Lambert here: Should be interesting to see how this plays out in 2018 and 2020.
By Tsvetana Paraskova, a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. Originally published at OilPrice.com.
The oil price slump has put pressure on the budgets of the U.S. oil and coal states that have been struggling with lower energy tax revenues and difficult decisions about which public-sector financing they should reduce. Higher budget deficits have led to cuts across the board, and education has been one of the sectors on the chopping block.
This week, Wyoming became the latest in a series of oil and coal producing states that have cut funds from education. Oklahoma, North Dakota and Alaska had already lowered some of the funding for various education programs throughout last year, when the sting of the low oil prices was most painful to monthly tax collections.
Last year, six of the top eight oil-pumping U.S. states slipped into recession, S&P Global Ratings said in a report in January. Alaska, Louisiana, New Mexico, North Dakota, Oklahoma, and Wyoming saw their economies shrink in 2016, while Texas and Montana had GDP growth much smaller than in 2015, estimates in the report show.
“The sharp pullback in exploration and production during the past 18 months has inflicted considerable damage on the economies of the oil producing states,” S&P said back in January.
While the oil price crash was affecting drilling and consequently, oil revenues of the states, U.S. coal production was also dropping. In the first quarter of 2016, U.S. coal output hit its lowest quarterly level since a major coal strike in the second quarter of 1981, the EIA said last June, with coal production from the Powder River Basin in Montana and Wyoming declining the most in tonnage and percentage since the previous quarter. Related: Oil Prices Wait And Watch For OPEC’s Next Move
And Wyoming was the latest U.S. state to cut from education funds. Governor Matt Mead approved on March 13 a K-12 education spending plan that cuts $34.5 million from schools.
The education funding shortage was a result of the downturn and previous years of generous spending. Wyoming’s State Superintendent of Public Instruction Jillian Balow told The Casper Star-Tribune in December that historically high spending levels are now untenable.
“The truth of the matter is that we’re going to need to think about funding education as a Chevy rather than a Cadillac in the future,” Balow told the newspaper.
Since around 30 percent of Wyoming’s spending on education comes from federal mineral royalties, and another 30 percent from property taxes often backed by these minerals, it’s hardly a surprise that the state has cut some of the education spend. Future funding for some of Wyoming’s educational programs could really depend on the state of the U.S. oil and coal industries, The Atlantic notes.
Across the oil producing states, North Dakota’s Revised Executive Budget Recommendation 2017-2019 prioritizes K-12 education, but envisages a $31-million reduction to higher education.
In the middle of last year, Alaska Governor Bill Walker cut a total of $150 million in budget allocations to schools, the university and the state education department.
“I especially struggled with the funding to education, which I have consistently prioritized. But a $4 billion deficit means nothing can be insulated,” Governor Walker said.
In Oklahoma, some school districts have switched to a 4-day school week to save funds in light of declining oil revenues.
It’s in Oklahoma, however, that the more stable and relatively higher oil prices since the beginning of this year started turning in increased gross receipts to the Treasury.
Mostly driven by rising oil and gas production collections, gross receipts to the Treasury grew by 0.5 percent on the year in January at $990.5 million, putting an end to a 20-month string of shrinking collections, State Treasurer Ken Miller said. Related: Can OPEC Resist The Temptation To Cheat?
“Low prices and curtailed production in the oil field led us into the latest downturn, and it appears rising prices and production are leading us out. Several data points — rising state GDP, rig counts, business conditions, and employment — give reason for cautious optimism,” Miller noted.
Receipts in February also inched up compared to February last year.
So, higher oil prices are helping Oklahoma’s revenues, while Wyoming’s coal is not thriving, either in production or in revenues for the state. Despite the oil price recovery from last year’s lows, the U.S. coal and oil states still have substantial budget gaps to fill in, and would be wise to continue sticking to some form of austerity in spending and budgeting.
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“People are our most valuable asset”.
“Education will qualify the labour force for the knowledge economy”.
“Re-vamped curricula are the solution to the incoming robotic revolution”.
“Unemployed people can be integrated in the working force through re-training and the acquisition of new skills”.
And something about drawing my revolver whenever I hear politicians, CEO, and so-called experts talk about a highly qualified work-force.
What is the purpose of education?
Frank Templeton used the analogy of the nation being a house, and needs good strong bricks to build. The schools being the refractory, and the citizens the bricks.
It’s been explicitly stated for over a decade that college-level skills are outdated by graduation. So it’s about learning to learn, they say.
Is it the Credentialling of pre-schoolers? Or football teams as feeder systems for the military? Or just publicly subsidized day-care to keep parents in the labor pool?
Perhaps the increase in charter schools and homeschooling is an evolutionary process of variation for an uncertain future, most will fail but no one knows which will succeed.
My millenial friends think the credentials are almost meaningless. The knowledge is online for free. They can pursue their interests despite no occupation available. As David Ehrenfeld said: “4. Have a practical trade, a skill, or an alternative occupation that you can resort to if conservation biology cannot support you on a full-time basis. There are trades that are always in demand, regardless of circumstances. Pick one.”
In the oldens it was readin’ writin’ ‘n’ ‘rithmetic. Parker tells me his cohort thinks in a different way, memetic, pictures and videos being an explicit mode with implicit emotional connotation. My old-school methodology worries about loss of analytic capacity. But in port cities, where pidgin bridges a gap between two languages, the kids growing up create an actual language with syntactic rules. So I find I can’t say the old way is better for the new world. I can say I don’t trust the corporations to teach the children.
Wealthy people will always be able to get their children a full and well-rounded education. Their skills and knowledge set will set the standard for what it means to be “educated”, and the gap will continue to widen between the “classes” with regard to “codes” and power structure hierarchy. I think it’s fine to home-school your children, but you must be educated yourself to do that, or have access to good curriculum to use. Learning online is fine right now, but who knows what the anti Net Neutrality people will get up to in the near future. Perhaps we will get children spending much more time outdoors and get a generation of people who love the Earth and understand that it is our support system. That would be good
Generally home schooling has been a failure as well as online education. There are several reasons but the biggest is motivation. Unless the child and the person supervising them is extremely self motivated, these two forms of leaning soon lose their glitter. The result is that these students become drop outs in these forms of learning. Once this happens it’s difficult to get these students interested in going back to a traditional school or any other means of acquiring an education. We hear of the success of a relatively few cases but don’t hear much about all of the failures. Schools and the educational process reflect the community where they exist. the way to improve the so called failing schools is to improve the failing communities where they exist.
Agree with Steve H. and others here who are skeptical about the value of what passes for “education” (public or charter) today.
I would add that this article seems to be PR for the next hike in oil prices. “Don’t you want to support education funding by paying more for your heating oil, more for your gas, etc. etc.? Rising oil prices are a good thing!”
I’m also skeptical about states’ budget allocations and how state legislatures are and have been colluding with big oil in making policy and spending decisions. Big oil was exploring and locating oil reserves in these 8 states since at least the middle of the 20th century. They have been buying up massive sectors of real estate and exerting political influence in states’ governments commensurate with their land holdings for a long time.
It may be safe to assume public education cuts are happening partly because it’s the Republican plan… the budget crisis as an excuse to further ideological goals.
The fairy tale of the ant and the grasshopper is often employed to suggest that fiscal conservatives are the ants, laying-in stores for the coming winter, while the spendthrift grasshopper grows fat eating summer grass, only to starve during the winter. A common bumper sticker seen around Texas read: “Please God, give us another oil boom, we promise not to piss it away this time.” Yet, they did piss it away. Among the unfortunate realities of our politically-obsessed leadership is that they are all grasshoppers, quite willing to ignore the fact that winters and economic downturns happen for one more blade of grass (votes).
Because these states depend on taxes from dirty, polluting, unhealthy oil and gas revenues, because the capitalist corporation that own them refuse to invest in alternative, clean energy the children of those states now suffer. Isn’t capitalism great!
Outlaw petroleum energy, and the planet’s human carrying capacity will drop to a few million impoverished souls. Let’s do it for the children! /sarc
oh puleeze
your portfolio is showing /s
“As already stated, the three main purposes for which oil is used worldwide are food, transport and heating. Agriculture is almost entirely dependent on reliable supplies of oil for cultivation and for pumping water, and on gas for its fertilisers; in addition, for every calorie of energy used by agriculture itself, five more are used for processing, storage and distribution.”
http://www.resilience.org/stories/2005-04-01/why-our-food-so-dependent-oil/
Is that an inevitable force and fact of nature? Or is that an artifact of overmechanizing and understaffing of agriculture? How much less oil would suburban homeowners need to burn to grow their own suburban homefood than what is burned per food unit on the megafarms?
Nothing says I love you like eating your seed corn.
In the Bakken much of the natural gas production is flared in fact so much is flared (burned on site)
that it can be seen from space.
The effects include loss of revenue to the state of North Dakota, loss of income to the land owners, and of course loss of income to the country as a whole.
The Bakken has become a natural gas field driven by tax credits or tax avoidance since the production losses (flaring) can be written off.
So the sate loses revenue and has to cut back on education to pay some who can wax fat on tax avoidance.
Talk about eating your seed corn !!!!
It is very unfortunate for the students and their parents, although there is an upside if one doesn’t mind indulging in a bit of schadenfreude. The fossil fuel billionaires could see their fortunes shrink, so they’ll have to decide whether or not they must reduce their political donations to odious causes. The Koch brothers and Harold Hamm are among those who could be affected, as well as this guy:
https://en.wikipedia.org/wiki/Chris_Cline
How charming — rationalizing greed by denying science.
My school just hired a new football coach for $6 million a year. Maybe the players can go out into the provinces during the off-season and use those leg muscles to do some old fashioned percussion drilling to generate some more oil and gas revenue. Or maybe the coach could donate some of his salary to the English department, or maybe for school lunches. I see many gifting opportunities.
“Oil and gas…cuts education” segues into last week’s “Race to the Bottom: Cities and States Spend >$45 Billion Per Year Competing for Jobs.”
According to CBPP, five of the eight states with the deepest K-12 education funding cuts also decreased income and/or corporate taxes from 2008 -2017. Oklahoma is at the top of the list cutting taxes by -26.9% (see graph)
Yep. Cut income/corporate taxes and fill the budget hole with energy revenues or severance taxes. When the energy revenues go down do the state leges propose raising income/corporate taxes back up to where they were? In Kansas the state lege this session tried rolling back the tax cuts. Gov. Brownback vetoed that legislation. The lege will try again, this time for a veto-proof passage. Don’t know if they can do it. Kansas now has a budget so far down the drain it’s a struggle just to see daylight. This has been a multi-year increasing disaster. Last election Kansans voted out a big group of Brownback’s strongest ‘no tax hikes ever’ allies and voted in a group of sane moderates. I think eventually the other states’ voters will do the same. But it will take a few years of things getting worse and worse: schools, childrens’ health programs, Medicaid, social services, roads & bridges, the state judiciary, community funding, etc. The Koch backed grouped AFP ran this play in Colorado several years ago and succeeded in getting votes that lowered the tax base to unsustainable levels. After a few years of this Colorado’s state budget was so bad and state services so poor that Colorado voters “kicked out” the AFP pols. (Colorado has been doing much better.) By then the APF road show had moved to Kansas and started here. Now our pols are trying to kick the AFP tax loons out. Meanwhile, the AFP road show has now moved on to Iowa and is starting there.
AFP tax cutters are like a bad case of the flu that’s goes ’round from state to state. imo.
adding: one additional play for AFP and others of like mind is to support tax funded vouchers for private or charter schools, since the public schools that they’ve underfunded have become “unable to do the job of educating our children.”
Charter schools are the progeny of the Clintons and their Wall Street hedge fund buddies. The New Market Tax Credits was extended and made permanent by Obama in 2013 (and of course lobbied by John Podesta- Center for American Progress and his brother’s Podesta Group). JPMorgan Chase promised 115% proceeds for a 7-year investment of $5–20 million for financing charter school construction in ‘empowerment zones’(code for impoverished areas). The plan in progress: underfund schools at state level. Next, sell the public lies about the failures of public education system. Lastly, get the public to demand privatization.
Education is Wall Street’s targeted pot of gold with the added bonanza of pocketing the $69.4 billion federal education budget plus all states education budgets.
Excerpt from WP: …The 2001 Consolidated Appropriations Act, passed by Congress and signed into law by President Clinton, included provisions fromthe Community Renewal Tax Relief Act of 2000 [..] provided tax incentives for seven years to businesses that locate and hire residents in economically depressed urban and rural areas. The tax credits were reauthorized for 2008-2009, 2010-2011, and 2012-2013.
As a result of this change to the tax code, banks and equity funds that invest in charter schools in underserved areas can take advantage of a very generous tax credit. They are permitted to combine this tax credit with other tax breaks while they also collect interest on any money they lend out. According to one analyst, the credit allows them to double the money they invested in seven years. Another interesting side note is that foreign investors who put a minimum of $500,000 in charter school companies are eligible to purchase immigration visas for themselves and family members under a federal program called EB-5.
Forbes: Too bad the kids in charter schools don’t learn any better than those in plain-vanilla public schools. Stanford University crunched test data from 26 states. About a quarter of charters delivered better reading scores, but more than half produced no improvement, and 19% had worse results. In math, 29% of the charters delivered better math scores, while 40% showed no difference, and 31% fared worse […]Nor does the evidence show that charters spend taxpayers’ money more efficiently. Researchers from Michigan State and the University of Utah studied charters in Michigan, finding they spent $774 more per student on administration, and $1,140 less on instruction.
About the only thing charters do well is limit the influence of teachers’ unions. And fatten their investors’ portfolios.
Americans For Disparity?
Why don’t the initials work?
Lambert:
Perchance, sarcasm on your part? that they picked education to whack. “rps” has picked up on it also.
This is really no big deal – resource based states have been doing this forever. Times are good education becomes gold plated – times are bad education gets cut. Whole countries do this as well – Saudi, Iran, Canada, Russia………..
First they came for the cakes, and I said nothing …
Just hand over the contraband croissants, comrade, and nobody gets hurt.
“I know no safe depositary of the ultimate powers of the society but the people themselves; and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion by education. This is the true corrective of abuses of constitutional power.” –Thomas Jefferson
And just wait till Nevada Geothermal comes online. Can you say Appalachia America? Or whatever. I honestly think we need a new industry that caters to the New Homesteader. Self-sufficiency on steroids.