Legislators introduce bills to diversify education budgets

Home|Feature Story, Local News, News|Legislators introduce bills to diversify education budgets

SHERIDAN — Education funding has often been near the forefront of legislative conversations in Wyoming. Funding for K-12 public education is the state’s largest budget item, costing more than $1 billion annually, so the topic will naturally be discussed frequently.

Wyoming’s education funding structure relies largely on property tax assessments — at local, county and state levels — and revenue from taxes on mineral companies.

Mineral prices often rise and fall, though, leading to fairly regular, sometimes significant fluctuations for school funding.

“When it’s good, it’s really good,” Sheridan County School District 1 business manager Jeremy Smith said. “…When it’s bad, it’s really bad.”

The Wyoming School Foundation Program handles distribution of funds to schools based on the state’s block grant. A few school districts around the state have large local mineral revenues and pay into the School Foundation program to even out education funding across the state. About 40 of the state’s 48 school districts, including the three in Sheridan County, receive money from the recapture program to help fund education.

Sheridan County School District 2 superintendent Craig Dougherty said Wyoming has a unique structure because of its access to an equitable educational opportunity.

The state’s funding structure makes schools less dependent on local property assessments, ideally giving students in lower-income communities the same education as kids in a wealthy community. “If we didn’t have that, we’d have to rely on taxpayers voting for mill levies and trying to pay for buildings and so forth,” Dougherty said.

In general, Wyoming’s public schools appear to be in good financial shape, but the money sources could be more stable from year to year. According to the October 2018 CREG report, minerals — the top four being oil, gas, coal and trona— account for about half of the state’s $22 billion total assessed valuation.

Mineral prices’ volatility make it difficult to forecast how much the state can comfortably spend on education, though. Because of the state’s reliance on mineral taxes, geopolitical events around the globe can impact Wyoming students.

As the price of crude oil barrels increases, so do gas prices, generally speaking. Due to this interdependence, in Wyoming an increase in crude oil price is likely a positive sign for the state’s public education funding. A decrease in oil prices is usually a negative indicator. “It’s a worldwide market for crude (oil), so weird things that happen in other parts of the world like Venezuela or the Middle East have a direct affect on what the crude prices are,” Smith said. “… All those things can have an impact on the funding that our schools in Wyoming receive, just because of our dependence on commodities for revenue.”

The state relies on mineral taxes and local property taxes for funding, so fluctuations in mineral prices can present both challenges and opportunities.

“When the money’s good, the money’s really good, and it’s hard to think about changing where those revenue streams come from,” Smith said. “…When the money’s bad, we’re like, ‘OK, we’re going to diversify.’ Well, how? What does that entail?”

School officials said the state generally provides excellent funding but expressed hope that funding will become less subject to the whims of commodities prices in the future.

Sheridan County School District 3 business manager Greg Rohrer said the fluctuations in commodity prices also affect small school districts more because of the outsized percentage of fixed costs at small schools. For example, heating and electricity bills take up a larger percentage of the SCSD3 budget than they do at larger school districts.

“In my opinion, the bigger districts — they need more money, but I still think they have a little bit more leeway,” Rohrer said.

Rohrer said the state must figure out other options to make funding more stable.

Dougherty agreed.

“The bottom line is the health of our oil, gas and coal industry is the health of our state, financially, until we diversify economically,” Dougherty said.

There are a few bills in this year’s legislative session aimed at diversifying education funding. One proposal, House Bill 220, would institute a 7 percent tax on larger corporations like Walmart and McDonald’s and use the revenue toward public education. The bill passed the House and now must make it through the Senate. Other possibilities include raising taxes for online companies and expanding tourism revenue. The overall idea between the different proposals is to have less instability for school funding.

“I think that’s what all of these people are trying to get out of, in various ways and forms, is that boom and bust cycle,” Smith said.

Smith said using the state’s Legislative Stabilization Reserve Account — also known as the rainy day fund — is another option to ensure funding remains somewhat smooth. He said the Legislature should save money when commodity prices rise but also be willing to spend those savings when the economy is in a downturn.

“So that you’re not just throwing money at every project on the planet when prices are good, but then you’re also not cutting vital services to schools and students and seniors and everyone else when prices drop,” Smith said.

SCSD1 superintendent Pete Kilbride agreed, noting the volatility likely wouldn’t apply to other professions, citing an example of heart surgeons. “‘In lean years you don’t do heart surgeries, in good years we’ll go ahead and do them,’” Kilbride said. “That’d be a crazy way to do business, and so education is no different.”

School officials can’t know for certain where the revenue streams will come from in the future, so Dougherty said they focus on instructing students to be prepared for what comes next.

“We can’t control what Saudi Arabia is going to   do,” Dougherty said. “We can only control what our product is, which is every child.”

Wyoming’s education funding will likely be linked to the minerals industry for the foreseeable future, but more conversations have begun about lessening that dependence.

By |Feb. 7, 2019|

About the Author:

Ryan Patterson joined The Sheridan Press staff as a reporter covering education, business and sports in August 2017. He's a native of Wisconsin and graduated from Marquette University with a bachelor's in journalism in May 2017. Email him at: ryan.patterson@thesheridanpress.com.

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