How to Diversity Oklahoma’s Economy

Bart Binning, Ed.D.

Bart Binning, Ed.D.

My original plan was that this article would be a second part to my “Foundations of Democracy” series. However,things happen… Specifically, I scheduled October speakers for the Club 29 Thursday Breakfast Makeup meeting; my October 30th speaker failed to appear. As a last minute topic we had a special form of “Table Talk” – we recapped the month’s topic, which was How to Diversify Oklahoma’s Economy.

As an introduction to each speaker in October, I began with the statement: There are three ways for society to create wealth. One can: 1) grow things (agriculture), 2) mine things (ex., oil and gas exploration), or 3) transform things (manufacturing / refining).

Historically, Oklahoma has done very well with the first two, but has been lacking in the transformation /manufacturing sector. This situation makes Oklahoma’s economy similar to that of a third world country; sending raw materials out of state for transformation, then importing finished products. With the current economic slowdown in the oil and gas industry, this seems to be a good time to examine ways to encourage economic development in the transformation / manufacturing sector. The speaker schedule for the month were:

October 1 –Nathaniel Harding spoke about “Oklahoma Works” (www.oklahomaworks.gov) an organization that brings together Oklahoma’s workforce resources, connecting employers, employees and job-seekers to information and programs that help build Oklahoma’s workforce. This organization is helping to identify mismatches between the skill set that educators are producing and what businesses need. Of note, the percentage of offenders that re-entering the workforce with vocational training or certifications is currently 3.79% and the target is 6%.

October 8 –Bob Gilliland–Chairperson of the new Oklahoma Workers Compensation Commission (www.ok.gov/wcc). In 2013, Oklahoma had the sixth highest Workers’Compensation premium costs in the nation. Oklahoma’s workers’ compensation premium costs have also been well above the regional average. Since the new Administrative Workers’ Compensation Act, effective February 1, 2014, those costs have dropped 36.8% or $358 million.

October 15 –Jeb Boatman–Site Director and Chief Legal Council for Boeing’s Oklahoma Division – With Tinker AFB in Oklahoma City, the AMR facility in Tulsa, the FAA Logistics Center in Oklahoma City, and Boeing in Oklahoma City, the aerospace component of the economy represents the largest sub-sector in the transformation / manufacturing sector. Jeb explained some of the reasons, including economic incentives and proximity to Tinker, that were considered by Boeing in the decision to move the headquarters for GS&S’ Aircraft Modernization and Sustainment (AM&S) division to Oklahoma City. According to OKC Chamber data, Boeing currently employees about 2,300 in Oklahoma City. Boeing will continue to hire hundreds more through the rest of 2015 and 2016, which will make Boeing the largest transformation / manufacturing company in the metro. From an employment standpoint, Boeing will be on par with Devon and St Anthony (SSM Health Care).

October 22 –Drew Dugan–Greater Oklahoma City Chamber of Commerce, VP Education and Workforce Development. An educated workforce leads to better business recruitment and expansion. A strong education system plays a large role in our ability to recruit new residents. The MAPS programs have helped the Oklahoma City Metro attract young people as the infrastructure developments help improve the quality of life. However, an obstacle to overcome is that of expectations — Oklahoman’s tend to have lower expectations than the national average in many areas, such as educational attainment.

For our October 29 meeting we broke into three groups to: A) identify problems that prevented Oklahoma from expanding its manufacturing / transformation base and B) suggest solutions to the problems. Each group focused on a different aspect, but there was a common thread, or two:

Group 1: 

Skills of the local workforce did not match the requirements of industry

Attitude of the Local Community (some work to attract new industry, some do not

Incentives are critical, such as New Market Tax Credits, Job incentives

Group 2: 

State is not proactive towards mom-and-pop manufacturing

There is a different Risk/Reward system for Manufacturing vs Oil and Gas Exploration; we have a streak of independence and would rather work for ourselves (Historically we “invest with after-tax dollars” in manufacturing, but “gamble with pre-tax dollars” in oil and gas exploration)

Rural Oklahoma tends to lack transportation infrastructure necessary to transport raw materials and finished goods

School System Stifles Creativity / Workforce lacking skills needed by industry

Poor Perception of Manufacturing (it is more glamorous to be an accountant, attorney, or even a computer geek)

Group 3

Historically, Oklahoma has less that a stellar reputation in supporting business, the perceptions that need to be overcome include:

Expensive Workers Compensation (current reforms have greattly reduced cost)

Unexpectedly removing tax incentives for the GM Plant (similar tax incentives are now reviewed by the Oklahoma Supreme Court)

Lacking skilled labor force

The following is my analysis of the group reports. While each group exposed somewhat different problems, the common thread that ran through each groups discussion was the lack of skilled workforce and a system of education that is not producing the skill set needed by industry. (These same concerns were also expressed in the 1990’s when I was involved with Higher Education.)

The groups concluded that what was needed was not just reform in the education sector, but a revolution. It was suggested that the education reforms of the last 20 years have not worked, and what is needed is a fresh start; what is needed is a re-defining and re-evaluating the current structure of the constitutionally mandated Common Education and Higher Education (and statutory CareerTech) systems of education that have independently evolved since statehood. For example:

Common Education: an elected Superintendent of Public Instruction; an appointed State Board of Education and 550 independent and dependent school districts with elected boards of education.

CareerTech: an appointed State Board of Career and Technology Education, and 29 Career Centers with elected boards of education

Higher Education: an appointed Chancellor of Higher Education, appointed State Regents for Higher Education and a plethora of appointed institutional boards of regents for colleges and universities.

Given the difficulty we have in integrating convicted felons back into society, it is arguable that the Corrections Department rehabilitation program should also be included in this proposed education revolution.

Under state law, a superintendent of a school district, or a president of a college or university is personally responsible for things that happen at their institution. In rural areas, this president or school superintendent is typically the most powerful person in the county. With Common Education policy largely mandated not by the board of education, but by the legislature; and with so many independent governing boards (some elected and some appointed) it is arguable that no one person is in charge of state education policy – so we do not have a unified education policy for the state.

The interesting conclusion is that to diversify the state’s economy, educational reform is needed. But education reform is politically difficult, and we live in a populist state.

The December theme for the Thursday Breakfast Meetings is “Education in Oklahoma –the Pluses and Minuses” and the March 2016 theme will involve ways we could change the structure of our educational system.

Be sure to join us for the fun…