Every month, the news gets worse for state agencies, state employees, and Oklahoma residents who increasingly rely on state services after losing jobs and benefits.

Although national reports point to an improving economy, just try to convince Oklahoma lawmakers, and state workers who face furloughs and increased budgets cuts at least for the remainder of this fiscal year – and probably into the next one that begins July 1.

Last week, state officials ordered agencies to cut 10 percent from their budgets. Most agencies have had to reduce budgets 5 percent each month for the first half of the fiscal year.

On Monday, State Treasurer Scott Meacham announced Oklahoma will experience a revenue shortfall of more than $729 million for this fiscal year. He told the Associated Press state agencies will have to tighten their belts even further, or receive funds from the constitutional Rainy Day reserve fund or other sources. Meacham forecasts a revenue decline for the 2011 fiscal year of almost $967 million, or 17.6 percent, from the current fiscal year.

To make things even bleaker, a November state budget report issued by the National Conference of State Legislatures ranks Oklahoma worst in the nation in revenue shortfall, with collections down more than 25 percent from a year ago.

The report ranks Oklahoma’s shortfall at 18.5 percent for the current fiscal year, with the No. 2 state being Arizona, at 18 percent, followed by Illinois, with 16.5 percent. Nationwide, states have cut $145.9 billion from their budgets for the previous year.

Local agencies are struggling to provide services with less money. Cherokee County Department of Human Services Supervisor Steven Edwards says his office is receiving more new clients, including many who never have sought DHS help before. At the same time, he has fewer social workers and other staff members to serve the increased caseload.

Northeastern State University and Tahlequah Public Schools are getting by — at least for now — without noticeable cuts, but that could change as state revenue continues to fall, officials from both institutions said.

State Sen. Jim Wilson, D-Tahlequah, and State Rep. Mike Brown, D-Tahlequah, have monitored the situation closely and have seen agencies implement more rigorous cost-cutting measures as the year progresses.

“We are in severe straits,” said Wilson, who doesn’t expect the news to get better in coming months. “The numbers are down about $100 million from November, and will be down $800 million to $1.1 billion this year.”

Because of holiday shopping, state sales tax revenue is generally strong for December and January, but when people begin paying income taxes in February, it usually falls off.

The state received $600 million in stimulus money it is spending this year, and with $600 million from the Rainy Day fund, which lawmakers will discuss appropriating in January, that could offset additional cuts.

So far, education, health care and public safety have been protected from the cuts, but that could change, Wilson said.

“If our shortfall goes to $1 billion, we’re in serious trouble, because it’s got to go into health care or something else major,” he said. “The people have to let the leadership know it’s not acceptable. People always talk about economic development and prosperity. We can’t do that without a strong education system. We can’t do it without infrastructure. We can’t do it without health care. The people of Oklahoma have been led to believe that tax cuts pay for themselves. We’re better off if we build our infrastructure on public investment so we can attract more industry and get better jobs.”

Brown said Oklahomans have been sheltered somewhat from the national recession, but are now beginning to feel the pain. Oklahoma banks did not make the excessive lending mistakes their counterparts in other parts of the country did.

But the tax cuts passed recently by the Legislature have led to many of Oklahoma’s financial woes.

“We have come to the point that we have cut services and are being affected by it right now,” Brown said.

He says the tax cuts did not create the jobs their promoters promised.

Some state agencies are furloughing their employees, while others are receiving “uncompensated work days,” where workers are promised they will be paid at some point in the future. At several agencies, these uncompensated days have become the rule because there are not enough employees to perform the work, Brown said.

“We’re heading into tough times, and things are going to get even tougher if we don’t get this tuned down,” Brown said. “It’s going to be a slow turnaround, and I don’t think we’re going to feel the full brunt of it until next year.”

Edwards points to DHS figures showing how the caseloads have increased.

During fiscal year 2008-’09, food stamp cases went from 2,101 with 5,439 recipients, to 2,397 with 6,188 recipients. The amount paid monthly went from $532,469 to $780,378. The number of people on Temporary Assistance to Needy Families rose from 186 to 236.

Tahlequah’s DHS office has 65 workers, far fewer than were based here when Edwards came 15 years ago. Many of the cubicles he walks by on the way to his office are vacant.

“We’re losing a lot of positions and not getting to fill them, because of the budget cuts,” he said.

People are the only thing he can cut at this point. So far, his office has experienced no furloughs, but Edwards doesn’t know if that can continue much longer.

“At one time, I had 20 child welfare workers. Now I have 10,” he said. “At one time in family support, medical, day care, I had 25 or 26 workers. Now I have 18.”

The clerical staff has been cut to almost nothing. While many duties have been computerized, human beings are still needed to perform much of the work, and for the face-to-face work with clients.

When a job does become available and Edwards is able to fill it, he has many candidates, including people with advanced degrees – even lawyers – applying for beginning social work positions.

“I’ve been around [DHS] for 30 years, and this is the worst I’ve seen it,” he said. “We’ve got people coming in here we’ve never seen before. We’ve got people who are working and not being able to make it on their salaries.”

Others are people who have been seeking work for some time, and whose unemployment payments have finally run out.

Many of the new recipients qualify for expedited services, meaning they have no income whatsoever, or their costs of shelter and utilities are above their income, Edwards said. The office is seeing 25 to 39 such people each month.

More people also have been applying for the energy assistance program. It has more money than last year, but that will be expended to help people keep their utility bills paid and the heat on.

Edwards said many citizens don’t realize the impact DHS assistance has on the local economy. The food stamps pump between one-half and three-quarters of a million monthly into local businesses.

Northeastern State University and Tahlequah Public Schools have not experienced furloughs, and officials hope there will be none this year. But their leaders are still looking to cut expenses and run a tight ship.

“We’re keeping a very close watch on the state and national economic climate,” said Mark Kinders, NSU vice president for university relations, adding that the current setback has been termed the “Great Recession.”

“It’s going to be a long, slow return to normalcy,” he said.

He believes it will be four or five years before the economy regains its strength.

NSU and other higher education institutions are receiving a benefit of sorts from the recession. People unable to find jobs in their field are returning to school to train for new careers. The federal government has made increased loan funds available for these students. The new GI bill also is providing services for veterans returning to school. “So far, we’ve been able to weather the storm,” Kinders said.

The university has tried to contain costs wherever possible, including reducing travel expenses. So far, there have been no layoffs or furloughs.

“Those are not on the horizon,” Kinders said. :The picture of the state would have to change drastically for us to consider furloughs.”

With much of its income coming from tuition, private donations, grants and other sources, NSU is not as heavily dependent on state funding as some agencies, he said.

Dr. Shannon Goodsell, Tahlequah superintendent of schools, said the district is preparing a four-phase plan to deal with decreased income. He calls the almost daily updates on the state’s economy “dreadful” news.

The impact on Tahlequah Public Schools will be between $600,000 and $1 million, he said.

“We are working on a strategy, and we have been for the past month, of Phase I, and all the way up to Phase 4, which is the worst of the worst-case scenario,” he said. “Our goal is that we want to impact the classroom the least.”

At some point, that may mean furloughs for administrators on a daily basis. School officials are examining those cuts now, he said.

If it becomes necessary to cut positions, the district hopes to do so by attrition, Goodsell said. The district may offer teachers close to retirement an incentive package to take early retirement.

Goodsell wants district patrons to realize budget money must be spent on the items for which it is earmarked; it cannot legally be transferred from one fund to another. The general fund isn’t one big checkbook, with money that can be spent on anything. It’s more like 100 little checkbooks, with money that can be spent only for certain purposes.

“The good thing about TPS is because of our general fund balance and the good shape our general fund is in, we’ve got a little time before the major impact hits,” Goodsell said.

Many marginal districts are having to make quick decisions and major cuts, but TPS has the time to plan any needed cuts so they will least impact the students, he said.