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What's Going on in the Finance World

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Finance
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September 4, 2017

We have several financial items on which to update you this month:

Petroleum Prices

Oklahoma's financial picture is fragmented right now. Hurricane Harvey is wreaking havoc on the commodities markets, and previously established values are not necessarily holding true right now. Due to refinery shut downs for the storm, we see an upward movement in fuel prices, but oil is not following at the same rate. This is a supply-and-demand problem that could cause issues in the next three to four months. 

Future contracts will have a fulfillment date in mid-September. This may cause either an artificial gain in prices or a depression due to the increase in oil storage amounts. Fuel prices will increase over the next few weeks, but that does not directly correlate to an increase in oil price. We saw the same phenomenon earlier this year, and this will be much more greatly exaggerated. The bottom line is this: don’t count on rising gasoline or diesel prices raising the price of oil. Just the opposite will occur. Since oil can’t be refined, it will be stored and likely drive oil prices down due to the increased inventory. Tip: If you have storage, it might not be a bad time to increase your reserve of diesel.

Tobacco Fee

We wait to see the result that the overturned tobacco tax has on the state budget. The Supreme Court has not yet ruled on the other two fees that have been argued. The tobacco fee should have limited effect on the State Aid formula, but stranger things have happened. If the Supreme Court rejects all three fees, we could see a very definitive change. Ongoing negotiations between Governor Fallin’s office and the legislature are unclear and some may confuse them as pre-election year chatter. 

Chargeable Data

Projections for a chargeables increase are holding predominately true. Motor vehicle numbers could be slightly skewed, and we won’t know if they are a net positive until we see the total payment pattern through December. The latest estimate of needs I have seen shows a very definitive growth pattern and will probably exceed the normal 4%. We expect that the overall ad valorem growth pattern will increase; however, this won’t happen everywhere. Caution for budget makers: check your new year's ad valorem actual numbers. Several districts have had the unfortunate experience of an extra amount figured into their chargeables that was not actually theirs. This could leave you losing State Aid and not collecting ad valorem listed on your estimate of needs--not a good day.

About the Author

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Andy Evans

Director, Finance

Andy serves as the Director of Finance for the OPSRC.  In this role, he provides help in financial and business-related areas for schools. This includes budgets, managing cash flow, Estimate of Needs, federal programs and general service to aid in the effective use of district resources. Additionally, Andy serves as a resource in customizing budget spreadsheets, projection sheets, and other financial tools essential to administrators in maintaining their district’s financial health.

Andy is a graduate of Southwestern Oklahoma State University with a Bachelor’s of Science in Natural Sciences and a Master’s in Education Administration. Andy has served as superintendent at Mountain View-Gotebo and the Prague school districts.

Want to learn some fun facts about Andy? Click here!