CHEYENNE – A white paper identifying areas with proposed solutions to the state’s anticipated K-12 education revenue-expenditure imbalance has been released by a Subcommittee of the Wyoming Legislature’s Joint Education Committee.
During the December 19, 2016, meeting of the Joint Education Committee, a Subcommittee was created to develop and consider options and possible solutions to the anticipated K-12 education revenue-expenditure imbalance in the coming years. Wyoming faces an estimated $360 and $400 million annual shortfall in the 2019-2020 and 2021-2022 biennia, respectively for funding the daily operations of Wyoming schools. In fact, the current biennial budget has a shortfall of approximately $644 million, but as of the 2016 Budget Session, the Legislature is using savings from prior years to bridge the gap.
Options to Address Deficit
The Subcommittee has identified five areas where the Legislature can find solutions to this problem. Each area might yield approximately $80 million. These five areas combined could potentially fill the $360 to 400 million yearly deficit:
1. Identify reductions or modifications to the current funding formula for Wyoming school districts and reductions to appropriations to state agencies from the School Foundation Program Account.
2. Identify current savings that could be used to offset revenue shortfalls.
3. Identify existing funding streams that could help offset revenue shortfalls.
4. Identify spending policies that could help offset revenue shortfalls.
5. Identify revenue enhancements that could offset revenue shortfalls.
Reductions or Formula Modifications
The Legislature may implement cuts in a phased-in approach, depending on which cuts, if any, are implemented. Examples of reductions in funding or modifications to the funding formula, in no particular order, include:
- Continued targeted decreases by a certain percentage of total funding. For example, a 0.6% reduction in total funding each year yields approximately $10 million in savings annually.
- Calibration of prices in the formula to “cost-based” levels for the non-personnel elements yields approximately $22 million in savings annually. A reduction to only technology and supplies budgets by 10% would yield approximately $6.5 million in savings annually.
- School district consolidation to 23 countywide school districts, while not closing any schools, but streamlining administration functions, yields approximately $7.5 million in savings annually.
- Statewide purchasing of school buses would eliminate the requirement for school buses to be leased or financed, which would yield approximately $0.4 to $1 million in savings annually.
- Reduction to central office administration salaries by 10% yields approximately $3.4 million in savings annually.
- Reduction in funding for student activities by half and requiring fees to augment activity budgets yields approximately $15 million in savings annually.
- The elimination of the instructional facilitator program would yield approximately $22 million in savings annually.
- Reduction of the number of professional development days funded from ten to five days would yield approximately $21.6 million annually. This would set the number of required days of operation to 180 days, which was the number of days required prior to school year 2006-07. This would reduce the salaries for positions in the funding model resourced for 185 days by five days or 2.7%.
Additionally, certain model elements could be held constant such as the 100% reimbursement for allowable transportation and special education expenditures to current funding levels until a review and recalibration of these elements could be performed. Holding transportation and special education expenditures, except bus purchases and leases, and special education tuition, would yield approximately $11.8 million dollars in savings for school year 2017-18.
Related options would be to freeze the fleet size of school buses, daily route miles or student activity miles. The State could also review the option of utilizing Medicaid funding as part of the special education formula.
Examples of current savings would be to use the Legislative Stabilization Reserve Account (current estimated balance at the end of the 2017-2018 biennium is $1.59 billion) or the School Foundation Program Reserve Account (current estimated balance at the end of the 2017-2018 biennium is $100 million). These funds would be used to balance out the School Foundation Program Account depending on other options implemented.
Existing Funding Streams
Examples of existing funding sources that could be utilized to assist funding K-12 education are the 1% statutory diversion of severance taxes (approximately $89 million annually) or increase the percentage of federal mineral royalties directed to the School Foundation Program Account.
An example of spending policy modifications would be to increase the balance of the Common School Permanent Land Fund Reserve Account to allow, or guarantee, a higher level of investment income to flow back to the School Foundation Program Account instead of being deposited to the Common School Permanent Land Fund corpus. Increasing the Reserve Account to 200% of the five-year average of the spending policy would require approximately $225 million to flow to the Reserve Account from investment income or some other revenue source by the end of the 2017-2018 biennium. A larger Reserve Account might guarantee 5% investment earnings each year starting in FY 2019, which would provide an additional $85 million to $100 million, annually.
The Legislature may implement revenue enhancements in a phased-in approach, depending on which, if any, are implemented. Examples of revenue enhancements, in no particular order, include:
- Increase the number of mill levies assessed for education, which would yield approximately $20 million per mill annually.
- Require the taxation of health and professional services at the current 4% statewide sales tax rate, which would yield approximately $64 million annually.
- Increase the statewide sales tax, which would yield approximately $150 million per cent increase annually.
The Subcommittee is requesting public comment on the proposed solutions which may be submitted through Jan. 4 on the Legislature’s Website. Submit comments here