One of the most common claims made for a data center in a local approval process is that it will generate substantial property tax revenue for the local school district. It is a fair claim. Hyperscale facilities are unusually valuable as assessed property, and they pay real taxes against that value. But there is an important question to keep in mind – “Does the local school district keep the local tax gain, or does the state’s school funding formula redistribute it?”
The answer is not the same everywhere. In one community in northeast Oklahoma, the answer is unusually clear, and unusually favorable to the local district.
How Public Schools Are Funded
Public schools in the United States are funded through a mix of local property tax revenue, state aid, and federal aid, in proportions that vary considerably from state to state. Most states use some form of equalization formula that raises funding for districts with weaker local tax bases by directing more state aid to them and correspondingly reduces state aid to districts with stronger local tax bases. The purpose of the formula is to keep per-pupil funding roughly comparable across districts within a state.
When a large taxable investment (a hyperscale data center, for example) arrives in a given school district, it increases that district’s local property tax base. In most states, the equalization formula sees that increase and responds by reducing the state aid the district receives. The local gain is not “lost” in any absolute sense, but it is partially redistributed across the state. Other districts see a little more state aid; the host district sees less.
Oregon’s State School Fund, for example, is explicit about this mechanic – local property tax gains in one district are offset at the state level so that per-pupil funding across the state remains comparable.
The question this raises for a host community is practical. If the local gain is going to be substantially redistributed, the school district’s net benefit from hosting a hyperscale campus is smaller than the gross tax payment would suggest. That is worth knowing because it changes what a school district should realistically expect.
Oklahoma Works Differently
Oklahoma’s State Funding Formula has a specific feature that produces a different result. A school district that generates local property tax revenue above a defined threshold, measured on a per-student basis, stops receiving state equalization aid altogether. The formula treats that district as locally self-funded at the foundation level. Any further local tax revenue the district generates is retained locally in full. The state does not redistribute it.
Districts in this status are referred to, in Oklahoma education policy shorthand, as being “off the formula”.
Being off the formula is not in itself a function of hosting a data center. Any sufficiently valuable taxable investment (an oil and gas operation, a large manufacturer, a casino) can push a small district above the threshold. The Oklahoma Policy Institute’s explainer on the state aid formula describes about 40 mostly rural districts as being off the formula at any given time.
What is distinctive about the Mayes County case is that a single hyperscale investment pushed Pryor Public Schools off the formula on its own, and that the local tax gain from that investment has been retained in full by the district ever since.
What Happened in Mayes County
Mayes County is in the northeastern corner of Oklahoma, about 45 miles east of Tulsa. Its largest town, Pryor, has a population of roughly 9,500. Sitting just outside Pryor is MidAmerica Industrial Park, a 9,000-acre state-owned industrial park that has been in operation since the 1960s and that has housed heavy manufacturing, chemicals, and logistics tenants for more than half a century. In 2007, Google announced that it would build a hyperscale data center campus on land inside MidAmerica Industrial Park. The campus was commissioned in 2011.
Tulsa World, which has covered the site continuously since the announcement, has documented the subsequent expansions. Cumulative announced investment in the Mayes County campus now exceeds $3 billion across successive phases, with an additional $9 billion of Oklahoma-wide expansion announced in August 2025 as part of Google’s AI and cloud infrastructure build-out covering further Pryor expansion plus a new Stillwater campus. Employment at the site is in the range of several hundred permanent positions, with additional contractor and vendor staffing.
The local fiscal story is the point of this post. In a 2025 interview with NewsOn6, the Pryor Public Schools superintendent described the district’s position directly: the district’s overall net assessed value grew from $80 million in 2007 to approximately $1 billion today, a twelve-and-a-half-fold increase attributed to the data center’s presence and the property tax revenue generated by its equipment and infrastructure. That growth in local assessed value pushed Pryor across the state aid threshold, and the district has been off the formula since. The Oklahoma State Department of Education’s State Funding Formula documentation is the primary reference for how the formula treats local revenue collections; Pryor has appeared on the list of off-formula districts continuously since the data center’s assessed value flowed into the district’s tax base.
The practical consequence is that every incremental dollar of local property tax revenue the district collects from the hyperscale campus stays with Pryor Public Schools. There is no offsetting reduction in state aid, because there is no state aid to reduce. The district uses those revenues for teacher compensation, facilities, and capital investment at the local level, independent of the state foundation program.
Three Things to Note About This Case
The off-the-formula story is the most consequential feature of the Mayes County case, but it is not the only feature.
First, Oklahoma’s abatement structure is short, but not a full local gap. Oklahoma provides a five-year ad valorem exemption for qualifying new manufacturing and data center investments under Title 68 of the Oklahoma Statutes. For the first five years after a new hyperscale building is commissioned, the associated property is exempt from local property tax. This is shorter than Oregon’s Strategic Investment Program framework and is structurally different from Virginia’s standard-assessment approach. What partially offsets the local revenue loss during those five years is Oklahoma’s Ad Valorem Reimbursement Fund, which is supported by one percent of state personal income tax and corporate income tax revenues, and which reimburses counties and school districts for the exempt property tax. The reimbursement does not always cover the full local loss, and the fund has historically required supplemental appropriations, but it is an important feature of the Oklahoma structure to name honestly. After the five-year window closes, the full local tax flow accrues to Pryor and to the other local taxing districts. In Pryor’s case, the initial exemption expired several years ago, and successive expansions have carried their own exemption periods that are in different stages of the five-year cycle.
Second, MidAmerica Industrial Park was not a greenfield. The park has been home to major industrial operations, including a large fertilizer plant, a steel operation, and multiple logistics and manufacturing tenants, since the 1960s. The hyperscale campus is the single largest tenant by investment. It has been transformational for the park’s profile in economic development circles.
A useful way to calibrate how large the hyperscale footprint is relative to the rest of the park, and relative to the rest of the state’s exempt industrial base, is to look at where the state’s reimbursement dollars flow. In tax year 2024, Mayes County received $39.6 million from Oklahoma’s Ad Valorem Reimbursement Fund, the single largest county disbursement in the state and more than the next two counties (Tulsa and Oklahoma) combined. That figure represents roughly 42 percent of the entire statewide reimbursement pool of $93 million. The “Computer” classification under NAICS 518210, which the Oklahoma Tax Commission reports separately from traditional manufacturing, large manufacturing, and distribution, totaled $39 million statewide in the same year. The Mayes County campus accounts for essentially the full statewide computer-class reimbursement. Inside MidAmerica Industrial Park, the hyperscale campus is a larger assessed-value base than the other several decades of industrial tenants combined. This is a concentration fact that is worth naming – the local fiscal story in Pryor is not a story about diversification, it is a story about a single investment that is structurally dominant within its host park, within its host county, and within its statewide asset class.Third, community grants are a separate line item.Google’s Data Center Community Grants Program distributes funds to local schools, libraries, first responders, and nonprofits in each of its U.S. host communities, Pryor included. Those grants are in addition to property tax revenue, and they operate on different rules. Figures for the Pryor site should be sourced to Google’s most recent community impact report rather than generalized from other host community totals.
What the Mayes County Case Demonstrates
The specific fiscal outcome in Pryor is not portable. No other state uses Oklahoma’s State Aid Formula, and within Oklahoma there are relatively few districts that are off the formula.
What is portable is the underlying question.
When a school district in a given state is presented with a hyperscale investment proposal, the right question is “how does our state’s school funding formula treat an increase in our local tax base?”
That question determines whether the school district’s net benefit looks more like Pryor’s, where the full gain is retained locally, or more like a district in a state with active equalization, where a substantial share of the gain is redistributed across the state.
Equalization exists for good reasons, and off-the-formula status exists because of where a district falls within its state’s specific funding mechanics. The point is simply that host communities and school districts engaging with a proposal should understand which regime they are operating under, because it changes what the realistic local fiscal outcome looks like.
Communities that engage with hyperscale proposals often focus on the gross tax payment figure. That is the most visible number, and it is the number most often quoted. But the durable local benefit is determined by what happens after those payments reach the local taxing districts. The community benefit agreement, the school district’s funding position within its state formula, the length and structure of the abatement, the existence and scale of a direct community grants program: these are the details that determine what the tax gain does, locally, over the fifteen- or twenty-year operating life of the campus. Mayes County’s case is one of the cleanest examples of that record in the United States. It is also an argument for asking the structural question earlier in the process, so that a community fully understands the impact of these large data center developments.
Sources: Tulsa World, “Google investment in Pryor reaches $3 billion with new expansion”; NewsOn6, “Pryor Public Schools talks impact of Google’s Data center on the district”; NewsOn6, “Google $9 billion Oklahoma investment”; Oklahoma Policy Institute, “State Aid/State Aid Formula”; Oklahoma Policy Institute, “Ad Valorem Manufacturing Exemption”; Oklahoma State Department of Education, “State Funding Formula”; Oklahoma Tax Commission, 2025 Ad Valorem Annual Report; Google Data Center Community Grants Program.