Oklahoma report offers options for public and charter school finances, bonds

Bloomberg News

A public school finance report released this week by Oklahoma Gov. Kevin Stitt raises the possibility of bond-funded endowments, property tax revenue for charter schools, and restrictions on budget balances. 

The analysis of revenue sources, spending allocations, and per-student expenditures ordered by the Republican governor in March comes as school districts continue to seek more funding despite having unspent budget balances that grew from $2.8 billion in 2019 to about $4.5 billion in 2025, according to a statement from his office.   

During that same time period, the percentage of districts with budget balances at 40% or more of annual revenue doubled to 16%, while more than $25 billion in cumulative year-end balances and roughly $359 million in interest income were reported. 

"The people of Oklahoma expect every education dollar to reach the classroom and make a difference for kids, not get lost in bureaucracy or sit idle in bank accounts," Stitt said. "This report demonstrates that there is work to do on how we allocate and spend education funds." 

The report offers a policy option that would require the allocation of a specified portion of balances and related interest earnings to support teacher recruitment, retention, and salaries; instructional specialists; and high-quality instructional materials. It would also exempt districts from excess balance penalties when the money is earmarked for teacher compensation. 

Teacher pay, along with other recurring instructional expenses, could be supported by local bond-funded endowments, the report suggested.

"The proceeds could be invested, with earnings used to support teacher salaries, or placed in a restricted account that provides long-term funds for salaries," the report said.

Ed Oswald, a partner at law firm Orrick, noted federal tax law prohibits the use of tax-exempt bond proceeds to fund school endowments. 

"On the other hand, taxable bonds can be issued for such purposes as otherwise permitted under state and local law," he said in an email.

A per-pupil funding disparity between Oklahoma's public and charter schools could be addressed by giving locally authorized brick-and-mortar charter schools a proportionate share of local operating property tax revenue, according to the report.

"The disparity increased from $1,385 per pupil in 2019 to $2,781 in 2025, meaning that the funding gap has more than doubled over time," it said. "Also worth noting is that this funding gap would be much larger if local bond funding were considered in these sector comparisons."