Structural Deficits Present a Challenging Outlook for Wyoming’s K-12 Education Funding
CHEYENNE, Wyo. (Press Release) - Wyoming’s K-12 Education (School Foundation Program (SFP) and School Capital Construction Account (SCCA)) are facing a $300 million annual structural deficit. This shortfall owes to rapidly declining coal and natural gas production and prices, which have reduced the State’s funding sources and diminished school district property tax collections.
Wyoming funds its schools like most states—with property taxes. Wyoming is blessed in that minerals pay 50% of our property taxes, allowing Wyoming residents, old and new, to enjoy the fifth-lowest property taxes in the country.
Local school property taxes from minerals have declined dramatically. Our state’s mineral severance tax and Federal Mineral Royalties have dropped to the lowest levels in decades, and Wyoming has lost over 200 million tons of coal production per year in the last few years. That is a 50% drop. The result is a one-two punch making it difficult for the Legislature to fulfill our Constitutional duty to fund an “equitable” public education for Wyoming’s children. This is a double whammy, as our school funding is the most mineral-dependent service of our state government.
Without further legislative action, our schools will use $331 million of the Legislative Stabilization Reserve Account (LSRA), the state’s “rainy day” fund, in the next school year and the coming years.
K-12 Education Budget Size
Wyoming’s K-12 Education budget obligations are virtually equal to its General Fund obligations. In FY 2021, General Fund appropriations were approximately $1.312 billion, compared to $1.534 billion for K-12 Education (including operations; excluding capital construction). School funding is provided by local school districts and then the State. As property taxes have declined because of falling mineral and energy values, a greater share of K-12 funding has been shifted onto the State. But State revenues to meet those responsibilities are also falling. To close the gap, the State must either create new revenues (taxes), redirect current funding streams, reduce spending (cuts) or a combination of these. Moderation in all these areas can produce a long-term permanent solution.
The Legislature is required by law to meet every five years and review the State’s K-12 education funding to ensure it remains adequate and equitable, or put more simply, that it is constitutional. This process is called Recalibration, and it requires the Legislature to examine education funding based upon current information. This Legislative Recalibration process started in 1995 and has continued to the present. The most recent study, which was completed this past year, resulted in a funding model recommendation that is $19 million more than our current legislative model, which is relatively close to what the Legislature is currently funding.
The House of Representatives is once again proposing a balanced approach that is important to Wyoming’s future. We propose reducing spending, shifting revenue streams, and spending down our savings. We are confident that rebounding oil prices will support this approach. We also have proposed a contingent increase in the sales tax—” a penny for education.” This is the last resort and would only be instituted if the other three options can’t meet this challenge and our savings reach minimum balances.
Every problem has a solution. We think it is important to solve problems and that now is the time to do so, rather than putting off the structural challenges to our education system any longer. The Legislature has its eye on the horizon and on our state’s future, our youngest citizens, our school children.
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