tion, adjusted upward for population growthplus inflation.

Department of Public SafetyOklahoma is unique among its neighboring

states in that it divides law enforcement dutiesacross five different agencies:• Department of Public Safety (DPS), whose

primary law enforcement responsibility ispatrolling state highways, county roads, andinterstates.

• Oklahoma State Bureau of Investigation(OSBI), which investigates crimes such asmurder or car theft for local law enforcementagencies and provides forensic crime labora-tory services.

• Oklahoma Bureau of Narcotics and Danger-ous Drugs (OBNDD), whose sole responsibil-ity is drug investigations.

• State Fire Marshal, which investigates firesfor the detection of possible arson and alsoperforms inspections on public buildings tohelp ensure compliance with the fire code.

• Alcoholic Beverage Laws Enforcement Com-mission (ABLE), which enforces state alcohol,tobacco, and gaming laws.Having several agencies responsible for

enforcing different sections of law, and havingeach agency with its own appropriation, limitsthe flexibility of law enforcement to adjust tochanging threats. For example, the terrorismthreat is principally managed by the Depart-ment of Public Safety within the constraints of itsbudget. The removal of the administrative andfinancial walls created by the multiple agencystructure would allow for a quick adjustment to

77

meet changing needs in both manpower andmoney.

Former Governor Frank Keating, whose 30-year career in law enforcement and publicservice included stints as an FBI agent, federaland state prosecutor, and official in the U.S.Department of Justice, looked at this existingstructure and reported in 2002: “Borderingstates recognize that having one central policeagency allows for a more effective and coordi-nated effort in the fight against crime. Consider-ing the Oklahoma City bombing and the tragicevents of September 11, the state would bebetter served by a state law enforcement systemwhere the chain of command is clear, communi-cation is standardized, and support services areshared.”25

The OCPA Budget recommends the consoli-dation of all law enforcement agencies into theDepartment of Public Safety. Not only will thepublic be better protected, but the savings fromthe elimination of administration, as well asfrom training and technology redundancies, willallow a reduction in the percentage of theoverall appropriation for law enforcement spenton support services and increase the percent-age spent on actual safety and security opera-tions. ABLE is a constitutional authority but thisbudget proposes moving its administrativefunctions, which accounted for nearly 50 percentof its expenditures, to the Department of PublicSafety in order to exact savings and increaseefficiencies.26

Additionally, under the umbrella of Safetyand Security there are two other agencies whichhave overlap and/or a similarity in purpose thatwould meld with DPS and benefit from the sameefficiencies:• Council for Law Enforcement Education and

Training (CLEET), whose mission is to estab-lish standards for peace officer certification,provide education and training programs topeace officers statewide, and establishlicensing and training standards for privatesecurity officers.27

• Board of Medicolegal Investigations, whichinvestigates deaths in Oklahoma that aresudden, violent, or suspicious. The primarygoal is to determine with medical and legalcertainty the cause of death. The agencyconducts scene investigations, autopsies andexternal examinations, histological examina-

tions and toxicological analysis.28

Part of CLEET’S budget is provided throughthe CLEET certified fund. This fund is comprisedof $4 criminal penalties that are added to anycriminal fine. In FY-2005 this produced $2.35million in revenue for CLEET. Additionally,legislation passed in 2004 will generate another$1.2 million through an increase in the penaltyassessment fee for FY-2005.5 CLEET has alreadytargeted the first $1.2 million for its new trainingcenter in Ada. However, any future years’ rev-enue from this increase should be used tofurther reduce CLEET’s appropriation.

The new training center is to be finished byApril of 2006, which would be just in time toallow the Department of Public Safety (DPS) tobegin using CLEET facilities for training itstroopers. In the past DPS has funded its owntrooper academies. $3.4 million was appropri-ated for two Highway Patrol Academies withinDPS for FY-2006.29 OCPA proposes that thistraining should be consolidated within theCLEET facilities in order to reduce administra-tive redundancies and reduce costs.

The OCPA Budget recommends that CLEETbe folded into DPS and CLEET’s appropriationbe reduced by 10 percent to reflect savings fromelimination of administrative and technologyredundancies.

The Board of Medicolegal Investigations alsohas a fee charged for forensic services, whichhas been expanded and brought the board’snon-appropriated revenues to nearly $2 millionincluding federal funds.30 Part of the $1.5 millionfee revenue should be used to reduce theboard’s dependence on appropriations. TheOCPA Budget recommends the removal of$800,000 from the board’s FY-2006 base. Thisbudget also recommends that the board bemerged into DPS and its appropriation bereduced by a further 10 percent to reflect sav-ings from elimination of administrative andtechnology redundancies.

Public safety is government’s most importantduty. Yet even law enforcement should beaccountable for its expenditures just as anyother agency entrusted with taxpayer dollars.The creation of multiple agencies – each with itsown chief financial officer, accounting staff,data processing staff, human resources staff,and redundant technology – is an inefficientallocation of taxpayer dollars. These salary and

78

technology redundancies would best serveOklahomans by being transferred to “boots onthe ground” enforcement personnel.

Department of Public Safety FY-06 Budget

Resources

General Revenue Fund $77,745,552Federal Funds $116,100,000Revolving Funds $43,162,230CLEET Fund $1,142,218Total $238,150,000



The OCPA Budget recommends the DPSreceive its FY-2006 appropriation, adjustedupward for population growth plus inflation,and that DPS look to fund other needs throughefficiency-enhancement opportunities withinDPS and savings from the consolidation of thevarious law enforcement agencies.

Endnotes1 Governor Brad Henry, FY-2005 Executive Budget, pp. 346-347.2 Governor Brad Henry, FY-2005 Executive Budget, pg. 348.3 Oklahoma House of Representatives, FY-06 Legislative

Appropriations, pg. 177.4 Oklahoma House of Representatives, FY-06 Legislative

Appropriations, pg 184.5 Governor Brad Henry, FY-2007 Executive Budget, pg. B-219.6 Governor Brad Henry, FY-2006 Executive Budget, pp. B-266-267.7 Governor Brad Henry, FY-2006 Executive Budget, pg. B-271.8 “Justice Fellowship’s Principles of Prison Work Reform.”Available at http://www.pfm.org/AM/Template.cfm?Section=Criminal_Justice_Issues&CONTENTID=14717&TEMPLATE=/CM/ContentDisplay.cfm9 Governor Brad Henry, FY-2005 Executive Budget, pg. 353.10 Governor Brad Henry, FY-2006 Executive Budget, pg. B-269.11 Governor Brad Henry, FY-2006 Executive Budget, pg. B-267.12 Governor Brad Henry, FY-2007 Executive Budget, pg. B-218.13 Oklahoma House of Representatives, FY-06 Legislative

Appropriations, pg. 188.14 Governor Brad Henry, FY-2005 Executive Budget, pg. 358.15 Governor Brad Henry, FY-2005 Executive Budget, pg. 358.16 Governor Brad Henry, FY-2006 Executive Budget, pg. B-265.17 Governor Brad Henry, FY-2005 Executive Budget, pg. 358.18 Governor Brad Henry, FY-2006 Executive Budget, pg. B-275.19 Governor Brad Henry, FY-2006 Executive Budget, pg. B-277.20 Governor Brad Henry, FY-2004 Executive Budget, pg. 225.21 Governor Brad Henry, FY-2004 Executive Budget, pp. 224 – 225.22 Governor Brad Henry, FY-2004 Executive Budget, pg. 225.23 Governor Brad Henry, FY-2005 Executive Budget, pg. 362.24 Governor Brad Henry, FY-2006 Executive Budget, pg. B-285.25 Governor Frank Keating, FY-2003 Executive Budget, pp. 323-324.


Data, pg. 595.27 Governor Brad Henry, FY-2007 Executive Budget, pg. B-269.28 Governor Brad Henry, FY-2007 Executive Budget, pg. B-271.29 Oklahoma House of Representatives, FY-05 Legislative


Appropriations, pg. 20831 Oklahoma House of Representatives, FY-06 Legislative


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Science and Technology DevelopmentOklahoma Center for the Advancementof Science and Technology

“The Oklahoma Center for the Advancementof Science and Technology is tasked withimproving the Oklahoma economy by movingtechnology from concept to commercialization.”1

“The mission and purposes of the OklahomaInstitute of Technology, as an institute within theOklahoma Center for Advancement of Scienceand Technology, shall include:

1. Attracting, retaining, and stimulating thedevelopment of information technology, biotech-nology, genetics, and emerging technologies;

2. Providing leadership development pro-grams to prepare rural residents for leadershipin a technologically enhanced economy;

3. Upgrading and enhancing rural technologyto grow or attract high technology companies;

4. Facilitating joint public-private technologyresearch and development projects usingresources and facilities of public higher educa-tion institutions or private entities; and

5. Providing engineering or managementassistance to new or existing businesses inbringing improved or innovative products.”2

In pursuing its mission OCAST spent morethan $112 million over the last 10 years. OCPAbelieves that to promote real economic develop-ment, the state must change its policy focusfrom specific development programs to insteadproviding a stable institutional environment withlow taxation, strong private property rights, andhigh degrees of economic freedom.

OCAST FY-06 Budget Resources

General Revenue Fund $12,400,942Research Support Revolving Fund $6,309,381Federal Funds $117,000Total $18,827,323



OCAST seeks to promote growth by providingseed capital to firms involved in new product orprocess development. Yet the market provides“seed” or venture capital to firms all the time. Isthere any reason to believe that governmentbureaucrats are better at identifying profitableinvestments for seed capital than the market is?Venture capitalists are experts in identifying

potentially profitable investments; the peoplewho are most successful at it are the ones withthe most venture capital to risk. These peoplealso have a great incentive to be right. If they are,they make lots of money; if they are not, they losemoney. These people have the knowledge and theincentive to fund all profitable opportunities.

The government bureaucrat is selected fordifferent reasons, without a natural-selectionmechanism for weeding out those who makebad investment decisions. The argument can bemade that projects funded with the state seedcapital program are either bad investments thatshould not be funded, or are projects that themarket would have funded anyway if they aregood investments.3

Like OCAST, OCPA seeks to improve theOklahoma economy. However, instead of dra-matically increasing appropriations for OCAST,we prefer broad-based tax reduction. We be-lieve that a reduction in Oklahoma’s onerouspersonal income tax rate will leave more moneywith Oklahoma entrepreneurs to invest as theysee fit. Since real economic development de-pends on satisfying consumer desires, we wantentrepreneurs channeling as many resources aspossible to their highest-valued uses. With lowertaxes, individuals have higher disposableincomes and more money gets allocatedthrough the market process. Consumers are leftwith more to spend on desirable items, andbusinesses receive more money and are able toinvest in producing more of what consumerswant. A strong economy rewards existingindustries and is the best recruitment tool fornew businesses.

The OCPA Budget recommends that OCASTreceive its FY-2006 appropriation, adjustedupward for population growth plus inflation.



Data, pg. 667.

3 For a further discussion, see Benjamin Powell, “Promoting Eco-nomic Development: Government Programs or Economic Free-dom,” chap. in Oklahoma Policy Blueprint, ed. Brandon Dutcher(Oklahoma City: Oklahoma Council of Public Affairs, 2002), pg.69; also see Grant Gulibon, Growing Oklahoma’s Economy: Tax

Cuts vs. Economic Development Programs (Oklahoma City: Okla-homa Council of Public Affairs, September 1999).

80

Secretary of StateElection Board

“The mission of the Oklahoma State ElectionBoard is to achieve and maintain uniformity inthe application, operation and interpretation ofthe state and federal election laws with amaximum degree of correctness, impartialityand efficiency. … The State Election Boardfunctions under the state and federal Constitu-tions and laws as the administrative agency forthe conduct of state and federal elections andfor oversight of County Election Boards. Specificfunctions are as follows: accepts filing fees forall state, judicial, district attorney, U.S. Senateand Congressional offices; prints and distrib-utes state and federal ballots to each county;prints or acquires and distributes electionsupplies to each county; promulgates rules andregulations for the conduct and administrationof elections; supervises the 77 county electionboards to ensure uniformity in the application ofelection and voter registration laws and rules.”1

The OCPA Budget recommends that the ElectionBoard receive its FY-2006 appropriation, adjustedupward for population growth plus inflation.

Ethics Commission“The Ethics Commission serves as the official

repository for personal financial disclosure;campaign registration and reporting require-ments for state and county candidates, as wellas ballot measures and committees supportingor opposing them; lobbyist registration andreports of things of value given by lobbyists andother persons; and other documents filed bycampaign committees, state officers, stateemployees, lobbyists and other persons. Itdistributes forms; conducts random reviews ofreports; makes registrations, statements andreports available to the public; holds hearingsand subpoenas records; conducts investiga-tions; prosecutes violations per civil proceed-ings in district court; enters into settlementagreements; educates the public and personswithin its jurisdiction; promulgates constitutionalrules and issues an annual report on its activi-ties of the preceding year.”2

House Bill 2664, which was signed into law in2004, levied a $100 fee on registered lobbyistsand a $50 fee on registered political action

committees but failed to adjust the Commission’sappropriation for FY-2005 to reflect the addi-tional revenue. In fact, the appropriation wasincreased by 7.5 percent for FY-2005.3

The OCPA Budget recommends that princi-pals (those who hire registered lobbyists) shouldpay a fee of $250 per year, that the fee forlobbyists should increase to $200 per year, andthat political action committees should pay $100per year. The Office of State Finance reported640 principals and 400 lobbyists in FY-2004.4

This fee should generate approximately$240,000, which should be removed from the FY-2006 appropriation base. This budget recom-mends that the Ethics Commission receive itsFY-2006 appropriation.

Council on Judicial Complaints“The mission of the Council on Judicial

Complaints is to efficiently and impartiallyinvestigate the conduct of persons occupyingjudicial positions. The Council will receivecomplaints of misconduct by any person or mayinstitute its own investigation. The Council willdetermine whether complaints would be thesubject of an action before the Court on theJudiciary, warrant a reprimand or admonition, orshould be dismissed.”5

The Council consists of three members, eachserving a five-year term, two of whom must bemembers of the Oklahoma Bar Association.Members are appointed by the Speaker of theHouse of Representatives, the President ProTempore of the Senate, and the President of theOklahoma Bar Association.6

The requirements for this Council and theappointing authorities ensure that the Councilwill always be dominated by (if not entirelycontrolled by) the Oklahoma Bar Associationand its members. In fact, the Council rents itsoffice space in the Oklahoma Bar Association’sbuilding. The OCPA Budget removes theCouncil’s appropriations and recommends thatthe members of the bar be asked to pay a fee inaddition to their regular yearly dues to financethe Council.

Secretary of State“The Secretary of State (SOS), created in

81

Article VI of the Oklahoma Constitution, has anumber of constitutional and statutorily estab-lished duties. These include:• Serving as the official repository of executive

orders and official acts of the Governor;• Filing and distributing copies of all laws

enacted by the Legislature;• Serving as the repository of inter-local and

cooperative agreements, including tribalagreements.

• Maintaining information about all meetingsheld under the Open Meeting Act;

• Maintaining a central registry for filingbusiness documents on corporations andpartnerships of all types;

• Maintaining official registration of charitableorganizations and professional fund raisersand solicitors;

• Maintaining original certificates of all par-dons and paroles.”7

SOS charges fees for many of these duties.Indeed, user fees accounted for more than 85percent of the FY-2006 funding for SOS.8 Gover-nor Henry’s FY-2005 budget recommendationwas to increase fees across the entire range ofservices for which SOS currently charges and tocompletely remove appropriations from the SOSbudget.9

The OCPA Budget concurs with that recom-mendation and removes all appropriations fromthe SOS budget for FY-2007.

Endnotes1 Governor Brad Henry, FY-2006 Executive Budget Historical


Data, pg. 680.3 Oklahoma House of Representatives, FY-05 Legislative

Appropriations, pg. 53.4 Governor Brad Henry, FY-2005 Executive Budget, pg. 390.5 Governor Brad Henry, FY-2006 Executive Budget Historical

Data, pg. 684.6 Governor Brad Henry, FY-2006 Executive Budget, pg. B-305.7 Governor Brad Henry, FY-2005 Executive Budget, pg. 392.8 Oklahoma House of Representatives, FY-05 Legislative

Appropriations, pg. 78.9 Governor Brad Henry, FY-2005 Executive Budget, pg. 393.

82

Transportation

Department of TransportationThe Oklahoma State Department of Transpor-

tation (ODOT) is charged with “the planning,construction, operation and maintenance ofOklahoma’s state and federal transportationinfrastructure,” as Governor Brad Henry’s FY-2006 executive budget points out. “This includeshighways, interstates, public transit, railroadsand waterways.”6

“The pressure to build new roads in Okla-homa has diverted limited resources frommaintenance,” the governor’s previous budgetbook had noted. “This has played a large rolein why our roads and bridges have receivedpoor condition ratings from the Federal HighwayAdministration. According to ODOT, Oklahomahas 3,350 miles of highways rated in inadequateor critical condition. Also, 1,156 bridges arestructurally deficient and functionally obsolete.”7

One of the reasons for the poor condition ofour roads and bridges is that policy-makershave failed to prioritize. Among the items theyhave deemed more important than safe roadsand bridges are: medical welfare for illegalaliens and for wealthy Oklahomans; meals andwine for Vietnamese Communists; and $100 carwashes for state employees.8

Another reason for the poor condition of ourroads and bridges is that policy-makers havediverted money that could have provided for theneeded repairs. For example, since 1985 themoney collected from fines for overweight trucks– which one would assume are a source of muchof the damage to Oklahoma highways andbridges – has, incredibly, been diverted to theOklahoma Tax Commission for reassignment.

Even more alarming is the fact that, as thetable on the following page shows, the moneyfrom motor vehicle registration fees is largely usedto pay for unrelated areas of state government.

These Oklahoma motor vehicle registrationfees have become one of the larger examples ofhow our state government has created backdoortaxes on Oklahomans. OCPA has consistentlymaintained that fees which exceed the costs ofproviding a service are quite simply taxes.When one considers that (as the table shows) amere 16.86 percent of the more than $585million collected in registration fees for FY-2005

Oklahoma Space IndustryDevelopment Authority (OSIDA)

“OSIDA aspires to aid economic developmentin Oklahoma by stimulating the creation ofspace commerce, education and space relatedindustries. With assistance from the SouthwestOklahoma Development authority, OSIDAacquired the Clinton Sherman Airpark. Thisacquisition was ideal for development of spaceindustry because of the airpark’s advantages.• Infrastructure in place• Favorable weather conditions• Community support• Local business incentives• Over 13,500 feet of runway and ramp space

In January 2003, Rocketplane Limited Inc.announced it would begin development of asub-orbital aircraft in Oklahoma. Rocketplanecited OSIDA, state leaders, and the advantages ofthe Clinton-Sherman Airpark as the reasons forwhy they chose Oklahoma for this huge project.”1

However, a current fact sheet from OSIDAmerely says Rocketplane “has leased a hangarat the Oklahoma Spaceport. They are currentlyrenovating to accommodate their operations.”2

If in fact Rocketplane chose this locationbased on the advantages of the location andlocal incentives, it is difficult to ascertain theneed for OSIDA’s assistance. OCPA reviewedOSIDA’s expenditures and found that salaries,benefits, and travel accounted for 87 percent ofthe total. With only five employees, the averagesalary and benefits per employee is an astonish-ing $92,200. Not helping matters any is the factthat OSIDA reports one of the selling points of theOklahoma Spaceport is an “onsite golf course.”3

Investment of taxpayer funds in this endeavorwould seem to make even less sense when oneconsiders that New Mexico may have alreadysupplanted the need for such a facility in theregion. The State of New Mexico has supplied$10 million and expects three flights in 2006.4

OCPA believes a low-tax, business-friendlyenvironment will help all businesses prosper.The elimination of waste and corporate welfarefor selected businesses is fundamental toachieving that goal. This budget proposes theOSIDA appropriations of $518,3235 be eliminatedas an unnecessary use of taxpayer dollars.

83

was directed to road maintenance or construc-tion, it’s no wonder that Oklahoma’s roads are inpoor shape.

If legislators in previous years had simplyapplied conservative fiscal approaches to thecollection and expenditure of motor vehicle regis-tration funds, Oklahoma might currently enjoysome of the finest roads and lowest motor vehicleregistration fees in the nation. Instead, Oklaho-mans are faced with a deteriorating highway andbridge infrastructure on a statewide scale.

Under ordinary circumstances OCPA does notcondone the increasing of state indebtedness.However, given our current infrastructure pre-dicament, innovative ideas are needed. We haveidentified an existing source of revenue thatcould provide a short-term way to reverse thedamage done by past budgetary imprudence.

The Oklahoma Transportation Authority (OTA)collects motor fuel taxes under Article V Section507 of its enabling legislation and deposits themoney in a Motor Fuel Tax Trust fund. This fundis used to service the debt on OTA bonds andany deficiencies in bond reserve accounts.Residual amounts are passed on to ODOT. Thisresidual amount has been growing steadily andis projected to exceed $37 million for 2006.

This residual should no longer be given toODOT. It should be used as the financing sourcefor a 20-year, $500 million bond issue to immedi-ately repair Oklahoma’s roads and bridges.

Secondly, Oklahoma legislators should alterthe distribution of motor vehicle registration feesto more properly reflect the actual costs ofmaintaining and expanding the necessaryinfrastructure for Oklahoma’s vehicle owners. Asthe table indicates, 36 percent of this fee revenuegoes directly to school districts, and 45 percentgoes to the general revenue fund. When youconsider that more than a third9 of the generalrevenue fund is spent on education, you see that,in total, more than 50 percent of the motorvehicle registration fee revenue – money thatshould have been spent maintaining roads andbridges – has in fact been siphoned off foreducation. That’s why some of us were mildlyamused by the argument of a retired schoolsuperintendent who last year called for a fuel taxhike on the grounds that our roads and bridgeswere unsafe for school buses.

Schools should be funded in the educationappropriation bills, not by creating hidden taxes

on Oklahoma drivers. Those are the sorts ofeducation revenues – see Appendices A and Bin the OCPA study “Education in Oklahoma: TheReal Costs” – that the education establishmentconveniently forgets to mention when decrying“inadequate” school funding.

The OCPA Budget recommends that ODOTreceive its FY-2006 appropriation adjustedupward for population growth plus inflationafter the removal of HB 1078 funding, one-timefunding for Oklahoma Capitol ImprovementAuthority debt service,10 and the estimated $21million in savings generated by debt servicerefinancing. HB 1078 provided additionalfunding for highway and bridge constructionand the $21 million saved by refinancing was tobe directed to the same cause. That will now beunnecessary given our proposed bond issue.

Endnotes1 Governor Brad Henry, FY-2007 Executive Budget, pg. B-312.2 http://www.okspaceport.state.ok.us/forms/osida_facts.pdf3 http://www.okspaceport.state.ok.us.4 Leonard David, “Southwest Regional Spaceport Touted asNew Mexico Moneymaker,” September 13, 2005. Available athttp://www.space.com.5 Oklahoma House of Representatives, FY-2006 Legislative

Appropriations, pg. 81.6 Governor Brad Henry, FY-2006 Executive Budget, pg. B-313.7 Governor Brad Henry, FY-2005 Executive Budget, pg. 402.8 Brandon Dutcher, “Your Tax Dollars at Work,” The Oklaho-

man, December 11, 2005. Available at http://www.newsok.com.9 Oklahoma House of Representatives, FY-2006 Legislative


Appropriations, pp. 86-87.

Motor Vehicle Revenue Apportionment

% of Motor VehicleRegistration Fees Program

35.91% Various School Districts45.29% General Revenue Fund

7.18% County Highway Maintenanceand Construction Fund

3.59% Emergency County RoadFund for County Fund

3.08% Various Cities andIncorporated Towns

2.56% County Road Fund for County Fund1.23% Oklahoma Law Enforcement

Retirement Fund0.82% Counties for the Support of

County Government0.31% State Transportation Fund0.03% Wildlife Conservation Fund

Source: Oklahoma Tax Commission, http://www.oktax.state.ok.us/mvhome.html.

84

Veterans AffairsDepartment of Veterans Affairs

“The Oklahoma Department of VeteransAffairs provides medical and rehabilitativeservices for veterans and their families. TheDepartment operates seven long term carecenters located in Norman, Clinton, Ardmore,Sulphur, Claremore, Talihina and Lawton. TheCenters provide intermediate to skilled nursingcare and domiciliary care for war time veter-ans.”1

The OCPA Budget recommends that thedepartment receive its FY-2006 appropriation,adjusted upward for population growth plusinflation.


85

LegislatureHouse of Representatives

The House of Representatives consists of 101members. Members serve two-year terms.

House of Representatives FY-06 BudgetResources

General Revenue Fund $18,629,154.00Special Cash Fund $0.00Total $18,629,154.00

Source: Oklahoma House of Representatives, FY-2006 Legisla-

tive Appropriations, pg. 64.

The OCPA Budget recommends that the Houseof Representatives’ FY-2007 appropriation befixed at FY-2006 levels and that carryover fundsbe used to finance any additional needs.

SenateThe state Senate consists of 48 members.

Senators serve staggered four-year terms.

Senate FY-06 Budget Resources

General Revenue Fund $13,146,893.00Special Cash Fund $0.00Total $13,146,893.00

Source: Oklahoma House of Representatives, FY-2006 Legisla-

tive Appropriations, pg. 79.

Feeding the Hand that Bites YouSome state legislators were

justifiably cranky after beingnamed as defendants in the“adequacy” lawsuit filed by thestate’s largest labor union. But

the only thing worse than beingsued is … appropriating money to

the plaintiff to allow him to sue you more effec-tively!

As it turns out, the union’s lawsuit will rely inpart on a report from an out-of-state consultingfirm that was paid at least $296,710 appropriatedby the legislature. For example, the FY-2005appropriations bill (HB 2012) provided for moneyto be “transferred to the Legislative ServiceBureau to contract with an independent consult-ant to conduct the second phase of the study ofthe adequacy of the State Aid Formula …”

The OCPA Budget recommends that theSenate’s FY-2007 appropriation be fixed at FY-2006 levels and that carryover funds be used tofinance any additional needs.

Legislative Service BureauThe Legislative Service Bureau (LSB) assists

the legislature by providing services as directedby the Speaker of the House of Representativesand the President Pro Tempore of the Senate.

Legislative Service Bureau FY-06 BudgetResources

General Revenue Fund $2,365,783.00Special Cash Fund $50,000.00Total $2,415,783.00



The OCPA Budget recommends that the LSBreceive its FY-2006 appropriation, adjustedupward for population growth plus inflation.

86

JudiciaryThe Court of Criminal Appeals

“The Court of Criminal Appeals is composedof five judges, one from each of the Court ofCriminal Appeals judicial districts. Judges areappointed for a term of six years then stand forretention by a popular vote in a nonpartisanelection.”1

Court of Criminal Appeals FY-06 Budget

Resources

General Revenue Fund $2,828,160.00Carryover $350,000.00Total $3,178,160.00



OCPA believes that the highest priority ofgovernment is the protection of its citizens. TheCourt of Criminal Appeals is an essential part ofthat function. The OCPA Budget recommendsthat the Court receive its FY-2006 appropriation,adjusted upward for population growth plusinflation.

District CourtsIn Oklahoma, the court of general jurisdiction

is the District Court. Seventy-seven districtcourts hear both criminal and civil cases.

District Courts FY-06 Budget Resources

General Revenue Fund $962,069.00State Judicial Fund $46,337,931.00Carryover $3,000,000.00Total $50,300,000.00



The OCPA Budget recommends that theDistrict Courts receive their FY-2006 appropria-tion, adjusted upward for population growthplus inflation.

Supreme CourtThe Oklahoma Supreme Court consists of

nine justices, each selected from one of ninejudicial districts. The Justices stand for retentionon a six-year rotating schedule. The SupremeCourt serves as the court of last resort.

Supreme Court FY-06 Budget Resources

General Revenue Fund $16,000,000.00Revolving Funds $12,000,000.00Carryover $1,015,000.00Federal Funds $400,000.00Total $29,415,000.00



The OCPA Budget recommends that theSupreme Court receive its FY-2006 appropria-tion, adjusted upward for population growthplus inflation.

Workers’ Compensation CourtThe Workers’ Compensation Court applies

the law as set out in the Oklahoma WorkersCompensation Act. Its responsibility is to pro-vide fair and timely procedures for the informaland formal resolution of disputes and identifica-tion of issues involving on-the-job injuries.

OCPA continues to encourage meaningfulreform of the workers compensation system.1

Simple reforms in the practices of the Court –such as timely dispute resolution through videoconferencing available in multiple locationsacross the state, limits on attorney fees, andombudsman programs – should be fundamentalparts of any legislation to fix Oklahoma’ssystem.

Workers’ Compensation Court FY-06 Budget

Resources

General Revenue Fund $4,365,564.00Revolving Funds $2,185,581.00Total $6,551,145.00



The OCPA Budget recommends that theWorkers’ Compensation Court receive its FY-2006 appropriation, adjusted upward for popu-lation growth plus inflation.

Endnotes1 Governor Brad Henry, FY-2005 Executive Budget Historical

Data, pg. 685.2 See, for example, our analysis at http://www.ocpathink.org/ViewPolicyStory.asp?ID=536#anchor204054.

87

Summary by CabinetOCPA OCPA

Recommended FY-2006 Recommended Reason

Agency FY-2006 Base Actual FY-2007 Base for

Name Appropriation Appropriation Appropriation Change

Governor $ 3,240,903 $ 2,578,710 $ 2,727,420 Reorganize Government

Lieutenant Governor $ 539,271 $ 592,436 $ 617,318

Agriculture

Department of Agriculture $ 13,946,177 $ 26,296,069 $ 17,296,069 Require More User

Responsibility;

Reorganize Government

Conservation Commission $ 5,017,658 $ 7,403,928 $ 1,503,928 Require More User

Responsibility;


Commerce & Tourism

Capitol Complex and

Centennial Commission $ 536,453 $ 3,899,630 $ 536,453 Redirect Spending to

Higher-Priority Uses

Department of Commerce $ 10,000,000 $ 26,334,663 $ 16,334,663 Require More User

Responsibility;

Remove Waste;

Revive Free Enterprise

Oklahoma Historical Society $ 9,128,028 $ 12,906,387 $ 11,615,748 Require More

User Responsibility

J. M. Davis Memorial

Commission $ - $ 347,454 $ - Redirect Spending to

Higher-Priority Uses;

Restore Civil Society

Department of Labor $ 3,061,658 $ 3,224,721 $ 3,360,159

Native American

Cultural Authority $ 533,851 $ - $ -

REAP (including

water projects) $ 6,000,000 $ 15,500,000 $ 8,200,000

Scenic Rivers Commission $ - $ 323,041 $ - Reorganize Government

Tourism and Recreation

Department $ 19,749,017 $ 25,955,959 $ 21,836,109 Require More User

Responsibility;

Remove Waste;


Will Rogers Memorial

Commission $ - $ 830,679 $ - Redirect Spending to



Education

Arts Council $ 3,139,097 $ 4,243,338 $ - Redirect Spending to



Career & Technology

Education $ 37,026,710 $ 130,287,358 $ 38,581,832 Reorganize Government

Oklahoma Educational

Television Authority $ - $ 4,624,059 $ - Redirect Spending to


Department of Education $ 2,161,430,126 $2,175,663,450 $ 2,369,722,329

Higher Education $ 828,480,018 $ 889,433,880 $ 926,790,103

88

Oklahoma Department

of Libraries $ 6,402,209 $ 6,681,355 $ 6,961,972

Board of Private

Vocational Schools $ 160,213 $ 171,879 $ -

Oklahoma School of

Science and Mathematics $ - $ 7,020,513 $ 7,020,513

Oklahoma Commission for

Teacher Preparation $ - $ 2,022,875 $ - Reorganize Government

Environment

Department of

Environmental Quality $ 18,723,417 $ 8,166,580 $ 22,521,580 Reorganize Government

Water Resources Board $ - $ 6,573,896 $ - Reorganize Government

Energy

Corporation Commission $ 9,239,205 $ 12,354,190 $ 10,118,439

Department of Mines $ - $ 849,165 $ - Reorganize Government

Finance & Revenue

Auditor & Inspector $ 500,000 $ 5,988,786 $ 500,000 Require More User

Responsibility;


State Bond Advisor $ 50,000 $ 181,212 $ 60,000 Require More User

Responsibility;


Office of State Finance $ 22,963,524 $ 22,756,515 $ 23,712,289 Require More User

Responsibility;


Insurance Department $ - $ 2,231,595 $ - Require More User

Responsibility

Commissioners of

the Land Office $ - $ 4,719,497 $ - Reorganize Government;

Remove Waste

Tax Commission $ 42,730,757 $ 45,626,291 $ 47,542,595

Treasurer $ 4,511,967 $ 4,524,498 $ 4,714,527

Consumer Credit Commission $ - $ 637,925 $ - Require More User

Responsibility

Securities Commission $ - $ - $ - Require More User

Responsibility

Health

Health Department $ 54,563,226 $ 62,790,819 $ 62,790,819

Trauma Care Fund $ 26,385,000 $ - $ -

Oklahoma Health

Care Authority $ 502,038,161 $ 634,786,355 $ 666,808,872 Reorganize Government

Mental Health Department $ 160,204,119 $ 171,810,647 $ 179,026,694

Human Resources and Administration

Department of

Central Services $ 12,234,432 $ 12,263,035 $ 12,263,035 Remove Waste;


Horse Racing Commission $ - $ 2,360,889 $ - Redirect Spending to


Human Rights Commission $ - $ 686,563 $ - Reorganize Government

OCPA OCPA




89

Merit Protection Commission $ 512,154 $ 565,684 $ - Reorganize Government;

Remove Waste

Office of Personnel

Management $ 4,497,011 $ 4,633,249 $ 5,142,365 Reorganize Government;

Remove Waste

Employees Benefits

Council $ (4,000,000) $ (4,000,000) Remove Waste

Human Services

Commission on

Children & Youth $ - $ 1,725,018 $ - Reorganize Government

Office of Handicapped

Concerns $ - $ 376,944 $ - Reorganize Government

Department of

Human Services $ 409,902,766 $ 481,991,177 $ 503,811,750

Oklahoma Indian Affairs

Commission $ - $ 255,530 $ - Remove Race-Based

Advocacy; Redirect

Spending to Higher-

Priority Uses

J.D. McCarty Center $ 3,259,548 $ 3,792,283 $ 3,951,559

Office of Juvenile Affairs $ 92,858,160 $ 98,323,348 $ 102,452,929 Reorganize Government;

Remove Waste

Physician Manpower

Training Commission $ - $ 5,361,490 $ - Reorganize Government

Department of Rehabilitation

Services $ 26,259,305 $ 27,365,925 $ 28,515,294

University Hospitals Authority $ 40,223,640 $ 40,549,342 $ 42,252,414

Military Department

Military Department $ 8,309,244 $ 12,546,432 $ 13,073,382

Safety and Security

Alcoholic Beverage

Laws Enforcement $ - $ 3,738,839 $ - Reorganize Government;

Remove Waste

Attorney General $ 6,910,264 $ 11,286,462 $ 12,329,369 Require More User

Responsibility;


Department of Corrections $ 389,393,700 $ 409,443,403 $ 426,640,026 Reorganize Government;

Remove Waste

District Attorneys’ Council $ 26,926,731 $ 30,592,742 $ 31,877,637

Department of Emergency

Management $ 701,810 $ 1,355,561 $ 731,286

Fire Marshal $ - $ 1,685,180 $ - Reorganize Government

Indigent Defense Fund $ 12,228,761 $ 15,633,001 $ 13,433,001 Require More User

Responsibility

Oklahoma State Bureau

of Investigation $ - $ 11,154,628 $ - Reorganize Government

Medicolegal Investigations

Board $ - $ 3,922,904 $ - Reorganize Government

Narcotics and Dangerous

Drugs $ - $ 5,389,595 $ - Reorganize Government

Pardon and Parole Board $ 2,216,128 $ 2,316,329 $ 2,413,615

Department of Public Safety $ 89,666,820 $ 78,887,770 $ 106,408,005 Reorganize Government

CLEET $ - $ 2,758,783 $ - Reorganize Government

OCPA OCPA




90

Science and Technology Development

Center for the Advancement

of Science and Technology $ - $ 12,400,942 $ 12,921,782

Secretary of State

Election Board $ 6,469,209 $ 6,621,839 $ 6,899,956

Ethics Commission $ 248,114 $ 492,277 $ 262,873 Require More User

Responsibility

Council on Judicial Complaints $ - $ 278,826 $ - Require More User

Responsibility

Secretary of State $ - $ 510,184 $ - Require More User

Responsibility

Transportation

Space Industry

Development Authority $ - $ 523,264 $ - Revive Free Enterprise

Department of Transportation $ 207,022,604 $ 275,148,137 $ 265,704,359

Veterans Affairs

Department of Veterans Affairs $ 31,011,962 $ 36,040,332 $ 37,554,026

Judiciary

Court of Criminal Appeals $ 2,834,708 $ 2,828,160 $ 2,946,943

District Courts $ 44,360,349 $ 47,300,000 $ 49,286,600

Supreme Court $ 13,745,673 $ 16,000,000 $ 16,672,000

Workers’ Compensation Court $ 3,885,784 $ 4,365,564 $ 4,548,918

Legislature

House of Representatives $ 18,671,939 $ 18,629,154 $ 18,669,557

Senate $ 13,198,460 $ 13,146,893 $ 13,187,297

Legislative Service Bureau $ 2,373,671 $ 2,415,783 $ 2,557,650

Total Recommended

Agency Appropriations $ 5,416,223,712 $ 6,038,003,816 $ 6,183,408,059

Appropriations Available

under OCPA Budget $ 5,525,504,432 $ 6,291,599,976

Funds Available for

Appropriation for Agency

Special Needs $ 109,280,724 $ 108,191,917

OCPA OCPA




OCPA BUDGET

Submitted by theOklahoma Council of Public Affairs, Inc.

To theTaxpayers of the

State of Oklahomaand Their Elected Officials

PROPOSED STATE BUDGETFOR THE FISCAL YEAR ENDING JUNE 30, 2007

A STATE BUDGET THAT RESPECTS YOUR FAMILY BUDGET“All persons have the inherent right to life, liberty, the pursuit of happiness,

and the enjoyment of the gains of their own industry.”

Constitution of the State of Oklahoma, Article 2, Section 2

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