The end of January brings February and the legislative session. The past three years have brought significant stress during the legislative session, but it does appear Oklahoma is in the midst of recovery. January 24th was the first time in a long time that the U.S. crude oil benchmark, West Texas Intermediate Crude, was over $65 a barrel. This is a strong and clear indication that Oklahoma’s petroleum industry is on the road to recovery. If you were to look at agriculture commodities, we saw increases in wheat and cattle, with cotton having a slight downturn of ten cents a pound. The agriculture commodities are a long way from healthy, but hope springs eternal.
The driving force in this recovery is a resurgent national and world economy, but a deeper look shows that the U.S. dollar's value has consistently declined since October 31, 2017. This correction in the dollar's value, though, is helping to push commodity prices higher. Oil's upward movement has been particularly meteoric, and the OPEC agreement will probably drive the prices up further.
Kansas State University economists discussed the farm economy in the High Plains Journal this week. One disconcerting bit in the article was that Kansas is seeing farm ground prices recede. This could be a problem if this occurs in Oklahoma because so much of our state valuations are based on agriculture valuations. Further, this is something that could directly affect school budgets if the trend continues.
Why should we concern ourselves with these facts gleaned from Bloomberg, Financial Times, Wall Street Journal and other trade magazines? Because this is going to directly drive budget choices this spring. It is important to maintain your budgetary discipline during an upturn.
It will take more than just a good spring to get our state budget back in the proper place. If you need help, we are currently in budget season and we are more than happy to help. We are working with several schools on their budgets, and if you want an outside evaluation, please feel free to contact
me. School finance is a many splendored thing, and several factors must be taken into account when planning for the future.