Oklahoma voters will decide Aug. 25 whether to allow the state to opt out of paying for one of its longest-running economic development programs — and school leaders in some of the state’s fastest-growing local economies say the change could end up reducing funding for schools statewide.
State Question 844 would amend the Oklahoma Constitution so the Legislature would no longer be required to reimburse local towns, counties and school districts for property tax revenue they lose out on when new and expanding manufacturing facilities take advantage of the state’s five-year property tax exemption.
Proponents, including House Speaker Kyle Hilbert and Senate President Pro Tem Lonnie Paxton, said lawmakers need greater control over a reimbursement system they argue has become increasingly expensive and uneven, with only a handful of counties receiving the bulk of payments.
Neither Hilbert nor Paxton were available for interviews for this story.
At the center of the issue are school districts such as Pryor, where major manufacturing investments including an ever-expanding Google data center have generated millions of dollars in property tax exemptions.
“The complaint is that only a few counties are receiving the majority of the reimbursements, but those counties have a disproportionate amount of their ad valorem being waived,” said Pryor Superintendent Lisa Muller. “If this program didn’t exist, we would just collect.”
Voters approved a state question in the mid-1980s to incentivize new or expanded manufacturing facilities with a five-year exemption from local property taxes. That ballot initiative also designated 1% of state income tax collections to be collected in the newly created Oklahoma Ad Valorem Reimbursement Fund, designed to compensate local schools, CareerTech centers, county governments, cities and towns, junior colleges, county health departments, and libraries for the property tax revenue they forgo.
For years, that fund adequately covered reimbursements. But as manufacturing investments accelerated, particularly with large industrial projects and data centers, reimbursement costs outpaced the dedicated funding source.
Last fiscal year, the state paid approximately $88.6 million in reimbursements, including $64 million in supplemental appropriations approved by the Legislature after the dedicated fund fell short. And in the previous decade, manufacturing exemptions required even higher state reimbursements, peaking at $161.2 million in FY2020.
The proposed constitutional amendment states “no individual county shall receive reimbursement in amounts that result in a detriment to the other counties of the state.” Ad valorem reimbursements went to 42 counties last year, but Mayes and Tulsa counties received nearly 60% of the money.
Mayes County Commissioner Steve Grossman said the prospect of a significant change in money available from the state reimbursement fund has taken him by surprise. Little more than one month before the matter goes to a vote of the people, Grossman said he is still studying the matter to try to better understand what it could mean for Mayes County coffers.
“If people in other counties think they’re going to get more, I think they’re mistaken,” Grossman said. “We’re one county trying to protect what we’ve been getting.”
Public schools are the largest beneficiaries of the Ad Valorem Reimbursement fund. If reimbursements are reduced, school districts that currently receive them would have to cut spending from their general funds, which cover staffing, student programs and other operational expenses, their building funds for utilities, maintenance, and safety costs, and their sinking funds, used to pay for school districts’ long-term capital debt including repayment of voter-approved bond issues.
If state reimbursements were eliminated, local tax entities such as Chouteau-Mazie Public Schools wouldn’t see the immediate benefit of a brand new ammunition plant going into an industrial park within its boundaries, according to Muller. But for Pryor Public Schools, which received $24 million from the state reimbursement fund for 2025-26, passage of SQ 844 wouldn’t be as simple as waiting five years for tax exemptions to expire and new revenue collections to begin rolling in.
For starters, Ad Valorem Reimbursement funds have made up a significant portion of Pryor’s annual budget for nearly a decade.
And Pryor residents just approved $98 million in bonds, the largest bond election in school district history, which factored in current property valuations. Without being able to rely on the state reimbursement funds for tax exemptions for manufacturing property owners, local property taxes would have to be increased to repay the bond, Muller said.
“We have been very fortunate to benefit from this investment in our community for many years,” Muller said. “For Mayes County, the state question would not just reduce funding for schools, it would also be a major detriment to roads, bridges, the sheriff’s department, and the Northeast Tech Pryor Campus. But the statewide implications are big if this program is changed. A number of smaller school districts that receive reimbursement funds would likely go back on the state aid formula, diluting available state aid funds for all state aid recipients.”
Currently, the most property-wealthy school districts receive little or no state aid because strong local property tax collections exceed the amount they would otherwise receive through Oklahoma’s equalizing school funding formula.
If the current level of state reimbursement isn’t maintained, some property-wealthy school districts could begin drawing state aid, leaving less money available for schools that have long been dependent on state aid.
“The districts that are receiving these reimbursement funds, that windfall allows them to go off the state funding formula more quickly, and that frees up more funding for all of the districts that are on the funding formula,” said Erika Wright, who founded the Oklahoma Rural Schools Coalition in 2018.
That advocacy group is urging voters to vote no on SQ 844 while it is engaged in get-out-the-vote efforts for the Aug. 25 election, which will also feature a Republican runoff in the state superintendent race.
“Bottom line: Legislative leaders want the ability to not have to pay out those big checks,” said Wright. “They haven’t created enough detail on what that plan looks like to make any Oklahoman feel confident about letting them put their hand in the cookie jar.”
Wright said she has been telling potential voters that the state question would remove constitutional protections for school funding that earlier generations of Oklahoma voters created more than four decades ago. She is very critical of the notion that current state reimbursements are unfair to the 35 counties that currently receive none.
“This isn’t free market at all,” Wright said. “If a community is going to work to get a company there and give whatever local incentives they can, then good for them. I would never expect Noble County to get a small cut of money out of Mayes County. Everybody else isn’t getting those jobs, everybody else is not using their local infrastructure and resources for those companies. The Legislature still wants the companies to come. They want to keep them happy – and the companies win either way.”
For FY26, which ended June 30, Wynnewood Public Schools relied on the Oklahoma Ad Valorem Reimbursement Fund for 16 percent of its general fund because of tax exemptions for a growing refinery owned by CVR Energy. A reduction or elimination of reimbursement funds could put the 630-student school district back on state aid through the school funding formula.
“It’s robbing Peter to pay Paul, which government’s good at,” said Wynnewood Superintendent Byron Mooney. “It is ridiculous all the way around and it comes down to the control of the almighty dollar, especially when you start talking about $100 million that they have to reimburse.”
Chad Wolfe, a kitchen employee at Lincoln Elementary School in Prypr, puts a tray of frozen tater tots and chicken tenders into an oven before students from a summer feeding program arrive.
The mandatory state reimbursements for tax exemptions create a symbiotic relationship between new and expanding manufacturing companies and the local entities that rely on property taxes. Changes that could result from SQ 844 threaten that longstanding dynamic.
“The company goes and gets this exemption and we’re all for it, because it’s good for everything around here,” Mooney said. “Now, you’ve got a politician talking to a constituency and they’re going to tell them what they want to hear. We like to cut off basic services for our people. This is no different than defunding the police in 2020. It’s defunding schools, county government, sheriffs, emergency services.”
Minco Public Schools is already able to afford to pay teachers $5,000 more than the state minimum salary, to maintain class sizes of no more than 15 students and to employ aides in early childhood education classrooms because of expansions in local industry since 2012.
But construction of the massive Rumble Solar project along both sides of the highway leading into town and two battery storage facilities to support it have the 610-student school district on track to needing no state aid funding in the next two years.
“Sometimes there’s this view that schools are hoarding money,” Minco Superintendent Kevin Sims said. “We are not. We are spending that money for the benefit of kids. I just hired a literacy specialist to get the ball rolling for the Legislature’s new literacy goals. If we were just on state aid, I think that would be a lot more difficult.”
With solar farms popping up in multiple counties and other incentive programs designed to attract new business to Oklahoma being created in recent years, Sims said changes such as the ones proposed in SQ 844 risk deterring economic development.
“I think the Legislature has to be really careful with tinkering with these things too much,” said Sims. “The Legislature itself has created a lot more of this through the years. It has helped create this climate of having to foot the bill for this.”
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This story was originally published by Oklahoma Watch and distributed through a partnership with The Associated Press.
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