22 Aug Oil and Gas Benefits and School Funding
Oil and Gas Development Does Not Equal More School Funding
New research on the impact of oil and gas development has on public school funding has recently come to light.
In a study conducted as part of their Community Impacts of Shale Gas and Oil Development Initiative, Resources for the Future found that despite any increases in revenue from oil and gas development, the long-term impacts to communities in the path of resource booms are not strictly positive.
This is particularly true in rural communities, where the large influx of students, high student turnover rates, and difficulty retaining faculty and staff all make it difficult for school districts to maintain an effective learning environment. School districts in Delta County were not considered in this study, but many of its conclusions are relevant, and should be considered in our local decision-making processes.
School districts in the Bakken saw the largest net-negative effects on education funding. The remote, rural nature of many of the communities in the path of the Bakken boom required that school districts spend massively on capitol improvement projects, which were largely funded by tax-payer bonds. Bakken boom school districts also saw statistically significant reductions in per-pupil revenue despite massive increases in oil and gas production.
The report also draws attention to the uniquely difficult position Colorado schools find themselves in as a result of the Tax Payer Bill of Rights. As revenue from severance tax increases, TABOR requires that other taxes be automatically ratcheted down. This is a double-edged sword. Communities are both unable to capture all the revenue potentially generated by gas booms, and they are left in a bind when production diminishes and the boom inevitably turns to bust. During the bust, production decreases while spending stays the same, meaning school districts have to resort to ballot measures asking for higher tax rates during a period of local economic hardship.
This study urges state and school district policy makers to avoid the allure of the boom. While several districts saw small positive impacts on school funding during the boom, when production inevitably fell off, the negatives largely outweighed them, resulting in net-negative impacts in the long-term.